Under our Corporate Principles of "Creating a beautiful and enriched lifestyle culture through fashion, thereby contributing to the development of society," we position sustainability as an important foundation of social trust for enhancing corporate value, and aim to achieve both the resolution of environmental and social issues through our business activities and sustainable growth.

Addressing climate change, transitioning to a circular economy, tackling human rights issues in responsible procurement, and promotion of human capital management--the environmental and social challenges surrounding the fashion industry pose risks that could significantly impact our business continuity, while also presenting important opportunities for creating new value.We recognize that it is our corporate responsibility to earnestly address these challenges and link them to medium- to long-term growth.

Based on this recognition, the Company has established the Basic Sustainability Policy, Environmental Policy, Human Rights Policy, and Human Capital Policy, and has identified four material issues: "Contribution to a sustainable global environment," "Efforts toward a circular economy," "Further promotion of CSR procurement," and "Promotion of human capital management."For each material issue, we have set quantitative targets and are implementing specific action plans while managing progress.In executing these action plans, each employee is working on them as their own responsibilities, while for larger issues spanning the entire supply chain, we are advancing collaboration with partner companies.

Among the four material issues, particularly in our "Efforts toward a circular economy," in fiscal 2024 we named our comprehensive 3R activities "SANYO RE: PROJECT" and launched Clothing Collection Activities with reuse in mind, along with sales of our certified reuse products "RE: SANYO."We view the reuse business not merely as a waste reduction initiative, but as an important business opportunity that leads to the creation of new customer touchpoints and the establishment of a circular business model.Cumulative results from fiscal 2024, the first year, through fiscal 2025 include 150,000 items of clothing collected and a Total reuse rate of 99%, and we also achieved our targets for sales of certified reuse products.In fiscal 2026, we established a new KPI with a target of achieving a 10% collection rate relative to the previous fiscal year's production volume of eligible items by fiscal 2031.
At the foundation of these initiatives lies the philosophy of "beauty in utility" cherished by our founder, Nobuyuki Yoshihara.The belief that what is truly useful is beautiful has been passed down through our company together with our Corporate Policy of "Truth, Goodness, and Beauty," and serves as the origin of our commitment to creating valuable Merchandise that is loved for a long time.Based on this foundation, we will strive to achieve both the realization of a circular society and the enhancement of corporate value.

Furthermore, in the "Promotion of human capital management," we believe that human resources are the most important management capital in achieving our goals of enhancing brand value, strengthening customer touchpoints, and realizing business transformation through digital utilization.We have identified human capital management as a material issue and formulated three basic policies linked to our management strategy.In September 2025, with the formulation of the Medium-Term Business Plan, we reassessed the importance of human capital management and updated the material issue "Creating a rewarding workplace that respects diversity" to the broader material issue "Promotion of human capital management."In human resource development, we are working to maximize individual capabilities through the development of "brand business professionals," "back-office professionals," and "IT/DX talent." In terms of developing our internal environment, we are enhancing employee engagement through optimal personnel placement, establishing rewarding systems, fostering corporate culture, and providing opportunities for self-directed learning, while working to maximize the demonstration of individual capabilities and create synergies by combining diverse knowledge and experience.

The Sustainability Committee monitors progress on quantitative targets and action plans linked to material issues.Important matters discussed by the Sustainability Committee are decided and approved by the Management Committee and regularly reported to the Board of Directors.Additionally, material issues and policies are reviewed annually in light of environmental changes and evolving social demands to achieve continuous improvement.

Based on our brand value and product planning capabilities cultivated over many years, as well as the trust we have built with our customers, we are committed to transforming sustainability into a new competitive advantage and achieving sustainable growth.Going forward, we will continue to co-create value with all of our stakeholders, including customers, employees, business partners, shareholders, and investors, while pursuing both the realization of a sustainable society and the enhancement of corporate value. As a result, we aim to become a company that earns the trust of society and continues to be chosen.