Fast Retailing

Stakeholder engagement
Fast Retailing discloses an overview of the issues raised during its stakeholder engagement activities, which cover nature, including biodiversity, and social issues. It also discloses how often and through which channels it engages with various stakeholder groups.

Impact and dependencies assessment
Fast Retailing conducted a biodiversity risk assessment of its value chain’s impact and dependencies in 2021 based on the IUCN guidelines. The assessment identified high-risk areas, such as land use change and pollution in cotton production, land use change in fibre production, and pollution from product use and disposal.

Water
Fast Retailing supports and engages with partner factories and reduced 15% of water usage between 2016 and 2020. It also demonstrates that it is reducing water withdrawal in its own operations. The company also reports a decrease in water pollution in its own operations. The company provides evidence of reducing water quality pressures and discloses its processes for managing and monitoring discharge water quality through a wastewater sampling programme. Fast Retailing also conducts wastewater testing and reports regularly on water quality parameters. The company has set a target to achieve zero wastewater pollution in its partner factories by the end of 2030 and reports progress against the target.

Solid and air pollution
Fast Retailing provides qualitative evidence of reducing the production of hazardous substances such as alkylphenol ethoxylates (APEOs) and perfluorinated compounds (PFCs). The company set a target to eliminate hazardous chemicals from the products’ life cycle and all production procedures by 2020 and achieved the target. Fast Retailing is also committed to not developing or marketing new chemicals with SVHC (substance of very high concern) properties in its manufacturing restricted substances list. Fast Retailing reports some activities to reduce plastic use and waste in its own operations.

GHG emissions
Fast Retailing is reducing its scope 1, 2 and 3 emissions and demonstrates a year-on-year reduction since the base year. The company has set a target to reduce 90% of its scope 1 and 2 emissions and 20% of its scope 3 emissions by 2030 compared to the 2019 base year, reporting progress against the target. All targets are aligned with a 1.5-degree trajectory.

Invasive species
Fast Retailing’s biodiversity impact assessment identifies the activities that could lead to the introduction of invasive species in its own operations. This assessment identified that cashmere and rayon production could lead to medium impact to the introduction of invasive species.

No leading practices were identified for the company in the social inclusion and community impact measurement area

Sustainability strategy and accountability
Fast Retailing discloses some sustainability targets related to topics such as water use, GHG emissions and solid waste, and reports progress against them. However, no evidence was found that the company has group-wide targets on key sustainability topics for the most material parts of its value chain based on the SBTN Sectoral Materiality Tool, including soil pollutants, air pollutants and terrestrial ecosystem use. Moreover, while the company discloses information on the remuneration of directors and executive officers, it is unclear whether the policies are linked to environmental, social and governance (ESG) targets. Furthermore, while the company discloses the expertise of directors, it is unclear what specific background and experience regarding nature the directors possess.

Lobbying
Fast Retailing discloses a list of trade associations of which it is a member wherever it operates. However, the company does not disclose a clear and detailed framework for assessing alignment of its trade associations with nature-positive policies. While the company states that it reports misalignments between the lobbying activities of its trade associations and nature-positive policies, no evidence of a clear and detailed framework could be found in the public domain.

Impact and dependencies assessment
While Fast Retailing discloses its assessment of its value chain’s impact and dependencies, it is unclear whether it covers and assesses all of its own operations.

Key areas and species
Fast Retailing does not disclose key species or areas important for biodiversity affected by its operations or suppliers. It has an opportunity to increase its transparency in this area.

Ecosystem conversion and restoration
No evidence was found regarding Fast Retailing’s efforts to avoid ecosystem conversion, including deforestation, or promote restoration. The company has an opportunity to develop a strategy and publicly report on specific, time-bound targets. While Fast Retailing is committed to sourcing man-made cellulosic fabrics from non-Ancient and Endangered forests, no evidence was found that the company sets similar targets for other high-risk commodities such as rubber.

Resource exploitation and circularity
Fast Retailing does not disclose its inputs, including its material footprint. The company does not report quantitatively on its group-wide circularity performance. Neither does it disclose efforts to improve soil health.

Water
Fast Retailing does not disclose a time-bound target to reduce water withdrawal across its own operations. It also does not report how much water is withdrawn for its own operations in water-stressed areas. The company does not disclose a commitment to respect the right to water. Nor does it disclose its processes for implementing preventive and corrective action plans for identified specific risks to the right to water and sanitation in its own operations.

Solid and air pollution
No evidence that Fast Retailing is reducing the production of hazardous waste was found. While the company discloses an 85% reduction in plastic use in shopping bags and product packaging in 2020, no evidence was found that the company reports on the most relevant part of its value chain. Moreover, while the company reports on waste plastics from its stores and its recycling rate, it is unclear if this only concerns its own packaging. Fast Retailing does not report on air quality parameters of emissions of harmful air pollutants. Moreover, the company does not report time-bound targets to reduce air pollutants across the most material parts of its value chain.

Safe, clean, healthy and sustainable environment
Fast Retailing is committed to respecting local communities’ right to a safe, clean, healthy and sustainable environment. However, no evidence that the company tracks its actual or potential negative impacts on the health of local communities was found. The company is not committed to zero tolerance for acts of violence, threats, intimidation or judicial harassment committed against land and environmental rights defenders.

Indigenous Peoples’ and land rights
Fast Retailing is committed to operating in accordance with the UN Declaration on the Rights of Indigenous Peoples. While the company recognises the rights of Indigenous Peoples and mentions giving or withholding free, prior and informed consent, the process to identify and recognise such rights, as well as whether the company adheres to international standards or guidelines, is unclear. Moreover, no evidence was found that the company requires its business relationships to have a process to identify legitimate tenure rightsholders, paying particular attention to vulnerable or marginalised tenure rightsholders, or that Fast Retailing negotiates with tenure rightsholders to provide them with adequate compensation.

Fast Retailing describes its human rights due diligence process to identify and assess its human rights risks. Moreover, the company describes the process for identifying human rights risks and impacts in its business relationships. It also discloses what it considers to be its salient human rights issues. Furthermore, the company illustrates the second stage of its human rights due diligence process, showing that it analyses the severity and likelihood of identified risks. The company describes a global system to take action to prevent, mitigate or remediate salient human rights issues, and this includes a description of how its global system applies to its supply chain. While the company discloses the categories of stakeholders it engages with generally on sustainability issues, it is not clear if these stakeholders are those whose human rights have been or may be affected by its activities.

Fast Retailing has a publicly available policy statement which shows it is committed to respecting the health and safety of workers, and it expects its suppliers to do the same. While the company discloses that it pays wages in accordance with local laws and regulation and/or international standards, it has an opportunity to disclose a time-bound target for paying all workers a living wage or that it has achieved paying all workers a living wage. However, the company does describe how it works to support the payment of a living wage by its suppliers. Fast Retailing has an opportunity to disclose the coverage of collective bargaining agreements. Moreover, while the company states that it encourages its suppliers to respect employees’ right to freedom of association and the right to collective bargaining, it has an opportunity to describe how it works to support the practices of its suppliers in this regard.

While Fast Retailing mentions that any significant compliance violations will be escalated to the Code of Conduct Committee, no evidence was found that the company describes the process to identify its bribery and corruption risks and impacts in specific locations or activities covering its own operations. However, the company does include anti-bribery and anti-corruption clauses in its contracts with direct business relationships. Fast Retailing outlines its approach to lobbying and political engagement but does not formalise this approach in a public policy document. Similarly, the company states that it does not make political contributions but has an opportunity to formalise this commitment in a public policy document. Fast Retailing discloses a global tax strategy.