ºÚÁÏÃÅ

Targets for Biodiversity Conservation Activities

ºÚÁÏÃÅ Group 2026 Medium-Term Management Plan

Data target range or company leading initiatives

1, 2: ºÚÁÏÃÅ Group (consolidated) (Japan only)

	Major initiatives	Metrics	Reference results	Targets
			FYE March 2023	FYE March 2027
1	Promote certification registration as a Site in Harmony with Nature * Registration in the OECM international database	Number of newly certified areas	N/D	1 new registration (total of 2)
2	Conclude maintenance management agreements to engage in forest conservation activities	Forest area under maintenance management agreements	N/D	40ha or more
3	Analysis and formulation of countermeasures aligned with the TNFD framework for raw milk and cocoa Promote initiatives to reduce deforestation of major raw materials such as cocoa and palm oil	For KPI, use the same as initiatives to achieve zero deforestation in cocoa beans and palm oil under "Human rights and environmentally friendly raw material procurement"

ºÚÁÏÃÅ Group 2023 Medium-Term Management Plan

KPI	Base Year	Results			Target
		FYE 3/2022	FYE 3/2023	FYE 3/2024	FYE 3/2024
Conduct biodiversity activities at all production sites worldwide by FYE 3/2024 [ºÚÁÏÃÅ G, consolidated]	-	61.9%*	77.1%*	100%	100%

* Impact of cancellation or postponement of plans due to the spread of COVID-19

Approach to Biodiversity

Due to the world's economic activities, we are facing a critical situation amid a rapid loss of biodiversity caused by disruption of habitats by deforestation and deterioration in habitat environments, including environmental pollution. As the businesses of the ºÚÁÏÃÅ Group depend on the abundant gifts of nature, including raw milk, cocoa and lactobacillus, and microorganisms used for developing antibiotics, we recognize that loss of biodiversity is a significant social issue. We identify the impact and dependency of our business activities on biodiversity throughout the entire supply chain, from raw material procurement to waste disposal, preserving and regenerating biodiversity to ensure that we enjoy the abundant gifts of nature for years to come. We comply with treaties, laws and regulations related to biodiversity, and contribute to the creation of a society that coexists in harmony with nature.

Biodiversity Conservation Activities Policy

In March 2024, we revised the ºÚÁÏÃÅ Group Biodiversity Conservation Activity Policy. In addition, we established the ºÚÁÏÃÅ Group Nature Positive Declaration. Amid ongoing loss of biodiversity, we intend to contribute to the creation of a society that coexists in harmony with nature throughout the entire supply chain, from raw material procurement to waste disposal.

• ºÚÁÏÃÅ Group Biodiversity Conservation Activity Policy
• ºÚÁÏÃÅ Group Nature Positive Declaration

Relationship between Our Business Activities and Biodiversity

The ºÚÁÏÃÅ Group is deeply involved in a variety of biological resources and ecosystems through our food and pharmaceutical businesses, and it has an impact on biodiversity throughout our entire supply chain, from raw material procurement to waste disposal. Based on this recognition, we pursue biodiversity-friendly activities, reduction in impact on biodiversity, effective use of biological resources and enhanced understanding of biodiversity among our employees.

Effect of Business Activities on Biodiversity

Environmental Risks Related to the ºÚÁÏÃÅ Group’s Business Activities

Impact of Water Risks on Yields of Main Raw Materials

What are Water Risks?
Stress: Degree of demand for water
(supply-demand balance of water resources)
Drought risk: Likelihood and impact of drought
Flood risk: Likelihood of floods 

Analysis of Dependency/impact of Business Activities on Nature in Line with TNFD (LEAP Approach)

Nature-related risk analysis and response in cocoa production using the LEAP approach

Utilizing the LEAP approach under the TNFD framework, we evaluated the dependency and impact of major ºÚÁÏÃÅ Group cocoa production sites (13 sites) on nature, analyzed each location, and assessed risks based on the results. The results are described below. In the future, we will pursue efforts to avoid and mitigate nature-related risks by conducting gap analysis, etc., for production areas.

Relationships of dependency and impact on nature in cocoa production areas: Evaluate and Locate

Figure Dependencies and Impacts in the Relationship Between Cocoa Cultivation and Nature

* We conducted assessments of dependency and impact on nature in cocoa bean production areas using ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure).

Risk analysis results by cocoa bean production area for priorities of impact/ dependency

Impact/ Dependency1	Impact				Dependency
High priorities2	Changes in terrestrial ecosystem usage	Air pollution	Water pollution	Soil pollution	Mitigation of the impact of natural disasters	Control of soil erosion
Number of VH3-Assessed sites	4	1	1	1	2	2

1. We conducted an evaluation by production area using the following evaluation tools and indicators.
[Importance of Biodiversity]
・Evaluation tool: IBAT (Integrated Biodiversity Assessment Tool)
・Evaluation indicators: Proximity to areas of high biodiversity importance (KBA, Natura 2000, World Heritage, Ramsar, UNESCO MAB, IUCN Management Ia-IV)
・Evaluation area: 5 km radius from the facility evaluated
[Tree Canopy Loss Rate]
・Evaluation tool: WWF Biodiversity Risk Filter
・Evaluation indicator: Forest canopy loss
[Eutrophication Potential of Coastal Areas].
・Evaluation tool: Aqueduct
・Evaluation indicator: Coastal eutrophication potential
[Water Pollution Index]
・Evaluation tool: WWF Water Risk Filter
・Evaluation indicator: Surface water quality index
[Ecosystem Integrity].
・Evaluation tool: WWF Biodiversity Risk Filter
・Evaluation indicator: Ecosystem Condition
[Frequency of Flooding]
・Evaluation tool: WWF Water Risk Filter
・Evaluation indicator: Estimated flood occurrence

2. Itemized evaluation indicators used were as follows. In cases where there were multiple evaluation indicators, we used the maximum value for each site.
・Change in terrestrial ecosystem usage: Importance of biodiversity, canopy loss rate
・Air pollution: Importance of biodiversity
・Water pollution: Importance of biodiversity, eutrophication potential in coastal areas, water pollution index
・Soil pollution: Importance of biodiversity
・Mitigation of the impact of natural disasters: Ecosystem integrity, frequency of flooding
・Control of soil erosion: Ecosystem integrity

3. Abbreviation for Very High; sites with high risk of impact and dependency

Examples of ºÚÁÏÃÅ Group nature-related risks in cocoa production: ASSESS
Risk emergence and business approaches

Table Linkages Among Nature-Related Dependencies, Impacts, and Risks

The relationship between risk emergence and business approaches is based on the TNFD Nature-related Risk and Opportunity Management and Disclosure Framework Final Draft - Beta v0.4 (March 2023).

Impacts and dependencies in the production of cocoa beans may be a contributing factor, and the above steps may cause changes in natural conditions and ecosystem services. Such changes could create physical and transition risks that have a financial impact on the ºÚÁÏÃÅ Group.

Examples of ºÚÁÏÃÅ Group nature-related risks in cocoa production

Classification		Risk
Physical Risk	Acute/Chronic	Limitations on procurement due to lower yields
		Increased procurement costs due to higher costs resulting from lower yields
Transition Risk	Regulations	Restrictions on imports and exports due to stricter regulations
		Increased costs for procurement of environmentally friendly raw materials (certified lumber, etc.) due to stricter regulations
		Increased burden of complying with new regulations (compliance with disclosure requirements)
	Market	Increased ESG investment activity in response to changing investor preferences (leading to share price instability if the Company is removed from ESG investment indexes)
		Increased ethical consumption due to changing consumer preferences (decrease in sales if products are not eligible as ethical consumption purchases)
		Soaring procurement costs due to changes in the supply-demand balance
	Technology	Increased burden in adopting new technologies
	Reputation	Decrease in sales due to decline in brand value
		Lower recruiting and employee retention rates due to declining brand value

Classifications of nature-related risks selected in reference to the TNFD Nature-related Risk and Opportunity Management and Disclosure Framework Final Draft - Beta v0.4 (March 2023).

Physical risks include the possibility that cocoa farmers may not be able to continue production activities as before, and cocoa yields may decrease if ecosystem services, such as natural disaster mitigation and soil erosion control, undergo degradation. This risk could cause the ºÚÁÏÃÅ Group to limit the amount of cocoa procured and experience increased procurement costs due to rising costs.
Transition risks include aspects such as tighter regulations, market changes, response to technological innovation, and reputation. Deforestation-related regulations are being implemented mainly in the EU, and considering the spread of such regulations to Japan and other factors, the ºÚÁÏÃÅ Group cannot ignore potential market and reputation impacts. In addition, air, water, and soil pollution are emerging as problems in certain areas, and there are risks associated with future tightening of regulations and new rules.

Responding to the risks posed by impact and dependence on biodiversity: PREPARE

The ºÚÁÏÃÅ Group established the following KPI (ºÚÁÏÃÅ Sustainable cocoa Bean Procurement Ratio) for sustainable cocoa bean production. We continue efforts to avoid and reduce environmental impacts such as deforestation and pollution in cocoa production areas through ºÚÁÏÃÅ Cocoa Support.
At the same time, the evaluation of the importance of nature-related risks remains only a simplified study. In addition to this evaluation, we must continue to study the actual situation on the ground in production areas and conduct scenario analysis. In the event efforts fall short, we must implement additional

Measures to avoid or mitigate nature-related risks.

Targets for our Sustainable Sourcing Initiatives

• Expanding the ºÚÁÏÃÅ Sustainable Cocoa Bean Procurement Ratio

Details of Initiatives

• ºÚÁÏÃÅ Cocoa Support

Reference: Measures to mitigate dependency /impact on biodiversity (examples)

The following represents a portion of our efforts to mitigate biodiversity loss in terms of avoidance, reduction, regeneration, restoration, and conversion. In the future, we must conduct more detailed analyses and engage in additional initiatives to avoid or mitigate nature-related risks, as we have done in cocoa production areas.

Mitigation (Avoid)	Procuring certified raw materials (support NDPE policy: No Deforestation, No Peat, No Exploitation; adopting wider usage of RSPO certified palm oil, etc.) Sustainable Sourcing
Reduce	Reducing GHG emissions in dairy farming Make Sustainable Dairy Industry
Regeneratte and restore:	Encouraging forest-building agriculture and agroforestry practices Efforts to Stop Deforestation
Transform	Invested in cocoa cell culture startup California Cultured Inc.

Activities at production sites and in the supply chain

Biodiversity risk assessments for land owned by the ºÚÁÏÃÅ Group

We assessed the dependence and impact on nature related to the ºÚÁÏÃÅ Group-owned land from the standpoint of business continuity. For the 61 company-owned production sites we investigated various risks using the WWF Biodiversity Risk Filter (WWF Biodiversity Risk Filter)¹. For company-owned production bases, the physical risk² of company production sites scored higher than reputational risk³, making physical risk which type demanding greater attention. In terms of physical risks related to company-owned production bases, the risk of exposure to natural disasters due to damage to biodiversity (landslides, wildfire hazard, plant / forest / aquatic pests and diseases, extreme heat, tropical cyclones, etc.) was rated particularly high. We intend to discuss countermeasures at future Group Environmental Meetings.

1. A tool released by the World Wildlife Fund (WWF) at the World Economic Forum in Davos in January 2023 to help companies implement science-based measures after identifying risks and opportunities related to biodiversity in their businesses and supply chains.

2. Driven by how dependent businesses are on nature, certain businesses may be affected by both natural and anthropogenic conditions on land and in the ocean.

3. Companies may face reputational risk if stakeholders and local communities perceive that the company is not operating in a sustainable and responsible manner with respect to biodiversity.

Activities in ºÚÁÏÃÅ Group Sites and Surrounding Areas

We undertook studies of 61 production sites using the IBAT¹ biodiversity assessment tool to determine the potential impact of the ºÚÁÏÃÅ Group business activities on biodiversity. We surveyed an area within a radius of approximately 3 kilometers from the production sites (total area of 2826 hectares)² to determine proximity to areas of biodiversity importance (World Natural Heritage sites, Ramsar Convention on Wetlands, UNESCO MAB, IUCN Categories Ia, Ib, â…¡, III, IV, and V). Our results indicated 19 sites in close proximity, two of which had IUCN Red List species nearby that were listed as vulnerable (VU) or higher and facing a high risk of extinction in the wild. The ºÚÁÏÃÅ Group established the ºÚÁÏÃÅ Group Environmental Policy and the ºÚÁÏÃÅ Group Biodiversity Conservation Activity Policy to ensure compliance with laws and regulations, reduce environmental impact, and conserve biodiversity. We recorded no violations of environmental laws or fines in fiscal 2022, and we have yet to identify any instances in which our operations cause direct damage to biodiversity in nearby biodiversity critical areas.

sites	Nature maintenance area, an important area of biodiversity								Areas where IUCN Red List species were identified
	World Heritage Sites	Ramsar Convention wetlands	UNESCO MAB	IUCN Protected Area Categories
				Ⅰa	Ⅰb	Ⅱ	Ⅲ	Ⅳ
Worksites in Japan (43 sites)	0	1	0	0	0	0	0	18	2
Worksites in China (6 sites)	0	0	0	0	0	0	0	0	0
Asia (Excluding Japan and China, 9sites)	0	0	0	0	0	0	0	0	0
North America and Europe (3 sites)	0	0	0	0	0	0	0	0	0
Total for all worksites (61 sites)	0	1	0	0	0	0	0	18	2

1. IBAT (Integrated Biodiversity Assessment Tool): An assessment tool for environmental protection that makes use of the latest foundational data, which was developed by IBAT Alliance (the United Nations Environment Programme (UNEP), the World Conservation Monitoring Centre (WCMC), Conservation International (CI), and BirdLife International)

2. The area in which business activities at production sites directly affect biodiversity would seem to be smaller than a radius of 10 km, but in consideration of damage to biodiversity as a result of environmental accidents and other unexpected occurrences, the scope for the investigation has been set as within a radius of 3 km.

Activities in the ºÚÁÏÃÅ Group Nature Conservation Area Kumamoto Sunlight Forest

We conducted research on the natural environment in Kumamoto Sunlight Forest (approx. 7 ha), land owned by KM Biologics from 2020. Kumamoto Sunlight Forest is a secondary forest consisting of Japanese cedar, cypress, Japanese chestnut oak and Konara oak. We confirmed the existence there of places where Satoyama-like natural environment has been preserved and of endangered wild plants and animals, which are listed in the Red Lists of threatened species published by the Japanese government and Kumamoto Prefecture. We also found that the forest served as an important biotope, a green corridor, for the region, with rich ecosystems being preserved and a variety of migratory birds being observed all year round.
We will endeavor to conserve biodiversity by promoting the recovery of forested lands that have been partially wasted and will carry out nature observation meetings and biodiversity conservation activities for our employees, their families and local residents. In doing so, we aim to increase our employees' understanding of biodiversity and to solve local ecosystems issues.

Kumamoto Sunlight Forest Biodiversity Conservation Activities

The ºÚÁÏÃÅ Group holds biodiversity conservation program (classroom lecture, insect observation, bamboo crafts using the bamboo that grows in the forest) three times per year at Kumamoto Sunlight Forest. We will continue these activities to deepen an understanding of the role of Kumamoto Sunlight Forest in the local ecosystem and the importance of biodiversity conservation, as well as to raise the environmental awareness of the ºÚÁÏÃÅ Group employees.

Status of Biodiversity Conservation Activities

Acquisition of the SEGES "Social and Environmental Green Evaluation System Excellent Stage 3" and "Shizen-kyousei site (Site in Harmony with Nature, OECM^*)"

Kumamoto Sunlight Forest was certified as "Excellent Stage 3" under the SEGES "Social and Environmental Green Evaluation System" This recognition was based on survey results commending the value of Kumamoto Sunlight Forest a green space, its relevance to the local community, and the green space conservation management system. The natural environment survey of Kumamoto Sunlight Forest was conducted by the Organization for Landscape and Urban Green Infrastructure. SEGES is an objective system that evaluates and certifies the value of green spaces owned and managed by companies, and whether these efforts contribute to society and the environment. Additionally, Kumamoto Sunlight Forest was certified as "Shizen-kyousei site (Site in Harmony with Nature, OECM)" by the Ministry of the Environment of Japan.

* Other Effective area based Conservation Measures

Activities at Domestic Sites with Production Plants

We pursue activities for biodiversity conservation at domestic sites including Group companies with production plants (42sites).

Eniwa Plant	Cleanup of Kotonihassamu River
Wakkanai Plant	Environmental maintenance such as weeding within the plant and surrounding area
Nishi Shunbetsu Plant	Maintenance for Nishi Shunbetsu cherry-tree-lined road
Tokachi Plant	Participation in the Flower Town Project along National Route 38 (plant management), etc.
Honbetsu Plant	Cleanup of Toshibetsu River Basin (green belt zone)
Tohoku Plant	Nanatsumori Satoyama conservation activities (ºÚÁÏÃÅ SDGs forest creation experience), etc.
Ibaraki Plant	Cleanup of Tomoe River tributary
Moriya Plant	Cleanup of Ono River riverside
Gunma Plant Gunma Nutritionals Plant Gunma Pharmaceuticals Plant	Cleanup of river surrounding the industrial park and removal of invasive species
Saitama Plant	Cleanup around Central Children's Park and Furusumida River
Toda Plant	Planting Primroses in Saiko-Doman Green Park
Sakado Plant	Cleanup of OKoma River
Kanagawa Plant	Sennokawa Riverside Natural Environment Conservation Activities
Nagano Cheese Plant	Cleanup of Chikuma River
Tokai Plant	Cleanup of Seto River
Aichi Plant	Cleanup of Sukatani River
Kyoto Plant Kyoto lactobacillus Plant	Cleanup of the drains around the plant and weeding the surrounding area
Kansai Plant Kansai Ice Cream Plant Kansai Nutritionals Plant	Cleanup of Nishikinohama Beach, etc.
Osaka Plant	Cleanup around the plant
Kurashiki Plant	Cleanup of Tamashima Harbor Island coast, endangered species breeding and conservation activities
Kyushu Plant	Hoshinohana Park maintenance activities, etc.
ºÚÁÏÃÅ Innovation Center	Rural Woodlands Conservation in Utsunuki Green Area
Donan Shokuhin Co., Ltd.	Cleanup of Kameda River
ºÚÁÏÃÅ Chewing Gum Co., Ltd.	Cleanup of Shonai River
Tokai Nuts Co., Ltd.	Cleanup around Shirafuji No Sato
Tokai ºÚÁÏÃÅ Co., Ltd.	Planting pine trees and clearing undergrowth at Asaba Coast
ºÚÁÏÃÅ Oils and Fats Co., Ltd.	Amanogawa River Clean & Walk
Gunma ºÚÁÏÃÅ Milk Products Co., Ltd.	Forest Conservation Activities in collaboration with NPO
Tochigi ºÚÁÏÃÅ Milk Products Co., Ltd.	Endangered species conservation activities
Shikoku ºÚÁÏÃÅ Co., Ltd. (Kagawa Plant, Matsuyama Plant)	Forest Matching (forest maintenance activities)
Okinawa ºÚÁÏÃÅ Milk Products Co., Ltd.	Yanbaru environmental conservation activities
Nihon Kanzume, Inc.	Cleanup of Memuro River
ºÚÁÏÃÅ Feed Co., Ltd.	Environmental maintenance (cleanup, weeding) in the research center and surrounding areas

Gifu Plant	Itonuki River cleanup activities (Genji firefly conservation activities), etc.
Ashigara Research Center	Sakawa River Cleanup/Beautification, Biotope Regeneration
ºÚÁÏÃÅ Seika Pharmatech Co., Ltd.	Participation in Odawara Medaka (endangered species) foster parent program
Ohkura Pharmaceutical Co., Ltd.	Cleanup of Uji River Basin (in cooperation with Uji city)

Headquarters and Kumamoto Production Center	Jointly held by Kumamoto Head Office/Office, Kikuchi Research Institute, Koshi Factory, and Aso Office Noyaki (Prescribed burn) on Mt. Aso Conservation of abandoned farmland Clean up of Lake Ezu “Kumamoto Everyone’s River and Sea Creation Day” environmental beautification activities (Cleanup of Wabu River and Shiohitashi River) Kumamoto Sunlight Forest Biodiversity Conservation Activities
Kikuchi Research Center
Koshi Production Center
Aso Production Center

Activities at Overseas Sites with Production Plants

We pursue biodiversity conservation activities at the ºÚÁÏÃÅ Group's overseas sites with production plants (12sites).

PT. ºÚÁÏÃÅ Indonesia plants productive trees in water catchment areas on the mountain slopes around the Pasuruan regency.

We at Medreich celebrated the world environment day with purpose and to create more awareness on the environment. Across the locations environment protection related banners were displayed.

Saplings were planted by employees to mark the importance of this very significant day. Posters were created, and employees were issued badges, environment tip cards. Employees were also encouraged to give environment related speeches to spread their knowledge on saving environments. Along with the above, employees took oath at every location for protecting environment.

Activities in Cooperation with Local Governments and NPOs

Biodiversity Conservation in the Nemuro Nature Conservation Area