Material Issues｜Sustainability

Priority Issues (Issues of Materiality) for Proceeding with Sustainability Management

As a corporate group closely related to the lives of people in local communities, we believe that we can achieve sustainable corporate growth by exercising our management philosophy to solve social issues and contribute to the establishment of a sustainable society. In 2021, we reviewed our priority issues (issues of materiality) and specified five themes.

Five Themes and 16 Priority Issues (Issues of Materiality)

Healthy Community

Sustainable Business Partnership

Contribution to the Global Environment

Healthy Workplace Environment

Corporate Governance

Process for Identifying Priority Issues (Issues of Materiality)

We have identified our priority issues (issues of materiality) through the process below. We will flexibly review them as necessary, in accordance with changes in our business and the external environment.

Selection of priority issues

First, we clarified our challenges based on interviews with the heads of departments and directors in charge,as well as on opinions from external specialists. Then we reviewed the priority issues while referring to the guidelines on sustainability (GRI, SASB), the SDGs, ESG rankings, and the efforts by rival companies at home and abroad. In the review process, we took into consideration our management philosophy and Sustainability Basic Policy.

Consideration of the order of priority

We considered the order of priority based on the opportunities, risks and major efforts for each priority issue from the perspectives of economic value and social value, and we created a materiality matrix.

Confirmation of the feasibility

After the board of directors reviewed the order of priority, we finalized the five themes and 16 priority issues (issues of materiality).

Five Themes and Priority Issues (Issues of Materiality)

Healthy Community

Themes and issues of priority	Opportunities and risks / Major efforts
Improvement of access to reasonable and quality healthcare services	Opportunity Acquisition of growing markets Risk Customer defection Major efforts Increasing the number of stores with a counseling function Enhancing online services Providing data-based healthcare services
Ensuring safety in medical care and proper management of medical and pharmaceutical products	Opportunity Increase in customer satisfaction Risk Decline of brand value Major efforts collecting near-miss cases and sharing them for training and infrastructure development Safely collecting medical and pharmaceutical products and medical equipment Providing information on medical and pharmaceutical products using digital tools
Improvement of convenience in everyday life and support for the community	Opportunity Acquisition of growing markets / Improvement in brand value Risk Decline of brand value Major efforts Improving access to products and services Enhancing medical and elderly nursing-care services for in-home patients Supporting activities by local communities and organizations
Health education and support for patients in the community	Opportunity Increase in customer satisfaction Risk Decline of brand value Major efforts Providing more information to promote prevention and care Providing information to and raising awareness of patients and their families Supporting patients and their families
Improvement of therapeutic effects for patients	Opportunity Increase in customer satisfaction / Increase in dispensing fees Risk Reduction in dispensing fees Major efforts Improving therapeutic effects by providing information to medical institutions Establishment of a robust society in terms of disaster risk reduction and crime prevention Improving therapeutic effects by preventing polypharmacy Improving therapeutic effects by providing information to medical institutions
Establishment of a robust society in terms of disaster risk reduction and crime prevention	Opportunity Improvement in brand value Risk Suspension of operation due to natural disasters, etc. / Decline of brand value Major efforts Establishing robust stores and infrastructure Supporting disaster-affected people in local communities

Sustainable Business Partnership

Themes and issues of priority	Opportunities and risks / Major efforts
Contribution to rich lifestyles through products	Opportunity Acquisition of growing markets / Improvement in brand value Risk Rival companies acquiring growing markets Major efforts Providing health-conscious products Focusing on the development of highvalue- added products
Maintenance of product safety and security	Opportunity Improvement in brand value Risk Customer defection Major efforts Establishing a product quality assurance framework Disclosing information appropriately Focusing on the development of ethical products
Establishment of a responsible supply chain management framework	Opportunity Cost reduction / Improvement in brand value Risk Customer defection Major efforts Managing supply chain appropriately Promoting smooth communication with suppliers

Contribution to the Global Environment

Themes and issues of priority	Opportunities and risks / Major efforts
Realization of a carbon-free society	Risk Cost increase due to carbon taxes / Decline of brand value Major efforts Shifting to renewable energy Reducing greenhouse gas emissions Reducing environmental impact through the entire life cycle
Realization of a recyclingbased society	Opportunity Improvement in brand value / Cost reduction Risk Decline of brand value Major efforts Promoting store development aimed at conserving water resources Promoting recycling through the cooperation of Risk Decline of brand value the manufacturing, distribution and sales sectors

Healthy Workplace Environment

Themes and issues of priority	Opportunities and risks / Major efforts
Human resources development	Opportunity Inspired innovation Risk Decline of competitiveness Major efforts Improving capacity development training for employee Shifting to a job-focused human resources system Actively providing opportunities for employees to fully demonstrate their Risk Decline of competitiveness abilities
Reform to realize healthy and safe working styles	Opportunity Enhanced recruiting capability / Inspired innovation Risk Employees leaving the company / Decline of brand value Major efforts Promoting health and productivity management Promoting the establishment of a workplace environment in consideration of employees’safety Promoting work-style reforms
Utilization of diverse human resources	Opportunity Accelerated store launch / Inspired innovation Risk Slowing store launch / Decline of brand value Major efforts Generating opportunities with a focus on diversity Developing a framework that supports diverse working styles Fostering a corporate culture that respects diversity

Corporate Governance

Themes and issues of priority	Opportunities and risks / Major efforts
Personal information protection and enhanced information security	Opportunity Improvement in corporate value Risk Occurrence of risks in business continuity / Decline of corporate value Major efforts Strengthening efforts for personal information protection and providing thorough training Strengthening the information security framework and providing thorough Risk training
Reinforcement of corporate governance	Opportunity Improvement in corporate value Risk Occurrence of risks in business continuity / Decline of corporate value Major efforts Improving board effectiveness Providing thorough compliance training Strengthening the risk management framework