Key CSR Themes

• Strengthen global operations under Head Office control
• Enhance public disclosures, including about SDGs and other non-financial information, and strengthen dialogue

• Strengthened global operations under Head Office control
  • Continued promoting the Global Business Infrastructure Innovation Project
    • Completed the operation conceptualization and planning phase for creating Group-unified IT systems
• Invested management resources in a disciplined manner according to the economic environment and strategy effectiveness
  • Re-examined the product portfolio and invested management resources in strategic areas
• Publicly announced approval of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
• Received a score of 4.0 in a FTSE general evaluation, an MSCI ESG rating of A, and a Gold rating by EcoVadis for non-financial information disclosures; achieved compliance with the core GRI standard

Response to the new coronavirus

• Started manufacturing surgical masks by applying Epson's unique Dry Fiber Technology
• Crisis response operations
  • Secured stable financing (with a committed credit line, etc.)
  • Estimated production delay and recovery schedule at production sites, and quickly found alternative suppliers and production sites

• Accelerate growth by engaging in collaboration and open innovation
• Strengthen the solution selling business
• Rapidly strengthen product lineups, including through collaboration
• Strengthen external sales businesses using core devices, and actively encourage open innovation
• Invest management resources in robotics to accelerate its growth into a core business

• Accelerated collaboration and open innovation
  • Invested in and started collaborating with Elephantech (IJ innovation), Cross Compass (AI technology), 4D Sensor (sensing technology) and other venture companies
  • Opened Epson Square in Tokyo and the Textile Solution Center Asia and Inkjet Innovation Lab at the Fujimi Plant to increase customer touch points
• Strengthened the core device sales business and open innovation using core devices
  • Strengthened external sales of inkjet printheads
    • Studied the possibility of creating flexible PCBs and other structures by ejecting metals
  • Opened the Epson Connect cloud service to third-party developers and began exploring the creation of new printing services
• Strengthened the solution selling business
  • Launched new subscription-based printing services in Europe
• Built circular manufacturing infrastructure
  • Created material products for 3D molding using metal powders refined from waste steel at Epson Atmix
  • Started a paper recycling project with PaperLab office papermaking systems that use Dry Fiber Technology.[Nineteen machines were installed in the Epson Group to demonstrate internal paper recycling. Up to 40% of purchased copier paper was replaced with paper made using PaperLabs (avg. 18%). Ink pads were also created through upcycling (the use of pads was extended to linehead printers, business inkjets, and other new models).]

• Continuously improve productivity to achieve high quality and high efficiency using sensing and automation technologies that are grounded on Epson's unique manufacturing and IT infrastructures and brought about by the efficient, compact, and precision technologies

• Continued to increase manufacturing efficiency by using machine learning to automate sensory testing of parts, and expanded the area of application
• Automated the collection and totaling of manufacturing and quality data by standardizing manufacturing systems and using direct communications with production equipment, and continuously developed an efficient manufacturing management scheme
• Increased the use of RFID (Radio Frequency Identification) and introduced an electronic kanban system to save logistics manpower, reduce dwell time, and improve data accuracy
• Accelerated an improvement cycle through collaboration between operations divisions and manufacturing sites using centrally managed manufacturing data, strengthened traceability, and advanced quality defect cause analysis

• Further improve sites to increase production competitiveness, including by completing construction of a new building at the Hirooka Office

• Built a system that allows us to continuously provide in a timely manner cost-competitive, high-quality products that cannot be easily imitated
  • Completed construction of a new building (the B Wing of the Innovation Center) in Hirooka and began manufacturing textile printers in it
  • Built a new wing at Akita Epson and integrated Ugo Plant into it

Response to the new coronavirus

• Crisis response operations
  • Achieved a quick recovery at sites where operations had stopped and met commitments with production at alternative sites

• Strengthen the global sales strategy and management functions to build BtoB sales organizations
  • Use high-capacity ink tank printers to accelerate office market penetration
  • Share knowledge about business printer sales acquired in Japan and Western Europe to North America and other areas
  • Improve sales sites in the Middle East, Africa, etc.

• Strengthened global sales strategies and management functions to establish a B2B sales organization
  • Developed the office market by improving customer convenience and productivity through introduction of subscription programs
  • Strengthened relationships with business product sales channels and established sales infrastructure in North America to put in place a foundation for providing customers with Epson product value
  • Established regional management headquarters for the Middle East (in Dubai) and Africa. Strengthened service infrastructure for dealers/distributors and customers by expanding local offices in the region

• Establish a reduction scenario for achieving a science-based target and implement concrete reduction measures
  • SBTi approved target (FY2017 is the baseline year)
    • Reduce scope 3 (categories 1 and 11) GHG emissions as a percentage of business profit by 44% by FY2025
• Disclose GHG data
  • Disclose data in the Integrated Report and Sustainability Report (all scopes)
  • Receive third-party verification of results data and disclose the verification results
• Calculate and disclose the contribution to the reduction by product
  • First introduce to inkjet printers
• Implement a field survey and improvement initiatives to reduce the GHG emissions of the supply chain

• Established a GHG reduction scenario for achieving a science-based target and implemented concrete reduction measures
  • Results
    • Scope 1, 2 emissions: 485,753t-CO₂e (18% reduction vs. FY17)
    • Scope 3 emissions: 5,780t-CO₂e/100 million yen (Due to a significant decrease in business profit)
    • Use of renewable energies: 12% (62,000t-CO₂e reduction)
    • Explore using locally procured electricity (allocate electricity generated at hydroelectric power plants in Nagano prefecture to the annual electricity consumed at the Head Office, Hirooka Office, and Shiojiri Plant)

• Disclose GHG data
  • Disclosed data in the Integrated Report and Sustainability Report (all scopes)
  • Received third-party verification of results data and disclosed the verification results
• Established a mechanism for deciding environmental investment (internal carbon pricing)
• Publicly announced approval of Task Force on Climate-related Financial Disclosures (TCFD)
• Established a framework for issuing green bonds
• Calculated and disclosed the contribution of products to avoided emissions
  • Established a method for calculating the contribution of projectors to avoided emissions
• Surveyed all suppliers with questionnaires and returned the results as feedback
• Examined resource recycling targets for achieving the Environmental Vision 2050
• Won the Minister of Economy, Trade and Industry Award at the 29th Global Environment Awards in recognition of Epson's efforts to minimize environmental impact through inkjet innovation

• Establish a reduction scenario for achieving a science-based target and implement concrete reduction measures
  • SBTi approved target (FY2017 is the baseline year)
    • Reduce scopes 1 and 2 GHG emissions by 19% by FY2025
• Disclose GHG data
  • Disclose data in the Integrated Report and Sustainability Report (all scopes)
  • Receive third-party verification of results data and disclose the verification results

• Visiting customers directly to gather and analyze information about their wants and needs, closely examining customer wants by analyzing customer inquiries, using the findings to shape future products and services, and improving quality and customer satisfaction
• Continue to combat counterfeiting globally and on Internet shopping sites to help reassure customers that they can buy genuine Epson brand products

• Product planners and design engineers visited customers to learn their wants, analyzed these wants, and used their findings to shape products and maintain and improve product quality

• Printing Solutions Business, Example 1
  A mechanism was introduced in commercial and industrial large-format inkjet printers to support customers who produce products around the clock. A pair of high-capacity ink packs (main and backup) are provided for each color to prevent printers from being interrupted by running out of ink.
• Printing Solutions Business, Example 2
  Customers complained that small liquid crystal displays on home and SOHO printers made it difficult to set up Wi-Fi connections and do other operations, so we developed a free Epson Smart Panel application that enables users to easily enter settings and perform operations from their smartphones, which can be used like a remote controller.
• Visual Products Business, Example 1
  We started selling stylish, portable projectors worldwide to meet the needs of customers who want to casually watch video on a large-screen at home. This market is mainly expanding in China.
  These projectors are able to receive video streaming services without connecting to other devices.
• Visual Products Business, Example 2
  After hearing the needs of businesses that rent projectors for large events, we launched the first native 4K Epson projector. This projector meets their needs by providing dust protection, easy installation, and superb image quality in the high-brightness segment.
• Robotics Solutions Business, Example 1
  A customer wanted to measure subtle color differences that occur among products, but their visual inspection process suffered from variability and defects.
  To solve this problem, we worked with the customer to understand the inspection principle and developed a spectroscopic camera, which is scheduled for launch in FY2020.
  The camera quantifies inspection results, enabling the customer to automate and improve the efficiency of their inspection process and prevent variations among the results. It contributed to improving the customer's color inspection quality.
• Robotics Solutions Business, Example 2
  We discovered that a customer had abandoned its efforts to automate the connection of cables and flexible printed circuits (FPC) in their product assembly process because cables were not being properly inserted and wires were getting bent. We automated the process with a combination of Epson's unique force sensors and high-accuracy six-axis robots, contributing to improved productivity and quality.

• Continued to combat counterfeiting by exercising our intellectual property rights
  • Blocked import and export of counterfeit goods at customs
  • Uncovered and halted the sale of counterfeit goods
  • Deleted web sites that sell counterfeit goods
  • Implemented awareness building campaigns about counterfeit goods

• Further enhance the product safety training curriculum
  • Conduct industrial machinery risk assessment training

• Further enhanced the product safety training curriculum
  • Created product safety training content that includes items related to industrial machinery risk assessments and provided training
  • Provided functional safety training seminars for industrial machinery on 14 occasions
• There was one serious product-related incident in FY2019 (abnormal odor and smoke from a desktop PC)

• Ask key suppliers to observe the procurement guidelines
• Survey suppliers using questionnaires
• Implement supplier on-site verification and take corrective action
  • A field survey to reduce supply chain GHG emissions and improvement activities, etc.
• Conduct conflict minerals surveys
• Establish supplier reporting channels (overseas)

• Asked key suppliers to observe Epson's Procurement Guidelines
  • Revised the Epson Group Procurement Guidelines in January in line with the revision of RBA Code of Conduct. Major manufacturing affiliates obtained agreements from their suppliers.
  • Held sustainable procurement briefings, in which 470 suppliers in Japan participated, and asked them to observe the Procurement Guidelines
  • Our main sales companies worldwide began asking their suppliers to observe the Procurement Guidelines through web sites notices and other means
• Requested all suppliers to answer questionnaires (SAQ)
  • Held supplier conferences in Japan to explain and ask them to complete the questionnaire (SAQ briefings). The briefings were attended by representatives from 145 suppliers in Japan.
  • Conducted SAQs with 124 indirect material suppliers (e.g., temporary staffing companies, on-site contractors) in Southeast Asia and China
  • Provided about 250 key direct suppliers who were surveyed in FY2018 with feedback on the survey results and drove improvements at seven suppliers found to be high risk
  • Conducted SAQs of direct suppliers in 2020
    • Asked 250 suppliers in Japan and abroad
• Supplier on-site verification and corrective action
  • A third-party audit was conducted at one of the seven suppliers (a Japanese supplier) that was found to be high risk based on the survey results
  • Outside consulting companies conducted follow-up audits on four overseas suppliers found to be high or medium risk
• Revised the conflict minerals survey process and asked all 1,200 suppliers (100%) to conduct the survey
• In-house training
  • Provided RBA training to procurement personnel (in Japan, Southeast Asia, and China)
• Established supplier reporting channels (overseas)
  • Established supplier reporting channels at all overseas manufacturing sites

• Check and address any issues concerning freely chosen employment of foreign workers
• Plan and start human rights due diligence related to labor suppliers

• Checked and addressed issues concerning freely chosen employment of foreign workers
  • Examined the situation involving the employment of foreign workers at our manufacturing affiliate in Malaysia
  • Investigated whether there were any major problems, including human rights issues, at our overseas affiliates based on the RBA Code of Conduct and on audit standards (no major problems were found)
• Planned and started due diligence related to labor suppliers
  • Studied a system for collaborating with the Production Planning Department (The Production Planning Department plans to perform due diligence related to labor suppliers)

• Promote the advancement of women
  • Implement programs in line with the Act on Promotion of Women's Participation and Advancement in the Workplace and the Act on Advancement of Measures to Support Raising Next-Generation Children
• Promote the advancement of non-Japanese employees
  • Further visualize overseas affiliate talent and promote their development
• Promote the participation of the elderly
  • Review and shape a hiring policy by focusing on the extension of the retirement age
• Promote hiring of persons with disabilities by further introducing PaperLab A-8000 dry process office papermaking systems

• Advancement of women in the workplace
  • Took action to increase the number of female senior staff (assistant manager class) and managers
    • Interviewed candidates and their boss to increase the number of female senior staff and implemented other individual measures (The number of persons who passed the promotion exam increased from the previous year after we accelerated job rotations, revised work responsibilities based on qualifications, increased motivation through interviews)
    • Provided training in unconscious biases to 100 participants and held discussions
  • Took action to retain young employees and employees who need to care for ill or elderly family members
    • Conducted a fact-finding study regarding the retention ratio between male and female employees and identified issues
    • Created an exit interview questionnaire and used it on a trial basis
    • Conducted a caregiver seminar (5 days and 285 participants in total)
• Advancement of foreigners in the workplace
  • Employed 16 foreign workers in Japan and abroad and held seminars at universities
  • Acted to develop new sources of foreign talent
    • Employed four workers using labor agents in the Philippines (facility work)
    • Joined events for locally hiring workers in Singapore and other areas, and hired two foreigners who resided abroad
  • Developed a better picture of talent at overseas affiliates and promoted their development
    • Completed Group-wide grading, identified key personnel based on the grading, and collected information about succession plans and evaluations of potential successors
• Promote the participation of seniors
  • Reviewed and shaped a hiring policy by focusing on the extension of the retirement age
    • Began reviewing hiring policies based on new legal trends, such as requiring companies to make reasonable efforts to secure employment for people until the age of 70
• Expansion of employment opportunities for persons with disabilities
  • Created jobs for nine persons with disabilities. Jobs include creating recycled paper and business cards and performing internal printing operations using high-speed linehead inkjet multifunction printers and dry process office papermaking system PaperLabs in upcycle centers

• Continue building the talent management system
  • Monitor the operation of the rotation system
• Provide career support to young workers
  • Study lifetime career support training for workers at the age of 30
• Continue implementing employee motivation surveys and 360-degree surveys
  • Study a system for using the survey results for HR measures

• Built a talent management system
  • Facilitate job rotation through arrangements with outside organizations and the matching of talent
  • Modified the HR system to understand the rotation results
  • Rotation results (vs. target of rotating 5% of candidates)
    • Leaders: 8.6%
    • Young employees: 11.3%
  • Designed the talent management system
  • Completed planning of lifetime career support training (LTCS30) to provide career support to young workers
• Continue implementing employee motivation surveys and 360-degree surveys
  • Examined the survey content for strengthening the interplay among work culture reform, work reform, and health and productivity management

• Strengthen global operations under Head Office control
  • Continue promoting the Global Business Infrastructure Innovation Project
    • Start designing and developing systems to create Group-unified IT systems
• Invest management resources in a further disciplined manner according to the economic environment and strategy effectiveness
  • Invest resources in strategic areas (continue)
• Start disclosing climate change related risks and opportunities in line with Task Force on Climate-related Financial Disclosures (TCFD) recommendations
• Enhance public disclosures, including about SDGs and other non-financial information, and strengthen dialog

Response to the new coronavirus

• Implemented crisis response operations
  • Strengthen business partner credit control
  • Take additional action to secure earnings (e.g., expenditure control)
• Prepare for rebound and demand recovery
• Formulate new post-pandemic business strategies that take into account external environmental changes

• Further accelerate collaboration and open innovation
  • Establish corporate venture capital (CVC)
• Shift to a new business model
  • Continue strengthening the lineup of high-capacity ink printers, and capture the LP market by advertising value (e.g., low TCO, heat-free) and by conducting global sales promotions
• Lead a rapid shift to digitization
  • Stimulate global sales campaigns and sell total solutions of commercial and industrial printers
  • Strengthen external sales of printheads by increasing their business applications
• Invest management resources in robotics to accelerate the growth of robotic solutions into a core business

• Establish infrastructure for using integrated manufacturing data to optimize factory operations, speed up decision-making, and improve the efficiency of indirect operations
• Finish deploying a standard manufacturing system to major manufacturing sites, and strengthen collaboration between factories by deploying the system to collaborating suppliers
• Accelerate the establishment of remote assistance infrastructure for mass production start-up, service, and support
• Innovate the engineering chain by smoothing information exchange and cooperation among design, engineering, manufacturing, and service departments

• Review production site strategies and allocation of functions in line with risk events such as natural disasters and infectious diseases
• Optimize inventory by setting appropriate theoretical DOS (days of supply) values, and establish CAPDo management
• Introduce an ERP (Enterprise Resources Planning) system based on the standard business processes used in production control, procurement, and logistics through the Group-wide global IT renewal project
• Reduce total costs in all directions
• Reform sales logistics flow lines, and improve logistics competitiveness by reducing air transport

Response to the new coronavirus

• Re-examine business continuity management (BCM) that emphasizes risk dispersion
• Strengthen the promotion of cost reduction programs

• Strengthen customer touch points to improve the B2B sales organization and optimize the organization for each customer and category
  • Revamp business models by strengthening infrastructure for solution sales
  • Establish global marketing techniques that take advantage of digital platforms
  • Execute strategic external communications to increase corporate value and support sales

Response to the new coronavirus

• Respond to the changes of customer behavior
  • Examine selling methods that accommodate a shift from face-to-face, real-world communications to on-line, digital communications
  • Examine a remote maintenance support system and a repair organization
  • Use on-line advertisements, on-line promotions, and Webinars

• Establish a reduction scenario for achieving a science-based target and implement concrete reduction measures
  • SBT initiative approved targets (FY2017 is the baseline year)
    • Reduce scope 3 (categories 1 and 11) GHG emissions as a percentage of business profit by 44% by FY2025
• Disclosed GHG data
  • Disclose data in the Integrated Report and Sustainability Report (all scopes)
  • Receive third-party verification of results data and disclose the verification results
• Calculate and disclose the contribution of products to avoided emissions
  • Start studying the contribution of textile printers
• Practice manufacturing that achieves resource recycling targets
  • The printer business first implements the measures
• Implement a field survey and improvements to reduce the GHG emissions from the supply chain

• Implement reduction measures to achieve the SBT targets
  • SBT initiative approved targets (FY2017 is the baseline year)
    • Reduce scope 1 and 2 GHG emissions by 19% by FY2025
  • Achieve CO₂-free sites and start using locally procured electricity (completely switch to CO₂-free electricity at the Head Office, Hirooka Office, and Shiojiri Plant)
• Disclosed GHG data
  • Disclose data in the Integrated Report and Sustainability Report (all scopes)
  • Receive third-party verification of results data and disclose the verification results (GHG emissions, energy usage, water usage)
• Start using a mechanism for deciding environmental investments (internal carbon pricing)
• Start disclosing climate change related risks and opportunities in line with Task Force on Climate-related Financial Disclosures (TCFD) recommendations
• Issue green bonds and disclose the results based on the framework
• Disclose the resource recycling targets for achieving the Environmental Vision 2050 and start implementing actions

• Visiting customers directly to gather and analyze information about their wants and needs, closely examining customer wants by analyzing customer inquiries, using the findings to shape future products and services, and improving quality and customer satisfaction
• Create an environment in which customers can confidently buy genuine Epson brand products, not counterfeit goods

• Conducted product safety training worldwide
  • Revise the content of a basic product safety online course that is meant for all employees and ensure that they complete the course
  • Develop human capital by providing various safety training (on functional safety, machine safety, risk assessment, etc.) and implement preemptive measures through product safety risk assessment
  • Ensure that product safety incidents do not reoccur in the future

• Establish supply chain management infrastructure to meet all obligations as a regular RBA member
  • Modify Procurement Guidelines in line with the revision of the RBA Code of Conduct
  • Obtain supplier agreements
  • Communicate with and educate suppliers
  • Check whether suppliers are observing the Procurement Guidelines (SAQ)
  • Help suppliers make improvements and undergo RBA audits
• Achieve 100% conflict-free mineral procurement by exercising due diligence in accordance with the OECD due diligence guidelines
  • Modify forms for the conflict minerals survey
  • Hold conflict mineral survey briefings
  • Collect survey forms and follow up
  • Extend the scope of the survey (add items about cobalt)
• In-house education (RBA & conflict minerals)

• Find any human rights issues based on the RBA Code of Conduct and audit standards, and draft improvement plans
  • Identify and confirm issues and problems and draft improvement plans based on the findings
  • Identify issues using SAQs, draft improvement plans, and improve (establish an annual routine)
  • Improve due diligence related to labor suppliers in collaboration with the Production Planning Department
• Establish Group CSR regulations (human rights and labor categories)
  • Involve overseas affiliates in an examination of the content and finalize it by the end of FY2020

• Advancement of women in the workplace
  • Interview candidates and their boss before promoting them to senior staff and implement other individual measures (ongoing)
  • Provide training in unconscious biases to a wider audience
  • Provide career design training for women
  • Make a list of female management candidates, set a population target, and take action to achieve the target
  • Build an employee network and obtain feedback from employees (four times/year)
• Advancement of foreigners in the workplace
  • Continue to hire foreign employees
  • Secure multiple sources for foreign employee hiring
    • Decide hiring targets in collaboration with overseas affiliates and take action to meet targets
    • Join events in universities outside Japan
    • Study and implement a scheme for transferring workers of overseas affiliates to Japan
• Advance and deepen foreign talent management
  • Conduct personnel reviews of people in key positions at overseas affiliates (at least three companies)
• Promote the participation of seniors
  • Design various elements in detail and determine the forms and areas of employment of people after sixty
• Employment of persons with disabilities
  • Build and deploy throughout the Group a model for employing persons with mental or developmental disabilities (in cooperation with special subsidiaries, Epson Mizube and Epson Swan)

• Continue building a talent management system
  • Implement and entrench rotation programs (ongoing)
    • Make a list of rotation candidates and continue to try to reach the target of rotating 5% of candidates in the leader and young employee categories, respectively
    • Understand the details of rotation results and incorporate the information into company-wide actions
  • Talent management system
    • Design the system and draft a plan for using the system in FY2020
  • Implement lifetime career support training (LTCS30)
• Continued implementing employee motivation surveys and 360-degree surveys
  • Plan, design, and implement a new employee motivation survey (provisional name)
• Develop leaders
  • Improve and implement leader training programs (future leader seminar, the Global Incubation Seminar, the Global Executive Seminar)

• Strengthen information security
  • Revise in-house quality standards (Epson Quality Standards)
  • Establish a secure development and operation regulation
• Ensure customer security
  • Implement cyber security measures that meet industry standards (e.g., configuration management, privileged account management, malware penetration prevention, system log monitoring)
• Raise employee awareness about correct information handling practices
  • Provide all employees with training for appropriately handling information depending on the type and life cycle
  • Implement targeted email attack training

• Continue implementing the global compliance program
  • Assess the situation at Group companies and divisions, and entrench a PDCA cycle through activities of Head Office supervisory departments
• Revise the compliance program
  • Revise the program to improve system effectiveness based on the results of an evaluation by outside specialists
• Introduce a whistleblowing system that suppliers can use to report potential issues at overseas manufacturing affiliates
  • Introduce a system that overseas suppliers can use to report potential problems at our manufacturing affiliates in addition to the supplier reporting system already operating in Japan