New Year’s Greetings for 2023

I wish you a very Happy New Year!

I would like to express my sincere gratitude for your support during the past year with my greetings in the beginning of 2023.

Last year marked the third year of living under the restrictions imposed by the new coronavirus epidemic and, as geopolitical risks such as Russia’s invasion of Ukraine become more apparent, more and more people thought of environmental and social issues “as their own issues”.

"Shifting ‘from things to experience’", as is often said, the nature of value of people is shifting from being fulfilled simply with the consumption to “feeling a ‘joy’ or ‘peace of mind’ in being recognized from others for what they do”.

In this way, I feel that we have reached a "turning point of the era" where many people are thinking about the "cohesive society" that we aim to realize in which they "cultivate the ability to understand others, treat others with altruism and feel that the happiness of others is of their own as well”.

In order to overcome such difficult era, I believe it is important that we stand face to face with the changes in collaboration with our stakeholders including consumers from the three starting points of "product value", "customer value" and "social value”.

Foreseeing these major changes in society, we have set our medium- to long-term ESG goals “Kyo-sei Life Vision 2030 - For a Diverse, Inclusive and Sustainable World –”. We have also formulated our 11^th Med-term Management Plan and worked on the various initiatives for contributing to consistently realize the “cohesive society” through our business activities.

Here are some of our initiatives. First, we have been promoting the "recycling of used disposable diapers" project since 2016. This project has already established developed a technology to recycle used diaper into hygienic and safe pulp of the same quality as unused pulp through the experimental study with Shibushi City and Osaki-Cho in Kagoshima Prefecture. In May last year, we manufactured adult diapers using recycled pulp and the nursing care facilities in Kagoshima that used such diapers commented that "the quality of diapers was by no means inferior to that of regular products" who also agreed with the significance of this initiative saying that they could easily participate in contributing to solve environmental problems through the use of paper diapers made from recycled pulp. Based on this progress, we plan to move into commercial operation this year.

In addition, we have completed the construction of a system of “visualization of GHG (greenhouse gas) emissions by product” that complies with the GHG Protocol, the global standard for calculating GHG emissions, which we have been working on since last May and we plan to start a test run this year. In order to calculate GHG emissions with higher accuracy and freshness, we are working with our material suppliers to calculate them by product using primary data for each material. We aim to complete various sorts of tuning of the system by the end of this year and share its outcome with consumers and other stakeholders for some of our products next year, in 2024.

We have incorporated these ESG-related initiatives into our executive compensation evaluation indicators since 2020 and, from this year, we will adopt them for all employees as well to promote new value creation through a concerted effort by everyone in the group as a whole to solve environmental and social issues.

We have set our goal to become “World #1” in 2030 and, in order to make that happen, “creation and penetration of value” is essential which, however, cannot be achieved overnight. This is because the nature of value demanded by consumers is changing rapidly and their mind of savings caused by psychological factors such as uncertainty about the future due to Japan's aging population have a significant impact on our goal of becoming the "World #1".

In a sense, these changes are "predictable future" and, in 2023, we will take a "Win with the first move" approach by demonstrating our "foresight" to this "predictable future”. Even if we fall behind, we will use our "response ability" to rewind and make 2023 a year of "Win even with the second move”.

Thus, I have decided to choose【先】(Sen) as the one letter kanji character for expressing our resolution for this year, 2023, with our strong will to "work on each and every task by taking the first move" with full of our "foresight" and "response ability".

We look forward to your continued support and encouragement this year.