Materiality Determination Process

The Pigeon Group uses its business activities to contribute to the development of a sustainable society, thereby enhancing its corporate value. As part of these efforts, in April 2019 the Group identified the materialities (important issues) for which it must find solutions

Step 1: Confirming our destination: Financial targets and fields of business

The Pigeon Group confirmed its medium-to-long-term financial target (net sales of ¥200 billion by 2030) and its intended fields of business when it reaches the target (maintaining existing business fields while strengthening products for babies and mothers).

Step 2: Selection of issues

1. Identification of social issues

The Group identified social issues in view of international standards and guidelines such as ISO 26000, the Global Reporting Initiative (GRI) standards and the Sustainable Development Goals (SDGs).

2. Identification of issues recognized by senior management

Interviews were conducted with eight directors in October 2018. Items requiring attention in order to reach the destination, in terms of general management and ESG/SDGs, were confirmed.

<Topics covered in interviews>

—Issues relating to company management

·Business environment surrounding the Group and prospects

·Current business results, variations in results and factors in their variation

·Basic management policy (areas requiring strengthening and their background)

·Target states of medium-to-long-term future (medium-to-long-term vision)

·Recognition of the Group’s competitive advantages and weaknesses

—Items related to ESG/SDGs

·Evaluation and recognition of issues related to current ESG/SDGs efforts (including creating shared value (CSV))

·Target orientation and form of the Group’s ESG/SDGs efforts

·Main hurdles anticipated in reaching the target orientation and form

Step 3: Prioritization

The Pigeon Group assessed the social and business environment, examined risks and opportunities and prioritized issues in its value chain to identify six materialities, from the perspectives of their importance for building a sustainable society and for pursuing businesses that increase the Group’s corporate value.

Step 4: Approval of the Board of Directors

In April 2019, the Board of Directors approved the identified materialities.

Step 5: Circulation within the Group

From May to July 2019, in-house briefing sessions were held regarding the Group’s advancement of ESG activities, including the identified materialities. In all Group locations, a total of 24 briefing sessions were conducted.

Step 6: Incorporation into the business plan

The materialities were reflected in the 7th Medium-Term Business Plan (covering the period from FY2020 to FY2022).