Kao sets ambitious carbon and waste targets amid new biodiversity and supply chain policies

27 May 2024 --- Kao’s annual sustainability report details progress with its ESG strategy. The Kirei Lifestyle Plan highlights Kao’s revised policies on biodiversity, human rights, DE&I and efforts to improve the traceability of palm oil procurement.

The initiatives are noted to support Kao’s mid-term plan for 2027 and improve its financial performance.

“At Kao, we strive to optimize our business operations across the value chain through ESG-focused Yoki-Monozukuri [production] and bring value to our communities through solutions to social issues,” comments Dave Muenz, director and managing executive officer of Kao’s ESG Division.

“Our ESG strategy, the Kirei Lifestyle Plan, puts the consumer at its center, illustrating the direction of our action and setting ambitious targets. Based on this, in 2023, we accelerated our initiatives, looking toward our mid-term plan with the visions of ‘sustainability as the only path’ and ‘protecting future lives.’”

Biodiversity and palm oil focus
The Japanese company states palm oil is “one of the main raw materials” it uses.

Kao’s SMILE program aids smallholders in Indonesia with sustainable palm oil production.Last year, Kao revised its biodiversity policy to align with the Taskforce on Nature-related Financial Disclosures (TNFD) framework. The update sets specific actions to conserve biodiversity and address climate change. 

Kao’s report includes an analysis of its impact on biodiversity using the TNFD’s LEAP approach. LEAP stands for locate (identify priority areas), evaluate (understand dependencies and impacts), assess (identify and evaluate risks and opportunities) and prepare (strategy, goal setting, evaluation and reporting).

The company confirmed 99% traceability to oil palm mills and 87% to plantations. Through its SMILE (SMallholder Inclusion for Better Livelihood & Empowerment) program, Kao says it supports Indonesian smallholders in improving yields and obtaining RSPO certification. 

Last year, the company trained 3,080 smallholders, 839 of whom achieved certification. Additionally, Kao launched a grievance mechanism to address smallholders’ concerns, receiving 213 inquiries by the end of the year.

Human rights and inclusivity concerns
According to the report, Kao’s core business continues to be dedicated to DE&I and human rights.

After conducting the annual assessment across its departments last year, Kao expanded its list of human rights risks to include climate change impacts. It identified “producers and farmers from whom Kao procures raw materials” and “foreign workers (including those at subsidiaries or affiliates and in the supply chain)” as high-priority issues.

Meanwhile, Kao’s latest DE&I policy aims to foster inclusive workplaces and diverse perspectives. 

Future targets
Kao highlights key areas of progress, including decarbonization, zero waste targets and responsible sourcing of raw materials.

Kao says it reached 100% renewable electricity usage in Japan last year.The company has set itself the goal of being carbon-negative by 2050 and carbon-zero by 2040. Kao says it met its 2025 target two years ahead of schedule in 2023 when it reduced Scope 1 and 2 CO2 emissions by 28% and reached 100% renewable electricity usage in Japan.

This year, Kao, Beiersdorf and L’Oréal were the only beauty companies that scored an A for climate, forest and water from the Climate Disclosure Project.

Through its zero waste initiative, Kao aims to achieve net zero waste for plastic packaging by 2040 and negative waste by 2050. Kao developed a plan to meet these goals and introduced products in 2023 that used recycled refill packs. The company wants to keep progressing with sustainable packaging solutions, and its plastic recycling rate has increased.

Earlier this year, Kao received approval from Japan’s Ministry of Economy, Trade and Industry and the Ministry of the Environment for the voluntary collection of plastic packaging at Kao business locations and in Kamakura City. It marked the first time Japan has let a manufacturer collect plastic waste from the general public.

In further growth strategies, Kao aims to emerge as the top player in the skin protection category.

In other ESG updates, Unilever faced backlash over plans to trim ESG efforts, telling us: “Our updated commitments are very stretching, but they are also intentionally and, unashamedly, realistic.” We also spoke to an ESG expert about corporate responsibility in Asia.

By Venya Patel