Together with supply Chains

Together with Supply Chains
Sustainability Material Issues ９Management

Building Responsible Supply Chain

Basic Approach

The Lion Group regards the creation of responsible supply chain management through reinforced coordination withmaterials manufacturers and production contractors as a key issue in its supply chain initiatives. To reduce the negativeenvironmental and social impacts of business activities and advance sustainable mutual business development, we must

work with suppliers to evolve our sustainably initiatives based on our Procurement Principles. These principles clearly lay
out Lion’s policy of considering legal compliance, environmental conservation and respect for human rights when selecting

suppliers.

Furthermore, Lion recognizes the importance of promoting the sustainable procurement of palm oil, a key plant-based raw

material for the Company, and is advancing initiatives to that end.

Instituting the LION Anti-Bribery Principles

The Lion Group established the LION Anti-Bribery Principles in January 2019 in light of developments around the world

related to strengthening legal regulations against acts of bribery and corruption.

Going forward, we will continue working to ensure that our business activities are fully compliant with the laws andregulations of the countries and regions in which we do business.

Overview and Implementation Framework

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Initiatives

Promoting Sustainability with Materials

Aiming for Sustainable Raw Material

Manufacturers and Production Contractors

Procurement

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Together with Supply Chains

Promoting Sustainability with Materials Manufacturers andProduction Contractors

Self-Checks Based on the Lion Group Supplier CSR Guidelines*1

To advance responsible procurement activities, each year the Lion Group asks that the materials manufacturers andproduction contractors (suppliers) it works with implement self-checks based on the Lion Group Supplier CSR Guidelines. In this way, we are promoting the creation of frameworks throughout the supply chain to avoid risk related to humanrights, labor practices, the environment, fair operating practices, consumer issues and compliance.

Since 2014, we have moved the self-checks entirely online, enabling suppliers to respond more efficiently. We also provide

suppliers with feedback based on the self-check results. The result of these efforts is a system that continuously advances

CSR procurement. We aim for a 100% response rate every year.

In 2023, Lion Corporation (Korea) requested self-checks from its 95 suppliers, achieving a response rate of 93%. Southern

Lion Sdn. Bhd. requested self-checks from its 38 suppliers, achieving a response rate of 95%. Lion Corporation (Thailand)Ltd. requested self-checks from its 55 suppliers, achieving a response rate of 60%.

Additionally, self-checks*2 were also conducted by 69 trading partners of Lion Engineering Co., a domestic Group company,
achieving a response rate of 94%.

We will continue to promote sustainability initiatives with our suppliers in the countries where we have all of our Group's

production division plants.

*1 The Lion Group Supplier CSR Guidelines comprise 21 guidelines under the five categories (Human Rights/Labor Practices, The
Environment, Fair Operating Practices, Consumer Issues, Compliance)

Lion Group Supplier CSR Guidelines and Glossary (English)

Lion Group Supplier CSR Guidelines and Glossary (Japanese)

Lion Group Supplier CSR Guidelines and Glossary(Japanese) (Lion Engineering Co. Ltd. version)

Lion Group Supplier CSR Guidelines and Glossary (Chinese)
Lion Group Supplier CSR Guidelines and Glossary (Korean)*2 Lion Engineering Co., Ltd.’s version of the self-check includes the addition of “Confrontation with antisocial entities: Cut off relations with
antisocial entities and reject any unreasonable demands” to item 21.

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Timeline of Sustainable and Responsible Procurement Initiatives

2005

Instituted the Basic Policy Regarding Purchasing and implemented appropriate
procurement of raw materials and products.

2008

Established the Procurement Principles, which clarify our social and environmental
considerations. Conducted a questionnaire survey for domestic and overseas raw

material manufacturers and production contractors about their corporate activities
regarding legal compliance, product service quality and safety, environmental
considerations, labor practices and human rights, and fair trade.

2013

Amended the Procurement Principles and clarified our stance of considering legal

compliance, environmental conservation and respect for human rights when selecting
suppliers. Instituted the Lion Group Supplier CSR Guidelines, which specify thesustainability initiatives we expect from raw material manufacturers and production

contractors and asked our suppliers to conduct self-checks of their sustainability
initiatives.

Introduced an online self-check system.

2014
2018

Lion Corporation (Korea) requested self-checks from its suppliers, expanding thenumber of countries in which the Group implements self-checks.

2019

Established the LION Human Rights Policy and LION Anti-Bribery Principles to clarify
our stance on initiatives for sustainable and responsible procurement.

Established the Sustainable Material Procurement Policy to advance initiatives aimed

at the sustainable procurement of palm oil derivatives and pulp and paper products,
which are key raw materials for the Lion Group.

Took part in the Supplier Ethical Data Exchange (Sedex)—headquartered in the United
Kingdom—in order to further reduce social and environmental risk in purchasing.

Overseas Group company Lion Daily Necessities Chemicals (Qingdao) Co., Ltd.

2020

requested self-checks from its suppliers.

Domestic Group company Lion Engineering Co., Ltd. requested self-checks from its

2021

suppliers.

2022

Overseas Group company Southern Lion Sdn. Bhd. requested self-checks from its

suppliers.

2023

Overseas Group company Lion Corporation (Thailand) Ltd. requested self-checks fromits suppliers.

The Lion Group does business with suppliers who have implemented self-checks based on the Lion Group Supplier CSR Guidelines.

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PDCA Cycle for Self-Checks

In order to ensure that our suppliers understand the importance of addressing sustainability-related issues, we include a

section explaining the situation surrounding sustainability in our self-check request form. The self-check employs a three-step checking standard for each initiative and a detailed glossary.

Number of Primary Suppliers Requested to Self-Check and Response Rates (Target: 100% every year)
2019

Primary Suppliers

2020
2021

585

2023

100%

474

96%

436

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99%

574
502

2022

Response Rate

100%
96%

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Results Summary

Self-Check Results (2023)

The response rate in 2023 was 96%, and the average score, on a scale of 1 to 3 points, was 2.76, confirming thatsustainability measures are being implemented throughout the supply chain.
There were 418 primary suppliers that responded to the self-check.

Key Suppliers

The Lion Group considers suppliers from whom it purchases substantial amounts of raw materials and suppliers that cannot

be readily replaced to be key suppliers. We monitor the sustainability initiatives of key suppliers on an ongoing basis.

Specifically, we define key suppliers as the top 30 companies (on a purchase price basis) serving each of the three divisionsof the Purchasing Headquarters (Raw Material Department, Packaging Material Department, Finished Product Department),
for a total of 90 companies (total includes five Group companies).

Key SuppliersPortion of purchasing that

Percentage of key

is from key suppliers

suppliers among primary

Number of key suppliers(monetary basis, amongsuppliers

2019

90

15.4%

2021

90

17.9%

2020
2022
2023

90

15.7%

90

17.9%

90

19.3％

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all primary suppliers)

80%
89%
89%
89%

89%

Lion Sustainability Website 2024

High-Risk Suppliers

After receiving the self-checks, the Lion Group confirms whether or not suppliers are meeting the standards it has set for its

key sustainability items. Suppliers with low scores are designated as high-risk suppliers. In 2023, there were no high-risk
suppliers.

Selecting New Suppliers

Before doing business with a new supplier, Lion requires the company to perform a self-check based on the Lion Group Sup

plier CSR Guidelines

to confirm that the company meets the standards it has set for its key sustainability items.

Joined Sedex, the Supplier Ethical Data Exchange

Headquartered in the United Kingdom, Sedex is a not-for-profit organization thatprovides the world’s largest platform for managing and sharing ethical supply chain
data, with the aim of establishing ethical and responsible business practices in global

supply chains. The Lion Group joined Sedex as an AB member at the end of 2019 inorder to further reduce social and environmental risk in its purchasing. We encourage

our suppliers to join Sedex to reduce the burden of self-checks and request that they

use the platform provided by Sedex to submit their annual self-check responses. Of

Lion’s 90 key suppliers, 39 are using the Sedex platform (as of March 31, 2024). Goingforward, we will continue to reinforce and enhance supplier management and risk
management.

Employee Training on Sustainable Procurement

Lion provides sustainable procurement training to every purchasing department employee who is involved in buying. We

also hold study groups to help employees obtain certification under the Certified Procurement Professional (CPP) system

offered by the Japan Management Association.* Participants not only learn buying operation management and gain

practical knowledge, they learn about the importance of procurement that takes into account the environment, ethics,
safety and hygiene, human rights and other such factors as well as about working with suppliers.

When selecting suppliers and setting pricing and other terms, we always enter into agreements through negotiations rooted

in fairness and transparency. We thoroughly enforce compliance with the Act against Delay in Payment of Subcontract
Proceeds, Etc. to Subcontractors through such means as training for Purchasing Headquarters employees.

In response to growing calls for CSR procurement, going forward, we will advance human resource development, including

proactively sending employees to seminars related to purchasing and procurement.

* CPP: A qualification for persons involved in corporate purchasing and procurement indicating that the holder has acquired specialized
knowledge in the field of purchasing and procurement.

CPP qualification website [Japanese]

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Together with Supply Chains

Aiming for Sustainable Raw Material Procurement
Sustainability Material Issue 9

Management

Building Responsible Supply Chain

Approach

The Lion Group aims to contribute to the achievement of the Sustainable Development Goals (SDGs), a set of sharedworldwide goals for 2030. However, palm oil derivatives and pulp and paper products, which are key raw materials in the

Lion Group's products, present risks related to raw material procurement to sustainable development in terms of humanrights, labor issues and environmental issues. To address these risks, we have established the Sustainable Material Procure

ment Policy. Based on this policy, we are advancing initiatives aimed at the sustainable procurement of palm oil derivatives

and pulp and paper products.

Sustainable Palm Oil Procurement

The Lion Group is proactively advancing the utilization of plant-derived materials that are carbon neutral and non-depletable. Among the plant-derived materials that Lion uses are derivatives of palm oil—the world’s leading vegetable oilin terms of production volume. Palm oil is produced in principally Malaysia and Indonesia.

The Raw Material Behind Palm Oil: Oil Palms

Palm oil production is increasing year by year, partly because oil palms (the source of palm oil) are highly productive andcan be harvested throughout the year. However, with the rapid expansion of production, a number of issues have arisen in

producing regions, such as the destruction of tropical rainforests and wildlife habitats as land is cleared for thedevelopment of new plantations. Furthermore, improper farming operations involving a wide range of human rights andlabor abuses that reflect a lack of social justice have been identified. These include poor labor conditions with inadequate

consideration given to health and safety, low wages, improper treatment of immigrant workers and the use of child labor.
Since 2006, Lion has been a member of the “Roundtable on Sustainable Palm Oil (RSPO),*1” which works toward theresolution of such issues. In 2012, the Oleochemical Production Site of Lion Chemical Co., Ltd., a domestic affiliate thatprocures palm oil from Malaysia and Indonesia, passed the RSPO’s supply chain certification system*2 inspection and wascertified as a plant that may handle RSPO-certified palm oils. Accordingly, Lion Group started procuring RSPO-certified palmoils from 2012. The Lion Chemical Corporation Fine Chemical Production Site received RSPO supply chain certification in
March 2020, and Lion Corporation and all its plants (the Chiba Plant, Odawara Plant, Osaka Plant and Akashi Plant) werecertified in August 2020. Moreover, Lion Specialty Chemicals Co., Ltd. was certified in June 2022.

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The Lion Group’s aim for the end of 2030 is to ensure RSPO certification for all the palm oil derivatives it uses. As of the endof 2022, Lion had switched to RSPO-certified products for 99% of its domestic key raw materials, and continued this effort in2023.

Furthermore, regarding the palm oil derivative used in its consumer products, the Group’s aim is to purchase only oil thatcan be traced to sustainability-conscious mills. To ensure traceability, the Group discloses a mill list detailing the key
materials procured from its primary suppliers.
Mill list

Going forward, we will continue to work to procure sustainable palm oil.
*1 The Roundtable on Sustainable Palm Oil

The Roundtable on Sustainable Palm Oil (RSPO) believes that for palm oil production to be sustainable, it must not only be compliant with

relevant laws and regulations, but economically sustainable, environmentally appropriate and socially beneficial. These requirements arelaid out concretely in the RSPO Principles and Criteria. Only palm oil produced in accordance with these seven principles and 40 criteria
can be RSPO-certified.

*2 RSPO Supply Chain Certification

This system certifies that RSPO-certified raw materials have a reliable delivery system in place throughout the entire supply chain, after

audits by external auditors.

RSPO Supply Chain Verification
certificates of the Lion Chemical Co., Ltd.
Oleochemical Production Site and Fine
Chemical Production Site

RSPO Supply Chain Verification
certificate of Lion Corporation
and all its directly owned plants

RSPO Supply Chain Verification
certificate of the Lion Specialty
Chemicals Co., Ltd.

Sustainable Pulp and Paper Procurement

Pulp and paper are used in the manufacture of the Lion Group’s product packaging, booklets and pamphlets as well as in

the copy paper and other office supplies the Company purchases. In order to better protect biodiversity in the procurementof these materials, based on the Sustainable Material Procurement Policy, we are advancing the procurement of third partycertified paper products. As of the end of 2023, 98% (by weight) of such products procured from domestic manufacturers
was third-party certified, and 75% (item ratio) of packaging materials for major products was third-party certified. In
addition, we have identified the country of harvest’s administrative divisions (states, provinces, etc.) for 100% of thewoodchips and pulp used in our product packaging.

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Participation in External Supply Chain Initiatives

Lion has been a member of the Roundtable on Sustainable Palm Oil (RSPO), an international initiative, since 2006.

Furthermore, since 2012, Lion has taken part in the Supply Chain Subcommittee of the Global Compact Network Japan,

contributing to the preparation of various publications, such as an introductory text on CSR procurement.

Roundtable on Sustainable
Palm Oil (RSPO)

Japan Sustainable Palm Oil
Network(JaSPON)[Japanese]

United Nations Global Co
mpact (UNGC)

Holding the Regional Purchasing Manager Meeting

The Lion Group holds the Regional Purchasing Manager meeting annually with the goals of reducing costs at the overall

Group level and reinforcing communication between the purchasing staff of participating companies by fostering personalconnections.

In 2023, the conference was held online as well as in-person in September, with participation from eight countries, including

Japan. At the meeting, the 13th of its kind, representatives from each company reported on their use of such sustainable

packaging materials as mono-materials and recycled plastics as part of their ESG initiatives, procurement of palm oil-related RSPO-certified products and their cost reduction efforts in addition to sharing information. We will continue tosupport the purchasing activities of each company to strengthen the purchasing power of the entire Group.

Participating Overseas Group Companies

Lion Corporation (Thailand) Ltd.

Southern Lion Sdn. Bhd.
PT. Lion Wings

Lion Corporation (Korea)

Lion Daily Necessities Chemicals (Qingdao) Co., Ltd.

Lion Kallol Limited

Merap Lion Holding Corporation

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Green Purchasing

The second item of Lion’s Procurement Principles states that Lion shall “Rationally select business partners not only on thebasis of quality, cost and timely delivery, but also regulatory compliance, environmental protection, labor, and humanrights, to fulfill our responsibility to customers and to create a sustainable, healthy society.” In line with this principle, we

promote environmentally friendly green purchasing on a Company-wide basis.

Along with green purchasing, we are committed to using environmentally friendly office supplies, including notebooks andcompany envelopes made from recycled paper and FSC certified paper. In addition, with the relocation to the newheadquarters, we have shifted from a conventional purchasing model with multiple departments ordering such supplies

independently to one in which a concierge counter handles bulk purchases, helping to regulate the overall volume of officesupplies in stock.

Transition to Biomass Inks for Product Packaging

Products with reduced environmental impact are required if we are to minimize environmental problems such as marine
plastic pollution and global warming. With this aim in mind, Lion has started using biomass inks* made from plant-based

raw materials for some of the color inks used in product packaging (pouches, shrink films, attention seals, labels, etc.).

* Inks designed with biomass-derived raw materials as a portion of the resin component and comprising more than 10% plant-based
ingredients in the ink film once dry.

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