Yamaha Group's Sustainability

Yamaha Group Sustainability Policy

Yamaha Group aims for a society where all people can live enriched lives. Guided by the corporate philosophy "Yamaha Philosophy," they strive to protect the invaluable global environment, contribute to an equitable society and comfortable living, and foster the development of music culture that enriches the soul. They also commit to creating a future where diverse talent can respect and thrive alongside each other, contributing to new inspirations and rich culture for people worldwide.

Based on this philosophy, Yamaha identifies materiality to create social value through initiatives that contribute to a sustainable society, thereby enhancing its mid-to-long-term corporate value. They actively promote sustainability activities based on these identified materialities.

Sustainability Management

Yamaha Corporation, under the supervision of its Board of Directors, has established a Sustainability Committee, chaired by the Representative Executive Officer and President. This committee discusses the direction of the Group's overall sustainability activities and monitors progress, reporting its findings to the Representative Executive Officer and President. The committee's deliberations and Yamaha Group's activities are regularly reported to the Board of Directors for review.

Subcommittees under the Sustainability Committee include the Climate Change Subcommittee, Resource Circulation Subcommittee, Procurement Subcommittee, Human Rights & DE&I Subcommittee, and Social Contribution Subcommittee. Each subcommittee addresses company-wide important themes, develops promotion systems, formulates policies, sets targets and measures, and reports to the Sustainability Committee.

In FY2025, the Sustainability Committee convened seven times. Key discussions included reviewing previous activities, confirming external disclosure content (including TCFD/TNFD), confirming progress and discussing issues for the current period, and deliberating on measures and KPI targets for the next Mid-term Management Plan.

The Board of Directors supervised sustainability efforts by monitoring the Sustainability Committee's activities twice and engaging with external experts once in FY2025. Discussions focused on sustainability policies and targets, and regular reviews of sustainability initiatives.

Materiality

Yamaha Group identifies key sustainability issues (materiality) that are crucial for sustainable societal development and enhancing mid-to-long-term corporate value, considering its business activities, environmental and social impact, stakeholder expectations, and societal demands. These materialities are integrated into the Yamaha Group Sustainability Policy to guide and manage activities.

The identified materialities are categorized into Environment, Society, Culture, and Human Resources.

Environment

• Climate Change Response: Reducing CO2 emissions from business sites and from procurement, logistics, and product usage.
• Sustainable Use of Wood: Promoting sustainable sourcing and utilization of wood, and advancing forest conservation.
• Resource Conservation, Waste, and Hazardous Substance Reduction: Reducing resource consumption in products and packaging, promoting resource circulation, and reducing hazardous chemical substances (e.g., VOCs).

Society

• Contributing to an Equitable Society and Comfortable Living: Ensuring the safety and health of individuals, promoting remote communication, and considering universal design and accessibility.
• Respect for Human Rights in the Value Chain: Upholding labor rights among suppliers.

Culture

• Spread and Development of Music Culture: Contributing to the spread and development of music culture through products, services, and activities, and fostering the next generation.

Human Resources

• Fostering a Creative and Challenging Organizational Culture: Promoting human resource development, conducting awareness surveys, creating opportunities for dialogue, and supporting work-life balance and employee well-being.
• Respect for Human Rights and DE&I: Implementing human rights initiatives (e.g., human rights education, due diligence) and promoting diversity, equity, and inclusion (DE&I).

Linking Executive Compensation to Sustainability

To further incentivize efforts towards creating sustainable and societal value, sustainability-related targets have been incorporated into the performance indicators for restricted stock awards for executive compensation since FY2023.

Management Targets

The report outlines financial targets such as revenue growth rate (CAGR) of 5%, ROE of 10%, and operating profit margin of 13.5%, along with a total return ratio of over 50%. It also details KPIs related to business expansion, profit improvement, strategic investments, and new value creation.

Key performance indicators include segment-specific revenue growth rates and operating profit margins, capital efficiency, and the number of new value creation initiatives.

Sustainability Metrics

The report highlights progress on key sustainability metrics, including a 30% reduction target for CO2 emissions (Scope 1+2) compared to FY2018, a 25% reduction target for expanded polystyrene (EPS) in packaging compared to FY2023, and a target for sustainable wood usage of 80%.

Social metrics include the number of social issue-related initiatives (target: 20) and the cumulative number of children participating in school projects (target: 7 million).

Stakeholder Engagement

Yamaha Group engages with various stakeholders to understand their opinions and requests, reflecting them in its corporate activities. They participate in the Stakeholder Engagement Program of the Japan Committee for Economic Development (CED) to identify key human rights issues in different industries.

Yamaha has also published a "Multi-Stakeholder Policy" to ensure appropriate distribution of profits and outcomes generated through co-creation with stakeholders such as employees and suppliers.

Stakeholder Engagement Activities

The report details engagement activities with various stakeholders, including customers, employees, suppliers, local communities, the global environment, and shareholders. These activities involve communication channels, specific initiatives, and feedback mechanisms to foster mutual understanding and collaboration.

• Customers: Providing safe and valuable products/services, promoting universal design, ensuring proper product information, and managing customer information.
• Employees: Fair evaluation and treatment, respect for human rights and diversity, talent development, support for diverse working styles, and ensuring health and safety.
• Suppliers: Fair and reasonable selection of suppliers, equitable transactions, and prohibition of abuse of superior bargaining position.
• Local Communities: Contributing to coexistence and development in local communities through cultural promotion, nurturing the next generation, welfare, employment, and technology/skill development.
• Global Environment: Pollution prevention, climate change mitigation, resource conservation, chemical substance management, and biodiversity conservation.
• Shareholders: Timely disclosure of accurate management information, appropriate profit distribution, and maintenance/improvement of corporate value.

Materiality Identification Process

Yamaha Group continuously evaluates and revises its materialities based on societal trends, sustainability issues, and stakeholder expectations. The process involves identifying key stakeholders, identifying sustainability issues, evaluating their importance from both business and stakeholder perspectives, and finally identifying and categorizing materialities.

The process includes scoring issues based on factors like sales/loss, reputation, compliance, and business sustainability, as well as considering stakeholder needs and industry initiatives.

The identified materialities are then approved by the Sustainability Committee and the Board of Directors.