Sustainable Products & Sustainable Factories

Responsible Manufacturing
For Now and the Future

The CITIZEN Group has been involved in manufacturing for over 100 years, based on its corporate philosophy, "Loved by citizens, working for citizens."

Human rights and compliance have become major social issues in recent times.
We believe it is important to embody our commitment to contributing to solving not only environmental but also various other social issues and creating sustainable corporate value.

Accordingly, in 2019, The CITIZEN Group launched a new initiative under the concept of "Sustainable Products and Sustainable Factories."

Through sustainable products and business processes, we aim to create an enriched environment and society and grow together.

Towards a new tomorrow,
we will work to realize the concept of "Sustainable Products and Sustainable Factories" throughout the entire value chain, including our business partners.

Our Vision

Sustainable Products

Products and services that contribute to business growth while helping to solve social issues linked to three of The CITIZEN Group’s five material issues*

Target

Increase the ratio of "sustainable products" to the Group’s total sales to 31% by FY2027.

Responding to Climate Change and Contributing to a Recycling-Oriented Society; Contributing to Better Quality of Life; Providing Solutions in the Industrial Sector

Sustainable Factories

The CITIZEN Group’s sustainable production facilities, offices, and business processes that comprehensively address human rights, the environment, the working environment, compliance, business continuity planning (BCP),* and productivity improvement.

Target

Realize the "sustainable factory" concept by 2030.

Business continuity planning (BCP): Planning during normal times to prepare for the possible effects of large-scale disasters on business activities to stipulate the systems, functions, and procedures necessary to continue supplying products and services and to make an early recovery

Sustainable Products Initiatives

Target

Increase the ratio of "sustainable products" to the Group’s total sales to 31% by FY2027.

Progress toward the sales ratio target

FY2025:
27.8%

Percentage of "sustainable products" in the Group’s total sales

Group Consolidated Sales and Sustainable Products Sales Ratio

Sustainable Products Certification Criteria

The Sustainable Products Certification System is an in-house system common to all The CITIZEN Group companies, under the supervision of external experts in terms of the formulation of certification criteria and the appropriateness of products and services to be evaluated for certification.
Based on our corporate philosophy, we certify products and services that are consistent with our business strategy, including our past sustainable initiatives, and our materiality as sustainable products.
Out of the five material issues identified by The CITIZEN Group, the following three need to be addressed through products and services: Responding to Climate Change and Contributing to a Recycling-Oriented Society; Contributing to Better Quality of Life; and Providing Solutions in the Industrial Sector.
For certification, each product/service must meet the essential Group-wide requirement of contributing to solving one or more of the three material issues and also satisfy criteria defined by each business division taking into consideration its business strategy and the uniqueness and superiority of the product/service.

Corporate Philosophy:"Loved by citizens, working for citizens.

The certification criteria consist of both criteria related to the product/service’s contribution to solving the Group’s three material issues and business-specific criteria defined by each business division for objective judgment.

Material issue	Specific area	Examples of contributing factors
Responding to Climate Change and Contributing to a Recycling-Oriented Society	Response to climate change	Energy efficient with an extended service life Designed to allow disassembly and repair and supported by a reliable service system Made of sustainable raw materials
	Contributing to a recycling-oriented society
Contributing to Better Quality of Life	Contribution to diverse lifestyles	Friendly to all users, including people with disabilities Supportive of health management
Contributing to Better Quality of Life	Contribution to medical care and healthcare
Providing Solutions in the Industrial Sector	Provision of labor-saving and automation solutions	Helpful in addressing labor shortages through labor-saving and automation solutions Providing digitalized solutions to the challenge of passing on skills Compatible with remote maintenance and other services
Providing Solutions in the Industrial Sector	Contribution to mobility

The Sustainable Products Certification System and the certification criteria for each business were discussed by the Sustainability Committee based on the opinions of external experts and approved by the Group Management Committee in 2023.
In the future, the certification criteria will be reviewed as necessary in response to changes in social conditions, and any changes to the certification criteria shall be discussed and approved by the Sustainability Committee.

Introduction of Sustainable Products

CITIZEN L

Creating sustainable beauty
that goes beyond appearance

See the products development story.

EcoBalance Machine

Contributing to the development of customers worldwide through sustainable manufacturing

See the product development story.

Examples of Sustainable Products

Watches
- Energy efficient with an extended service life
- Designed to allow disassembly and repair and supported by a reliable service system
- Made of sustainable raw materials
Movements
- Energy efficient with an extended service life
- Designed to allow disassembly and repair and supported by a reliable service system
Machine Tools
- EcoBalance Machine
  (EcoBalance-certified machine equipped with technologies for reduced CO₂ emissions, reduced operation time, and improved productivity)
- Helpful in addressing labor shortages through labor-saving and automation solutions

Sustainable Factories Initiatives

Target

Realize the "sustainable factory" concept by 2030.

Toward Realization of the "Sustainable Factory" Concept

The CITIZEN Group as a whole aims to make all its factories, offices, etc. "sustainable factories" by 2030.

Specifically, we have formulated a vision of what we aim to achieve by 2030 in the areas of response to climate change, contribution to a recycling-oriented society, enhancement of quality compliance, respect for human rights and labor practices, and promotion of sustainable procurement, as well as a roadmap toward fulfillment of this vision. We are devoting Group-wide efforts to fulfilling the vision based on the roadmap while updating them as necessary. Our overall targets for 2030 in each specific area of each material issue, as well as numerical or specific targets set for relevant key performance indicators (KPIs), are shown in the table below.

Material Issues	Specific area and overall target for 2030 therein	2030 targets for key indicators
Responding to climate change and contributing to a recycling-oriented society	Response to climate change Reduce greenhouse gas emissions in the value chain.	Scope 1 and 2 CO₂ emissions: 50.4% reduction (compared to FY2018) Scope 3 CO₂ emissions in Categories 1 and 11: 30% reduction (compared to FY2018) Water withdrawal: 35% reduction (compared to FY2018); recycling rate (waste reuse rate): 90%
	Contribution to a recycling-oriented society Promote sustainable resource use.
Fulfilling social responsibility	Enhancement of quality compliance Comply with the Group Quality Code of Conduct.	Zero violations of the Group Quality Code of Conduct
	Respect for human rights and labor practices Comply with the Group Human Rights Policy. Comply with laws related to work style reforms (Japan). Entrench the Group Basic Health and Safety Policy.	Establishment of human rights due diligence Zero lost work injuries at work
	Promotion of sustainable procurement Ensure that 100% of the Group companies and 70% of major suppliers* comply with the CSR Procurement Guidelines. Suppliers in the top 90% in terms of procurement volume and suppliers of irreplaceable critical items	100% of major suppliers responding to self-assessment questionnaire (SAQ)* surveys A self-assessment questionnaire (SAQ) created by Global Compact Network Japan (GCNJ), which asks companies whether they have in place policies, systems, initiatives, and corrective measures in nine fields, including human rights, the environment, the working environment, and quality.

Progress in the Sustainable Factory Roadmap

Responding to climate change and contributing to a recycling-oriented society

Target FY2025

Introduce electricity derived from renewable energy sources and energy-efficient and high-performance equipment, improve production and business processes.

KPI FY2025

CO₂ emissions
(Scopes 1, 2): 29.4% reduction*
Renewable energy ratio:31.7%

Achievement status FY2025

CO₂ emissions
(Scopes 1, 2): 51.9% reduction*

Achievement rate: Over 100%
Renewable energy ratio:34.5%

Achievement rate: Over 100%

Compared to FY2018

Environmental Vision and Environmental Goals

Enhancement of Quality Compliance

Target FY2025

Conduct effective monitoring of compliance with the Quality Code of Conduct at all sites (risk identification to correction).

KPI FY2025

Implement a multilingual e-learning program.
Review the roadmap for FY2025 and beyond.
Conduct awareness activities for the Quality Code of Conduct.

Achievement status FY2025

Implement a multilingual e-learning program.

Materials prepared (scheduled for implementation from next year onwards)
Review the roadmap for FY2025 and beyond.

Implemented
Conduct awareness activities for the Quality Code of Conduct.

Implemented

Enhancement of Quality Compliance

Respect for Human Rights and Labor Practices

Target FY2025

Establish human rights due diligence (ranging from identification of negatives to formulation of targets and plans), respond to and comply with labor-related laws and regulations, and promote the Basic Health and Safety Policy.

KPI FY2025

Comply with laws and regulations regarding overtime work and acquisition of annual paid leave.
Implement a human rights e-learning program (Japan).
Audit the human rights and labor practice status in The CITIZEN Group in line with labor-related laws and regulations.

Achievement status FY2025

Comply with laws and regulations regarding overtime work and acquisition of annual paid leave.

Conducted regular questionnaire surveys and had the relevant committees monitor and discuss the situation
*Zero noncompliant cases (with corrective measures adopted)
Implement a human rights e-learning program (Japan).

Implemented (Japan)
Identify potential human rights risks.

Completed auditing four out of the 10 companies to be audited; audits of the remaining six companies scheduled for FY2026

Respect for Human Rights

Promotion of Sustainable Procurement

Target FY2025

Strengthen responsible mineral procurement.

KPI FY2025

Strengthen supplier engagement.

Achievement status FY2025

Strengthen supplier engagement.

Provided feedback to suppliers who had reported transactions with unapproved smelters

Promotion of Sustainable Procurement

Sustainable Factories Promotion Activities

Since cooperation throughout our value chain, including our suppliers, is essential to realizing the "sustainable factory" concept, we promote activities to seek the understanding and cooperation of our stakeholders. We use a self-assessment questionnaire (SAQ) created by Global Compact Network Japan (GCNJ) as a tool for awareness-raising and risk management. This SAQ asks companies whether they have in place policies, systems, initiatives, and corrective measures in nine CSR fields, including corporate governance, human rights, the environment, the working environment, and quality. Using this basic questionnaire usable across all industries, The CITIZEN Group conducts self-assessment surveys of all its sites, including overseas ones, and its major suppliers of direct materials.

Self-Assessment Questionnaire (SAQ) Surveys of Suppliers

Our Vision

The CITIZEN Group has set "Crafting a new tomorrow" as its long-term vision for 2030 and is promoting sustainable management.

To fulfill this vision, we have launched two initiatives: a "Sustainable Factory" initiative to create sustainable production facilities and offices that address not only environmental issues such as climate change, but also social and economic issues such as human rights, labor practices, and productivity improvement; and a "Sustainable Product" initiative to increase the sales ratio of products and services that contribute to solving major social issues and business growth. These initiatives embody sustainable management and serve as the core of our journey toward realizing our long-term vision.

By promoting the Sustainable Product and Factory initiatives, The CITIZEN Group aims to be a corporate group that delivers peace of mind, a feeling of trust, and impressive value, enriching not only the lives of people but also their hearts, and passing that wealth on to the next generation.

Materiality Concept of Sustainable Management
＆Sustainability Promotion System

	FY2025 results	FY2026	FY2027	FY2030
Overall target	Establish human rights due diligence (ranging from the formulation of goals and plans to their operation and monitoring), ensure compliance with labor-related laws and regulations, and promote the Basic Health and Safety Policy.	Establish human rights due diligence (ranging from the formulation of goals and plans to their operation and monitoring), ensure compliance with labor-related laws and regulations, and promote the Basic Health and Safety Policy.	Establish human rights due diligence (ranging from the formulation of goals and plans to their operation and monitoring), ensure compliance with labor-related laws and regulations, and promote the Basic Health and Safety Policy.	Ensure compliance with both the Group Human Rights Policy (ranging from monitoring to the redress process) and labor-related laws and regulations, and firmly institutionalize the Basic Health and Safety Policy.
KPI targets	Conducted interviews to identify human rights risks according to the OECD standards. Ensured compliance with laws and regulations on the treatment of regular employees and other workers.	Identify human rights risks according to the OECD standards. Achieve an attendance rate of 100% at e-learning programs. Reduce the lost time injury rate by 50% or more from the FY2019 level. Ensure compliance with laws and regulations on the treatment of regular employees and other workers.	Achieve an attendance rate of 100% at e-learning programs. Reduce the lost time injury rate by 50% or more from the FY2019 level. Ensure compliance with laws and regulations on the treatment of regular employees and other workers. Ensure disclosure of detailed ESG data.	Establish human rights due diligence at overseas sites. Achieve zero lost time injuries at work. Provide suppliers with human rights education and conduct supplier questionnaire surveys and audits. Establish grievance mechanisms. Implement follow-up measures based on the results of engagement surveys.
Measures	Implemented human rights e-learning programs. Continued awareness-raising efforts focusing on the Basic Health and Safety Policy at domestic and overseas sites. Monitored the legal and regulatory compliance status of Group companies in Japan through audits and questionnaire surveys. Promoted the Basic Health and Safety Policy.	Continue awareness-raising efforts focusing on the Basic Health and Safety Policy at domestic and overseas sites. Conduct monitoring and ensure compliance with laws and regulations. Promote the Basic Health and Safety Policy. Collect and disclose information from the perspective of human capital management. Expand the scope of companies required to disclose ESG data.	Continue awareness-raising efforts focusing on the Basic Health and Safety Policy at domestic and overseas sites. Conduct monitoring and ensure compliance with laws and regulations. Promote the Basic Health and Safety Policy. Collect and disclose information from the perspective of human capital management.	Establish consultation desks for employees at all sites. Improve the human rights due diligence process. Conduct monitoring and ensure compliance with laws and regulations. Continue to conduct activities based on the Basic Health and Safety Policy.

	FY2025	FY2026	FY2027	FY2030
Overall target	Set annual targets toward achieving the 2030 target of 70% of major suppliers complying with 100% of the CSR Procurement Guidelines.	Set annual targets toward achieving the 2030 target of 70% of major suppliers complying with 100% of the CSR Procurement Guidelines.	Set annual targets toward achieving the 2030 target of 70% of major suppliers complying with 100% of the CSR Procurement Guidelines.	Ensure that 100% of the Group companies and 70% of major suppliers comply with the CSR Procurement Guidelines.
KPI targets	Conduct an SAQ survey of all major suppliers. Send 100% of applicable suppliers a request for response to the SAQ survey and the document "Requests for Our Business Partners."	Conduct an SAQ survey of all major suppliers. Send 100% of applicable suppliers a request for response to the SAQ survey and the document "Requests for Our Business Partners."	Conduct an SAQ survey of all major suppliers. Send 100% of applicable suppliers a request for response to the SAQ survey and the document "Requests for Our Business Partners."	Achieve an SAQ survey response rate of 100% among major suppliers. Ensure that 70% of major suppliers achieve an overall score of 100% in the SAQ survey.
Measures	Enhance remediation measures for conflict minerals-related due diligence. Continue to carry out remediation action, including communication Continue efforts to reduce high-risk suppliers to zero. Introduce procurement survey systems to a wider range of companies.	Enhance remediation measures for conflict minerals-related due diligence. Continue to carry out remediation action, including communication. Continue efforts to reduce high-risk suppliers to zero. Introduce procurement survey systems to a wider range of companies.	Enhance remediation measures for conflict minerals-related due diligence. Continue to carry out remediation action, including communication. Continue efforts to reduce high-risk suppliers to zero. Introduce procurement survey systems to a wider range of companies.	Ensure that 100% of major suppliers comply with the Green Procurement Standards. Continue to carry out remediation action, including communication.

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Responsible Manufacturing
For Now and the Future

Sustainable Products Initiatives