Materiality and progress

Materiality
Deciding Materiality
Key Sustainability Topics, KPI, and FY2024 Results

Materiality

Epson’s corporate management is rooted in the concept of materiality. Materiality is identified based on the impact of societal issues. We consider Epson’s business activities to be a means of directly addressing these issues. Epson sees achieving sustainability in a circular economy, advancing the frontiers of industry, improving the quality of life and fulfill our social responsibility as key themes for solving societal issues.

Achieve sustainability in a circular economy
This entails initiatives aimed at driving sustainable economic activities by achieving closed-resource-loop systems through effective use of resources such as electricity, energy and water as well as reduction in usage of underground resources to control climate change.
Advance the frontiers of industry
This entails initiatives aimed at transforming conventional processes to contribute to the resolution of social issues. It is intended to help to make improvements to environmental pollution, labor and other issues by converting manufacturing processes from analog techniques to digital, for example.
Improve the quality of life
This entails making contributions on the health front to help people lead a healthy life, and making educational contributions relating to people’s growth and maturity. We will enable people to select diverse lifestyles through products and services offered by Epson, and promote initiatives that contribute to an abundant and colorful life.
Fulfill our social responsibility
This means that Epson is committed to fulfilling its corporate responsibility required to achieve sustainability and enrich communities. It entails initiatives that help to realize the ideal state expected of a company by society, such as dialogue with diverse stakeholders, environmental and social responsibility related to materials procured and suppliers, respect for human rights and promotion of diversity, and capabilities to ensure business continuity.

Deciding Materiality

Epson has analyzed social issues and megatrends defined by SDGs, ISO26000 and others, examined its own strengths that can lead to social impact, and identified four materialities that are highly important issues for Epson to address to solve challenges in society.

Material Trends and Frameworks Referenced

The Sustainable Development Goals (SDGs)
Task Force on Climate-related Financial Disclosures (TCFD)
Macro trends in the social and economic fields, including climate change (European Green Deal Policy, Paris Agreement, etc.)
Global Japan: 2050 Simulations and Strategies
GRI Standard
SASB Standard
ISO 26000
Socially Responsible Investing (SRI) survey items
Responsible Business Alliance (RBA) Code of Conduct

Key Sustainability Topics, KPI, and FY2024 Results

Key Sustainability Topics

To increase effectiveness with which we can address the materialities, we mapped 12 key sustainability topics to the materialities, considered how we could contribute to solving societal issues, set concrete key performance indicators (KPIs), and then got to work.

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Key Sustainability Topics, KPIs, and FY2024 Results

The table below summarizes the key sustainability topics, key performance indicators (KPI), and FY2024 results. In FY2022, some of the KPIs were incorporated in evaluations used to determine executive management compensation, thereby clarifying management responsibility for sustainability.

1. Materiality: Achieve sustainability in a circular economy

Key Sustainability Topics	RS Index¹	Initiative Topics	Key Performance Indicators (KPI)	FY2024 Targets	FY2024 Results	FY2025 Targets
Decarbonization initiatives	●	Using energy-saving equipment and facilities, removing greenhouse gases, engaging suppliers, and pursuing carbon-free logistics to become carbon negative by 2050	Reduction rate of total Scope1+2+3 GHG emissions	-	-	34% reduction from FY2017
			Scope 1 & 2 total GHG emissions rate	Reduce by 80% compared to FY2017 (SBT: FY2025 target 34%)	Reduced by 81% compared to FY2017	Reduce by 80% compared to FY2017
			Reduction rate of Scope 3GHG emissions (per unit of business profit)	Reduce by 35% compared to FY2017 (SBT: FY2025 target 44%)	Reduced by 39% compared to FY2017	(Included in the totaltarget)
		Using renewable electricity	Renewable electricity adoption rate	Maintain adoption ratio of 100% globally	Achieved an adoption rate of 100% globally	Maintain adoption ratio of 100% globally
Closed resource loop initiatives		Becoming underground resource² free by 2050: Using resources efficiently by reducing size and weight, using recycled materials, etc. Establishing closed-loop production systems that minimize production losses	Rate of sustainable resources³	35％	33%	38％
Closed resource loop initiatives			Final landfilled rate⁴	≤1%	0.59%	≤1%
Customer environmental impact mitigation		Maximizing avoided emissions with products and services that have a lower environmental impact⁵	Emissions avoided through products & services	Avoid more emissions than in the previous year	A3 color inkjet printer avoided emissions: 9,800t-CO₂e^*6	Avoid more emissions than in the previous year
Environmental technology development		Becoming carbon negative and underground resource free by 2050 Developing high-performance sustainable resource technology High-added-value recycling technology for used metal CO₂absorption technology	Development process progress / State of progress in developing high-performance materials	Expand the scope of practical application	Packaging materials : Verified the validity of EPS alternatives inpackaging Housing plastics : Improved material performance Recycled fabrics: Developed defibration technology for longer fibers	Publicly announce the results of development
			Development process progress / State of metal resource recycling facility operations	Develop technology for high-value-added metal powders (molding material) for practical applications	Prepared to launch a refining plant for metal recycling	Start refineryoperations & conduct a closed resource loop trial within the Epson Group
			State of development of CO₂separation membranes & DAC systems	-	-	Develop a system for PoC ⁷

¹ Executive compensation (restricted stock compensation) evaluation indicator
² Non-renewable resources such as crude oil and metals
³ The ratio of sustainable resources (renewable resources + recycled resources + less-depletable resources) to raw materials
⁴ The percentage of production waste that goes to landfill versus the total resources input
⁵ A quantity that expresses the contribution by products and services to a reduction in society's GHG emissions
⁶ A value calculated based on a method verified by Mizuho Research & Technologies, Ltd. The difference between the weighted average of the publicly disclosed lifetime CO₂ emissions of major laser printers in the global market and the lifetime CO₂ emissions of the company's A3 color inkjet printer is multiplied by the number A3 color inkjet printers sold during the fiscal year. Due to a reexamination and revision of the calculation conditions, the assumptions used to calculate this year's value differ from those used to calculate the value disclosed in FY2023. (For reference, the value calculated for FY2023 under the same conditions is 10,700 t-CO₂ e.)
⁷ A PoC (proof of concept) is a process to verify the feasibility and actual effects of new technologies.

2. Materiality: Advance the frontiers of industry

Key Sustainability Topics	Initiative Topics	Key Performance Indicators (KPI)	FY2024 Targets	FY2024 Results	FY2025 Targets
Increasing productivity through digitalization and automation	Leading the digitalization and automation of commercial and industrial printing with inkjet technology and an expanded portfolio of solutions and services to reduce environmental impact and increase productivity	Average sales growth rate of commercial and industrial IJPs⁸ compared to the previous year	3%	-1%	10% or more
Improving working environment and educational environment	Providing printing environments that meet societal needs by reducing environmental impact and increasing productivity through inkjet technology and open solutions	Sales growth rate of high-capacity inkjet printers for SOHO and home use compared to the previous year ⁹	5％	6%	4% or more
	Eliminating labor shortages through automation using robots	Number of labor shortages eliminated ¹⁰	29,000 persons	23,000	27,000
	Providing a fair, natural, and comfortable communication environment without boundaries, combining the real and remote, with both a sense of presence and information content	Number of co-creation or collaborative projects and number of partners	Co-creation: Continuation + 3 implementations Companies / partners: Continuing + 1 or more new companies	Co-creation: Continuation + 3 implementations Companies / partners: Continuing + 1 or more new companies	Co-creation:Continuation + 5 implementations Customers / Partners:Continuing + new development of at least one company
	Creating equal learning opportunities through smart, portable displays that enable large-screen communication in a compact form, to mitigate learning disparities stemming from differences in regional and social conditions	Number of local demonstration programs through co-creation and collaboration	Cumulative number of instances of use in education and awareness-raising: 40	Cumulative number of instances of use in education and awareness-raising: 40	Cumulative total nstances of use in education and awareness-raising: 60
		Number of countries with PoC verifying mitigation of learning disparities in general education and awareness of societal issues.	2 countries	3 countries	Total: 5 countries

¹ Executive compensation (restricted stock compensation) evaluation indicator
⁸ Revised to align with the financial disclosure segments.
⁹ Changed to an indicator more suitable for assessing improvements in working and educational environments (year-on-year unit sales growth rate in emerging markets). (For FY2024, the average year-on-year sales growth rate was used.)
¹⁰ Calculated based on the effectiveness of Epson's internal projects

3. Materiality: Improve the quality of life

Key Sustainability Topics	RS index¹	Initiative Topics	Key Performance Indicators (KPI)	FY2024 Targets	FY2024 Results	FY2025 Targets
Proposing diverse lifestyles		Converting customer data obtained from sensor-based wearable products into value, providing health advice, and offering health and safety monitoring to enrich and support diverse lifestyles.	Percentage of revenue accounted for by the data business in support services¹¹	28%	23%	20% or more
Realizing an abundant and colorful life		Providing attractive and high-quality products with our efficient, compact, and precision technologies and our artisanal skills, to enrich the diverse lifestyles of our customers.	Growth in unit sales of attractive, high-quality products compared to the previous year	12%	2%	20% or more

¹ Executive compensation (restricted stock compensation) evaluation indicator
¹¹ Business model that provides value by converting data using algorithms

4. Materiality: Fulfil our Social Responsibility

Key Sustainability Topics	RS index¹	Initiative Topics	Key Performance Indicators (KPI)	FY2024 Targets	FY2024 Results	FY2025 Target
Increasing stakeholder engagement		Responding to needs and social demands by strengthening dialogue with stakeholders	Monetary value of social assistance programs	≥0.1% of sales	≥0.1% of sales	Monetary assistance equivalent to 0.1% of sales
			Number of discussions with shareholders and investors and reflecting their feedback to management	≥200 times	248	≥200 times
			Evaluation indices of external evaluation agencies	Earn high ratings¹²	Acquired high ratings	Earn high ratings
Realizing responsible supply chains		Reinforcing supply chain BCM	Impact on customers due to disruption and stagnation in supply chain	Zero sales impact	Zero sales impact	Zero sales impact
	●	Realizing responsible supply chains	CSR risk levels of suppliers SAQ collection rate (FY25～) ¹³	Direct materials: High risk 0%, medium risk 2% or less Indirect materials: High risk 0%, medium risk 20% or less	Direct materials: High risk 0%, medium risk 22% Indirect materials: High risk 0%, medium risk 9%	Direct materials & indirect materials: High risk 0% SAQ response rate: 100%
		Realizing responsible sourcing of minerals	Conflict-free (CF) ratio of products Survey response rate ¹⁴	New products that are conflict-mineral free 100% survey response rate	New products that are conflict-mineral free 99.6% survey response rate	New products that are conflict-mineral free 100% survey response rate
Respecting human rights and promoting diversity		Creating a free and open organizational culture	Organizational climate assessment score for team and organization performance	Motivation cloud Engagement rating: BBB (score of 56.0 or higher) Number of workplaces rated D: 20	Rating: BB (score: 52.9 pts.) Number of workplaces rated D: 36 (9 fewer than last time)	Motivation cloud Engagement rating: A (score of 58.0 or higher) Number of workplaces rated D: Zero
			Number of high-risk workplaces in mental health assessments (total health risk)¹⁵	Reduce the number of workplaces rated high risk in terms of total health risk	Workplaces with 10 or more people: 12→10	High-risk workplaces for general health risk: 0
			Implementation of harassment prevention measures (education and training, case sharing, appointment process, etc.) & reporting of incidents to the Head Office	Continued harassment prevention training at different echelons Regular training for advisory service staff Start outsourcing advisory services and conduct a review. Consider introducing external advisory services at domestic affiliates.	Conducted training for different echelons and advisory service staff as planned. Started using an external advisory service and conducted a review.	Continuing FY2024 measures
		Respect for human rights through dissemination of the new Human Rights Policy within the Group	Embedding and improving the commitment for respecting human rights, human rights due diligence (DD) and relief mechanism	Establishing and improving the PDCA cycle for respecting human rights Regular review of human rights policy Continued implementation and improvement of human rights due diligence through RBA schemes, etc. Understanding and improving the system and situation of overseas consultation services	Establishing and improving the PDCA cycle for respecting human rights Regular review of human rights policy Continued implementation and improvement of human rights due diligence through RBA schemes, etc. Check the overseas human rights related consultation services	Continuing FY2024 measures
	●	Utilizing human resources in a way that respects diversity	Female manager ratio (the Company) One or more female executive officers by FY2025 (in Japan)	Female manager ratio: 6% Female supervisory position ratio: 9%	Ratio of female managers: 5.3% The ratio of female section assistant manager is 8.1 % (as of March 31, 2025) One female executive appointed on April 1, 2025	Ratio of female managers: 8% Ratio of female assistant managers: 10% 1 or more women in executive officer positions
Fulfil our Social Responsibility	●	Reinforcement of compliance management platform	Incidents of serious compliance violations¹⁶	0 cases	0 cases	0 cases
		Enhancement of Group compliance level	Implementation ratio of compliance training (online course) to all Group employees	Completion rate in Epson Group: 100%	Completion rate in Epson Group: 100%	Completion rate in Epson Group: 100%
		Maintaining and strengthening the governance structure to realize transparent, fair, prompt and decisive decision-making	Ratio of outside directors on the board of directors Ratio of outside directors on the Nomination & Compensation Committees	Maintain the ratio of outside directors on the board at ≥1/3 Maintain the ratio of outside directors on the Nomination & Compensation Committees at ≥80%	Maintain the ratio of outside directors on the board at ≥1/3 Maintain the ratio of outside directors on the Nomination & Compensation Committees at ≥80%	Maintain the ratio of outside directors on the board at ≥1/3 Maintain the ratio of outside directors on the Nomination & Compensation Committees at ≥80%
		Reinforcing information security	Serious information security incidents	0 cases	1 incident	0 cases

¹ Executive compensation (restricted stock compensation) evaluation indicator
¹² Sustainalytics: Low, FTSE: ≥ 4 points, within the top 50 in Toyo Keizai's corporate CSR rankings
¹³ Changed the operation to focus on risk control to ensure that all high-risk suppliers who are asked to complete an SAQ will be asked to complete an SAQ and that the number of high-risk suppliers will be reduced to zero as a result of corrective actions.
¹⁴ Percentage of suppliers who submitted answers to the survey
¹⁵ Target value management is applied to workplaces with 10 or more respondents.
¹⁶ Serious compliance violations: Violations that fall under grounds for timely disclosure