Kao Basic Policy on Biodiversity Conservation with Action Policies and Introductions of Activities

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1 Kao Basic Policy on Biodiversity Conservation with Action Policies and Introductions of Activities Coastal Japanese Black Pine forest as a protection against tidal waves (Wakayama Plant) The conservation management of Wakayama Plant paid respect to the history and ecosystem of the coastal forest developed as a protection against tidal waves that mainly consisted of Japanese Black Pine trees and located in the historic site of Wakayama in the premise of the plant. This effort won the 2nd Urban Green Award in /ecology/biodiversity/

2 In April 2011, Kao announced Basic Policy on Biodiversity Conservation, setting forth the efforts Kao regards as necessary for the conservation of biodiversity. Kao Basic Policy on Biodiversity Conservation 1) Identify the relationship between our business activities and biodiversity. 2) Reduce the impacts of our business activities on biodiversity. 3) Develop innovative technologies to enable sustainable use of ecosystem services*. 4) Comply with relevant international agreements. 5) Make efforts to conserve local ecosystems in the vicinity of our business activities. 6) Raise awareness of biodiversity among all employees and promote sharing of information on biodiversity between divisions. 7) Pursue cooperation with external stakeholders in conserving biodiversity. * Ecosystem services are wide range of functions provided by ecosystems which are useful either directly and indirectly for human well-being. Action policies and examples for each item of basic policy are as follows.

3 1) Identify the relationship between our business activities and biodiversity. Identify the relationship between business activities and biodiversity using proper evaluation methods for relevant ecosystems in Japan and overseas, local communities, and various stakeholders in all cycles of our products including the procurement of raw materials, production, distribution, sales, use, and disposal. - Identification of the relationship between business activities and biodiversity and risks through hearings with relevant departments and workshops - Environmental impact assessment of main products of Kao using LCA (now in the exploration phase) Ecosystem Wastewater Gas emissions Water Water Distribution Development and production Use Wastewater Vegetable fat and oil Procurement of raw materials Disposal Waste

4 2) Reduce the impacts of our business activities on biodiversity. Set specific targets based on the impact level of business activities, urgency of conservation, and the effect of conservation to reduce the impact on biodiversity by starting with prioritized activities such as engaging in sustainable procurement of raw materials. - Procurement of sustainable palm oil based on the Guidelines for Sustainable Procurement of Raw Materials* => The Guideline sets goals to be achieved by 2020 such as making sure that Kao commits to zero deforestation at the source of palm oil and Kao will purchase only sustainably sourced palm oil that is traceable to the plantation for use in Kao Group consumer products. *Guidelines for Sustainable Procurement of Raw Materials Harvesting palms

5 3) Develop innovative technologies to enable sustainable use of ecosystem services. Promote the development of unique technologies of Kao or the use of new technologies to effectively use limited resources of the Earth such as by minimizing the use of raw materials and promoting the development of and use of raw materials with smaller impact on biodiversity such as algae biomass. - Technological development for the production of fats and oils from algae => In the research on algae, Kao succeeded to find enzyme that can produce a large number of medium chain fatty acids-the main components of natural fats and oils (e.g. palm kernel oils and coconut oils), which are raw materials for surfactants in detergents, shampoos, and other related products. Eco-Technology Research Center (ETRC) A facility intended to integrate environmental researches and accelerate ecoinnovation researches (located within Wakayama Plant)

6 Aichi Targets 1 Awareness increased 4 Sustainable consumption and production 5 Habitat loss halved or reduced 8 Pollution reduced 9 4) Comply with relevant international agreements. Comply with international agreements on biodiversity set in the Convention on Biological Diversity and relevant laws of individual countries to promote biodiversity conservation. Summary of the activities of Kao to contribute to achieve the Aichi Targets Invasive Alien Species prevented and controlled Relevant activities of Kao Spread of certified products, awareness improvement and participation of employees Procurement of sustainable palm oil, paper and pulps Support for zero deforestation ( Guidelines for Sustainable Procurement of Raw Materials ), Development for the production of fats and oils from algae Risk assessment of prioritized materials to be evaluated Elimination of alien species which affect ecosystems 13 Genetic diversity maintained Conservation of coconut species Conservation of coconut species Kao plants several species of high-yield coconut palm tree, which is the fruit of Kao s development of a hybrid coconut palm in the 1980s, in the grounds of its plant in the Philippines.

7 5) Make efforts to conserve local ecosystems in the vicinity of our business activities. Implement business activities which respect ecosystems in forests, rivers, swamps, and oceans which support local lives and cultures with a presumption of maintaining a good balance with local communities. - Biodiversity assessment and conservation activities - Acquisition of certificates: Wakayama Plant (SEGES) / Kashima Plant (ABINC) Pilipinas Kao, Inc. (Philippines) Kao planted nursery plants of mangrove which is called the cradle of biodiversity on the coast around the plant in cooperation with the Department of Environment and Natural Resources of the Philippines. Kao thereby promoted efforts to restore the local ecosystem. icle_01.html Kashima Plant Kashima Plant adopted a biodiversitybased maintenance and management for a community-oriented vegetated area which is based on the pollution prevention agreement concluded with the prefecture and the city upon the launch of the plant. The plant acquired the certificate of Association for Business Innovation in Harmony with Nature and Community (ABINC certificate) in 2015.

8 6) Raise awareness of biodiversity among all employees and promote sharing of information on biodiversity between divisions. Improve the understanding and awareness of all employees on biodiversity and promote information sharing among departments through the participation in activities to conserve local biodiversity such as green zones in the premises of work sites. - E-learning for employees of the Kao group in Japan - Encouragement for employees to participate in conservation activities Enterprise Forest Project (Wakayama) Kao loaned an unmanaged mountain forest in Wakayama and planted 700 trees and implemented forest maintenance and management. More than 100 employees are volunteering in activities such as weeding every spring and autumn. ther/10.html Post Tsunami Monitoring Project (sponsored by Earthwatch Japan) About a dozen employees are volunteering in biodiversity investigation in rice fields and tidal lands, that sustained damage in the tsunami after the Great East Japan Earthquake, every year.

9 7) Pursue cooperation with external stakeholders in conserving biodiversity. Cooperate with organizations outside of Kao such as customers, business partners, central government agencies, local governments, corporate organizations, academic organizations, NGOs and NPOs and improve the effectiveness of conservation activities. - Joint researches in JBIB (Japan Business Initiative for Biodiversity) - "Kao Creating Forests for Everyone" Program (cooperation with Organization for Landscape and Urban Green Infrastructure) - Kao Earthwatch Teachers' Fellowship (cooperation with Earthwatch Japan) - "FURUSATO" Environment conservation project in North Thailand (cooperation with OISCA) "Kao Creating Forests for Everyone" Program Kao Earthwatch Teachers' Fellowship

10 Frequently Asked Questions; Q: What is biodiversity? A: Biodiversity means the diversity of all types of lives and their relationships. A variety of organisms, including the humans, have been born over a long time since the birth of Earth. These organisms lived on Earth while being connected with each other. Biodiversity refers to the mutually connected variety of lives, in other words, the existence of a variety of species, which have a variety of genotypes within, which result in a variety of ecosystems. Many types of benefits that biodiversity offers are supporting our lives and societies. Q: Why is Kao working on biodiversity conservation? A: The business activities of Kao are being benefited by biodiversity such as natural resources and water in all cycles of products including the procurement of raw materials, production, distribution, sales, use, and disposal. Meanwhile, Kao is affecting biodiversity in a variety of scenes such as the use of vegetable fats and oil, water used for production and wastewater generated as a result, emissions of gases in distribution, water used while consuming products and wastewater generated as a result, disposal and incineration of packaging materials, work sites and the environment nearby. We need to conserve biodiversity and use it without depleting its benefits in order for us to enjoy the benefits of biodiversity for many generations to come. Kao is deeply aware of the importance of protecting the diversity of all lives and their relationships that is now diminishing. Kao is going to voluntarily and aggressively work on technological development and other activities to conserve biodiversity, of course. In addition, we are going to work together with our customers, business partners, and all members of the society to conserve biodiversity.

11 First edition (January 2016)