Materiality

The Happinet Group’s Materialities (Vision, Targets/KPIs, Results)

○: Target achieved  △: Partially achieved  ×: Not achieved

ESG	Category		Vision	Targets/KPIs	FY2024 Results	Progress Assess -ment
Environment	1	Reduce and Recycle Waste	We will build a system that prevents valuable resources from being wasted, via proper demand forecasting, inventory management, and business execution.	Reduce the amount of waste Improve the defect rate by improving quality of original products Reduce, Reuse, Recycle (the “3Rs”)	Reduced defect rate of original toys Reduced amount of promotional material waste by reviewing operational methods Introduced POS system at capsule-toy stores and reduced waste by analyzing and using sales data Made efforts to go paperless ➡Reduced purchase quantity by 11.7% Reduced waste by reviewing product packaging methods in distribution ➡Reduced cardboard waste by 4.3%	〇
	2	Reduce Environmental Impact of the Supply Chain	Based on the recognition that environmental considerations are an important issue for the realization of a sustainable society, we will work to reduce our environmental impact throughout our entire supply chain.	Aggregate and reduce the number of times goods are received and shipped Work to implement joint shipping with other companies Reduce CO2 emissions from business activities ➡CO2 emissions at Company locations: Reduce by 50% (by FY2030) Virtually zero (by FY2050) Develop low environmental impact products Strengthen environmental management Plan and evaluate measures to reduce environmental impact through the introduction of various solutions	Reduced packaging materials with more deliveries using collapsible crates ➡Expanded to 322 stores Full-scale use of green electricity at Funabashi Logistics Center ➡Reduced approx. 180t-CO2 Introduced a solar power generation system at Ichikawa Logistics Center ➡Reduced approx. 70t-CO2 Strengthened management of environmental impact factors ➡Earned a B rating in the CDP* Climate Change 2024 questionnaire Improved efficiency for replenishment and delivery of capsule toys	△
Society	3	Contribute to Happy, Abundant Lives through Products and Services	By creating and developing products and services unique to the Happinet Group, we will provide happiness and affluence to all people connected with us.	Provide enjoyment and contribute to society through products and services Create services from the perspective of business partners and consumers Develop a system concerning the development and creation of new businesses Promote internal understanding of sustainability	Expanded production capabilities in each business Produced video works with subtitles and audio descriptions to assist people with disabilities Assisted suppliers and providing enjoyment by holding game events Opened more capsule-toy stores ➡“gashacoco”: Total of 114 directly operated stores and 23 franchised stores Communicated the Group’s sustainability issues to employees and implemented measures to promote understanding	○
	4	Promote Diversity and Inclusion	We will create a rewarding work environment by being inclusive, respectful, and acknowledging of the differences and values of each and every employee, aiming for the sustainable growth of the Happinet Group.	Formulate and promote a human resources cultivation program, including a succession plan Develop a system and environment that enables diverse human resources to flourish ➡Percentage of female managers: 20% (FY2025) Percentage of employees receiving health checks: 100% Stress check response rate: 100% Promote measures to improve employee engagement	Improved the percentage of female managers ➡ Percentage of female managers: 19.3% Expanded employment of people with disabilities ➡Employment rate of people with disabilities: 4.5% Implemented training and internal PR to improve employee engagement Recognized as a Certified Health & Productivity Management Outstanding Organization ➡Percentage of employees receiving health checks: 100% Stress check response rate: 100%	○
	5	Digital Transformation	We aim to increase the value of our businesses and achieve sustainable management by proactively utilizing digital technology.	Promote work efficiency through digitization Establish a system for promoting DX in order to realize business and management strategies Create new services by leveraging digital technologies	Promoted digitalization and operational efficiency in each division by introducing a system for placing and receiving orders, AI and OCR systems, etc. Promoted digital marketing	△
Governance	6	Build a Foundation for Sound and Effective Corporate Governance	We will build a sound and effective corporate governance foundation, recognizing that maximizing corporate value and ensuring sound management are the most important issues facing management.	Build a system for appropriate risk management and operation Implement a corporate governance code and plan and propose relevant measures	Reviewed the business continuity plan (BCP) and conducted training Implemented system assessments to strengthen security Implemented harassment prevention training and other ethical awareness measures	○

• * CDP is a not-for-profit charity based in the United Kingdom that operates a global disclosure system through which investors, companies, nations, regions, and cities can manage and disclose their environmental impacts.

• Materiality Designation Process