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Materiality

Last Updated: 2018.11.30
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Materiality Assessment as Management Strategy

At the Fast Retailing Group, our vision is to become the world's No.1 digital consumer retail company. We cannot achieve our vision in good conscience unless we ensure sustainable business practices from an environmental and social point of view. As one part of our management strategy, we defined six key issues (materialities), and are setting goals to address each of them.

The Materiality Assessment Process at Fast Retailing

We used a four-step approach to conduct a materiality assessment, identifying key issues for the Fast Retailing Group.
In conducting our materiality assessment, we referred to the UN Sustainable Development Goals (SDGs), as well as to indicators recommended by Environmental, Social, Governance (ESG) investment firms.

1. Identify Material Issue Categories
We identified key issues related to sustainable growth for the Fast Retailing Group. Global Reporting Initiative (GRI) Guidelines, major ESG evaluation standards, and SDGs were taken into consideration. 2.  Map Issues (Prioritize); Verify Suitability 
Having  identified key issues, we prioritized them according to (1) importance to Fast Retailing (X axis) and (2) impact on or expectations of customers and other stakeholders (Y axis). This process allowed us to identify the most important areas overall.
This mapping process included input from outside experts, external directors, and company managers from those divisions impacted. 3. Confirm Materiality  
Deliberations by the Sustainability Committee confirmed the six materialities.
*The Sustainability Committee consists of external and internal directors, full-time members of the Audit and Supervisory Board, executive officers, and external advisors. 4.  Execute Action Plans  
Under the direction of executive officers assigned to different materiality areas, we developed action plans and launched a series of projects.
Each project has a goal with deadlines to be met.

Six Materialities

We selected six materialities under which we conduct our sustainability activities.

 

1. Create New Value Through Products and Services

Among the tenets of the Fast Retailing Way (Group Corporate Philosophy) is the commitment "to create truly great clothing with new and unique value, and to enable people all over the world to experience the joy, happiness and satisfaction of wearing such great clothes."

UNIQLO, the main brand of the Fast Retailing Group, operates under the brand concept of LifeWear. Under this concept, we deliver products that make life more comfortable for all people. Our innovative product development, strong business partnerships, and large-scale store network has established UNIQLO as a unique brand in the apparel industry. Going forward, we will be expected to go beyond simply improving the functionality and quality of clothing, and to provide solutions to social and environmental challenges. We will be expected to create new forms of value. We must, for example, adopt more environmentally conscious manufacturing practices and source materials ethically, including caring for animal welfare, the environment, and farmworker living conditions. We believe that through various sustainability initiatives, our customers will feel a greater sense of reassurance and peace of mind. Fast Retailing will continue to work towards a better society by creating new value through our business.

 

2. Respect Human Rights in Our Supply Chain

We respect the basic human rights of all people who work in our supply chain. One of our most important duties is to protect the physical and mental health, as well as the security and safety, of these people. Our partner factories know that we will not tolerate any violation of human rights (child labor, forced labor, harassment, discrimination, physical abuse, etc.). In addition, mechanisms are in place to ensure strict compliance. Fast Retailing asks all partner factories to comply with our Code of Conduct for Production Partners, which is based on the core labor standards of the International Labour Organization. We will fulfill our responsibilities in this area, aligned with the UN Guiding Principles on Business and Human Rights and other international human rights principles and declarations.

 

3. Respect the Environment

Fast Retailing works to eliminate waste in our business operations and across our supply chain, striving for the effective use of resources. As we reduce our environmental impacts, we also adopt innovative technologies to support a more sustainable way of doing business. Fast Retailing will focus on five environmental areas:

  • ・Address climate change
  • ・Improve energy efficiency
  • ・Manage water resources
  • ・Improve waste management and resource efficiency
  • ・Manage chemical substances
 

4. Strengthen Communities

Today, the world faces various challenges, including an increasing burden on the environment, wide-spread poverty, discrimination, terrorism, regional conflicts and refugees. As a global business, we must do our part to help solve these challenges. We understand that the retail industry cannot thrive without stable economic and social conditions in the markets they serve. The same goes for manufacturing bases. Fast Retailing strives to grow and prosper with surrounding communities, through our stores, people, products, and community outreach activities.

 

5. Support Employee Fulfillment

Our business success depends on our people. The Fast Retailing Way (Group Corporate Philosophy) highlights the values shared by all employees to "Respect and support individuals to foster both corporate and personal growth". As we grow as a company, each individual develops their professional skills, leading to greater enthusiasm in the workplace and personal growth. To encourage this positive cycle, we created the Employee Engagement Policy, which defines activities focusing on three major initiatives: (1) Equality, diversity and inclusion; (2) Employee training and development; and (3) Employee well-being.

 

6. Corporate Governance

The Fast Retailing Corporate Statement is "Changing clothes. Changing conventional wisdom. Change the world." Our goal is to become world's leading digital consumer retail company. At the same time, we will engage in sustainability initiatives through our business, responding to the needs of our customers, business partners, shareholders and other stakeholders as we manage our business with agility and transparency.
We are striving to build an effective corporate governance system to achieve these goals. According to our corporate auditor governance model, the majority of the Fast Retailing board of directors consists of external directors. This arrangement increases the independence of the board of directors, while also strengthening its supervisory functions. Having adopted an executive officer system, we separate the function of management decision-making from day-to-day operations to ensure timely decisions and operations. To support the functions of our board of directors, we have established the Human Resources Committee, Sustainability Committee, Disclosure Committee, IT Investment Committee, Code of Conduct Committee, Business Ethics Committee, and Human Rights Committee. We are holding open discussions and making decisions to achieve the respective goals of each committee.

We established the Fast Retailing Group Code of Conduct to serve as a guide for our employees to observe in practice. We continue to endeavor for the proper operation of our internal controls system, as well as to strengthen our corporate governance.

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