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For the Creation ov Environment Management System

Approved by SBT Initiative

The GHG emissions reduction targets set by the Group were approved as science-based reduction targets by the international Science Based Targets initiative (“SBTi”)* in October 2019.

The SBTi updated its target validation criteria by adding two categories including “1.5˚C” and “well-below 2˚C” to its existing upper limit of temperature rise of “2˚C” above pre-industrial levels in December 2019 reflecting the IPCC Special Report on global warming of 1.5˚C published in October 2018.

The Group’s targets were approved under the second strictest category of “well-below 2˚C”-aligned targets.

Daimaru Matsuzakaya Department Stores, a main operating company, is taking actions such as use of 100% renewable energy in the head office building (Koto-ku, Tokyo) and the Daimaru Shinsaibashi store to reduce GHG emissions. As a result of these efforts, the Group reduced Scope 1 and 2 GHG emissions by 6.0% in fiscal year 2018 compared to fiscal year 2017, which is the base year. Originally, we set the GHG reduction target for fiscal year 2018 at 3.9% below fiscal year 2017 in the same scope. So the Group steadily reduces GHG emissions.

The Group will take more proactive measures such as the expansion of the share of renewable energy and the strengthening of energy saving to achieve the targets approved by the SBTi.

* Established by a collaboration between four organizations including CDP, the UN Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) in 2015 for the purpose of promoting the achievement of science-based GHG emissions reduction targets to limit the temperature increase to below 2˚C compared to pre-industrial levels.

SBTi GHG emissions reduction requirements

Support for TCFD Recommendations

The Group expressed its support for the recommendations of the “Task Force on Climate-related Financial Disclosures (TCFD)” that was established by the Financial Stability Board (TCFD recommendations) in May 2019.

And in Japan, the “TCFD Consortium” was launched on May 27, 2019 as an opportunity for holding discussions on effective corporate information disclosure and initiatives that lead disclosed information to financial institutions’ appropriate investment decision making and we participated in it. We actively join the working groups organized by the “TCFD Consortium” with the hope of leading it to constructive dialogue with investors and financial institutions.

Going forward, the Group will effectively disclose information on its actions for climate change in line with the TCFD recommendations.

Target Setting by Each Operating Company

With the aim of achieving GHG emissions reduction targets, the Group holds the Sustainability Committee meetings, which are chaired by the President and Representative Executive Officer, semiannually to share the action plans of each operating company and manage the progress. In addition, the Board of Directors receives reports about what was discussed at the Sustainability Committee meetings and discusses and supervises the long-term goals on ESG issues and the progress of actions.

Each operating company sets GHG emissions reduction targets separately. Daimaru Matsuzakaya Department Stores and Consumer Product End-Use Research Institute have ISO 14001 certified environmental management systems and promote environmental activities such as annual external audits.

Going forward, the Group will strive to strengthen governance in environmental management to achieve GHG emissions reduction targets.

Creation of Environmental Data Calculation and Aggregation Rules

The Group operates at more than 400 locations including department stores and offices in Japan and abroad. We have recognized we need a group-wide standardized system to calculate and aggregate environmental data, for example, accurately calculate GHG emissions at each operating company and location in the Group to achieve GHG emissions reduction targets. As part of building its foundation, we created Scope 1 and 2 GHG emissions calculation and aggregation rules in June 2019.

Firstly, in this process, we set the scope of the calculation and aggregation of the Group’s Scope 1 and 2 GHG emissions. We clarified the Group’s business locations, the period of time, and the types of emissions in Scope 1 and 2 to ensure the completeness of calculated and aggregated data on GHG emissions.

Next, we developed a system to manage the progress on GHG emissions on a monthly basis. We clarified the system to enter and check environmental data on a monthly basis, the way to manage the evidences that support actual energy use to ensure the accuracy of calculated and aggregated data on GHG emissions.

Going forward, we will introduce a system that centralizes the management of environmental data to improve the efficiency and accuracy of the calculation and aggregation of GHG emissions. Thereby we will strengthen governance to reduce GHG emissions.

Acquisition of Third-Party Assurance

The Group thinks it is important to ensure accuracy and reliability and receive recognition from a third-party organization concerning the effectiveness of the environmental management system, energy usage, and actual GHG emissions, which are disclosed to stakeholders, in order to reduce GHG emissions steadily. To this end, the Group received an independent assurance statement from Lloyd's Register Quality Assurance Limited (LRQA) for Scope 1 and 2 energy usage and GHG emissions in fiscal years 2017 and 2018 and their calculation method and appropriateness for the first time in July 2019.

As the process of third-party verification, the effectiveness of data calculated and aggregated by J. Front Retailing was inspected. And in light of the current status of the Group’s GHG emissions, on-site inspections of main stores of Daimaru Matsuzakaya Department Stores and Parco were conducted. The exhaustive calculation and aggregation of actual energy usage at more than 400 business locations across the Group and the accurate calculation and aggregation of data, each of which is supported by evidences, are recognized by the third-party organization.

We will continue efforts to receive third-party assurance for Scope 1 and 2 energy usage and actual GHG emissions. In addition, in order to reduce GHG emissions across the supply chain, we have been working to improve the accuracy of Scope 3 GHG emissions calculation and aggregation process and build an environmental management system since fiscal year 2019 to receive third-party assurance.

Independent assurance statement

Environmental performance data for FY2018 (Scope 1 and 2)

The Group GHG emissions and energy usage

FY2017 (base year)

FY2018

% change

GHG emissions
(t-CO2)

194,154

182,566

(6.0)

Electricity usage (kWh)

333,514,110

328,899,897

(7.1)

City gas usage (m3N)

5,625,325

5,366,712

(4.7)

Steam and hot/cold water usage
(MJ)

233,130,037

237,488,273

1.9

Heavy oil usage (kl)

6

6

0

Gasoline usage (kl)

708

655

(7.5)

Natural gas usage (m3N)

1,040

1,083

4.3

CFC usage (kl)

1,504

2,137

42.1

* Received third-party assurance from Lloyd's Register Quality Assurance Limited (LRQA).

The Group GHG emissions by operating company Unit: t-CO2, unless otherwise indicated

FY2017

FY2018

Emissions

Emissions

% share

% YoY

Daimaru Matsuzakaya Department Stores Co. Ltd. *1

147,884

137,516

75.3

(7.0)

Parco Co., Ltd. *2

42,981

41,918

22.9

(2.5)

J. Front Design & Construction Co., Ltd.

553

553

0.3

(3.5)

Dimples’ Co., Ltd.

137

116

0.1

(15.7)

Daimaru Kogyo, Ltd. *3

469

461

0.3

(1.8)

J. Front Foods Co., Ltd.

371

389

0.2

4.8

Consumer Product End-Use Research Institute Co., Ltd.

196

162

0.1

(17.2)

Angel Park Co., Ltd.

970

936

0.5

(3.5)

JFR Information Center Co., Ltd.

445

373

0.2

(16.1)

J. Front Retailing Co., Ltd.

148

161

0.1

8.7

Total J. Front Retailing Group

194,154

182,566

100.0%

(6.0)

*1 Daimaru Matsuzakaya Sales Associates Co. Ltd., Daimaru Matsuzakaya Tomonokai Co., Ltd., JFR Card Co., Ltd., JFR Service Co. Ltd., JFR Online Co. Ltd., The Hakata Daimaru, Inc., Kochi Daimaru Co., Ltd., and The Shimonoseki Daimaru, Inc. are included.
*2 Neuve A Co., Ltd., Parco Space Systems Co., Ltd., Parco Digital Marketing Co., Ltd., Parco (Singapore) Pte Ltd, Japan Retail Advisors Co., Ltd. are included.
*3 Daimaru Kogyo International Trading (Shanghai) Co., Ltd., Daimaru Kogyo (Thailand) Co., Ltd., and Taiwan Daimaru Kogyo, Ltd. are included.

Environmental and Social Activities Management Promotion System of Daimaru Matsuzakaya Department Stores

In order to promote the implementation of the Group Sustainability Policy, we appoint the Senior Executive General Manager as an “administrator” and place “promotion committee members” in charge of practical operations in each store/division to educate all members including people from suppliers and raise their awareness.

*Promotion members include people from Daimaru Matsuzakaya
Sales Associates, Daimaru Matsuzakaya Tomonokai,
JFR Card, Dimples’, J. Front Foods, and JFR Service.

Medium-term Goals for Environmental and Social Activities

Daimaru Matsuzakaya Department Stores has set company-wide medium-term goals under the Group Basic Mission Statement, Vision and Environmental and Social Activities Policy in light of environmental and social aspects, issues inside and outside the Company and risks.

〈FY2017 - 2021 Daimaru Matsuzakaya Department Stores environmental and social activities〉
(1) “Proposal for environment-friendly lifestyles” and “promotion of social contribution activities with the participation of customers” through business activities
(2) Reduction of greenhouse gas emissions (realization of a low-carbon society)
(3) Creation of a recycling society
(4) Biodiversity conservation
(5) Continuous improvement using the environmental and social activities management system

〈Numerical targets〉
・Reducing CO2 emissions from energy use by cutting energy use intensity (Volume used / Total floor area × Business hours) by 5% in FY2021 compared to FY2016
*CO2 emissions in the bussiness activities of department stores are caused by use of air conditioning and lighting.
・Reducing the intensity (Final waste disposal volume ÷ Sales) of final waste disposal volume (Volume of waste generated - Recycling volume) by 5% against FY2016
・Increasing the food recycling rate to the 60% level by FY2021

FY2017 - 2021 Daimaru Matsuzakaya Department Stores environmental numerical targets

FY2017 FY2018 FY2019 FY2020 FY2021
CO2 emissions (intensity) *1

0.0424

0.0414

0.0410

0.0405

0.0401

Energy consumption (intensity) *2

0.0204

0.0197

0.0196

0.0195

0.0193

Final waste disposal (intensity) *3

11.13

10.97

10.85

10.74

10.63

Food waste recycling rate *4

59.8%

57.0%

58.0%

59.0%

60.0%

*1 Intensity: CO2 emissions (t-CO2) / Business hours (h) × Total floor area (m2)
CO2 emissions targets for FY2018 and beyond have been calculated using CO2 emission factor for FY2016.
*2 Intensity: Crude oil equivalent energy (kl) / Business hours (h) ×Total floor area (m2)
*3 Intensity: Final waste disposal volume (kg) / Sales (¥million)
*4 Volume of food waste recycled / Volume of food waste generated

VOICE
Mr. NAKAGAWA Hisashi, Manager, Lead Auditor, QMS&EMS Audit Office, ISO Registration Center, Union of Japanese Scientists and Engineers (JUSE)

I have trained the leaders of audit team four times since the audit in 2012 and directly led the audit team at the audit in 2018.

ISO management system standards have evolved and require organizations more strongly than ever to accomplish their original business purposes. The amendment of the standards made it clear that companies should integrate their business processes and management systems. In addition, the major feature of the amendment is to aim at business continuity, which will lead to differentiation from and advantage over other companies, by responding to any business environment in a timely manner and managing risks.

At an early stage, Daimaru Matsuzakaya, on its own, sought and built an environment management system integrated with its business activities. They have asked the certification body to conduct audits from that perspective since the standard version 2004. With a background like that, I think both the organization and the audit team could easily be aligned on the same vector for a transition to the version 2015. The greatest pillar of Daimaru Matsuzakaya’s environment management system is to see widely the “environment” not just as the natural environment in a narrow sense but as the work environment and the local environment and think about how they can make a social contribution to the local communities through business, try and make improvements. Offering and buying of eco-friendly products and proposals for and realization of various local events as well as reduction of CO2 and waste are exactly such activities. Therefore, when conducting audits, we strived to assess the effectiveness of challenges to problems and risks such as quality aspects and safety aspects more than standard aspects to the extent possible.

It is only thanks to the cooperation of the top management and other executives extended to us to make it easier for us to audit from two sides: the detection of events that obstruct the achievement of business purposes and the high evaluation of already good activities. We expect that Daimaru Matsuzakaya will use the management system effectively and further raise the level of the management system that begins to take root in the organization using the audit system and that each store will long contribute to the local community as the number one store in the area.

Contribution to a Low-carbon Society