Ryohin Keikaku : MUJI REPORT Dialogue Q&A Summary

RYOHIN KEIKAKU CO., LTD. MUJI REPORT Dialogue Summary

April 20, 2023 14:00-15:00 Participation of 19 people from major sell side in Japan

April 27, 2023 16:00-17:15 Participation of 14 people from major buy side in Japan, person(s) in charge of voting rights and ESG

ESG in	Contents	Answers
general
	The content of the report has evolved since the last update.
1	The establishment of Mujirushi Ryohin (MUJI) and the issues	－
	of the company are well organized. Especially, the executive
	messages for each product are easy to understand.
		New members have joined the board of directors, and discussions have
2	What is the change in the atmosphere of the board of	become lively. They include a number of outside audit & supervisory board
	directors after the reshuffle in the composition of directors?	members, in addition to the three newly appointed outside directors. They
		provide many tough, challenging opinions.
	The page structure of MUJI Report makes the relationship	We want to express that materiality is firmly linked to corporate value based
	between materiality and individual initiatives (including human	on our "two missions" set forth. The employee engagement survey was
3	rights and engagement) difficult to follow, with an impression	conducted in November last year and its results came out in February.
	that the information is fragmented. The KPI for 2030 is good,	Although its scores are not necessarily high due to the transformation period
	and its progress will be more transparent to outside readers	we are going through, progress made is a forum for discussion established
	by providing a preliminary interim target.	for each department based on the results. We would like to devise future
	It would be better if the story starting from the corporate
	philosophy leading to the ideal vision became clearer. Further,
4	it would be appreciated if descriptions were given on the	Let us make it a matter to be taken care of during the next fiscal year.
	details of the specific initiatives and the results, as well as the
	remaining issues.
G: Governance	Contents	Answers
	If messages from all outside directors were given in the report,
5	they would facilitate the readers' understanding of their ideas.	We will explore it going forward.
	Short messages are just fine. Please explore the potential in
	this regard.
	There are cases in other companies' reports whereby they	After the governance system was changed, we reviewed and enhanced the
	feature interviews with outside directors only. If outside	support system to the Board of Directors. To have better views on the local
6	directors spoke, on behalf of minority shareholders, about the	workplace, we assisted newly appointed outside directors to make site visits
	company's challenges and future outlook, it would deepen	to the Naoetsu store, which is becoming more indigenous to the local
	investors' understanding over the company. Inclusion of	community. Furthermore, we hold regular interviews with outside directors
	articles relevant to succession plans would be preferable.	and our executives, in addition to holding dialogues with institutional
	In the area of remuneration for the board members, please	The share-based compensation with transfer restrictions is linked to ESG-
	related efforts and progress of the board members. Targets are set at the
	disclose progress made and targets set in detail for issues
7	Executive Advisory Committee (attended by the board members) and the
herein. At present, it is difficult to assess the measures for
	their validity.	ESG Promotion Committee. An interim report was recently presented to a
	board meeting for discussions. We will look for more comprehensible
		The Company advocates a "Public Interest and People-Centered
		Management," in which our customers, shareholders, and other stakeholders
		participate in our business management. Using our stores as a platform, we
		will cooperate with our customers and shareholders in activities that will lead
	Please elaborate on the targets of the recently announced	to regional revitalization. Some products have been created from the
8	opinions of our customers. Shareholder meetings are held as a place to
introduction of shareholder benefits.
		directly listen to the opinions of our shareholders. The company split its
		shares in 2019 to increase individual shareholders, having led to the
		introduction of this shareholder benefit program. We are hoping for as many
		stakeholders as possible to participate in our business management, leading
		to an increase in our corporate value.
S: Society	Contents	Answers
	Regarding to the disclosure of Engagement Survey. It must be	Employee engagement surveys were conducted in November, focusing on
	difficult to make presentation on progress in transformation in	our original questions. Subsequently, discussions have been made at the
9	corporate culture. However, disclosure of engagement survey	Board of Directors' meeting and each division, based on the survey results.
	is still requested, such as by providing time-series numerical	We are cautious about disclosing basic scores, but will look for appropriate
	data figures like competitors.	methods of disclosure, including the process of response and relevant
		In this period of transformation, the external environment is also changing
	What are the initiatives being promoted as we move ahead	significantly, and the Company is actively promoting external recruitment
10	with integration with mid-career employees? Any change in	because of the need for a speed in change. At the same time, we are hiring
	turnover rate?	new graduates to support store openings, and have set up a program to
		train employees to be store managers within three years. As issues differ
		across departments and teams, it is necessary to take steps for each team,
	Under the banner of "Public Interest and People-Centered	rather than steps that are uniform across the entire company. For this
	reason, the role of middle management is important, and their training and
11	Management," how are the values of mid-career employees
education are repeated. A system and mechanism are required to make
	being integrated with those of proper employees?
	employees more positive. Turnover is not at the level of concern.
		The personnel system was substantially overhauled last year. In addition to
	How are the personnel systems being reviewed during the	revamping the salary system in order to actively promote external
12	recruitment, we have adopted a new grade system and designed
transformation of the second startup?
		remuneration to be linked to improvements in roles and skills. We are now in
		a transition period and the transition will be completed within two years.
		Compared to when I joined the company, the share of female in all
	Regarding to the enhancement of disclosure on active	employees has been declining year by year, which is an issue. We are at the
	stage where the Diversity Committee focuses on the empowerment of
	participation by women. The empowerment of women is
13	women and discussions are underway on how women can play an active role
deemed important for your company. Please elaborate on the
	relevant challenges and action plans.	through their careers. In order to enable women to work for a long time, we
	will develop work styles and support systems from different perspectives, so
		that they can take on challenges regardless of their life events.

	Please elaborate on results of regional localization and local	Various efforts are being made for regional localization, but the current
	status and its disclosure are still insufficient. However, connections with
14	area revitalization, in conjunction with KPIs and numerical
lodging, cafes, farmers, etc. have been created. We will increase our
	values.
	achievement, so that our goal is more visible.
		The regional division started in September 2021 as a role model of
		autonomous decentralization and individual store management. There is no
	How is the development of human resources to support the	manual for the management of individual stores, and good examples are
15	region making progress after the launch of the regional	accumulated at each regional division, with the Kinki region as a leader. In
	division? How about overseas?	order to train community managers, we plan to start systematic education.
		In mainland China, Taiwan, Hong Kong, and other countries, efforts with a
		focus on food and agriculture themes have begun a gradual move forward.
		The contribution to the local community is possible, only if based on the
16	How do you foster perspectives of business and earnings as	power cultivated through store management. We are gradually increasing
	you proceeding regional localization?	the number of stores that contribute to local community, taking into account
		the abilities of our employees.
	Regarding to human rights due diligence. We look forward to	This time, we disclosed our human rights policy as a first step. Supply chains
17	better relevant disclosure in relation not only to our suppliers	have a high risk in human rights. We will continue our efforts in this regard,
	but also to our employees.	including audits.
	Re: supply chain management. Retailers generally tend to look	We believe it is necessary to improve the literacy of production control
	at their business partners in a genuine way. While the site	members and to enhance the expertise of the ESG team. Instead of dividing
18	inspections into factories or manufacturing sites are becoming	ESG and production, the need of a dedicated organization is also being
	more common, please be reminded that strict checks are	discussed. We ensure the thorough check of the risk of business partners
	crucial when starting businesses.	before starting the transactions.
E: Environment	Contents	Answers
	Regarding to activities with "Circular" in mind. Please disclose
	information linked to specific products. Behind this request, for
	example, is the lack of information about completely	It is important to be more mindful about how to present our environmentally
19	commercialized products although the description of the
conscious perspectives in the sales floor through product sales activities.
	recycled wool is given. This request is applicable to the efforts
	Currently, our thoughts have not reached our customers sufficiently. The
	for reuse and recycling. The readers of the Report will find	company is making steady progress in its environmental initiatives, such as a
	Mujirushi Ryohin's strengths more if the Company responds
	focus on environmental consideration to packaging and product materials,
	I found the stories about natural materials such as kapok. I
	collecting plastics, and offering flat-rate monthly services for furniture. We
	hope for the message that the Company is doing something
	will use our ingenuity in the ways to make our efforts known externally,
	basically good to be delivered more to outside the Company,
20	including how to present it in the report.
	including the customers. Disclosure of corporate information is
	also effective, such as the information that the income of
	employees involved in production is rising.