Sustainability-related Financial Disclosures in accordance with the SSBJ Standards For the year ended December 31, 2025
About this Document
As of the date of disclosure of this document, the current regulatory framework does not allow an assurance report on sustainability-related financial disclosures to be attached to the Annual Securities Report. Therefore, this document has been prepared separately.
The sustainability-related financial disclosures of our group have been prepared in accordance with the Sustainability Disclosure Standards* which the group has adopted early from the current fiscal year.
The content of this document represents an excerpt from the disclosures under "Part 1 Company Information, II Overview of Business, 2. Approaches to and Initiatives for Sustainability" of the Group's Annual Securities Report for the 187thfiscal year, as published on March 27, 2026, and has been voluntarily prepared in alignment with the Sustainability Disclosure Standards.
With respect to the sustainability-related financial disclosures contained in this document, governance, risk management, Scope 1 and Scope 2 emissions, and certain metrics have been subject to third-party limited assurance conducted by KPMG AZSA Sustainability Co., Ltd. The scope of assurance is identified by a † symbol in the table of contents on the following page and in the relevant portions of the main text. Please refer to the assurance report at the end of this document.
*: Sustainability Disclosure Standards developed by the Sustainability Standards Board of Japan (SSBJ) (Japanese standards) to be consistent with the IFRS Sustainability Disclosure Standards developed by the International Sustainability Standards Board (ISSB).
Report for the 187thfiscal year
Page
Basis of preparation of sustainability-related financial disclosures 1
Governance† 1
Risk management† 8
Strategy 9
Disclosure by material theme 11
Adverse effects of alcohol consumption 11
Governance† 11
Risk management† 11
Strategy 12
Strategy-Resilience 13
Metrics and targets 13
Healthy longevity society 14
Governance† 14
Risk management† 14
Strategy 14
Metrics and targets 17
Unmet medical needs 17
Governance† 17
Risk management† 17
Strategy 18
Strategy-Resilience 22
Metrics and targets 22
Human capital 25
Governance† 25
Risk management† 25
Strategy 25
Strategy-Resilience 29
Metrics and targets 29
Human rights 30
Governance† 30
Risk management† 30
Strategy 30
Strategy-Resilience 32
Metrics and targets 33
Consumer issues 33
Governance† 34
Risk management† 34
Strategy 34
Strategy-Resilience 35
Metrics and targets 35
The environment (climate change and natural capital) 36
Governance† 36
Risk management† 36
The contents including and after (ii) Identification of risks and opportunities, a. Scenario analysis related to climate change are not in scope of assurance.
Strategy 39
Strategy-Resilience 49
Metrics and targets 51
With respect to the metrics, those subject to assurance are identified by a † symbol in the main body.
Basis of preparation of sustainability-related financial disclosures
General information
The Group prepares its sustainability-related financial disclosures in accordance with the Sustainability Disclosure Standards,*which have been early adopted from the current fiscal year pursuant to Article 19-9, Paragraph 1 of the Cabinet Office Ordinance on Disclosure of Corporate Affairs (Ministry of Finance Ordinance No. 5 of 1973), as applied under Article 2, Paragraph 1 of the Supplementary Provisions of the Cabinet Office Ordinance Partially Amending the Cabinet Office Ordinance on Disclosure of Corporate Affairs and the Cabinet Office Ordinance on Disclosure of Information, etc. on Regulated Securities (Cabinet Office Ordinance No. 5 of February 20, 2026). Forward-looking statements contained herein are based on the judgments of the Group as of the end of the current fiscal year.
These sustainability-related financial disclosures have been prepared for the reporting period of the current fiscal year (from January 1, 2025 to December 31, 2025). These sustainability-related financial disclosures do not include comparative information, in accordance with paragraph 93 of the Universal Sustainability Disclosure Standards "Application of the Sustainability Disclosure Standards," paragraph 42 of the Theme-based Sustainability Disclosure Standard No. 1 "General Disclosures," and paragraph 102 of the Theme-based Sustainability Disclosure Standard No. 2 "Climate-related Disclosures." Furthermore, these sustainability-related financial disclosures do not include Scope 3 greenhouse gas emissions, in accordance with paragraph 103 (2) of the Theme-based Sustainability Disclosure Standards No. 2 "Climate-related Disclosures." Scope 3 greenhouse gas emissions will be disclosed once preparations for such disclosure are complete.
These sustainability-related financial disclosures were authorized for issue on March 27, 2026 (date of authorization for issue) by Shinjiro Akieda, Director of the Board, Senior Executive Officer, CFO and Chairperson of the Group Information Disclosure Committee, after deliberation by said committee, and are reported to Takeshi Minakata, Representative Director of the Board, President & COO.
The Group has obtained third-party assurance (limited assurance) from KPMG AZSA Sustainability Co., Ltd. for governance, risk management, and Scope 1 and Scope 2 emissions, as well as a portion of the metrics within these sustainability-related financial disclosures. For details, please refer to the "Sustainability-related Financial Disclosures in accordance with the SSBJ Standards - 187th Fiscal Year (2025)" available on the following website.
URL: https://www.kirinholdings.com/jp/investors/library/financial_results/
*Sustainability Disclosure Standards developed by the Sustainability Standards Board of Japan (SSBJ) (Japanese standards) to be consistent with the IFRS Sustainability Disclosure Standards developed by the International Sustainability Standards Board (ISSB).
Information on sources of guidance
The Group applies the Sustainability Disclosure Standards to identify material themes, risks, and opportunities for its sustainability-related financial disclosures. In addition, taking into account the Company's business and business model described later, the Group refers to the Industry-based Guidance on implementing IFRS S2 (published in June 2023; hereinafter referred to as the "Industry-based Guidance") for the alcoholic beverages, non-alcoholic beverages, and processed foods industries published by the International Sustainability Standards Board (ISSB), and the SASB Standards (last revised in December 2023; hereinafter referred to as the "SASB") for the alcoholic beverages, non-alcoholic beverages, processed foods, and biotechnology and pharmaceuticals industries. Furthermore, from among the management issues extracted in the Group Materiality Matrix (hereinafter referred to as the "GMM"), which was formulated with reference to GRI, ISO 26000, etc., the Group has identified the following seven material themes as targets for identifying sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects. The Group has also assigned an executive officer in charge to each theme to ensure accountability.
Adverse effects of alcohol consumption
Healthy longevity society
Unmet medical needs
Human capital
Human rights
Consumer issues
The Environment (climate change and natural capital)
Judgments
Of the judgments made in the process of preparing the sustainability-related financial disclosures, the judgment that has the most significant effect on the information included in the disclosures is as follows:
Identification of sustainability-related risks and opportunities
For further details, please refer to "(3) Risk management, 1) Sustainability-related risk management, (a) Identification of material sustainability-related risks and opportunities."
Measurement uncertainty
The most significant source of uncertainty affecting the quantitative information reported in the sustainability-related financial disclosures is as follows:
Financial effects assessed through climate-related scenario analysis
For further details, please refer to "(5) Disclosures by material theme, 7) The Environment (climate change and natural capital), (b) Risk management, (ii) Identification of risks and opportunities, a. Scenario analysis related to climate change, c. Financial impacts and responses based on analysis results."
Governance†
As a pure holding company, the Company is responsible for formulating and promoting the overall Group strategy, monitoring each business, promoting the creation of synergies through Group-wide coordination, examining sustainability-related issues, and formulating fundamental policies regarding sustainability.
The Group regards material themes essential to its sustainable existence and growth, together with stakeholders, as management issues, and promotes CSV management through proactive responses. The Group strives to establish a system to address sustainability-related issues across the organization, aiming not only to advance risk management but also to create revenue and profit opportunities through co-creation with stakeholders.
When making decisions at meetings of the Board of Directors and the Group Executive Committee, in accordance with the Rules of Decision-Making Procedures and relevant internal regulations, the Group identifies potential strategic options, clarifies both the expected effects and risks of each option, and discusses the risks and opportunities anticipated to arise from the selection of each strategy, including their potential impacts and likelihood of occurrence, as well as measures to address such risks (elimination, mitigation, and risk taking).
Supervisory structure (governance body or individual)
The Board of Directors is responsible for the oversight of sustainability-related risks and opportunities. The Board of Directors recognizes sustainability-related risks and opportunities as material management issues. From the perspective of enhancing corporate value over the medium to long term, the Board of Directors discusses initiatives to address these issues after resolving the Group CSV Policy, which includes the GMM, based on the Regulations on Work Authority.
Additionally, on an annual basis, the Board of Directors receives information from the Director of the Board, Senior Executive Officer, CFO, the chairperson of the Group Information Disclosure Committee, regarding sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, identified based on the GMM, and their monitoring metrics.
The Board of Directors oversees the execution of sustainability-related operations through quarterly reports from the Corporate Strategy Department for each business and function.
The Board of Directors oversees the effectiveness of sustainability management through these deliberations and reports from management described below.
Furthermore, regarding the process from the selection of significant risks and opportunities to sustainability-related financial disclosures, the Group has established the Sustainability-related Financial Disclosure Policy Based on SSBJ Standards and the Practical Guidelines for Sustainability-related Financial Disclosures Based on SSBJ Standards and maintains and operates internal systems accordingly. These internal systems are subject to internal audits by the Company's Internal Audit Department.
Executive structure (management role)
The Group has established the four bodies described below as advisory bodies to the President & COO. As a general rule, matters discussed or decided by the Group CSV Committee, the Group Risk and Compliance Committee, and the Group Information Disclosure Committee are deliberated at the Group Executive Committee before being reported to the Board of Directors.
Group Executive Committee
The Group has established the Group Executive Committee as an advisory body to support the President & COO in decision-making. Consisting of Senior Executive Officers or above including the President & COO, Standing Audit & Supervisory Board Members, and professional advisors, the committee discusses strategies and investments that have significant implications for the Group's management, and meetings are held weekly in principle.
Based on long-term policies and strategies, the Group Executive Committee deliberates and resolves short- to medium-term non-financial targets and investment plans necessary for their realization. It also receives reports from operating companies and divisions on the status of target achievement and risks, and supervises these companies and divisions.
Group CSV Committee
The Group has established the Group CSV Committee to discuss CSV issues across the Group, which in principle meets three times a year. In accordance with the Rules of the Group CSV Committee, the committee is an advisory body to the President & COO, co-chaired by the CEO and the President & COO of the Company, with its members being the CEOs of major Group companies and Senior Executive Officers or above of the Company. With the participation and advice of outside experts from a multi-stakeholder perspective as necessary, the committee exchanges opinions on long-term sustainability policies and strategies, such as the GMM, and submits or reports the results to the Board of Directors.
Group Risk and Compliance Committee
The Group has established the Group Risk and Compliance Committee, chaired by the Executive Officer in charge of risk management with members consisting of Senior Executive Officers or above serving as standing members, and meets twice a year in principle. In accordance with the Group Risk Management Regulations, the Group defines risk as "uncertainty with the potential to seriously impede the accomplishment of the Kirin Group's business targets or impact business continuity (including both opportunities and threats)." The committee oversees all aspects of risk management activities, including those related to sustainability issues, determines risk management policies, selects the Group's major risks, and reports them to the Board of Directors.
Group Information Disclosure Committee
The Company has established the Group Information Disclosure Committee, chaired by the Director of the Board, Senior Executive Officer, CFO, with members consisting of relevant officers and department heads, and it meets quarterly in principle. In accordance with the Rules of the Information Disclosure Committee, the committee decides on timely disclosure information, including Annual Securities Reports. Sustainability-related risks and opportunities to be disclosed in the Annual Securities Report that could reasonably be expected to affect the Group's prospects, along with their monitoring metrics, are decided by the Group Information Disclosure Committee and reported to the President & COO.
Sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects to be disclosed in the Annual Securities Report, as well as their monitoring metrics, are discussed in bodies established for each material theme in principle. These are
finalized in consideration of the Group's major risks selected by the Group Risk and Compliance Committee, and are determined by the Information Disclosure Committee based on the results of such discussions.
Corporate Governance System
Skills and competencies required of the Board of Directors
In order for the Company to ensure that its supervisory and executive structures function appropriately and to realize sustainable growth and the improvement of corporate value for the Group, it is required that the Board of Directors and the Audit & Supervisory Board each possess the necessary skills as a whole while ensuring diversity in terms of gender, internationality, and other factors. This requirement applies equally to the executive side.
Looking beyond KV2027, the Company has recently announced a new Long-Term Management Vision, "Innovate2035!" Taking this opportunity, the Company has reviewed the skills required of the Board of Directors and the Audit & Supervisory Board.
First, the Company considers an in-depth understanding of and empathy for the philosophy of "CSV management" promoted by the Group to be a basic and essential requirement common to all Directors of the Board and Audit & Supervisory Board Members.
On that basis, while premised on comprehensive capabilities in "Corporate Management" through experience as a corporate or business executive, the Company has positioned knowledge in the areas of "Sustainability," "Global," "Finance / IR," and "Legal / Risk Management" as essential basic skills for driving the Company's management and ensuring the effectiveness of corporate governance.
Furthermore, under "Innovate2035!," the Group aims to achieve sustainable growth through CSV management and contribute to the social issue of "Health and Well-Being." The Group has established the following vision: "Vitalize the world through innovation by our people and technology, as a global leader in Creating Shared Value (CSV)." The sources for creating innovation are the Group's organizational capabilities such as "R&D," "Marketing," "Human Resources and Organization," "ICT and DX," and "Manufacture and Quality Assurance." These capabilities are regarded as essential skills for the Board of Directors and the Audit & Supervisory Board to conduct highly effective decision-making and oversight.
Regarding skills related to "Sustainability," the Company provides input on sustainability (CSV management) as part of its corporate governance training conducted annually for the Company's newly appointed officers and department heads. After the input session, the Company also facilitates exchanges of opinions among officers on material themes, including questions and answers regarding the content.
Definitions of skills and competencies
The definitions of skills and competencies required of the Company's Directors of the Board, Audit & Supervisory Board Members, and Executive Officers are as follows.
Areas of
skills and competencies
Definitions of skills and competencies
Benchmark for fulfillment
Management/ Governance
Corporate Management
Capability to oversee the formulation and execution of group-wide strategies, the optimal allocation of management resources, and the building of trust with stakeholders, for the purpose of sustainable improvement of corporate value.
Management experience as Director or Executive Officer at a listed company, etc.*1, experience bearing decision-making responsibility at management meetings and/or meetings of board of directors, or equivalent achievements in other organizations*2.
Sustainability
Capability to identify material issues such as climate change, natural capital, human rights, and the supply chain, and integrate these issues into business strategy, capital allocation, risk management, and KPIs to lead to the medium- to long-term improvement of corporate value.
Experience in the formulation and promotion of sustainability strategies at a listed company, etc., leading roles in relevant committees, the introduction of disclosures or external assurance, and experience of dialogue with investors and stakeholders, or equivalent achievements in other organizations.
Global
International management capability to capture growth opportunities in global markets and expand corporate value.
Business experience in two or more countries, responsibility for executing cross-border M&As, experience of addressing local laws, regulations, and cultures, or equivalent achievements in other organizations.
Finance/IR
Strategic financial management capability to enhance corporate value by ensuring financial soundness and optimizing capital efficiency.
Experience as a CEO or CFO at a listed company, etc., leadership experience in fundraising, M&A, or IR activities, or equivalent achievements in other organizations.
Legal/Risk Management
Capability to ensure the reliability and sustainability of the Company through compliance with laws and regulations and through the identification, assessment, and response to corporate risks.
Experience overseeing legal and compliance departments at a listed company, etc., or equivalent achievements in other organizations.
Source of Innovation
R&D
Capability to formulate and oversee R&D strategies that contribute to the medium- to long-term growth and enhancement of corporate value by creating new values and establishing competitive advantages
through technological innovation.
Experience overseeing R&D departments at a listed company or research institutions, experience of commercializing research themes, and experience as the person responsible for formulating technology
roadmaps.
Marketing
Capability to enhance competitive advantage and corporate value by creating customer value and improving brand value.
Experience as a CMO at a listed company, etc., experience in formulating and executing global brand strategies, experience overseeing advertising and PR activities, or equivalent achievements in other organizations.
Human Resources/ Organization
Capability to formulate and execute human resources strategies that enhance organizational competitiveness by maximizing the value of human capital.
Experience as a CEO or CHRO at a listed company, etc., experience in the formulation and operation of succession plans, and experience as the person responsible for promoting DE&I, or equivalent achievements in other organizations.
ICT/DX
Capability to promote operational efficiency and new value creation by utilizing digital technology, contributing to the strengthening of corporate competitiveness and the enhancement of customer experience.
Experience as a CDO at a listed company, etc., experience in the formulation and execution of DX strategies, and experience in establishing IT governance and information security systems, or equivalent achievements in other organizations.
Manufacture/ Quality Assurance
Capability to manage the integrated flow from procurement, manufacturing, and logistics to sales to achieve stable supply and efficiency. Capability to maintain and enhance customer trust and corporate value by ensuring quality, safety, and supply stability.
Experience as a head of production departments in the manufacturing industry, experience leading the formulation and execution of SCM strategies, and experience of improving inventory, logistics, and supply systems. Experience as a head of quality assurance departments, acquisition and maintenance of ISO and other certifications, experience in handling major quality issues, or equivalent achievements in other organizations.
*1: A listed company, etc. means a listed company or other comparable organizations.
*2: Organizations include government agencies, law firms, audit firms, academia, NPOs, and other similar entities.
Status of fulfillment of skills and competencies, etc.
The status of skills and competencies held by each officer is as follows.
Directors (Note 1)
Position
Name
Management / Governance
Source of Innovation
Corporate Management
Sustainability
Global
Finance / IR
Legal / Risk Management
R&D
Marketing
Human Resources /
Organization
ICT / DX
Manufacture / Quality
Assurance
Representative
Director of the Board & CEO
Yoshinori Isozaki
◎
◎
〇
◎
〇
〇
〇
Representative Director of the Board,
President & COO
Takeshi Minakata
◎
〇
〇
〇
◎
◎
〇
Director of the Board,
Senior Executive
Vice President
Junko Tsuboi
〇
〇
◎
◎
◎
Director of the Board,
Senior Executive
Officer
Toru Yoshimura
◎
〇
◎
〇
〇
〇
〇
◎
Director of the Board,
Senior Executive
Officer
Shinjiro Akieda
〇
◎
〇
◎
〇
〇
◎
Director
Hiroyuki
Yanagi
●
●
●
Director
Noriko
Shiono
●
●
●
Director
Shinya
Katanozaka
●
●
●
Director
Yoshiko
Ando
●
●
●
Director
Shingo
Konomoto
●
●
●
Director
Naoko
Mikami
●
●
●
Director
Kenichi
Fujinawa
●
●
●
(Note 1) For Internal Directors, areas in which they possess expertise and experience are indicated by "〇," and among those, areas where particularly significant contributions are expected are indicated by "◎." For Non-executive Directors, areas where particularly significant contributions are expected are indicated by "●" (The maximum number of "◎" and "●" is set at three).
Executive Officers (Note 2)
Position
Name
Management / Governance
Source of Innovation
Corporate Management
Sustainability
Global
Finance / IR
Legal / Risk Management
R&D
Marketing
Human Resources /
Organization
ICT / DX
Manufacture / Quality
Assurance
Senior Executive
Officer
Mitsuharu
Yamagata
〇
〇
◎
◎
◎
Senior Executive
Officer
Kazufumi
Nagashima
〇
〇
〇
◎
◎
Senior Executive
Officer
Toshihito
Hama
〇
◎
〇
◎
◎
Senior Executive
Officer
Daisuke
Fujiwara
〇
◎
◎
〇
Senior Executive
Officer
Yoshiyuki
Yonetani
〇
〇
◎
◎
Senior Executive
Officer
Hiroaki
Takaoka
◎
〇
◎
◎
Senior Executive
Officer
Hideki
Horiguchi
◎
〇
◎
〇
◎
〇
Senior Executive
Officer
Kazuhiro
Inoue
◎
◎
〇
〇
〇
Senior Executive
Officer
Hideki
Mitsuhashi
◎
〇
◎
〇
〇
◎
〇
〇
Senior Executive
Officer
Alastair Symington
◎
〇
◎
〇
◎
〇
(Note 2) For Senior Executive Officers, areas in which they possess expertise and experience are indicated by "〇," and among those, areas where particularly significant contributions are expected are indicated by "◎" (The maximum number of "◎" is set at three).
Audit & Supervisory Board Members (Note 3)
Position
Name
Management / Governance
Source of Innovation
Corporate Management
Sustainability
Global
Finance / IR
Legal / Risk Management
R&D
Marketing
Human Resources / Organization
ICT / DX
Manufacture / Quality Assurance
Standing Audit & Supervisory Board
Member
Toru Ishikura
●
●
●
Standing Audit & Supervisory Board
Member
Hajime Kobayashi
●
●
●
Audit & Supervisory
Board Member
Kaoru Kashima
●
●
●
Audit & Supervisory
Board Member
Yoko Dochi
●
●
●
Audit & Supervisory
Board Member
Tim Lester
●
●
●
(Note 3) For Audit & Supervisory Board Members, areas where particularly significant contributions are expected are indicated by "●" (The maximum number of "●" is set at three).
Process for determining the skill set of Directors of the Board, Audit & Supervisory Board members, and Executive Officers
The level of skill fulfillment is included in the annual evaluation of the effectiveness of the Board of Directors, and the Nomination and Remuneration Advisory Committee selects candidates based on the results of these evaluations.
When it is necessary to nominate a new candidate possessing skills and competencies deemed necessary based on the results of the effectiveness evaluation, skills are assessed through professional history, interviews, and other means. In such cases, importance is placed on the candidate having experience in corporate management and general business management experience and experience in direct dialogue with stakeholders.
For candidates for re-appointment, skills are regularly evaluated and reviewed based on the experience and content of discussions during previous terms in office, as well as the provision of information on the Group's businesses, training, and other factors.
Incorporation into executive remuneration
Remuneration for Executive Officers is designed to function as an incentive for the realization of CSV management and the enhancement of corporate value over the medium to long term.
Remuneration for Directors of the Board is determined by resolution of the Board of Directors in accordance with the Regulations on Work Authority, within the limit of the total amount previously resolved at the General Meeting of Shareholders. In determining such remuneration, its validity is deliberated by the Nomination and Remuneration Advisory Committee to ensure a fair process with enhanced transparency and objectivity.
Executive remuneration is composed of three parts: basic remuneration, which is fixed remuneration; bonus as a short-term incentive, which is performance-linked remuneration; and stock-based remuneration as a medium- to long-term incentive. In determining stock-based remuneration, evaluation indicators are selected from the consolidated financial and non-financial indicators for the Kirin Group set out in the business plan, with the aim of promoting both medium- to long-term improvement of shareholder value and the creation of social value.
Regarding stock-based remuneration, the Company has adopted a trust-type stock compensation plan. This plan is composed of Restricted Share Units (RSU), which do not have performance requirements, and Performance Share Units (PSU), which are linked to the degree of achievement of performance targets under the three-year rolling business plan. The performance evaluation indicators for the PSU consist of ROIC and EPS growth rate, which are major management indicators set out in the business plan, as well as non-financial indicators. The nonfinancial indicators are determined based on a quantitative evaluation of the degree of achievement of specific indicators defined for each of the four items: "The Environment," "Community Engagement," "Health and Well-Being," and "Human Capital." After evaluating each item by incorporating qualitative aspects of each indicator and the overall items, the non-financial evaluation is decided through a comprehensive evaluation that considers both the evaluation results and qualitative considerations. The pay rate for the PSU is variable ranging between 0% and 200%, with 100% representing the achievement of targets.
Structure of officers' remuneration
Calculation formula for PSU performance-linked factor under the trust-type stock compensation
For the Representative Director of the Board & CEO, basic remuneration accounts for 27%, bonus for 31%, and stock-based remuneration for 42%. Of the stock-based remuneration, RSU accounts for 30% and PSU for 70%, and the proportion of non-financial performance within PSU is 20%. Accordingly, assuming a pay rate of 100% for each component, approximately 6% of the executive remuneration for the Representative Director of the Board & CEO is linked to non-financial evaluation indicators.
Of the officers' remuneration recognized in the current fiscal year (including remuneration for Non-executive Directors and Audit & Supervisory Board Members, who receive only fixed remuneration), approximately 5% is linked to non-financial evaluation items. As described above, the non-financial evaluation is determined based on a comprehensive evaluation of the four items; therefore, the portion related to climate-related evaluation items cannot be separately identified.
To ensure objectivity and transparency, the evaluation results and payout list are deliberated by the Nomination and Remuneration Advisory Committee based on the evaluation by the Group Executive Committee, and then determined by the Board of Directors. The non-financial indicators are shown in the figure below.
Non-executive Directors are responsible for overseeing and advising on the management of the Company and the Kirin Group as a whole from an objective standpoint, and Audit & Supervisory Board Members are responsible for auditing the execution of duties by the Directors of the Board and Executive Officers from an objective standpoint; accordingly, only basic remuneration (fixed remuneration) is paid to these respective parties.
Item
Indicator
The Environment
Community Engagement
Health and Well-Being
Human Capital
Reduction ratio of GHG emissions (Scope 1+2 (compared with 2019))
Percentage of recycled resin used in PET bottles in Japan
Water use intensity at manufacturing sites with high water stress
Level of contribution to the creation of a positive force for society through business activities
Social impact of the Group's health science products and contribution to the expansion of the immunity market (LC-Plasma)
Global product launch status in key countries
Achievement level of collaboration between pharmaceuticals and health science
CSV practice score
Employee engagement score
LTIR Score
Presenteeism
Ratio of female managers in Japan (Kirin Holdings Company, Limited)
Consideration of trade-offs associated with risks and opportunities
For decision-making regarding transactions within the Group that require approval by the Company, the proposing company or department examines the risks through which material themes, primarily "The Environment (climate change and natural capital)" and "Human rights," exert impact, considering the magnitude of impact and likelihood of occurrence, as well as responses to risks and opportunities (elimination, mitigation, and risk taking). The results of this examination are submitted for approval after consultation with the relevant departments within the Company.
Risk management†
Risk management related to sustainability
Significant risks and opportunities related to sustainability are monitored as part of the management process for the Group's major risks. Risk management for material themes is described in the risk management sections for each material theme.
The Group's major risks are identified by aggregating risks from two perspectives: (i) risks related to the entire Group's goals, strategies, and business execution, and (ii) business-specific risks. Each risk is assessed in terms of both quantitative and qualitative impact on the Group while also taking into account the likelihood of occurrence. The materiality of each risk is determined based on the two axes of impact and likelihood. Furthermore, major risks are centrally managed through a risk map. The Group Risk and Compliance Committee discusses the Group's major risks identified through this process, including responses to each risk and the level of risk tolerance. In addition, the Group's major risks are deliberated by the Board, which reviews changes in conditions and assesses countermeasures.
The Company and other Group companies promote and exercise risk management in cooperation with each other by formulating and implementing measures tailored to each risk. Meanwhile, through monitoring conducted from the dual perspectives of business and function, we manage and control strategic risks, while establishing a risk management system designed to prevent the manifestation of risks that could develop into a crisis and minimize any potential negative impact when such a crisis occurs, thereby striving for risk mitigation and appropriate management.
In addition, compared with previous reporting periods, no changes have occurred in the management processes for significant risks and opportunities related to sustainability within the Group.
Identification of significant sustainability-related risks and opportunities
The Group identifies management issues extracted through the GMM, which was developed with reference to the GRI Standards, ISO 26000, and other frameworks, as a foundation (long list). These issues are then consolidated into material themes, taking into account the SASB disclosure topics. Risks and opportunities related to each material theme are reviewed annually. After consulting with the departments responsible for each theme, the Group Information Disclosure Committee determines whether any revisions are required. Where revisions are deemed necessary, specific reviews are conducted by the meeting bodies established for each theme. In addition, the significance of such risks and opportunities is assessed using two axes: the magnitude of financial impact in the event that they materialize (less than ¥5 billion, ¥5 billion to ¥10 billion, or ¥10 billion or more) and the likelihood of occurrence (approximately once every 10 years, once every 10 to 30 years, or once every 30 years or more). Specifically, risks and opportunities with a large financial impact (¥10 billion or more) are assessed as having high significance regardless of likelihood. For those with a moderate financial impact (¥5 billion to ¥10 billion), only those with a high likelihood of occurrence (approximately once every 10 years) are assessed as having high significance and selected as risks and opportunities to be disclosed.
Integration into the management process for the Group's major risks
The results of the selection of sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects are provided to the Corporate Strategy Department as part of the confirmation of policies, environmental changes, business activities, and other relevant factors to be considered when selecting the Group's major risks.
Subsequently, the Corporate Strategy Department collects information from a wide range of sources on external risks (such as geopolitics, legal systems, climate change, natural disasters, and technological innovation) that could affect the Group's business and strategy. The department conducts various analyses including scenario analysis (scenario analysis is conducted for environmental themes), and based on these analyses, identifies and selects the Group's major risks, including sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects. These results are discussed by the Group Risk and Compliance Committee and determined by the Board of Directors.
Furthermore, the Company regards sustainability-related issues as consideration factors and risk drivers underlying various types of risks and manages them within the framework of its integrated risk management. While the Company does not prioritize sustainability-related risks over other categories of risk, it positions CSV as the core of its management and pursues management that prioritizes the co-creation of value with society. Accordingly, sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects are consistently considered within its management strategy and risk management processes.
Determination and reporting of sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects
The sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, which have been finalized taking into account the results of the identification of the Group's major risks, are decided by the Group Information Disclosure Committee and reported to the President & COO.
Employee training regarding sustainability-related risks that could reasonably be expected to affect the Group's prospects and response when risks materialize
In the Group, for the purpose of "fulfilling both legal and ethical responsibilities that society expects from us, not to mention adhering to laws, internal and external regulations and rules, thereby meeting stakeholders' expectations and maintaining and improving trust in and the corporate value of the Kirin Group," the Group conducts compliance training and information security training every year for all officers and employees, including contract and temporary employees in Japan. These training programs include the necessity of responding to risks such as the leakage of personal information, which is recognized as one of the material sustainability-related risks and could lead to a loss of customer trust and the incurrence of claims for damage compensation.
Furthermore, in the event that a risk materializes despite such employee training, the Group responds in accordance with the "Group Crisis Management Manual."
Strategy
Business model
Beginning with Fermentation and Biotechnology that the Kirin Group cultured through its founding beer business for over a century, the Group operates its businesses in the three domains of Food & Beverages, Pharmaceuticals, and Health Science.
Food & Beverages domain (alcoholic and non-alcoholic beverages)
Centered on its founding beer business, this remains the Group's core business segment. Since the 1990s, the Group has accelerated its global expansion, primarily in Asia and Oceania, and manufactures and sells numerous high value-added brands.
Pharmaceuticals domain
By combining biotechnology with technology evolving from microorganism and cell research cultivated through beer manufacturing, the Group commenced pharmaceutical research and development in the 1980s. It has now developed into a major business for the Group, which operates its business globally with a focus on biopharmaceuticals.
Health Science domain
Through research into natural ingredients in the Food & Beverages domain, as well as fermentation and cultivation, the Group has discovered many substances beneficial to the body, including Lactococcus lactis strain Plasma (LC-Plasma, a postbiotic). This is a business domain that the Group will foster as a pillar of its future growth by leveraging these assets.
Based on the businesses and business model of the Group described above, the Group has identified the alcoholic beverages industry, non-alcoholic beverages industry, processed foods industry, and biotechnology and pharmaceuticals industries as industries relevant to the Group.
Planning horizons
The Group recognizes that achieving the "2035 Vision" set out in "Innovate2035!," the Kirin Group's ten-year Long-Term Management Vision starting in 2026, will contribute to the Group's sustainable growth and the enhancement of medium- to long-term corporate value, and has therefore formulated and is implementing its plans.
To realize the "2035 Vision," defined as "Vitalize the world through innovation by our people and technology, as a global leader in Creating Shared Value (CSV)," the Group has identified material issues to address in order to continue to exist and develop sustainably alongside society over the next ten years, and has organized them in the GMM.
While taking into account the long-term material issues identified through the GMM, and based on performance in the most recent fiscal year, the Group determines medium-term plan targets for the next three years and further translates them into annual plans. The three-year plan targets are reviewed and rolled forward annually to reflect actual performance.
Accordingly, the Group defines the short-, medium-, and long-term time horizons over which sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects may arise, as follows: the short term as one year after the end of the current fiscal year, the medium term as two to three years, and the long term as four to ten years.
Value chain
The representative value chains for the Group's three domains, Food & Beverages, Pharmaceuticals, and Health Science, are as follows. Regarding sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, information on where in the value chain they are concentrated, as well as the current and anticipated effects of these risks and opportunities on the business model and value chain, is provided in the table of "Sustainability-related risks and opportunities that could reasonably be expected to affect the Group's* prospects" within the strategies for each material theme.
In addition, as the effects on the Group* and the concentration of risks and opportunities within the value chain are described in the columns for "Effects on the business model/value chain and financial effects that occur when risks and opportunities materialize," "Likelihood," "Financial materiality," and "Segments affected by risks and opportunities" in that table, the "Value chain" column in that table lists the Group*'s stakeholders, excluding the Group* itself.
*For the Unmet Medical Needs theme, the term "Kirin Group" is used.
Food & Beverages domain
Pharmaceuticals domain
Health Science domain
Trade-off case
In the acquisition project carried out during the current fiscal year, the Group conducted ESG due diligence and made its decision by assessing the impact on sustainability-related risks, with environment and human rights considerations treated as essential requirements.
Disclosures by material theme
Adverse effects of alcohol consumption
The Alcoholic Beverages Business accounts for approximately 50% of the Group's consolidated revenue and consolidated normalized operating profit. Over the medium term, if regulations on alcohol sales (including increase of liquor tax), advertising, and promotion are strengthened in the countries and regions where the Group operates, there is a possibility that a decrease in alcohol sales and an increase in regulatory compliance costs, among other effects, may occur in those countries.
Governance†
To promote a response to the adverse effects of alcohol consumption, the Group annually includes alcohol-related problems as an agenda item at either the Group CSV Committee, in which the officer in Charge of CSV strategy participates, or at the Board of Directors. The Group reports on or discusses the Group's initiatives and reflects the outcome in the overall Group strategy. When matters are reported or discussed at the Group CSV Committee, the outcomes are reported to the Board of Directors. In the current period, these issues were discussed by the Board of Directors.
Furthermore, to deepen the understanding of the adverse effects of alcohol consumption and reflect it in management, the CEO and other officers involved in the Alcoholic Beverages Business visit the National Hospital Organization Kurihama Medical and Addiction Center, which provides specialized treatment for alcoholism, and receive lectures on the latest research and issues regarding alcohol-related problems. The most recent visit took place in 2023.
Risk management†
Where the Group Information Disclosure Committee determines that a review of risks and opportunities is required, the Group CSV Committee or the Board of Directors discusses revisions to risks related to the adverse effects of alcohol consumption in light of changes in the internal and external environment. In addition, for sustainability-related risks that could reasonably be expected to affect the Group's prospects, the Group CSV Committee or the Board of Directors monitors the progress of response strategies. In the current period, the Board of Directors has addressed external trends concerning alcohol-related problems and reaffirmed the importance of raising awareness of responsible drinking.
Strategy
The Group has identified "Health and Well-Being," "Community Engagement," and "The Environment" as material issues for sustainable growth and development alongside society, but as a prerequisite, fulfilling the "Responsibility of Kirin Group which runs Alcoholic Beverage Businesses" is positioned as its CSV Purpose. Through its business activities, the Group strives to identify stakeholders who could potentially be subject to the adverse effects of alcohol consumption, as well as the impact that such stakeholders could have on the Group's business. The Group is committed to preventing and mitigating these adverse effects, fulfilling its responsibility as the Kirin Group that operates an alcoholic beverages business, and making steady progress toward initiatives to eradicate the harmful use of alcohol.
In the current fiscal year, the Group has been promoting these initiatives in accordance with the plan envisioned at the end of the previous fiscal year.
The sustainability-related risks and opportunities identified for this theme that could reasonably be expected to affect the Group's prospects are as follows.
Risks and opportunities
Value chain (Stakeholders of the Group)
Effects on the business model/value chain and financial effects that occur when risks and opportunities materialize
Likelihood
Financial materiality
Segments affected by risks and opportunities
Time horizons over which the effects of risks and opportunities are
expected to occur
Upstream
The Group
Downstream
Risk
(i) Risk of strengthened regulations on the sale of alcoholic beverages (including increase of liquor tax), advertising, and promotion in the countries and regions of business operations
Consumers
Effects on the business model/value chain
degree of strengthening)
High
Medium
Alcoholic beverages
Medium term
Strengthening of regulations on the sale of alcoholic beverages
Decrease in sales volume Financial effects
Decrease in sales of alcoholic beverages (the financial effect varies depending on the countries where regulations are introduced and the degree of strengthening)
Increase in regulatory compliance costs (the financial effect varies depending on the countries where regulations are introduced and the
Response strategy for the "Risk of strengthened regulations on the sale of alcoholic beverages (including increase of liquor tax), advertising, and promotion in the countries and regions of business operations"
The Group has established the "Policy for responsible drinking" to fulfill its CSV Purpose of "Responsibility of Kirin Group which runs Alcoholic Beverage Businesses" and to advance initiatives toward the eradication of the harmful use of alcohol. While promoting efforts to eradicate the harmful use of alcohol throughout the Group, the Group will contribute to the cultivation of a moderate drinking culture and the realization of a vibrant society. With respect to alcoholic beverages marketing, the Group has enacted the Kirin Group Global Marketing Code for Responsible Drinking. This code represents the Group's commitment to conducting its business in accordance with social norms based on the standards of each country and region, while promoting responsible alcohol consumption and consistently maintaining high standards. It applies to all employees and partners involved in the Group's marketing and promotional activities for responsible drinking. Furthermore, to ensure that employees acquire the knowledge of responsible drinking expected of members of a corporate group engaged in the alcohol business, the Group provides training aimed at raising awareness of responsible drinking for Group employees in Japan. The Group also conducts the Alcohol Use Disorders Identification Test (AUDIT) to provide opportunities for employees to reflect on their own drinking habits. Additionally, in countries and regions where the Group operates alcoholic beverage businesses, the Group takes action to raise awareness of responsible drinking for consumers. Through these activities, the Group encourages consumers to understand their own alcohol tolerance, to correctly understand the characteristics and benefits of alcoholic beverages, as well as the negative aspects associated with misuse, and to provide guidance for responsible alcohol consumption. In the current fiscal year, as specific activities to raise awareness of responsible drinking, the Group conducted video distribution and awareness activities within winery tours, and visited universities and companies to hold responsible drinking seminars. Furthermore, the Group is a member of the International Alliance for Responsible Drinking (IARD), a group supported by global alcohol producers, through which the Group promotes initiatives to raise awareness of responsible drinking and reduce the harmful use of alcohol. In Japan, Kirin Brewery is a member of the Brewers Association of Japan and works to raise awareness of responsible drinking in collaboration with the beer industry. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
The response strategies for sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, and the financial effects arising from the responses to those risks and opportunities, are as follows. In the current fiscal year, these risks have not materialized. However, in the medium term, if regulations on the sale of alcoholic beverages (including increase of liquor tax), advertising, and promotion are strengthened in the countries and regions of business operations, there is a possibility that a decrease in sales of alcoholic
beverages or an increase in regulatory compliance costs may occur in the countries where the Group operates its alcoholic beverages business. Furthermore, quantitative information is not disclosed, as it is difficult to estimate the extent to which existing customers would be affected in the event that the risk materializes.
Risks and opportunities
Response strategy
for risks and opportunities
Financial effects of response strategy
Financial effects (¥ millions)*1
Current
fiscal year
Short term
(1 year later)
Medium term
(3 years later)
Long term
(10 years later)
Risk
(i) Risk of strengthened regulations on the sale of alcoholic beverages (including increase of liquor tax), advertising, and promotion in the countries and regions of
business operations
Profit or loss effects
responsible drinking
377
Approx. 380
Approx. 380
Approx. 380
Financial position effects
-
-
-
-
Total
Profit or loss effects
377
Approx. 380
Approx. 380
Approx. 380
Financial position effects
-
-
-
-
Cash flows effects*2
377
Approx. 380
Approx. 380
Approx. 380
Raising awareness of responsible drinking among consumers in countries where the Group operates its business
Expenses related to activities to raise awareness of
Not applicable
*1: The Group defines the short-, medium-, and long-term time horizons over which sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects may arise as follows: the short term as one year after the end of the current fiscal year, the medium term as two to three years, and the long term as four to ten years. However, to enable an understanding of the trends in quantitative information, the Group presents figures for a single fiscal year occurring one year later for the short term, three years later for the medium term, and ten years later for the long term.
*2: As it is difficult to accurately calculate cash flows effects, the total amount of profit or loss effects and financial position effects is presented.
Expected changes in financial position over the short, medium and long termNo investments or disposals are planned, and no financing is planned to fund the execution of the strategy. The Group does not expect that the risks described above will result in any material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual reporting period.
Strategy-Resilience
Based on the time horizon over which sustainability-related risks that could reasonably be expected to affect the Group's prospects regarding the adverse effect of alcohol consumption are expected to occur, the Group evaluates its resilience on this issue over the medium term. While the Group raises awareness of responsible drinking among consumers in the countries where the Group operates its business and contributes to the eradication of harmful use of alcohol as a member of the industry, the Group believes that even if regulations are further strengthened, it will be possible to further capture demand for low- and non-alcoholic products and create new product categories by leveraging the product development capabilities and existing logistics and sales networks cultivated to date.
As a result of the business model impact analysis described above, the executive officer in charge of CSV Strategy has evaluated that even if the adverse effect of alcohol consumption were to occur beyond the Group's expectations over the medium term, the Group has the capacity to respond to the manifestation of such uncertainties and there is no need to change its current business model for the alcoholic beverages business.
Metrics and targets
As response measures differ across the countries and regions where the alcoholic beverages business operates, metrics are established for each individual business company rather than on a group-wide basis.
Risks and opportunities
Metrics
Source
Unit
Targets
Results
(Target year)
Interim targets
Risk
(i) Risk of strengthened regulations on the sale of alcoholic beverages (including liquor tax), advertising, and promotion in the countries and regions of business operations
(Kirin Brewery)
Number of people reached through participation in or views of responsible drinking awareness-raising programs
Proprietary metric*1
Persons
20,000
thousand persons (2027)
Note: cumulative
total from 2025
-
14,220
thousand persons
(Mercian)
Number of people reached through participation in or views of responsible drinking
awareness-raising programs
Proprietary metric*2
Persons
8,550 persons
(2027)
Note:
cumulative total from 2025
-
5,098 persons
(Lion)
Number of people reached through engagement in the "Alcohol & Me" (responsible drinking awareness-raising)
program
Proprietary metric*3
Persons
Improvement compared with 2026
(2027)
-
124,671
persons
*1: It is an absolute measure and has not been validated by a third party.
(Definition) Number of participants in or viewers of activities to raise awareness of responsible drinking (in-person or online) planned and executed by Kirin Brewery
(Calculation method) Number of participants in seminars to raise awareness of responsible drinking + number of viewers of videos to raise awareness of responsible drinking + number of engagements with social media posts intended to raise awareness of responsible drinking
*2: It is an absolute measure and has not been validated by a third party.
(Definition) Number of participants in activities to raise awareness of responsible drinking planned and executed by Mercian (Calculation method) Number of people who received explanations on raising awareness of responsible drinking at Château Mercian wineries +
number of people who received explanations at Mercian events
*3: It is an absolute measure and has not been validated by a third party.
Progress against the target value for this metric is managed to achieve year-on-year improvement from 2025 to 2027.
(Definition) Number of people reached through participation in or views of "Alcohol & Me" (responsible drinking awareness-raising program, in-person or online) planned and executed by Lion
(Calculation method) Number of participants in in-person programs + number of users who viewed online programs
Analysis of trends or changes in the entity's performanceInitiatives at each alcoholic beverage business company are progressing steadily toward achieving the targets for reducing the adverse effects of alcohol consumption.
Healthy longevity society
The Group recognizes the aging society with a declining birthrate and increasing health needs in Japan, other countries of operation, and other regions as sustainability-related opportunities that could reasonably be expected to affect the Group's prospects. The Group aims to expand and create markets by leveraging its strengths, such as fermentation and biotechnology cultivated in its founding alcoholic beverages business, long-standing immune research, and the advantage of having the non-alcoholic beverages and pharmaceuticals businesses within the Group.
Governance†
To promote responses to health issues, the Group holds the Health Science Executive Committee twice or more a month. Chaired by the executive officer in charge of Health Science Strategy, participants include the Company's relevant officers and department heads, as well as presidents, vice presidents, or general managers of corporate planning from Group business companies. Matters discussed at the Health Science Executive Committee are reported if necessary at the Group Executive Committee or at the Board of Directors. Items reported to the Group Executive committee are reviewed and deliberated by that body and, where necessary, subsequently reported to the Board of Directors and reflected in the Group's overall strategy. At the same time, the Board of Directors oversees the progress of the Group's Health Science business plan.
Risk management†
Where the Group Information Disclosure Committee determines that a review of risks and opportunities is required, the Health Science Executive Committee discusses revisions to risks and opportunities in light of changes in the internal and external environment. Regarding response strategies for sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, progress is monitored on a quarterly basis at the Group Executive Committee or Health Science Executive Committee. The Board of Directors oversees the effectiveness of risk management through deliberations and reports on significant risks escalated from the Group Executive Committee or the Health Science Executive Committee.
Strategy
The Group has established "Health and Well-Being" as one of its CSV Purposes and aims to "Raise the number of healthy people, lower the number of sick people, and contribute to the people who are involved in healthcare." While interest in health has been increasing due to recent social trends, the specific issues faced by individuals vary depending on their life stages and characteristics. The Group contributes to addressing these issues by designing concepts based on the exploration of consumer needs through research marketing, and by deploying a wide range of products that combine ingredients and technologies from both inside and outside the Group. Based on the results of the analysis of impacts on the business model, the Group has recognized the importance of exploring and developing high value-added ingredients through basic research, identifying latent health needs of consumers, and establishing new business models, and is advancing these efforts.
Kirin Beverage, in the non-alcoholic beverages business, is executing a growth strategy with the Health Science domain as a driver. Through the acquisition of Blackmores in 2023 and the consolidation of FANCL in 2024, as well as the business structural reform of Kyowa Hakko Bio Co., Ltd., the Group has established the governance and management foundation to promote its strategy globally. Furthermore, through human resource exchange with Kyowa Kirin, and through Cowellnex Corporation established in 2024 as a joint venture with Kyowa Kirin, expertise such as disease understanding in the Pharmaceuticals Domain, research expertise, and academia networks are already being leveraged. Through these initiatives, the Group strives to proceed with efforts using Kirin's unique approach focusing on "Building Natural Health as a Foundation" and "individual health issues." The Group aims to address globally increasing health issues and become one of the largest Health Science companies in the Asia-Pacific region.
In the current fiscal year, the Group has been promoting these initiatives in accordance with the plan envisioned at the end of the previous fiscal year.
The sustainability-related risks and opportunities identified for this theme that could reasonably be expected to affect the Group's prospects are as follows.
Risks and opportunities
Value chain (Stakeholders of the Group)
Effects on the business model/value chain and financial effects that occur when risks and opportunities materialize
Likelihood
Financial materiality
Segments affected by risks and opportunities
Time horizons over which the effects of risks and opportunities are
expected to occur
Upstream
The Group
Downstream
Opportunity
Increasing interest in building natural health as a foundation consisting of nutrition, exercise, rest, and immune care, as well as physical condition management and skin issues, driven by factors such as climate change and future uncertainty
Consumers
Effects on the business model/value chain
Financial effects
services
High
Large
Health Science Non-alcoholic beverages
Short, medium and long term
Exploration of potential health needs and deployment of a wide range of products
Increase in sales and new products and services and improved profitability of immune-related products and services
Increase in sales and improved profitability of basic skincare, supplements related to skin health, and inner and outer approach products and services (new)
Increase in sales and improved profitability of VDS (supplements), health-oriented beverages, foods, and high-performance ingredients deployed by Group companies
Increase in investment in the development of new products and
The Group plans to expand customer benefits to enter the global immune market.
Specifically, by exploring high-value-added ingredients and developing functions, the Group strives to increase the range of health issues it can solve, leading to enhanced customer benefits. Furthermore, the Group will strengthen awareness activities for immune care. Through these activities, the Group aims to increase recognition of the benefits that immune care provides for physical condition management and create touchpoints between the Group's products and potential customers. In fact, following the expansion of the Group's sales area into Vietnam, improved literacy regarding immunity in the country has led to an increase in sales volumes of LC-Plasma containing products.*The Group intends to continue participating actively in government initiatives and other efforts to expand recognition of LC-Plasma and improve health consciousness in Vietnam. In addition, the Group is accelerating the B2B business of LC-Plasma in overseas markets through strategic partnerships with leading global companies in microbial fermentation ingredients. Through expansion into global markets, the Group strives to gain insight into the health issues of overseas consumers and continue research and development of products and services to solve them. The Group plans the global expansion of LC-Plasma into at least one country annually. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
*Lactococcus lactis strain Plasma (LC-Plasma) is a lactic acid bacterium that supports the maintenance of immune function in healthy individuals. Research has reported that it acts on pDC, which serves as the commander of the human immune system. Kirin, Koiwai Dairy Products, and Kyowa Hakko Bio have jointly conducted research, and in cooperation with universities and research institutions both in Japan and overseas, have published numerous scientific papers and conference presentations. The Group offers LC-Plasma-containing products in various categories, including beverages, supplements, and yogurt.
The Group will strengthen initiatives aimed at the growth of its cosmetics business both in Japan and overseas.
Skin health is a health-related issue of strong interest to many consumers, and as the Group operates a cosmetics business, including skincare products, it is committed to resolving this issue. The Group will capture opportunities by integrating the expertise of Group companies to meet diverse consumer interests. As one example, a cross-functional Group project addressing "appearance care for cancer patients" was launched in 2022. This project aims to create an environment in which individuals can continue to fulfill social lives in their own way even when their appearance changes due to cancer or its treatment, supported by the medical expertise of Kyowa Kirin in providing information to healthcare professionals and patients. Going forward, the Group will focus on developing new products that approach beauty and skin health from the inside and outside the body by leveraging synergies among Group companies including FANCL and Blackmores. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
The Group will strengthen initiatives to expand its social impact across all operating companies.
Because of rapid environmental changes and current social conditions, an increasing number of people desire to remain healthy for longer. The Group believes that "immune care" as a daily health habit, as well as nutrition, exercise, and rest, contribute to building natural health as a foundation. Accordingly, the Group is strengthening initiatives to expand the social impact of its supplements, health-oriented beverages and foods, and high-performance ingredients. For example, through the "Genki na Meneki Project," a public-private partnership project communicating the importance of immune care, the Group engages in awareness activities with the support of various companies, organizations, and local governments. The Group has also continuously conducted educational programs on immunity, striving to improve health consciousness within households, including parents. Furthermore, through Cowellnex Corporation, a joint venture company with
Kyowa Kirin, the Group is strengthening collaboration with the Pharmaceuticals domain in areas such as R&D, venture investment, and business development, and is working to generate innovation that leads to solutions for social issues surrounding health.
Aiming for further functional expansion of Health Science products, the Group strives to increase opportunities to understand customer needs by increasing touchpoints with consumers through product shipments and awareness-raising activities. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
The response strategies for sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, and the financial effects arising from the responses to those risks and opportunities, are as follows.
The growing interest in building natural health as a foundation consisting of immune care, nutrition, exercise, and rest, as well as physical condition management and skin condition issues, is an opportunity with significant financial effects for the Group, which possesses strengths in long-standing immunology research and the skincare domain. Effects such as an increase in revenue and improvement of profitability for related products and services are expected over the medium to long term. Furthermore, opportunities to resolve health issues such as increased stress caused by climate change, urbanization, and modernization will lead to an increase in sales of supplements and foods with high functional claims offered by Group companies and an improvement in profitability. Meanwhile, an increase in research and development expenses for new products and services is expected to occur over the short, medium and long term.
In this fiscal year, revenue from the Health Science business increased by ¥76,111 million compared to the previous fiscal year (including the increase in revenue associated with making FANCL a wholly owned subsidiary). While the Group considers that the materialization of opportunities may have been one of the contributing factors to this increase, quantitative information is not disclosed, as it is not possible to separately identify the impacts attributable to the materialization of such opportunities.
In addition, in the event that medium- to long-term opportunities materialize, quantitative information is not disclosed, as it is difficult to estimate the extent to which existing customers would be affected.
Risks and opportunities
Response strategy
for risks and opportunities
Financial effects of response strategy
Financial effects (¥ millions)*1
Current fiscal year
Short term (1 year later)
Medium term (3 years later)
Long term (10 years later)
Opportunity
Increasing interest in building natural health as a foundation consisting of nutrition, exercise, rest, and immune care, as well as physical condition management and skin issues, driven by factors such as climate change and future uncertainty
at each group company
Profit or loss effects
Plasma
7,000
Approx. 8,000
Approx. 8,000
Expected to increase from the medium-term level
Financial position effects
-
-
-
-
Total
Profit or loss effects
7,000
Approx. 8,000
Approx. 8,000
Total amount of profit or loss effects
above
Financial position effects
-
-
-
-
Cash flows effects*2
7,000
Approx. 8,000
Approx. 8,000
Total amount of profit or loss effects
above
Expanding customer benefits to enter overseas immunity markets
Strengthening initiatives for the growth of the cosmetics business in Japan and overseas (including leveraging synergies between FANCL and Blackmores), and creating new value through approaches to beauty and skin health from the inside and outside the body
Strengthening initiatives to expand social impact
Expenses associated with the promotion of research and development
Marketing expenses for LC-
Not applicable
*1: The Group defines the short-, medium-, and long-term time horizons over which sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects may arise as follows: the short term as one year after the end of the current fiscal year, the medium term as two to three years, and the long term as four to ten years. However, to enable an understanding of the trends in quantitative information, the Group presents figures for a single fiscal year occurring one year later for the short term, three years later for the medium term, and ten years later for the long term.
*2: As it is difficult to accurately calculate cash flows effects, the total amount of profit or loss effects and financial position effects is presented.
Expected changes in financial position over the short, medium and long termThe Group is considering investments for the development of new products and services and is currently formulating an investment plan for this purpose. As such investments can be funded through internal resources, no financing is planned to execute the strategy. The Group does not expect that the opportunities described above will result in material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual reporting period.
Metrics and targets
Risks and opportunities
Metrics
Source
Unit
Targets
Results
(Target year)
Interim targets
Opportunity
Increasing interest in building natural health as a foundation consisting of nutrition, exercise, rest, and immune care, as well as physical condition management and skin issues, driven by factors such as climate change and future
uncertainty
Social impact of the Kirin Group's Health Science products: (Annual number of people consuming the products, calculated based on shipment volumes) + (Number of people reached through awareness
activities)
Proprietary metric*1
Persons
135 million persons (2027)
-
127,781,023
persons
Contribution to the expansion of the immunity market: Of the above, those related to LC-Plasma
Proprietary metric*2
Persons
3.05 million persons (2027)
-
3,492,902
persons
*1: It is an absolute measure and has not been validated by a third party.
(Definition) (Annual number of people consuming the products, calculated based on shipment volumes) + (Number of people reached through awareness activities)
Since operating companies select the targets of their awareness activities according to their respective products, business models, and target customers, the definitions vary by company.
(Calculation method) The annual number of people consuming the products is calculated as: annual sales volume / annual recommended intake.
The calculation methods for major group companies are as follows:
Koiwai Dairy Products: (Annual number of people consuming milk, processed milk, fermented milk, and household cheese) + (Number of participants in seminars and study sessions)
Kyowa Hakko Bio: (Annual number of people consuming citicoline for health foods) + (Number of visitors to exhibitions, etc.)
*2: It is an absolute measure and has not been validated by a third party.
(Definition) (Annual number of people consuming the products related to LC-Plasma, calculated based on shipment volumes) + (Number of people reached through awareness activities regarding products related to LC-Plasma)
(Calculation method) Same as above
Analysis of trends or changes in the entity's performanceInitiatives aimed at creating the opportunities described above are progressing as planned.
Unmet medical needs
In the Kirin Group, which positions health as a sustainability-related issue, Kyowa Kirin, which is responsible for the Pharmaceuticals business, emphasizes patient-centered medical needs. In particular, the Kirin Group identifies contributing to the resolution of health issues by providing Life-changing value to people facing illness with high unmet medical needs (including rare diseases) as a sustainability-related opportunity that could reasonably be expected to affect the Kirin Group's prospects.
Governance†
Kyowa Kirin sees materiality as key management issues to realize the Vision. With regard to materiality (key management issues), from a perspective of impact on social sustainability as well as on the Group's businesses, Kyowa Kirin has identified materiality. In this process, we referred to SASB (Sustainability Accounting Standards Board), Access to Medicine Index, PSCI, etc.
Materiality has been promoted by being incorporated into the FY2021-2025 Medium Term Business Plan and the linked annual business plan. From FY2026 onward, Kyowa Kirin will align with "Vision 2030 and Beyond: Our Growth Story" and promote it by incorporating it into Kyowa Kirin`s annual business plan. In addition, the progress of the plans is monitored and reported to the Executive Committee and the Board of Directors on a quarterly basis. To promote the solution of medium- to long-term management issues, business indicators from FY2024 will include non-financial targets formulated in the fiscal year business plan, including targets related to materiality.
Kyowa Kirin reviews the materiality every year based on changes in environments within and outside the Company, which is approved by the Executive Committee and the Board of Directors.
Following discussions at Kyowa Kirin, progress is reported quarterly to the Group Executive Committee for flat discussion. Furthermore, a summary of these reports covering the entire Group, including Kyowa Kirin, is reported to the Board of Directors of Kirin Holdings. The Board of Directors of Kirin Holdings oversees the response policies and execution plans for the issues.
Risk management†
Risk management (RM) system and process for identifying principal risks
The Kyowa Kirin Group defines risk as uncertainty that may affect the achievement of management and strategic targets. It encompasses both threats (negative impacts) that could damage corporate value during business operations and opportunities (positive impacts) that, when appropriately addressed, can lead to the creation and growth of corporate value. Under the framework of Enterprise Risk Management (ERM), the Group positions risk not merely as something to be avoided, but as a key management issue that should be leveraged to maximize opportunities and create and preserve corporate value.
The Group promotes its business activities under its "One Kyowa Kirin" global management system, which combines a regional axis focusing on the three regions of JAPAC, including Japan, North America, and EMEA, a trans-regional functional axis, and a product (franchises) axis.
Regional Risk Management Committees were established in each of the three regions to discuss principal risks specific to each region. The Group holds meetings of the Group Risk Management Committee that is positioned as a place globally opened to stakeholders, mainly CxO, twice a year, and deliberates strategies related to Group-wide risk management and activity policies.
Regarding the process of identifying principal risks, once a quarter, the business execution lines identify risks based on changes in the internal and external environment in a working-level meeting, and analyze the impact on management and the frequency of occurrence (possibility of occurrence). The Group Risk Management Committee Secretariat adjusts the results of the analysis while discussing changes in the internal and external environment and risk trends with the business execution lines, and then organizes risks by category to identify principal risks. In addition to confirming whether principal risks have been appropriately identified, the Group Risk Management Committee discusses measures for mitigating the risks from a company-wide perspective. Progress toward mitigating principal risks is monitored alongside action plans, with the Global Executive Committee monitoring progress and changes in risk significance based on evolving circumstances. The Group Risk Management Committee maps out risks based on the results of these assessments. Measures to mitigate principal risks discussed in these committees and findings from monitoring activities are reported to the Board of Directors.
Within the Kirin Group, significant risks identified by Kyowa Kirin are consolidated and reviewed by the Corporate Strategy Department of Kirin Holdings, together with risks common across the Kirin Group as a whole. Based on this review, the Corporate Strategy Department identifies significant Group risks, including sustainability-related risks and opportunities that could reasonably be expected to affect the Kirin Group's prospects. The results are discussed by the Group Risk and Compliance Committee and are then determined by the Board of Directors of Kirin Holdings.
Strategy
The Kyowa Kirin Group sees materiality as key management issues to realize the Vision. The specified materiality of the Group are categorized into "Topics for value creation" and "Topics for value enhancement," which correspond to the strategic pillars to realize Vision 2030: "Provide pharmaceuticals for unmet medical needs," "Address patient-centric healthcare needs," "Retain the trust of society," and "Strengthen human resources and structures to realize Life-changing value." In addition, we set the targets for each materiality and work on it strategically, whereby we can realize our vision, which will lead to the sustainability of both society and the Group.
The materiality of Kyowa Kirin Group is also related to those of the Kirin Group, to which the Company belongs. In particular, the materiality items that have a high impact on the business of the Kirin Group-"Creation and delivery of Life-changing pharmaceuticals" and "Quality assurance and a stable supply of pharmaceuticals"-are linked to our Group's materiality items: "Creation of innovative medicines ," "Maximization of product value ," "Pipeline enrichment," "Access to medicine," "Co-creation of new value based on the needs of people facing illness," and "Product supply and quality assurance ."
Based on the above, the Kirin Group has selected "creating and delivering Life-changing pharmaceuticals" and "quality assurance and a stable supply of pharmaceuticals" as sustainability-related risks and opportunities that could reasonably be expected to affect the Kirin Group's prospects under this theme, as follows.
The Group considers trade-offs with other sustainability-related risks and opportunities as it advances its initiatives.
Risks and opportunities
Value chain
(Stakeholders of the Group)
Impact on the business model and value chain, and financial impact in the event that risks and opportunities emerge
Likelihood
Monetary importance
Segments affected by risks and opportunities
Time frame in which the impact of risks and opportunities
Up-
stream
The
Company
Down-
stream
Opportunities
1) Enhance the corporate value by creating and delivering Life-changing value
People facing illness
Impact on people facing illness:
Financial impact:
Life-changing value*1
High
Large
Pharmaceuticals
Short term Medium term Long term
Risks
2) Risks of not being able to stably supply the required quantity of products or investigatio nal drugs for important products, resulting in shipment restrictions
or shortages
People
Impact on people facing illness
Medium
Large
Pharmaceuticals
Short term
facing
Medium term
illness
medications*1
Financial impact
Life-changing value*1
Improve the quality of life for people facing illnesses with high unmet medical needs and make them smile*1
Increase in the Group's revenue and profits*1
Increase in capital to further create
Failure to deliver sufficient
Decrease in revenue and profits*1
Decrease in capital to further create
*1: the Kirin Group will achieve the creation of both of two values; one is social value (the Group solves social issues by providing Life-changing value to make people facing illness smile) and the other is economic value (the Group gains profits which can be the source of investment in human capital and intellectual capital to realize Life-changing value).
Response strategy for risks and opportunitiesResponse strategy for "Enhance the corporate value by creating and delivering Life-changing value"
Since 2021, we have been promoting activities to realize Vision 2030. However, amid significant and challenging changes in the pharmaceutical industry-such as growing pressure to contain healthcare costs worldwide and increasing difficulties in developing new drugs-we introduced "Story for Vision 2030" as a strategy to ensure the successful realization of Vision 2030. This is our strategy for continuously creating and delivering Life-changing value, which the Group has advocated in Vision 2030. We have defined the focus disease areas and modalities*1more clearly. In addition to this, we will accelerate and strengthen open innovation, partner collaboration, venture capital, and corporate venture capital fund investments.
From the perspective of maximizing the Life-changing value generated by these activities, it is necessary to select an appropriate business model. For assets in the focus disease areas, the Group will manage everything from development to sales on a global basis. It will be important to deliver the created value to patients, while also amplifying our own strengths in those areas by reflecting their feedback in research and development.
For strategic partnering assets, we will leverage outside capabilities to maximize value. We expect to maximize the value, including the fastest delivery to patients, by building the best possible business model with the right partners.
Thus, by selecting the appropriate business model, the Group is focused on bringing the value it creates to as many people facing illness as possible as quickly as possible.
*1: Modalities: Classes of drug discovery technologies (methods and means) that facilitate the realization of the envisioned therapeutic concept.
Assets in the focus disease areas:
Kyowa kirin will work to create and deliver value in the three areas set out below as the focus disease areas of the Company. For each disease area, Kyowa Kirin will continue to strive to penetrate markets by increasing the number of countries and regions where our products have been launched and implementing disease awareness raising activities and patient support programs, etc.
Bone and mineral
With regard to Crysvita, Kyowa Kirin has started selling hypodermic syringes in Japan and Europe as an easier and safer dosage form of self-injection at home which was expected by patients and healthcare professionals. In Italy, Crysvita has become eligible for insurance reimbursement for treatment of tumor-induced osteomalacia. The development of KK8123*2and KK8398*2is steadily in progress.
Intractable hematological diseases/hemato oncology
Ziftomenib (product name in the U.S.: KOMZIFTI) has been approved as an oral menin inhibitor that can be taken once daily for relapsed or refractory acute myeloid leukemia (AML) by NPM 1-mutation in the U.S., for the first time in the world. Kyowa Kirin will promote partnership with Kura Oncology, aiming to provide new therapeutic options (combination therapies and early line treatment) for acute leukemia.
Regarding Poteligeo, Kyowa Kirin promote initiatives that use machine learning and AI technology to improve patient access to treatment. In addition, Kyowa Kirin will steadily develop KK2845, etc.*2which is our first antibody-drug conjugate (ADC).
Rare diseases (hematopoietic stem cell gene therapy)
Regarding OTL-200 (product name in Europe: Libmeldy, in the U.S.: Lenmeldy), Kyowa Kirin promotes newborn screening for metachromatic leukodystrophy (MLD) in the U.S. and Europe. In Spain, it has become eligible for insurance reimbursement. Due to the recommendation by the U.S. Secretary of Health and Human Services that the federal government include MLD in newborn screening programs, the Company will continue its efforts to expand implementation across individual states. In Japan, it has been designated as an orphan regenerative medical product for early-onset metachromatic leukodystrophy. In Saudi Arabia, it has also been designated as an orphan drug and granted priority review designation. Kyowa Kirin will also steadily develop OTL-203*2and OTL-201*2.
Strategic partnering assets:
Kyowa Kirin aims to maximize the value, including the fastest delivery of the value to patients, by creating the best business model with appropriate partners.
Kyowa Kirin will also aim at maximizing the value of small molecule KHK4951*3(generic name: tivozanib), KK2260*2and KK2269*2which are created with our proprietary REGULGENT bispecific antibody technology, POTELLIGENT antibody KK4277*2, and KK3910*2, for which Kyowa Kirin have started Phase I clinical trial for essential hypertension in 2025, including through collaboration with partners.
As for KHK4083*2(generic name: rocatinlimab), which Kyowa Kirin have continued to advance in multiple clinical trials in collaboration with Amgen, the partnership agreement with Amgen regarding development and commercialization was terminated in January, 2026 against the backdrop of Amgen's strategic portfolio review, and Kyowa Kirin reacquired full control of the global rocatinlimab program, including regulatory filings and future commercialization. However, on March 3, 2026, based on the latest safety information and a comprehensive risk-benefit assessment, Kyowa Kirin decided to discontinue all ongoing clinical trials for rocatinlimab.
In addition, Kyowa Kirin have provided Boehringer Ingelheim with a license related to a preclinical development program aimed at developing a first-in-class small molecule therapeutic medicine candidate for autoimmune diseases.
For "Strategies and initiatives to address the opportunities," although there was some impact from political situations in certain countries, progress was generally smooth. Subsequently, Kyowa Kirin decided to discontinue clinical trials for rocatinlimab. We have decided not to change the medium- to long-term financial targets set forth in "Vision 2030 and beyond: Our Growth Story " formulated before this decision, and Kyowa Kirin will continue to advance these initiatives.
*2.For details of the development pipeline, please refer to "II. OVERVIEW OF BUSINESS, 6 RESEARCH AND DEVELOPMENT ACTIVITIES"
Response strategy for risks of not being able to stably supply the required quantity of products or investigational drugs for important products, resulting in shipment restrictions or shortages
The Group will maintain and strengthen a stable supply system and establish unwavering trust from society to ensure that Life-changing value created by the Company is delivered to patients. To prepare for various risks that may threaten the quality and stable supply of pharmaceuticals, including external factors such as disasters and changes in international circumstances, and internal factors such as GMP violations and manufacturing problems, Kyowa Kirin is promoting integrated approaches for building a robust production and supply structure, strengthening production and quality technologies, and developing human resources to ensure a stable supply of pharmaceuticals of reliable quality.
Currently, Kyowa Kirin has core production facilities in Takasaki-shi, Gunma and Ube-shi, Yamaguchi, and are constructing a biopharmaceutical API manufacturing building (Sanford Plant) in North Carolina, United States. The development and strengthening of our in-house production system will enable flexible production responses in the event of risk occurrence. In the Takasaki area, the Bio Process Research and Development Laboratories and Takasaki Plant are located next to each other, serving as a core center for biopharmaceutical drugs, and creating an environment that allows us to seamlessly proceed with the entire process from research to manufacturing to applying for approval. This proximity enables smooth technology transfer and quick response to manufacturing problems. In addition, by consolidating quality control and quality assurance functions into Q-TOWER and strengthening mutual collaboration, quality divisions as a whole are working to maintain solid quality. As an automated mass production plant for oral solid dosage preparations (OSDP), Ube Plant is equipped with the latest technology and a robust quality control system to support highly efficient supply. For important products, kyowa Kirin has established a dual sourcing system with external CDMOs in addition to our proprietary plants to further improve supply stability. Supply chain management, including contractor management, is becoming increasingly complex. However, Kyowa Kirin is working to improve management capacity and resilience by strengthening internal and external collaboration and monitoring KPIs. To prepare for unexpected manufacturing stoppages or shipment delays, Kyowa Kirin maintains inventory levels that can cover demand for a certain period, enabling us to continue supplying products. In launching a U.S. base, our aim is not only to expand in-house production capacity but also to raise the level of overall production technology through the international circulation of technology and human resources. In the Takasaki area, construction of the HB7 building was completed in 2025, with manufacturing training facilities installed. In addition to employees from Takasaki Plant, the Sanford Plant staff will also come, and both bases will work together to improve technical proficiency.
For "Response strategy for risks of not being able to stably supply the required quantity of products or investigational drugs for important products, resulting in shipment restrictions or shortages" are generally progressing well.
Regarding the opportunities that materialized in the current fiscal year, they are as described in "Materiality related to providing pharmaceuticals for unmet medical needs and addressing patient-centric healthcare needs > Strategies and initiatives to address the opportunities identified above." In addition, because it is not possible to separately identify the financial impact resulting from the materialization of opportunities, Kyowa Kirin has not described the financial impact for the current fiscal year and subsequent fiscal years. No risks have materialized during the current fiscal year. In addition, because it is difficult to estimate the extent of impact if risks materialize in the next fiscal year or thereafter, quantitative information on the financial impact is not provided.
Below is the strategy to address sustainability-related risks and opportunities that could reasonably be expected to affect the Group's forecasts, as well as the financial impact that could arise from addressing these risks and opportunities.
As investments necessary to realize "Strategies and initiatives to address the opportunities identified above," there are strategic investments in external assets (including license introductions, VC/CVC investments, etc.) along with research and development investments aimed at
maximizing value, including the creation of innovative pharmaceuticals and the expansion of their indications. Their results for the fiscal year ended December 31, 2025 and future projections are shown in the table below. These financial investments also include development investments in appropriate regions with a view to subsequent sales. In addition, these future projections of financial investments may change subject to the scale of sales revenue and strategies.
Financial investments necessary to implement "Strategies and initiatives to address the risks identified above" include costs and investments related to the in-house manufacturing, quality assurance, and supply chain management. Results for the fiscal year ended December 31, 2025 and future projections are shown in the table below. These future projections of financial investments may change subject to changes in internal and external conditions.
Risks and opportunities
Response strategy
for risks and opportunities
Financial effects of response strategy
Financial effects (¥ millions)*1
Current
fiscal year
Short term
(1 year later)
Medium term
(3 years later)
Long term
(10 years later)
Opportunities
1) Enhance the corporate value by creating and delivering
Life-changing value
・See "Response strategy for risks and opportunities" as stated above.
Impact on PL
・R&D investment to create and deliver innovative drugs as
Life-changing value
101,200
Approx.122,000
Targeting 20% of consolidated
revenue
Targeting 20% of consolidated
revenue
Impact on BS
・Strategic investment for pipeline and acquisition of drug discovery
technology
Approx.400,000
Based on the
strategy Respond flexibly
Based on the
strategy Respond flexibly
Based on the strategy Respond flexibly
Risks
2) Risks of not being able to stably supply the required quantity of products or investigational drugs for important products, resulting in shipment restrictions or
shortages
・Establish and appropriately operate a system and procedures to ensure the continued quality assurance and stable supply of products supplied by the company
Impact on PL
・Costs related to in-house manufacturing, quality assurance, and supply chain
management*2
Approx.54,000
Approx.59,000
Approx.59,000
Assumed to be the same
level as medium-term
Impact on BS
・Investments in our own manufacturing, quality assurance, and supply chain management*3
Approx.33,000
Approx.44,000
Approx.10,000
Expected to be within the
range of depreciation
Total
Impact on PL
Approx.155,200
Approx. 181,000
Total amount of the impact on the PL
above
Total amount of the impact on the PL
above
Impact on BS
Approx.433,000
Total amount of the impact on the BS
above
Total amount of the impact on the BS
above
Total amount of the impact on the BS
above
Impact on CF*4
Approx. 588,200
Total amount of the impact on the PS/BS
above
Total amount of the impact on the PS/BS
above
Total amount of the impact on the PS/BS
above
*1: The Kirin Group defines short term, medium term, and long term as one year, two to three years, and four to ten years after the end of the fiscal year ended December 31, 2025, respectively. However, for the financial impact arising from addressing risks and opportunities, we indicate single-year figures that will occur one year later for the short term, three years later for the medium term, and ten years later for the long term, so that trends for these terms can be understood.
*2: Since it is difficult to calculate only the cost required to address risks, the total cost of related divisions (excluding variable costs associated with manufacturing) is shown.
*3: Since it is difficult to calculate the amount of direct investment to address risks, the total amount of investment in related divisions is shown.
*4: Since it is difficult to accurately calculate the impact on CF, the sum of the impact on PL and the impact on BS is shown.
Expected changes in financial position over the short, medium and long termStrategic investment for pipeline and acquisition of drug discovery technologies as the above strategy to address opportunities will be flexibly implemented based on the management strategy. Regarding the investment funds, Kyowa Kirin will continue to maintain our net cash position in principle. In addition to cash on hand, Kyowa Kirin will secure sufficient borrowing capacity and methods of flexible financing (CPs (commercial papers) and commitment lines) for strategic large-scale investment projects. Kyowa Kirin does not believe that the above strategy to address opportunities will result in material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual reporting period.
As investment related to in-house manufacturing, quality assurance, and supply chain management as a strategy to address the above risks, Kyowa Kirin are constructing a biopharmaceutical API manufacturing building (Sanford Plant) in North Carolina, United States. Kyowa Kirin plans to procure the investment funds from cash on hand. Kyowa Kirin does not believe that the above strategy to address risks will result in material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual
reporting period.
Strategy-Resilience
Based on the time horizon over which sustainability-related risks that could reasonably be expected to affect Kirin Group's prospects regarding unmet medical needs are expected to occur, the Group evaluates its resilience on this issue over a medium-term time horizon.
The Kyowa Kirin Group's resilience towards the Risks of not being able to stably supply the required quantity of products or investigational drugs for important products, resulting in shipment restrictions or shortages is described below.
When formulating product supply plans, Kyowa Kirin make sure there will be sufficient inventory levels to meet demand for a certain period so that Kyowa Kirin can continue to supply products in the event that manufacturing at our proprietary plants or at an external CDMO stops due to unexpected circumstances. Furthermore, Kyowa Kirin puts in place a system that will ensure the continual supply of products by keeping inventories at stock points that can support a certain period of supply even if product shipments from a plant are halted. Our proprietary plants are equipped with emergency power supplies to maintain production in case of power outages due to natural disasters. In addition, Kyowa Kirin has established a dual sourcing system for important products to further strengthen a stable supply in the event of risk occurrence. To address quality risks, both of our proprietary plants and CDMOs conduct regular GMP audits based on the latest GMP trends and risks, and manage any issues identified, ensuring that corrective and preventive measures are implemented. All identified risks are also registered in a quality risk register, and the progress of any necessary response measures is monitored.
As a result of the business model impact analysis described above, Kyowa Kirin has evaluated that even if the negative impacts on unmet medical needs were to occur beyond Kyowa Kirin's expectations over the medium term, Kyowa Kirin has the capacity to respond to the manifestation of such uncertainties and there is no need to change Kyowa Kirin's current business model of the Pharmaceuticals business.
Metrics and targets
Risks and opportunities
Metrics
Source
Unit
Targets
(Target year)
Results
Interim targets
Opportunities
1) Enhance the corporate value by creating and delivering Life-changing value
Development pipeline and status of major applications and approvals
Kyowa Kirin's own source (considering SASB)*1
-
-
-
Refer to a list of the development pipeline and the information on major applications and
approvals*2
Launch of global products in major countries
Kyowa Kirin's own source*3
Country
CRV_XLH (Adult): 8/8 CRV_XLH (Pediatric): 8/8 CRV_TIO: 6/8 POT_CTCL: 8/8
Libmeldy_PSLI: 6/8 (2027)
-
CRV_XLH (Adult): 8/8 CRV_XLH (Pediatric): 8/8 CRV_TIO: 6/8 POT_CTCL: 8/8
Libmeldy_PSLI: 5/8
Risks
2) Risks of not being able to stably supply the required quantity of products or investigation al drugs for important products, resulting in shipment restrictions
or shortages
Number of enforcement actions taken in response to violations of good manufacturing practice (GMP) or equivalent standards
violations by type
Kyowa Kirin's own source (considering SASB)*4
Case
-
-
0 cases
Number of occurrences of limited or suspended product supplies due to our own reason.
Kyowa Kirin's own source*5
Case
Maintain zero cases
-
0 cases
*1: It is an absolute metric and is not certified by a third party. In addition, this metric has been set with reference to SASB: HC-BP-000.B. In order to further clarify the status of each item, a table related to a list of the development pipeline and the information on major applications and approvals is included.
*2: For details, please refer to "Development pipeline" and "Major applications and approvals."
*3: It is an absolute metric and is not certified by a third party.
(Definition) Launch of global products (Crysvita, Poteligeo, Libmeldy/Lenmeldy) by indication in eight major countries with high social and economic impact (Japan, the U.S., Canada, the UK, France, Italy, Germany, and Spain)
(Calculation method) Number of countries where global products are marketed by indication as of December 31, 2025
*4: It is an absolute metric and is not certified by a third party. In addition, this metric has been set with reference to SASB: HC-BP-250a.5. The scope of data aggregation has been adjusted before disclosure in consideration of the financial impact on the Group.
(Definition) Number of enforcement actions taken in response to violations of GMP or equivalent standards violations by type as determined by the Company
(Calculation method) (1) Actual results are as of December 31, 2025. (2) This applies to enforcement actions resulting in the suspension of shipments of global products such as CRV and POT due to GMP violations caused by serious deficiencies or deviations in pharmaceutical manufacturing and quality control systems.
*5: It is an absolute metric and is not certified by a third party.
(Definition) Number of occurrences of limited or suspended product supplies of important pharmaceutical products due to our own reason, as determined by the Company.
(Calculation method) (1) Actual results are as of December 31, 2025 (2) In-house reasons refer to circumstances that are within the scope of responsibility of the manufacturer and distributor (such as problems in procurement of raw materials including APIs, manufacturing problems, quality problems, administrative penalties [including those caused by contract manufacturing partners]). This category does not include other instances of running out of stock (stockouts) or limited shipments due to transient excessive demand or damage from disasters. (3) The number of stockouts or limited shipments will be counted as one case if it originates from the same reason, even if the instances cover more than one report. (4) The scope of aggregation covers events that reach the criteria established by the Company, taking into consideration the financial impact on the Company and the impact on patients.
Analysis of trends or changes in the entity's performanceFor "Response strategy for "Enhance the corporate value by creating and delivering Life-changing value"," although there was some impact from political situations in certain countries, progress was generally smooth. Subsequently, Kyowa Kirin decided to discontinue clinical trials for rocatinlimab. Kyowa Kirin has decided not to change the medium- to long-term financial targets set forth in "Vision 2030 and beyond: Our Growth Story" formulated before this decision, and Kyowa Kirin will continue to advance these initiatives.
For "Response strategy for risks of not being able to stably supply the required quantity of products or investigational drugs for important products, resulting in shipment restrictions or shortages" are generally progressing well.
R&D pipelineNote: For detailed information on ziftomenib (Product Name in the U.S.: KOMZIFTI)'s development status, please refer to Kura Oncology's website. https://kuraoncology.com/
Major Applications and ApprovalsCode Name, Generic Name, Product Name
Indication
Application/Un der Review
Countries/Regions Received Approval in 2025
ziftomenib (Product name in the U.S.: KOMZIFTI)
Adult Relapsed or Refractory (R/R) Acute Myeloid Leukemia (AML) with a
Nucleophosmin1 (NPM1) Mutation
-
U.S.
Human capital
For the Group, which possesses a unique business portfolio, increasing sympathy for the Group Philosophy, Values, and CSV is essential. Based on this common foundation, promoting human resource exchange across the Food & Beverages (alcoholic and non-alcoholic beverages), Pharmaceuticals, and Health Science domains both in Japan and overseas, and enhancing both the diversity of business experiences and attributes as well as inclusiveness toward diversity, serve as sources of innovation. The Group therefore considers these efforts as sustainability-related opportunities that could reasonably be expected to affect the Group's prospects.
Governance†
In the Group, the Company's Group Executive Committee discusses and exchanges opinions about strategies related to human capital. After these discussions are reflected in the plans of People & Culture Department, these strategies are then discussed again at the Group Executive Committee as part of the group plan and then reported to the Board of Directors. The Board of Directors oversees the progress of the implementation of human capital strategies as an integral part of group monitoring.
Furthermore, to promote health management proactively and independently, including occupational health and safety, the Group has established the "Group Health and Safety Meeting" under the Group CSV Committee, which meets twice a year. The Chief People Officer (CPO) chairs this meeting, and the general managers of human resources department of major domestic operating companies participate. Matters discussed at the Group Health and Safety Meeting are reported to the Group CSV Committee, and then reported to the Company's Board of Directors for reflection in the Group's overall strategy. At the same time, the Board of Directors oversees the Group's response policies and execution plans for health management.
Risk management†
Where the Group Information Disclosure Committee determines that a review of risks and opportunities is required, the Group Executive Committee discusses revisions to risks and opportunities related to human capital strategies in light of changes in the internal and external environment. In addition, the Group Executive Committee monitors the progress of response strategies to sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects.
Strategy
The Group is guided by its core philosophy of "Respect for Humanity," which is founded on a belief in the limitless potential of people. The Group provides an environment where each and every employee can take the challenge of creating new value, work to their fullest, and continue to grow through their work. The Group values human capital as a source of value creation through innovation and competitive advantage, and by investing in human resources, it aims to be "a company where human capital grows and that wins through human capital." The human capital strategy is designed not only to enhance the effectiveness of the execution of current management strategies, but also to expand the potential of management strategies by strengthening human capabilities, which are critical factors in enhancing corporate value over the long term. The key elements of this approach are "expertise" and "diversity." The Group develops human capital that combines both "expertise" and "diversity" by providing an environment where each employee can enhance their expertise and accumulate a variety of business experiences and perspectives within its unique and robust business portfolio spanning Food & Beverages (alcoholic and non-alcoholic
beverages), Pharmaceuticals, and Health Science.
Furthermore, the Company will foster an organizational culture that embraces diversity and will promote CSV management through cross-organizational and cross-team creation, thereby achieving the Group's sustainable growth and improved corporate value.
In the current fiscal year, the Group has been promoting these initiatives in accordance with the plan envisioned at the end of the previous fiscal year.
The sustainability-related risks and opportunities identified for this theme that could reasonably be expected to affect the Group's prospects are as follows.
Risks and opportunities
Value chain (Stakeholders of the Group)
Effects on the business model/value chain and financial effects that occur when risks and opportunities materialize
Likelihood
Financial materiality
Segments affected by risks and opportunities
Time horizons over which the effects of risks and opportunities are
expected to occur
Upstream
The Group
Downstream
Opportunity
(i) Opportunity to increase employee sympathy with the Group Philosophy, Values, and CSV, thereby accelerating the practice of CSV
management
Employees
Effects on the business model/value chain
Financial effects
High
Medium
Alcoholic beverages Non-alcoholic beverages
Pharmaceuticals Health science
Medium term
Risk
(ii) Risk of a
decline in productivity resulting from employee occupational health and safety issues
Employees
Effects on the business model/value chain
training costs
High
Medium
Alcoholic beverages Non-alcoholic beverages
Pharmaceuticals Health science
Medium term
Opportunity
(iii) Opportunity to create or expand customers and markets by promoting new ideas and strategic thinking through increasing the diversity of human capital involved in decision-making and organizational
management
Employees
Effects on the business model/value chain
Financial effects
High
Medium
Alcoholic beverages Non-alcoholic beverages
Pharmaceuticals Health science
Medium term
Realization of new value creation and innovation
Increase in revenue due to increased sales opportunities for products and services
Decline in employee productivity and loss of human resources Financial effects
Decrease in revenue
Increase in fixed cost ratio
Increase in litigation costs such as claims for compensation from employees and others
Increase in recruitment and
Realization of new value creation and innovation
Increase in revenue due to increased sales opportunities for products and services
Response strategy for "Opportunity to increase employee sympathy with the Group Philosophy, Values, and CSV, thereby accelerating the practice of CSV management"
The Group is implementing global internal branding initiatives to embed the CSV management philosophy, aimed at fostering employees who are healthy and energetically engage in their work with motivation.
Taking into account differences in the level of penetration and circumstances across Group operating companies, the Group considers and deploys new initiatives tailored to each situation. Through these efforts, the Group is advancing the development of an environment in which each employee deepens their understanding of and sympathy with the vision and direction pursued by the Kirin Group, and can work with pride as a member of the Group. Specifically, for the purpose of timely dissemination of Group information and fostering employee understanding, the Group is deploying "KIRIN Now," an internal website shared by group employees to disseminate management information. The Group also conducts the "Kirin Group Award," which recognizes initiatives that embody the Group Philosophy, Values, and CSV, as well as the "CSV experiences" program to promote understanding of CSV among group employees.
Through these initiatives, the Group aims to accelerate the practice of CSV management, which is positioned at the core of its management. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
Response strategy for "Risk of a decline in productivity resulting from employee occupational health and safety issues"
Ensuring occupational health and safety for group employees is the foundation of value creation and is essential for the practice of CSV management. The Group places the highest priority on ensuring safety and health, strives to maintain a safe and hygienic work environment, and understands and complies with laws and regulations related to occupational safety and health. Furthermore, the Group complies with labor-related laws and strives to maintain a healthy and comfortable work environment.
The Group has established the Kirin Group Occupational Health and Safety Policy. Under this policy, each Group company and workplace has a clearly defined structure with assigned roles and responsibilities, and appropriate management resources are allocated. Through the continuous improvement of occupational health and safety activities, the Group aims to ensure that each and every person who works with the Group is healthy, safe and lively in mind and body, and has a heightened sense of job satisfaction.*
In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
*Work with the Group: all people who work in the same workplace (including employees of partner companies, outsourcing companies, and subcontractors)
Response strategy for "Opportunity to create or expand customers and markets by promoting new ideas and strategic thinking through increasing the diversity of human capital involved in decision-making and organizational management"
The Group has set "diversity and inclusion, culture for innovation" as a necessary organizational capability to become a global leader in CSV. In recent years, amid increasing uncertainty and rapid changes in the external environment, and as the business environment surrounding the Group becomes more challenging, it is necessary for the Kirin Group to achieve sustainable growth by practicing "human capital management" and accelerating innovation through diverse human capital who sympathize with CSV management and work to their fullest to maximize their individual potential.
The Group has long been committed to fostering an organizational culture in which women can demonstrate autonomy and creativity and thrive with vitality. In 2022, the Group formulated the "Kirin Group's Long-Term Plan for the Advancement of Women 2030," which aims to increase the female leadership ratio to 30% by 2030. To foster an organizational culture where both men and women can demonstrate leadership from an early stage, the Group promotes "accelerated career development," which encourages group employees to gain work and success experiences and build expertise before experiencing life events such as childbirth and childcare. Furthermore, the Group is advancing a transformation into an organization that accepts diversity by identifying and eliminating factors that hinder diverse group employees from working with mutual respect.
In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
The response strategies for sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, and the financial effects arising from the response to those risks and opportunities are as follows.
Although no risks have materialized during the current fiscal year, there is a possibility that the occurrence of occupational health and safety issues among group employees could lead to a decline in productivity, resulting in a decrease in revenue due to impacts on operations and an increase in recruitment and training costs due to the departure of human capital. These effects may occur over the medium term. In addition, from the next fiscal year onward, there is a possibility of increased revenue over the medium term as opportunities materialize, such as the creation of new value and innovation leading to increased sales opportunities for products and services. However, quantitative information is not disclosed, as it is difficult to estimate the extent to which sales would be affected in the event that the opportunities materialize.
Risks and opportunities
Response strategy
for risks and opportunities
Financial effects of response strategy
Financial effects (¥ millions)*1
Current fiscal year
Short term (1 year later)
Medium term (3 years later)
Long term (10 years later)
Opportunity
(i) Opportunity to increase employee sympathy with the Group Philosophy, Values, and CSV, thereby accelerating the practice of CSV
management
Profit or loss effects
135
Approx. 200
Approx. 200
Approx. 200
Financial position effects
-
-
-
-
Risk
(ii) Risk of a decline in productivity resulting from employee occupational health and safety
issues
Profit or loss effects
35
Approx. 70
Approx. 70
Approx. 70
Financial position effects
-
-
-
-
Opportunity
(iii) Opportunity to create or expand customers and markets by promoting new ideas and strategic thinking through increasing the diversity of human capital involved in decision-making and organizational
management
Profit or loss effects
development
31
Approx. 40
Approx. 40
Approx. 40
Financial position effects
-
-
-
-
Total
Profit or loss effects
201
Approx. 310
Approx. 310
Approx. 310
Financial position effects
-
-
-
-
Cash flows effects*2
201
Approx. 310
Approx. 310
Approx. 310
Promoting global internal branding to embed the CSV management philosophy at major domestic and overseas Group companies
Engagement survey expenses
Kirin Group Award program operating expenses
Not applicable
Establishing a group-wide occupational health and safety policy promotion system in collaboration with Group companies.
Occupational health and safety consulting expenses
Health-related program implementation expenses
Not applicable
Strengthening development and support plans for female leaders
Creating an organizational environment that embraces diversity
Expenses related to various programs for self-reliant career
Not applicable
*1: The Group defines the short-, medium-, and long-term time horizons over which sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects may arise as follows: the short term as one year after the end of the current fiscal year, the medium term as two to three years, and the long term as four to ten years. However, to enable an understanding of the trends in quantitative information, the Group presents figures for a single fiscal year occurring one year later for the short term, three years later for the medium term, and ten years later for the long term.
*2: As it is difficult to accurately calculate cash flows effects, the total amount of profit or loss effects and financial position effects is presented.
Expected changes in financial position over the short, medium and long termNo investments or disposals are planned, and no financing is planned to fund the execution of the strategy. The Group does not expect that the risks and opportunities described above will result in any material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual reporting period.
Strategy-Resilience
Based on the time horizon over which sustainability-related risks that could reasonably be expected to affect the Group's prospects regarding human capital are expected to occur, the Group evaluates its resilience on this issue over a medium-term time horizon. In the countries of business operations, the Group proactively and voluntarily promotes health management, including occupational health and safety. Nevertheless, even in the event that a serious occupational accident were to occur, the Group promptly shares information about the outline and cause of the incident among Group companies, identifies similar operations, and swiftly implements measures to prevent recurrence, including facility improvements such as the installation of safety devices, revisions to work procedures, and employee training.
As a result of the business model impact analysis described above, the Chief People Officer (CPO) has evaluated that even if the adverse effects on human capital were to occur beyond the Group's expectations over the medium term, the Group has the capacity to respond to the manifestation of such uncertainties and there is no need to change its current business model.
Metrics and targets
Risks and opportunities
Metrics
Source
Unit
Targets
Results
(Target year)
Interim targets
Opportunity
(i) Opportunity to increase employee sympathy with the Group Philosophy, Values, and CSV, thereby accelerating the practice of CSV
management
CSV practice score in engagement survey
Proprietary metric*1
-
72
(2025)
-
77†
Employee engagement score
Proprietary metric*2
-
75
(2027)
-
76†
Risk
(ii) Risk of a decline in productivity resulting from employee occupational health
and safety issues
LTIR score
Proprietary metric*3
-
2.00
(2027)
-
2.04†
Opportunity
(iii) Opportunity to create or expand customers and markets by promoting new ideas and strategic thinking through increasing the diversity of human capital involved in decision-making and organizational
management
Ratio of female managers in Japan
Proprietary metric*4
%
-
-
17%†
(Reference)
Ratio of female managers among employees of Kirin Holdings: 30%
(2030)
(Reference)
Ratio of female managers among employees of Kirin Holdings: 24%
(2027)
(Reference) Ratio of female managers among employees of Kirin Holdings: 18%
*1: The Group has requested responses from its employees and conducted scoring based on the responses obtained. It is an absolute measure and has not been validated by a third party.
(Definition) † Score of the "CSV Practice Index" in the Engagement Survey
(Calculation method) † Percentage of favorable responses (Top 2 Box) to three questions in employee engagement surveys
*2: The Group has requested responses from its employees and conducted scoring based on the responses obtained. It is an absolute measure and has not been validated by a third party.
(Definition) † Score of the "Sustainable Engagement" in the Engagement Survey
(Calculation method) † Percentage of favorable responses (Top 2 Box) to 10 questions in employee engagement surveys
*3: It is an absolute measure and has not been validated by a third party.
(Definition) † Frequency of occupational accidents among all employees (including dispatched employees), including those from partner companies, who regularly work at the Group's sites and workplaces, represented by the number of fatalities and injuries resulting from occupational accidents (accidents occurring during the performance of duties and resulting in at least one day of absence from work) per million total actual working hours
(Calculation method) † Number of fatalities and injuries from occupational accidents / 1,000,000 total actual working hours
*4: As the ratio of female managers at overseas consolidated subsidiaries is relatively higher than that at domestic consolidated subsidiaries, and given its lower strategic
priority, the ratio of female managers in Japan is targeted for disclosure. In addition, it is an absolute measure and has not been validated by a third party. (Definition) † Percentage of female managers among all managers of the Company and its domestic consolidated subsidiaries. Managers
refer to workers who are in an integral position with the management in the decision-making on working conditions and other labor management, and those who are in a supervisory or management position.
(Calculation method) † Number of female managers of the Company and its domestic consolidated subsidiaries at the end of the current fiscal year
/ Total number of managers of the Company and its domestic consolidated subsidiaries at the end of the current fiscal year
Analysis of trends or changes in the entity's performanceInitiatives aimed at creating innovation through human capital that combines "expertise" and "diversity" are progressing as planned.
Human rights
For the Group, which operates its businesses and supply chains globally together with group employees and business partners, respect for human rights is the foundation of all business activities, and is recognized as a sustainability-related risk that could reasonably be expected to affect the Group's prospects.
Governance†
To promote responses to human rights issues, the Group has established the "Group Business and Human Rights Meeting" as a cross-group governance body specialized in human rights issues under the Group CSV Committee, which meets twice a year. The Chief People Officer (CPO) serves as the chairperson of this meeting, and relevant officers and department heads of the Company participate. Matters discussed at the Group Business and Human Rights Meeting are reported to the Group CSV Committee and subsequently to the Company's Board of Directors, and are reflected in the Group's overall strategy.
Furthermore, to deepen the understanding of the importance of placing respect for human rights as the foundation of management for sustainable business development and to reflect it in management, the Group conducts annual human rights awareness training for top management, targeting not only the participants of the Group Business and Human Rights Meeting but also presidents, officers, and department heads of domestic Group companies.
Risk management†
Where the Group Information Disclosure Committee determines that a review of risks and opportunities is required, the Group Business and Human Rights Meeting discusses revisions to risks in light of changes in the internal and external environment regarding human rights issues. Furthermore, regarding response strategies for sustainability-related risks that could reasonably be expected to affect the Group's prospects, the Group Business and Human Rights Meeting monitors the progress of those strategies.
Strategy
To address social issues through its business activities and achieve sustainable growth together with society, respect for human rights is a prerequisite for the Group. The Group positions respect for human rights as the foundation of all business activities and as one of the "Fundamentals of Corporation" that form the basis of the CSV Purpose. The Group regards respect for the human rights of all stakeholders as an important management issue and is committed to addressing it on an ongoing basis, while also developing a framework for that purpose. The Group strives to identify, prevent, and mitigate adverse human rights impacts and implement appropriate remedial measures. Through its business, the Group seeks to understand stakeholders who could potentially be subject to adverse human rights impacts, as well as the associated human rights impacts. By preventing and mitigating adverse impacts and taking appropriate corrective actions where such impacts occur, the Group remains committed to the continuous respect for the human rights of all people involved with the Group.
In the current fiscal year, the Group has been promoting these initiatives in accordance with the plan envisioned at the end of the previous fiscal year.
The sustainability-related risks and opportunities identified for this theme that could reasonably be expected to affect the Group's prospects are as follows.
Risks and opportunities
Value chain (Stakeholders of the Group)
Effects on the business model/value chain and financial effects that occur when risks and opportunities materialize
Likelihood
Financial materiality
Segments affected by risks and opportunities
Time horizons over which the effects of risks and opportunities are
expected to occur
Upstream
The Group
Downstream
Risk
(i) Risk of human rights violations occurring in the Group's supply chain
Business partners
Effects on the business model/value chain
Financial effects
for switching suppliers
High
Large
Alcoholic beverages Non-alcoholic beverages
Medium term
Risk
(ii) Risk of the Group's officers, employees, or suppliers committing human rights violations and the subsequent remedial measures being insufficient
Business partners
Employees
Effects on the business model/value chain
Financial effects
to human rights violations
Medium
Large
Alcoholic beverages Non-alcoholic beverages
Pharmaceuticals Health science
Medium term
Inhibiting the stable procurement of raw materials
Decrease in revenue due to loss of customers
Incurrence of costs for responding to human rights violations or costs
Inhibiting the stable procurement of raw materials
Disruption of product supply chains
Decrease in revenue due to loss of customers
Increase in recruitment and training costs due to the loss of human resources
Incurrence of costs for responding
Response strategy for "Risk of human rights violations occurring in the Group's supply chain"
The Group has formulated the Kirin Group Human Rights Policy and conducts human rights due diligence, which is a continuous process encompassing the identification of human rights issues in the value chain, the planning and execution of remedial measures, monitoring, information disclosure, and communication with external stakeholders. The Group assesses human rights risks across the entire value chain and prioritizes initiatives to address human rights risks in the upstream portion of the value chain. With advice from Business for Social Responsibility™ (BSR), an external expert organization, the Group identifies agricultural products and processed agricultural goods with heightened human rights risks. Using Sedex evaluation tools, the Group prioritizes these risks based on two axes; human rights risks in sourcing countries and the magnitude of impact on the business, and conducts human rights due diligence across the supply chain accordingly. Furthermore, the Group regularly conducts risk assessments of suppliers and works to remediate non-conformities, striving to eliminate child labor and forced labor among suppliers. During the current fiscal year, human rights due diligence has been conducted as planned, targeting countries identified as having relatively high risks based on the results of country-specific human rights risk assessments. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
Response strategy for "Risk of the Group's officers, employees, or suppliers committing human rights violations and the subsequent remedial measures being insufficient"
To mitigate the risk of the Group's officers and employees committing human rights violations, the Group continuously conducts annual training for officers, level-specific training and human rights awareness training for all employees in Japan. Furthermore, the Group established a supplier hotline and a grievance desk as reporting channels for stakeholders who have concerns about human rights violations related to the Group's business. During the current fiscal year, reports were received through the supplier hotline and the grievance desk, and the Group implemented necessary remedial measures in response to those reports. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
The response strategies for sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, and the financial effects arising from the response to those risks and opportunities, are as follows. In the current fiscal year, these risks have not materialized; however, if serious or suspected violations of the Human Rights Policy or the Sustainable Supplier Code occur, revenue may decrease due to the loss of sales opportunities resulting from the deterioration of relationships with existing customers, the effect of which may extend over the medium term. Furthermore, quantitative information is not disclosed, as it is difficult to estimate the extent to which existing customers would be affected in the event that the risk materializes.
Risks and opportunities
Response strategy
for risks and opportunities
Financial effects of response strategy
Financial effects (¥ millions)*1
Current fiscal year
Short term (1 year later)
Medium term (3 years later)
Long term (10 years later)
Risk
(i) Risk of human rights violations occurring in the Group's supply chain
Profit or loss effects
0
Approx. 9
Approx. 9
Approx. 9
Financial position effects
-
-
-
-
Risk
(ii) Risk of the Group's officers, employees, or suppliers committing human rights violations and the subsequent remedial measures being
insufficient
Profit or loss effects
2
Approx. 5
Approx. 5
Approx. 5
Financial position effects
-
-
-
-
Total
Profit or loss effects
2
Approx. 14
Approx. 14
Approx. 14
Financial position effects
-
-
-
-
Cash flows effects*2
2
Approx. 14
Approx. 14
Approx. 14
Human rights due diligence
Supplier risk assessment
Consulting fees for the advancement of human rights due diligence
Implementation costs of human rights due diligence
Implementation costs of supplier risk assessments
Sedex membership fees
Not applicable
Supplier hotline
Grievance mechanism
Human rights awareness training and related costs within the Kirin Group
Costs for various hotlines
Not applicable
*1: The Group defines the short-, medium-, and long-term time horizons over which sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects may arise as follows: the short term as one year after the end of the current fiscal year, the medium term as two to three years, and the long term as four to ten years. However, to enable an understanding of the trends in quantitative information, the Group presents figures for a single fiscal year occurring one year later for the short term, three years later for the medium term, and ten years later for the long term.
*2: As it is difficult to accurately calculate cash flows effects, the total amount of profit or loss effects and financial position effects is presented.
Expected changes in financial position over the short, medium and long termNo investments or disposals are planned, and no financing is planned to fund the execution of the strategy. The Group does not expect that the risks described above will result in any material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual reporting period.
Strategy-Resilience
Based on the time horizon over which sustainability-related risks that could reasonably be expected to affect the Group's prospects regarding human rights issues are expected to occur, the Group evaluates its resilience on this issue over a medium-term time horizon. Even if negative impacts of human rights issues materialize and procurement from specific raw material production areas becomes difficult despite the Group's implementation of human rights due diligence and operation of the supplier hotline and grievance desk, the Group believes the impact would be limited as it has diversified its suppliers and has a low level of dependence on specific production areas.
As a result of the business model impact analysis described above, the Chief People Officer (CPO) has evaluated that even if negative impacts related to human rights were to occur beyond the Group's expectations over the medium term, the Group has the capacity to respond to the manifestation of such uncertainties and there is no need to change its current business model regarding human rights issues.
Metrics and targets
Risks and opportunities
Metrics
Source
Unit
Targets
Results
(Target year)
Interim targets
Risk
(i) Risk of human rights violations occurring in the Group's supply chain
Number of human rights due diligence (including remedial
activities) conducted for suppliers
Proprietary metric*1
Cases
At least 1 case per year
-
211 cases
Number of suppliers for which risk assessments were conducted
Proprietary metric*2
Sites
-
-
954 sites
Number of suppliers where nonconformities were identified
through risk assessments
Proprietary metric*3
Sites
-
-
30 sites
Number of suppliers that implemented remedial measures among those where nonconformities were identified through risk assessments
Proprietary metric*4
Sites
Remediate nonconformities identified in the previous
year
-
33 sites
Number of reported cases of child labor at suppliers
Proprietary metric*5
Cases
Maintain 0 cases
-
0 cases
Number of reported cases of forced labor at suppliers
Proprietary metric*6
Cases
Maintain 0 cases
-
0 cases
Risk
(ii) Risk of the Group's officers, employees, or suppliers committing human rights violations and the subsequent remedial measures
being insufficient
Number of grievances regarding labor practices or human rights impacts filed, addressed, and resolved through formal grievance mechanisms
Proprietary metric*7
Cases
0 cases
-
105 cases
*1: It is an absolute measure and has not been validated by a third party.
(Definition) Number of on-site audits conducted by the Group or a third party for suppliers with high human rights risks, in accordance with the United Nations Guiding Principles on Business and Human Rights
(Calculation method) Number of on-site audits conducted during the current fiscal year
*2: It is an absolute measure and has not been validated by a third party.
(Definition) Number of supplier sites for which risk assessments were conducted via the Self-Assessment Questionnaire (SAQ), among direct material suppliers (excluding sole proprietors and non-continuous transactions) with a continuous supply relationship to local brands that have a significant impact on Group management, including the KIRIN brand, in the Alcoholic Beverages and Non-alcoholic Beverages segments
(Calculation method) Number of supplier sites subject to risk assessments using the SAQ during the current fiscal year
*3: It is an absolute measure and has not been validated by a third party.
(Definition) Number of supplier sites where legal violations requiring remediation were identified among those for which risk assessments were conducted
(Calculation method) Number of supplier sites where legal violations were identified through risk assessments during the current fiscal year
*4: It is an absolute measure and has not been validated by a third party.
(Definition) Number of supplier sites that completed remediation among those where legal violations were identified (Calculation method) Number of supplier sites that completed remediation of legal violations identified in the previous fiscal year
*5: It is an absolute measure and has not been validated by a third party.
(Definition) Number of reported cases regarding child labor among reports to the Group hotline or grievance mechanism (Calculation method) Number of child labor reports during the current fiscal year
*6: It is an absolute measure and has not been validated by a third party.
(Definition) Number of reports related to forced labor received through the Group hotline or grievance mechanism (Calculation method) Number of reports related to forced labor received during the current fiscal year
*7: It is an absolute measure and has not been validated by a third party.
(Definition) Number of reports related to human rights risks, including child labor and forced labor, received through the Group's hotline or grievance mechanisms for which responses and resolutions have been completed
(Calculation method) Number of reports related to human rights risks for which responses and resolutions were completed during the current fiscal year
Analysis of trends or changes in the entity's performanceHuman rights due diligence for suppliers assessed as having higher human rights risks is progressing as planned, and the Group will continue its efforts to reduce human rights risks.
Consumer issues
In the Alcoholic Beverages, Non-alcoholic Beverages and Health Science domains of the Group, providing consumers with safe and secure
products and services is the foundation of all of the Group's activities. The inability to provide such safe and secure products and services is regarded as a sustainability-related risk that could reasonably be expected to affect the Group's prospects.
Governance†
To enhance quality assurance levels across the Group, the Quality Assurance Department, which is the department in charge of quality assurance functions, formulates an annual department plan every year. To ensure steady execution of the plan while responding promptly to changes in the environment, the Group holds quarterly monitoring meetings in which the Chief Quality Assurance Officer participates. Matters discussed at the monitoring meetings are reported to the Company's Board of Directors via deliberation at the Group Executive Committee as necessary and reflected in the Group's overall strategy. At the same time, the Board of Directors oversees response policies and execution plans for the Group's quality assurance issues.
Risk management†
Where the Group Information Disclosure Committee determines that a review of risks and opportunities is required, revisions to risks are discussed at the quarterly monitoring meetings for the annual plan in light of changes in the environment concerning quality assurance. Additionally, at quarterly monitoring meetings for the annual plan, the Group monitors the progress of response strategies for sustainability-related risks that could reasonably be expected to affect the Group's prospects.
Strategy
To solve social issues through business activities and achieve sustainable growth together with society, the Group positions "Ensuring food safety and security" as one of the material themes in its GMM. The Kirin Group has established a quality management system based on the concepts of international standards (such as ISO 9001 and FSSC 22000) and implements continuous improvement initiatives.
The components of this international quality management system start with the Kirin Group's Quality Policy. Guided by our fundamental Values in the KIRIN WAY - "Pioneer with Innovation," "Consumer/Patient at Heart," and "Quality in Mind," the policy clearly states its commitment to prioritizing consumer satisfaction and the provision of safe and secure products and services above all else. Next, the Commitments to Action declare specific actions and approaches for realizing the Quality Policy, serving as a guide for all activities of each Group company.
These elements are systematically embodied in the Kirin group Global Quality Management Principle (KGQMP). KGQMP is reflected in the quality management systems of each Group company and serves as a set of Group-wide common rules to provide high-quality, safe, and secure products and services by setting and achieving quality targets across the entire value chain. Additionally, compliance with KGQMP is verified every other year.
Furthermore, the Quality Assurance Department monitors the status of quality assurance activities through individual dialogues with major Group companies and supports the autonomous quality assurance activities of each company.
In the current fiscal year, the Group has been promoting these initiatives in accordance with the plan envisioned at the end of the previous fiscal year.
The sustainability-related risks and opportunities identified for this theme that could reasonably be expected to affect the Group's prospects are as follows.
Risks and opportunities
Value chain (Stakeholders of the Group)
Effects on the business model/value chain and financial effects that occur when risks and opportunities materialize
Likelihood
Financial materiality
Segments affected by risks and opportunities
Time horizons over which the effects of risks and opportunities are
expected to occur
Upstream
The Group
Downstream
Risk
(i) Risk of unexpected quality issues occurring in the Group's products
Consumers
Effects on the business model/value chain
Financial effects
damages
Medium
Large
Alcoholic beverages Non-alcoholic beverages Health science
Medium term
Suspension of operations at manufacturing sites
Disruption of the product supply chain
Decrease in revenue due to loss of customers
Increase in response costs, including compensation for
Response strategy for the "Risk of unexpected quality issues occurring in the Group's products"
To address this risk, the Group has established and continuously improves a quality management system in accordance with international quality assurance systems.
Manufacturing sites within the Group are promoting the acquisition and operation of food safety management systems, such as ISO 22000 and other international certifications recognized by the Global Food Safety Initiative (GFSI), thereby establishing a quality management system that meets international standards. Additionally, both the details and the number of significant product recall incidents within the Group are appropriately monitored and used to formulate and execute measures to prevent recurrence. In the current fiscal year, there were no cases in which trade-offs between other sustainability-related risks and opportunities were considered.
The response strategies for sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects, and the financial effects arising from the responses to those risks and opportunities, are as follows. In the current fiscal year, product disposal loss
primarily resulting from quality defects amounted to ¥574 million. If a risk were to materialize from the next fiscal year onward and unexpected quality issues occur in the Group's products, there is a possibility that revenue may decrease due to the loss of customers and response costs, including compensation for damages, may increase over the medium term.
Risks and opportunities
Response strategy
for risks and opportunities
Financial effects of response strategy
Financial effects (¥ millions)*1
Current fiscal year
Short term (1 year later)
Medium term (3 years later)
Long term (10 years later)
Risk
(i) Risk of unexpected quality issues occurring in the Group's products
improvements
Profit or loss effects
etc.
42
Approx. 50
Approx. 40
Approx. 40
Financial position effects
-
-
-
-
Total
Profit or loss effects
42
Approx. 50
Approx. 40
Approx. 40
Financial position effects
-
-
-
-
Cash flows effects*2
42
Approx. 50
Approx. 40
Approx. 40
Establishment of a quality management system in accordance with international quality assurance systems and implementation of continuous
Costs for acquisition and maintenance of certifications,
Not applicable
*1: The Group defines the short-, medium-, and long-term time horizons over which sustainability-related risks and opportunities that could reasonably be expected to affect the Group's prospects may arise as follows: the short term as one year after the end of the current fiscal year, the medium term as two to three years, and the long term as four to ten years. However, to enable an understanding of the trends in quantitative information, the Group presents figures for a single fiscal year occurring one year later for the short term, three years later for the medium term, and ten years later for the long term.
*2: As it is difficult to accurately calculate cash flows effects, the total amount of profit or loss effects and financial position effects is presented.
Expected changes in financial position over the short, medium and long termNo investments or disposals are planned, and no financing is planned to fund the execution of the strategy. The Group does not expect that the risks described above will result in any material adjustments to the carrying amounts of assets and liabilities reported in the related financial statements during the next annual reporting period.
Strategy-Resilience
Based on the time horizon over which sustainability-related risks that could reasonably be expected to affect the Group's prospects regarding consumer issues are expected to occur, the Group evaluates its resilience on this issue over a medium-term time horizon. The Group verifies each company's compliance with KGQMP and conducts individual monitoring of major Group companies. Nevertheless, even if negative impacts related to consumer issues were to materialize, the Group would respond promptly and appropriately in accordance with the Group Crisis Management Manual to minimize damage and impact. Depending on the nature and severity of the issue, the Group would establish a response headquarters and promptly report and share information within the Group, including with the President & COO and relevant officers, while also reporting and disclosing necessary information externally to prevent the spread of damage. Furthermore, centered on the response headquarters, and in coordination with the Group Risk and Compliance Committee and relevant departments, the Group would assess the situation, conduct analysis, consider response policies based on the worst-case scenario, and implement countermeasures.
As a result of the business model impact analysis described above, the Chief Quality Assurance Officer has evaluated that even if negative impacts related to consumer issues were to occur beyond the Group's expectations over the medium term, the Group has the capacity to respond to the manifestation of such uncertainties and there is no need to change its current business model regarding consumer issues.
Metrics and targets
Risks and opportunities
Metrics
Source
Unit
Targets
Results
(Target year)
Interim targets
Risk
(i) Risk of unexpected quality issues occurring in the Group's products
Percentage of manufacturing sites that have obtained GFSI-recognized scheme certifications
or ISO 22000
SASB*1
%
100%
(2027)
-
97.0%
Number of product recalls
SASB*2
Cases
Maintain 0
cases
-
1 case
*1: FB-PF-250a.1
*2: FB-PF-250a.4
Analysis of trends or changes in the entity's performanceThe certification rate of international food safety certifications (GFSI-recognized certification and ISO 22000) is showing an improving trend toward the final target of 100%, and is progressing as planned. The number of product recall incidents is also on a downward trend, as each Group company implements autonomous quality assurance activities based on the Kirin Group's Quality Policy and Commitments to Action, as well as the Kirin group Global Quality Management Principle (KGQMP) that embodies them.
The Environment (climate change and natural capital)
Governance†
Supervisory structure
Governance related to sustainability issues in general, including the environment, is described in the governance section of the general disclosures mentioned above.
For the four environmental issues (biological resources, water resources, containers and packaging, and climate change), the Group has established the Group Environmental Meeting (meets twice a year) under the Group CSV Committee as one of the group meetings for each sustainability issues. Chaired by the Senior Executive Officer in charge of CSV Strategy, with relevant officers and department heads as members, the meeting's key agenda items include "Sharing awareness of sustainability-related risks and opportunities and discussing strategies" and "Monitoring of progress related to roadmaps towards achieving the Kirin Group's Environmental Vision 2050 and exchanging opinions on related policies, strategies, and plans." Discussions at this meeting are reported to the Group CSV Committee and the Company's Board of Directors. At the same time, the Board of Directors oversees the Group's response policies and execution plans for environmental issues. Through the establishment and operation of this meeting, the Group is strengthening its initiatives for sustainability-related issues as required by the Corporate Governance Code, which was revised in 2021. Environmental management, such as responses to climate change, is operated as part of the CSV management system.
Incorporation into executive remuneration
The Group's approach to executive remuneration in relation to sustainability issues in general, including the environment, is described in the governance section of the general disclosures mentioned above. Specifically, the "Reduction ratio of GHG emissions (compared with 2019)," which is a metric for achieving the "Science Based Targets (SBT) 1.5°C" target for climate change, the "Percentage of recycled resin used in PET bottles in Japan," and the "Water use intensity at manufacturing sites with high water stress" are set as KPIs linked to executive remuneration. Note that environment-related considerations are factored into executive remuneration as part of the non-financial evaluation together with other evaluation items and cannot be separately identified. For the overall evaluation items, please refer to (2) Governance, 7) Incorporation into executive remuneration.
Other various environmental metrics are also incorporated into the Group's rolling three-year management plan as management targets, and are set as performance indicators for the Company's officers in charge and each Group company to be reflected in management plans.
Risk management† ((ii) Identification of risks and opportunities, a. Scenario analysis related to climate change are not in scope of assurance)
Risk management system
Based on the determination by the Group Information Disclosure Committee regarding whether revisions to risks and opportunities are required, the Group Environmental Meeting shares awareness of and discusses strategies for climate change, natural capital, laws and regulations, and other environment-related risks and opportunities. Furthermore, it monitors the progress of response strategies for environmental risks that could affect the Group's prospects.
The Group Risk and Compliance Committee determines significant risks based on the Group risk management policy for the fiscal year and the risks assessed and identified by each Group company, including the Company. The Committee also reports to the Board of Directors as necessary and oversees all aspects of risk management activities, including those related to the environment. In addition, compared with previous reporting periods, no changes have occurred in the management processes for significant risks and opportunities related to sustainability within the Group.
Identification of risks and opportunities
Environment-related risks and opportunities could reasonably be expected to affect the Group's prospects over the short, medium, and long term. To understand these risks and opportunities through assessment and analysis based on objective scientific evidence and to consider strategic options, the Group utilizes "scenario analysis related to climate change" and "assessment of risks and opportunities related to natural capital following the LEAP approach."
The Group Environmental Meeting and the Group CSV Committee share and discuss the risks and opportunities identified through these processes. Furthermore, these are submitted and reported to the Board of Directors, while also being shared with the Group Risk and Compliance Committee Secretariat to be managed alongside other risks.
Scenario analysis related to climate change
Climate-related scenario analysis is conducted across the entire Group to understand and assess the potential effects of climate change on the Group's overall operations under multiple plausible scenarios. The scenarios are established based on reasonable and supportable information, including publicly available data such as regional and international climate projections.
In 2018, the Group initiated a scenario analysis in accordance with the 2017 final report, "Recommendations of the Task Force on Climate-related Financial Disclosures" by the Task Force on Climate-related Financial Disclosures (TCFD) issued by the Financial Stability Board (FSB). In the analysis, Intergovernmental Panel on Climate Change (IPCC)'s Representative Concentration Pathways (RCPs) were used as base scenarios for physical risks, and Shared Socioeconomic Pathways (SSPs) were used as supplementary scenarios. The Group reviews the scenario analysis at least once a year to identify whether it is necessary to update the effects of climate-related uncertainties, and performs detailed analysis, as necessary.
For the most recent analysis, the Group has established the following two KIRIN Group climate scenarios with reference to IPCC and International Energy Agency (IEA) scenarios:
Scenario 1: A scenario in which global average temperature rise is limited to 1.5°C or 2°C above pre-industrial levels, consistent with the goals of the Paris Agreement
Scenario 3: A 4°C temperature rise scenario reflecting the impact of a society in which decarbonization efforts are insufficient
In assessing the Group's exposure and financial risks based on these two scenarios, the Group applied time horizons of 2030 and 2050. Based
on the social and economic conditions assumed under each scenario, the Group qualitatively assesses the magnitude of impacts on its strategies and business activities and identifies risks for each scenario.
While the Group's current management strategy is established under the assumption that climate-related risks are controlled to a certain extent (refer to Scenario 1 below), the Group also considers mitigation and adaptation measures as necessary to respond to more severe scenarios (refer to Scenario 3 below). Furthermore, as described in the section "Capacity to adjust strategy and business model," the Group believes it has the capacity to strengthen its response, as necessary.
These scenarios are intended to identify risks and opportunities and assess strategic resilience under a range of reasonable climate projections, providing information across a diverse range while reflecting significant risks to the Group's business.
RCP level
Scenario overview
Analysis results
Scenario 1
1.5°C or 2°C Scenario SSP1/RCP2.6
Scenario 3 4°C scenario SSP3/RCP8.5
diseases, heatstroke, etc.
Governments around the world enact strict laws and regulations related to climate change, resulting in a sufficient reduction in GHG emissions.
The rise in temperature is curbed, natural disasters do not increase much more than current levels, and the impact on agricultural yields is also limited. Natural disasters do not change significantly from current levels.
The financial impact on companies of compliance with laws and regulations and energy usage is large, but the cost of using natural capital is acceptable.
The impact of global warming on health is minimal.
The impact on yields of agricultural products and procurement costs is minimal.
The impact of floods and droughts caused by climate change on agricultural production areas, production, and delivery is minimal
The impact of energy costs and agricultural prices due to carbon taxes is major.
The impact of infectious diseases and heatstroke due to global warming continues.
Laws and regulations related to climate change are strict in developed countries, but insufficient globally, resulting in failure to achieve the required reduction in GHG emissions.
Higher temperatures, droughts and heavy rains, and reductions in daily temperature ranges lead to significant decreases in the yield and quality of agricultural products. Natural disasters caused by climate change also become frequent and severe.
The financial impact on companies of compliance with laws and regulations and energy usage is small, but it becomes difficult to use low-cost, high-quality natural capital.
Global warming also leads to an increase in infectious
Significant decline in yields of major agricultural products. Possible decline in quality. Increase in procurement costs.
Damage to agricultural production areas, production stoppages, and delivery difficulties due to floods and droughts caused by climate change.
The increase in energy costs and agricultural prices due to carbon taxes is minimal.
There is major harm from infectious diseases and heatstroke due to global warming.
These scenarios are supported by the scientific research shown in the table below.
Climate change scenariosDomain
Supporting evidence
Yield reduction in agricultural products
Drought risk
(IFPRI), etc.
Flood risk
Financial impact on agricultural products due to carbon pricing
BodirskyBL, DoelmanJC, FellmannT, Kyle Petal. 2018)
Financial impact on energy due to carbon pricing
IPCC Special Report on Global Warming of 1.5°C)
Decreases in global beer supply due to extreme drought and heat, Nature Plants, VOL.4, NOVEMBER 2018, 964-973 (Xie, et al.)
IPCC (2019) Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems Chapter 5: Food Security
Risk of increased food insecurity under stringent global climate change mitigation policy. Nature Climate Change, volume 8, pages 699-703 (Hasegawa T, Fujimori S, HavlíkP, Valin H, BodirskyBL, DoelmanJC, FellmannT, Kyle P et al. 2018)
Zebish et al (2005) "Climate Change in Germany Vulnerability and Adaptation of climate sensitive Sectors" FAO "Food and agriculture projections to 2050," etc.
Aqueduct 3.0 (current risk), Aqueduct 2015 (risk assessment combining future projections, climate scenarios RCP4.5 and RCP8.5, and socioeconomic scenarios SSP2 and SSP3)
Assessed by cross-referencing data on food production, demand, trade, prices, and hunger in countries and regions around the world from the WRI's Aqueduct Food and the International Food Policy Research Institute
AIR Touchstone version 8.2
IPCC (2019) Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems Chapter 5: Food Security and Risk of increased food insecurity under stringent global climate change mitigation policy. Nature Climate Change, volume 8, pages 699-703 (Hasegawa T, Fujimori S, HavlíkP, Valin H,
IEA "World Energy Outlook 2019" Annex A (rate of decline in future electric power emission factors), IEA WEO 2019 (Kirin Group Scenario 3: Current Policies Scenario, Group Scenario 1: SD Scenario, 1.5°C Scenario:
Analysis and assessment of risks and opportunities related to natural capital following the LEAP approach
The identification of dependencies, impacts, risks, and opportunities related to natural capital, both directly and in the upstream and downstream value chains, is assessed in accordance with the LEAP approach shown in the TNFD recommendations.
Based on an overview of the business domains and value chain of the entire Group, the Group has established the hypothesis that there is a high degree of dependence and impact on nature at the stage of procuring agricultural raw materials. Accordingly, the Group analyzed and evaluated 21 raw agricultural products with high procurement volumes, including items covered by the "Kirin Group Action Plan for the Sustainable Use of Biological Resources," on the two axes of "impacts of the business on nature" and "nature-related dependencies of the business." Through this process, the Group applied the LEAP approach to scope agricultural products for detailed analysis. The Group is currently proceeding sequentially with the analysis of these priority agricultural products in line with the LEAP approach.
Sri Lankan tea leaves, one of the priority agricultural products, underpin the flavor of "Kirin Gogo-no-Kocha." As their sustainable procurement has a significant impact on the Group's business and these plantations represent "locations" that are critical from both natural and social environmental perspectives, the Group has identified the relevant tea plantations as priority areas and has taken the lead in conducting assessment in line with the LEAP approach on the condition of the ecosystem, concerns, and necessary actions.
The results revealed that Sri Lankan tea plantations are exposed to various nature-related risks, including climate change, natural degradation, labor force reduction, and increased costs due to economic development and strengthened regulations. Conversely, mitigating these risks through regenerative agriculture, thorough human rights due diligence, and fair-trade procurement will lead to stable production and the acquisition of opportunities in the ethical consumption market. From the perspective of risk reduction and opportunity acquisition, supporting the acquisition of Rainforest Alliance (RA) certification-which the Group has provided since 2013-and promoting the "Regenerative Tea Scorecard" introduced in 2024 are considered effective. To manage progress, the Group is preparing to set targets that align with science-based and international goals related to nature.
Assumptions for analysis and evaluationTo identify priority agricultural products for which a more detailed assessment of risks and opportunities, as well as related trade-offs, should be conducted in line with the LEAP approach in the future, the Group has established a hypothesis-based on an overview of the business domains and value chain of the entire Group-that there is a high degree of dependence and impact on nature at the stage of procuring agricultural raw materials. Accordingly, the Group analyzed and evaluated these products on the two axes of "nature-related dependencies of the business" and "impact of the business on nature."
"Nature-related dependencies of the business" was assessed as the degree of dependence on the "provisioning services" of raw agricultural products, as indicated in the TNFD recommendations. The Group evaluated this using its own proprietary indicators, including "procurement amount," "impact on Group sales revenue," "substitutability of production areas for raw materials," and "concentration of import source country."
Concerning the "impact of the business on nature," the Group assessed indicators for which data is available on a per-crop basis, including "carbon footprint at the cultivation stage," "land use footprint," "water footprint by agricultural product," and "fertilizer usage." These fall under the five impact factors listed by IPBES (an intergovernmental organization that scientifically assesses trends related to biodiversity and ecosystem services and strengthens links between science and policy) that the TNFD recommendations state should be considered. Additionally, using external databases on risk incidents, the Group checked whether the target agricultural products are commodities with "reputation risk" on a global scale.
This analysis and evaluation are supported by the scientific research shown in the table below.
Nature capital scenariosDomain
Supporting evidence
Carbon footprint at the cultivation stage
Land use footprint
included in FAOSTAT)
Water footprint by agricultural product
Pages 490-501)
Commodity risk
Fertilizer usage
per hectare (kg/ha) by crop
Reputation risk
Carbon footprint: CarbonCloud | ClimateHub database
Data on agricultural production: FAO average over the past five years, emissions models based on IPCC guidelines, and global warming factors applied to IPCC GWP100
Paper: CFP data from the Japan Paper Association (because it is not in the ClimateHub database)
Area harvested (ha) per crop and production quantity (t): Calculation of acreage per unit yield (ha/t) using 2022 data in FAO FAOSTAT
Paper: Calculated using data from papers related to global forest product footprint estimation (because it is not
M. M. Mekonnen and A. Y. Hoekstra (2011) The green, blue and grey water footprint of crops and derived crop products Hydrol. Earth Syst. Sci., 15, 1577-1600. If not included in this, the water footprint was identified in another paper by Schyns et al. (Joep F. Schyns, Martijn J. Booij, Arjen Y. Hoekstra (2017) The water footprint of wood for lumber, pulp, paper, fuel and firewood Advances in Water Resources Volume 107, September 2017,
Judged based on whether or not agricultural products are included in the SBTN's High Impact Commodity List
Judged based on whether or not they are included in the list of commodities covered by the European Regulation on Deforestation Free Products (EUDR)
International Fertilizer Association (IFA) database "IFASTAT": Inputs of nitrogen, phosphorus, and potassium
RepRisk database
Financial impacts and responses based on analysis results
The Group measures the impact of significant risks based on the magnitude of financial impact and the likelihood of occurrence. These risks are managed in a unified manner on a risk map, and for risks with high impact, the Board of Directors conducts monitoring and implements countermeasures.
The following table summarizes the financial impacts identified through scenario analysis and other estimations, along with the corresponding