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September 15, 2021

Sony Group ESG Briefing FY2021

Evolving Sustainability Management: Initiatives to Create Value Through Sony’s Business

    Sony Group Corporation ("Sony" or "the Company") continues to operate its business with a long-term view centered around "people", based on its Purpose to "fill the world with emotion, through the power of creativity and technology." At its ESG Briefing held today, Sony outlined the evolution of its sustainability management, focusing on initiatives that aim to create social value through its diverse business activities and technology. Highlights from the presentation are below. For further details, please refer to the related materials, which are available through Sony's Investor Relations (IR) website.

    1. Dialogue with Stakeholders / Integration of Sustainability Activities into Businesses

    Sony greatly values dialogue with its diverse stakeholders, and incorporates insights gained from this interaction into the management of its businesses. As part of this dialogue, ESG Briefings have been held every year since 2018.

    Sony is integrating sustainability into its business activities and accelerating the social and environmental measures it is taking through its business and technology. Having identified the most important materiality topics for the overall Sony Group as "technology" and "employees", the Company has defined and disclosed the type of social value each of its businesses aims to create, and the key priorities relating to sustainability within each business.

    2. Initiatives Relating to the Global Environment

    Based on its "Road to Zero" long-term environmental plan leading up to 2050, Sony is implementing initiatives to reduce its environmental impact across all Sony Group companies, manufacturing sites, supply chains and product life cycles, based on four perspectives: climate change, resources, chemical substances and biodiversity.

    Initiatives in the Imaging & Sensing Solutions (I&SS) Business

    • "Responsibility" regarding the environment:
      <Energy Conservation> At the newly constructed Fab 5 within Nagasaki Technology Center, installation of the latest energy-saving technology has resulted in a 30% improvement in the energy efficiency of clean rooms*. Additionally, 70% of the water used on the production lines is collected and reused.
      • *Estimate based on data from the Nagasaki Technology Center for the fiscal year ended March 31, 2016 (FY2015).
      <Renewable Energy> Sony is proceeding with the installation of solar panels at its manufacturing sites in Japan. In addition, Sony Device Technology (Thailand) Co., Ltd. is moving forward with the largest scale installation of solar panels among any facility within the Sony Group. Together with the purchase of Renewable Energy Certificates, the site is expected to run on 100% renewable electricity by the end of the current fiscal year ending March 31, 2022 (FY2021).
    • "Contribution" to the environment:
      The "IMX500" intelligent vision sensor developed by Sony Semiconductor Solutions Corporation is equipped with AI processing functionality within the logic chip of the image sensor. This technology is expected to support advancement in areas such as the Internet of Things (IoT). Processing data on the sensor itself, at the edge of edge systems, makes it possible to extract only the required metadata (semantic information). As a result, this technology contributes to a reduction in power consumption by lowering the volume of data sent to and processed within the cloud, while also enhancing latency (response speed) and having positive implications for privacy.
      "IMX500" is being used in trials of solutions addressing social issues such as traffic congestion and accidents in urban areas, and as part of the effort to reduce the energy consumed by air conditioning systems in buildings.

    Initiatives to Enhance Product Energy-Efficiency, and Reduce Plastic in Packaging

    • Sony is dedicated to improving the energy efficiency of its TVs, game consoles and other consumer electronics products. In the fiscal year ended March 31, 2021 (FY2020), the quantity of power consumed annually per product was 54% lower than in the fiscal year ended March 31, 2014 (FY2013).
    • Regarding small-sized products, for which Sony plans to eliminate plastic packaging entirely by 2025, Sony is now using its "Original Blended Material," a newly developed paper material made from bamboo, sugarcane, and recycled paper, in the packaging of headphones. The use of plastic has also been significantly reduced in the packaging for XperiaTM and PlayStation® 5. For TVs, which continue to increase in size, Sony is accelerating the use of its SORPLASTM originally developed flame retardant recycled plastic material.

    Applying Sony's Environmental Technologies within Society

    • Sony is proceeding with the development of its VISION-S Prototype electric vehicle (EV) incorporating its latest automotive sensing technologies, and a cloud platform that connects with the vehicle via 5G. Electric vehicles are capable of functioning as large capacity storage batteries in a microgrid, while the cloud platform enables vehicle functions to be continually upgraded through software update. As such, Sony intends to contribute to the evolution of mobility and to the environment through these technologies.
    • The "Open Energy System (OES)" developed by Sony Computer Science Laboratories, Inc. is a microgrid system that enables residences to mutually exchange electric power via direct current. The results from feasibility testing of this system were made available on an open source basis at the end of last year.
    • SynecO, Inc., which was established as the inaugural project of the Sony Innovation Fund: Environment, aims to contribute to biodiversity and solutions concerning climate change, through its knowledge and support technologies related to Synecoculture and other augmented ecosystems.
    • In order to provide people with experiences that reaffirm the relationship between "The Planet Earth and Space," Sony is engaged in joint technological demonstrations and the exploration of business opportunities with the support of the University of Tokyo and the Japan Aerospace Exploration Agency (JAXA). This includes the co-development of an ultra-small satellite equipped with Sony camera technology, capable of capturing images in all directions. It is scheduled to launch into space next year.

    3. Initiatives Relating to People and Society

    The diversity of Sony's employees is its strength, and the Company continues to promote diversity, equity and inclusion across the Sony Group. At the same time, it also engaged in initiatives focusing on diversity and social justice within society and all of the communities in which it operates.

    Inclusion Initiatives in Product Development and the Work Environment

    • Sony consults people with disabilities and involves them in usability tests right from the planning and development stage of its products and services. By reflecting their feedback and making improvements, Sony is able to enhance the accessibility of its products, user interfaces and services.
    • Each Sony Group company is engaged in efforts to promote the creation of an inclusive work environment. For instance, Sony Kibou/Hikari Corporation employees with mental and intellectual disabilities are members of Sony's software and product development teams for mirrorless cameras, where they are able to flourish by applying their own individual skillset.
    • In December 2019, Sony joined the "The Valuable 500," an international initiative which aims to promote the participation of disabled people in business. Sony was also selected as one of the 13 Iconic Leaders of this initiative.

    Supporting the Medical and Education Fields, and the Creative Community

    • In April 2020, Sony established the "Sony Global Relief Fund for COVID-19" to support people around the world affected by the COVID-10 pandemic. Sony Group companies have engaged in wide-ranging activities to support medical care, education, and the creative community through their businesses and technology, and the allocation of approximately 80% of the 100 million US dollars pledged through the fund has now been determined. To date, Sony has provided support to a total of approximately 5,500 organizations through this fund.
    • Sony Music is collaborating with organizations such as non-profit organizations (NPOs) in the US, UK and other countries to provide support for artists and help construct an environment where creators can immerse themselves in their work, in a positive state of both physical and mental well-being. Measures are also being taken in Japan to support both the mental and physical health of artists and creators signed to exclusive management contracts, as well as the staff that support them.

    Promoting Social Justice and Diversity

    • In June 2020 the Sony Group established a 100 million US dollar Global Social Justice Fund following the protests against racism and the social justice movement in the US and other countries. Through this fund, Sony Group companies in the US and around the world are supporting organizations that work towards social justice and the protection of human rights, while also promoting diversity inside and outside of the Company from a long-term perspective. The allocation of approximately 70% of the 100 million dollars pledged through this fund has now been determined.

    4. Governance that Supports Sustainability Initiatives

    Sony considers governance to be a framework that enables the Company to carry out its sustainability initiatives, and is continually working to reinforce this structure.

    • From FY2020, Sony has adopted an index for evaluating sustainability initiatives as a factor determining performance-linked compensation for Senior Executives.
    • From FY2021 onwards, Sony is integrating sustainability initiatives areas such as employees and the environment that have been identified as key priorities by each business, into their respective Mid-Range plans. It is also setting related KPIs and evaluating the results as an integral measure of business performance.
    • Cautionary Statement
      Statements made in this release with respect to Sony's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Please note that Sony discloses the consolidated financial statements and its forecast for consolidated results for the fiscal year ending March 31, 2022 based on International Financial Reporting Standards (IFRS). Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:
    • (i)Sony's ability to maintain product quality and customer satisfaction with its products and services;
    • (ii)Sony's ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences;
    • (iii)Sony's ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
    • (iv)the effectiveness of Sony's strategies and their execution, including but not limited to the success of Sony's acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives;
    • (v)changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility;
    • (vi)Sony's continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;
    • (vii)Sony's reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations;
    • (viii) the global economic and political environment in which Sony operates and the economic and political conditions in Sony's markets, particularly levels of consumer spending;
    • (ix)Sony's ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;
    • (x)Sony's ability to forecast demands, manage timely procurement and control inventories;
    • (xi)foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony's assets, liabilities and operating results are denominated;
    • (xii)Sony's ability to recruit, retain and maintain productive relations with highly skilled personnel;
    • (xiii)Sony's ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others;
    • (xiv)the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment;
    • (xv)shifts in customer demand for financial services such as life insurance and Sony's ability to conduct successful asset liability management in the Financial Services segment;
    • (xvi)risks related to catastrophic disasters, pandemic disease or similar events;
    • (xvii)the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony's business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and
    • (xviii)the outcome of pending and/or future legal and/or regulatory proceedings.
    • Risks and uncertainties also include the impact of any future events with material adverse impact. The continued impact of COVID-19 could heighten many of the risks and uncertainties noted above. Important information regarding risks and uncertainties is also set forth in Sony's most recent Form 20-F, which is on file with the U.S. Securities and Exchange Commission.
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