Epson Group

Sustainability Report 3-3-5 Owa, Suwa-shi, Nagano-ken 392-8502 Japan TEL: +81-266-52-3131 http://global.epson.com

2015

Highlights

April 2014 - March 2015

Individuality and Teamwork Customer Commitment

Sustainability Report 2015 Highlights P.3

CONTENTS

40th Anniversary of the Epson Brand P.13

P.5

Leveraging Unique Sensing Technologies

Creating a Dynamic Workplace

Trusted Throughout the World

P.15

Socially Responsible Procurement

Epson conducts business activities with the aim of becoming an indispensable company to customers and society. Our activities

40th Anniversary of the Epson Brand

3

Leveraging Unique Sensing Technologies

5

Integrated Environmental & Business Strategy

9

Environmental Conservation Is a Corporate Obligation

11

Creating a Dynamic Workplace

13

Socially Responsible Procurement

15

Corporate Citizenship in the Community

17

To Our Stakeholders

19

Business Vision

21

CSR Management

23

Epson Group Overview

24

are rooted in our Management Philosophy and the employee mission underpinning the Exceed Your Vision tagline.

Prospering with the Community Editorial Policy This report covers representative CSR activities in the Epson Group during 2014. The structure is meant to portray the direction we are headed, with articles arranged in

Commitment to Environmental Conservation

chapters that mirror Epson’s Management Philosophy. Prepared for Epson’s worldwide stakeholders, this report is

P.17

brief and concise. Refer to Sustainability Report 2015 for

Corporate Citizenship in the Community

more detailed information.

Disclaimer P.11

Environmental Conservation Is a Corporate Obligation

This report includes forward-looking statements, estimates, and plans. Projections herein are based on the best information available at the time of publication. Actual results may vary from those discussed.

P.9

1

Epson Group Sustainability Report 2015 Highlights

Integrated Environmental & Business Strategy

Note: “Epson” refers to the Epson Group, unless indicated otherwise.

Epson Group Sustainability Report 2015 Highlights

2

Customer Commitment

EP + SON = “EPSON” The origin of the “Epson” name

40th Anniversary of the Epson Brand

The Epson brand name comes from the EP-101, an electric printer that kicked off the company’s expansion into the information equipment business. The “Ep” stands for “electric printer” and the “son” represents our desire to follow the original electronic printer with many more worthwhile products and services in a variety of fields.

The EP-101, the world’s first miniature digital printer

Filling the Technology Void

Changing the World in Four Areas

On June 12, 2015, the Epson brand marked its 40th anniversary.

Epson leverages its unique core technologies to alter the scope and nature of its businesses to meet the changing needs of

This 40-year journey is defined by an ethos that we call “creativ-

customers and society. We are developing original products and services in line with a vision of initiating positive change in the

ity and challenge.” Epson engineers have always filled technology

four areas of printing, visual communications, quality of life, and manufacturing.

voids by finding creative solutions to challenges in order to realize their dreams of creating the value they envision and the products they want to present to the world. Since its founding as a watch manufacturer in 1942, Epson has been renowned for generating

1963 Printing Timer Electronic recording system

original products by continuously advancing its microfabrication

Sales

and ultra-high-precision processing technologies.

Manufacturing

Today, printers are Epson’s largest business. The catalyst for venturing into this business was the development of a printing timer, a groundbreaking electronic recording system that could accurately measure times at sporting events and immediately print out the results. The printing mechanism used in this system served as the platform for the EP-101, introduced in 1968 as the world’s first miniature digital printer. Commercialization of this printer laid the foundation for later expansion into other businesses.

Printing

Visual communications

Quality of life

High-precision manufacturing

Manufacturing

1963 Seiko Crystal Chronometer QC-951 World’s first portable, high-accuracy, battery-operated quartz timer

Responding sincerely to customers’ opinions

Design Micro Piezo

Micro display

Sensing

Robotics New Core Technologies

Planning

Core devices

Planning and designing innovative products

Developing original core devices

Enduring Commitment to Creativity and Challenge

1969 Seiko Epson began in 1942 as Daiwa Kogyo

3

Epson Group Sustainability Report 2015 Highlights

Seiko Quartz Astron 35SQ The quartz watch that revolutionized horology

Vertical integration is one of Epson’s strengths. We develop the core devices and core Micro Piezo printhead, microdisplay, sensing, and robotics technologies that enable the products we manufacture and sell. Control over the manufacturing process allows us to create value that exceeds customer expectations. On the following pages, we report on products for two of the above areas that integrate sensing technology.

Epson Group Sustainability Report 2015 Highlights

4

Customer Commitment

Epson provides sports products that combine accurate data and professional knowledge

Change quality of life

for runners and golfers. We are enriching the lives of people with immaculately designed,

Leveraging Unique Sensing Technologies

comfortable wearable products that can acquire your location information using GPS.

Wearable products are a perfect fit for Epson thanks to our combination

Runsense GPS Sports Watches

of watch, semiconductor, and crystal device businesses.

SF-810V

WristableGPS for Trekking MZ-500B

Epson’s wearables can be paired with smart devices to provide customers with advice on improving their health or athletic performance based on data collected by precision sensors.

Improving Quality of Life with Sensors Epson is focused on maximizing sensing accuracy. Accurate sen-

Runsense GPS Sports Watch is equipped with a

Provides useful, accurate information for hiking based

pulse sensor as well as GPS. Perform heart

o n re a d i n g s f ro m a c o m b i n ati o n of s e n s o r s (G PS,

rate-based training without a chest strap.

geomagnetic, accelerance, temperature & barometric).

Thin (14.2 mm) and lightweight (52 g).

The product is only sold in Japan.

sors acquire better data, and this data can, in turn, serve as the

Mizuno Baseball Swing Analysis System Swing Tracer

basis for high-value products and services.

M-Tracer Golf Swing Analyzer MT500G II

Our Pulsense activity monitors are equipped with sensors that measure your pulse at the wrist and track your activity to provide you with objective data that you can access at any time from a PC or smartphone. You can see, for example, the time you spent exercising in the fat-burning zone or your state of mind (relaxed or excited) at any time of day. Pulsense helps you acquire habits that will form the basis for good health throughout your life.

Pulsense heart rate monitors with activity tracking

How heart rate is tracked The light-absorbing property of hemoglobin is used to track pulse. LED light is shone on blood vessels

The sensor attaches to the base of a bat to trace and

Attach the sensor to a club to accurately measure the

analyze the swing path for baseball, fastpitch softball and

data needed to analyze a swing. Data is sent to your

slowpitch softball.

smartphone so you can identify areas for improvement.

The product is only sold in Japan.

and pulse rate is counted based on

(Product photo provided by Mizuno Corporation)

changes in the amount of reflected light.

VOICE

Voice of the customer

VOICE

Using Pulsense in our Lively Health Diagnostic Program

Sensors for an IT revolution in batting Swing analysis requires a small, lightweight, high-precision sensor. Epson’s sensors allow us

We at Ikenotaira Hotel & Resort Corporation provide personal-

to measure and analyze eight important swing factors, enabling us to commercialize Swing

ized exercise and lifestyle advice to our clients based on body

Tracer. We hope to keep Epson as a valued partner as we work to further develop this product

type and measurements of their heart rate and exhalations dur-

and offer scientific support for effective instruction and training.

ing exercise. During interval walking, where we alternate aerobic and anaerobic exercise, our clients need to be able to see changes in their heart rates. We use Epson’s activity trackers to accurately measure heart rate.

5

Epson Group Sustainability Report 2015 Highlights

Voice of the customer

Hikaru Ozawa Health Fitness Programmer / Health & Exercise Instructor Lively Health Diagnostic Program Ikenotaira Hotel & Resorts Corporation

Takeshi Naruo Chief Researcher Mechanical Engineering Ph.D. Research and Development Department Mizuno Corporation

Epson Group Sustainability Report 2015 Highlights

6

Customer Commitment

Case

Case

1

2

Leveraging Unique Sensing Technologies

Leveraging Unique Sensing Technologies

Creating New Value With Moverio

Making Communities Safer

Epson is creating new value with the Moverio Pro BT-2000, a multi-sensor smart headset for business

Epson’s industrial sensing systems are used to monitor buildings, infrastructure, and potential disaster

applications that is based on the Moverio with Epson’s binocular, see-through, hands-free wearable

sites to enable quick evaluations and decision-making.

products.

Our goal is to make communities safer by helping to ensure that people are not exposed to risks posed by deteriorating infrastructure or disasters.

Comfort a priority

Contributing to Research on Building Safety

Epson Sensors in ICT & Urban Development

Tests were conducted in January 2015 at the “E-Defense”

Epson’s sensing system technology was used in a govern-

Three-Dimensional Full-Scale Earthquake Testing Facility

ment-sponsored research project on ICT and urban devel-

in Hyogo, Japan, as part of a multi-year government-spon-

opment in the city of Shiojiri, Japan. In April 2015, Shiojiri,

sored project to mitigate the seriousness of disasters arising

which is promoting the use of sensor networks to increase

from urban vulnerabilities. An Epson sensing system based

community safety, installed Epson accelerometers on city

on 158 inertial measurement units (IMU) was used to help

bridges and inclinometers on hillsides for field tests.

assess damage to the structure under test.

The BT-2000 can be worn comfortably for long periods—a necessity for business applications—thanks to a headset that distributes the weight of the system.

Boosting Work Efficiency I am the leader of the Moverio Pro development project. Smart glasses with see-through lenses are attracting attention because they allow you to work with both hands and What is an inertial measurement unit ?

see your surroundings while also viewing visual content displayed in front of you. We have conducted numerous joint

An IMU is a sensor that measures object move-

real-world tests with Moverio in various fields. We developed

ment in 3D with accelerometers, which sense

the BT-2000 based on the insights we gained into customer

linear motion, and gyro-sensors, which sense

needs.

rotation.

The IMU also provides

VOICE

The design of the BT-2000 was tweaked to further in-

extremely accurate head

Shinichi Kobayashi

crease operational efficiency. For example, the headset was

tracking, so augmented

HMD Business Management Department

equipped with an Epson inertial measurement unit (IMU),

reality content can be

a motion sensor for accurate motion tracking and indoor po-

displayed in the proper

Our urban development partner

sitioning. Analyzing a motion log allows you to identity waste

location in your field of view, for complete comfort.

The city of Shiojiri is looking to create a safe, secure community, but we lack the wherewithal

and obtain insights that will lead to greater operational ef-

to inspect and maintain all of the more than 500 bridges and hillsides equally. The data pro-

ficiency and productivity. Since it knows your position, the

The BT-2000, the product of a total collective effort by mul-

vided by Epson’s sensors should allow us to quickly see their state and take efficient action.

headset can, for example, help you

tiple operations divisions, is allowing Epson to deliver new

Epson offered superior technology and by far the most accurate accelerometers and inclinom-

quickly navigate to specific loca-

value.

tions in a large warehouse where outdoor GPS signals do not reach by providing information overlaid An inertial measurement unit

7

Voice of the customer

Haruo Kaneko

eters. Epson has been the perfect partner, and we look forward to continuing our relationship.

Chief Technology Officer Information Policy Section Manager Planning & Policy Department City of Shiojiri

on your actual environment.

Epson Group Sustainability Report 2015 Highlights

Epson Group Sustainability Report 2015 Highlights

8

Commitment to Environmental Conservation

Integrated Environmental & Business Strategy

High-Capacity Replaceable Ink Pack System Print up to 75,000 A3 sheets without replacing the ink2. The ink pack system reduces CO2 emissions

We articulated our 2015 environmental goals in our environmental policy, and the environmental

by using fewer resources and facilitates consumables management. 2

this approach is to reduce end-user environmental impacts. 3

“New Perspective” Products and Services Products and services that are designed from a new per-

tomers by offering them innovative, eco-considerate Epson

spective make your work and life easier and sharply reduce

technologies, products, and services that will change the

your environmental impacts. As we continue to improve the

way they work.

CO2 emissions3 Approx.

programs we are pursuing are firmly linked to our business strategies. We are addressing environmental issues from a variety of angles, one of which we call “new perspective.” The goal of

Low global warming impact

95

 uoted yields are extrapolated based on Epson original methodology Q from the print simulation of test patterns provided in ISO/IEC 24711 and ISO/IEC24712. Quoted yields will vary depending on the images that you are printing, the paper type that you are using, frequency of printing, environmental conditions, etc.  igures calculated under Epson’s test conditions. Compared with the F Epson LP-M5300FZ Japan model, a color laser MFP with equivalent functions. We use a life cycle assessment to calculate the total global warming impacts of consumables across the product life cycle (material, material processing, distribution, disposal) as CO2 emissions. CO2 emissions will vary depending on customer printer use.

% reduction

(75,000 prints)

Four high-capacity ink packs

CO2 emissions

CO2 emissions

3.81

80.39

kg-CO2

kg-CO2

52 toner cartridges & 6 photoconductor units Volume of consumables used to print the same number of pages with the Epson LP-M5300FZ, a color laser MFP with equivalent functions

Epson RIPS technology printer

Supporting Energy-Efficient Offices with Inkjet Printers

environmental performance of our products, we are also helping to mitigate the environmental impacts of our cusEpson inkjet printers, which use slight changes in pressure to eject ink droplets instead of heat, con-

Reducing Eco Impacts with RIPS Technology

sume far less electricity than laser printers, which do use heat. 4

Epson printers with replaceable ink pack system1 (RIPS)

er. Epson is helping to reduce the environmental impacts of

technology are a “new perspective” product for the office.

our customers by supplanting laser printers, which have long

Equipped with high-capacity replaceable ink packs, these

dominated office printing, with inkjet printers.

business inkjets offer approximately 95% lower CO2 emis-

5

sions and use 88% less power than an equivalent laser print-

Low electricity consumption Electricity consumption Approx.

88

 or the A3 all-in-one basic model, the A3 printer basic model, and the F A3 printer full set

% reduction

(TEC approach4)

 ypical electricity consumption (TEC) is based on the ENERGY STAR® T program’s TEC test method criteria. Measured when making 288 prints per day. Compared with the Epson LP-M5300FZ Japan model, a color laser MFP with equivalent functions. The TEC value of the WorkForce Pro WF-R8590 series is 0.7 kWh.

Electricity consumption

0.6

5

kWh/week

Epson RIPS basic model

VOICE

Electricity consumption

5.2

kWh/week

LP-M5300FZ Equivalent Epson color laser MFP (sold only in Japan)

Voice of the customer

RIPS is a game changer We use the Epson RIPS technology printer as the main printer for our office. It is reassuring to know that for just 12,000 yen per month—the basic monthly fee for the full-set plan, which includes servicing—we can call field service to resolve any issues that arise. The replaceable ink packs are huge, so we never have to worry about running out of ink. Another advantage of Nobuhiko Yasuda 1

9

Epson Group Sustainability Report 2015 Highlights

In some geographies, printers with RIPS technology include a managed print service with a choice of printers as well as ink and maintenance for a fixed monthly fee.

Representative Sakura Chuo Tax Accountants’ Corporation

Epson’s inkjet solutions is that they consume far less power than laser printers, which helps us to keep our electrical bills down.

Epson Group Sustainability Report 2015 Highlights

10

Commitment to Environmental Conservation

Environmental Conservation Is a Corporate Obligation We at Epson are putting our environmental technologies and know-how to work in global environmental

Reducing CO 2 by Visualizing Air Conditioning At Epson Portland Inc. (EPI) in the US, more than 7 million

EPI reduce its annual

kWh are consumed each year, on average, for air condition-

CO2 emissions by more

ing and production support equipment. In 2011, the Facilities

than 100 tons.

team worked with the non-profit Energy Trust of Oregon to

initiatives.

introduce a new air conditioning monitoring system to re-

Since implementing this

Here, we present some examples of initiatives in the UK and USA.

duce EPI’s energy use and environmental impact.

cooling system in 2011, EPI has taken advantage

Sustainable Factories with Zero-Cost Recycling

of various other energy

cord the actual air temperatures in the ink cartridge produc-

conservation opportuni-

tion areas throughout the day. EPI used the data to modify

ties. These have result-

the air conditioning system so that, when outdoor tempera-

ed in cumulative CO2

tures are lower than those in the production areas, warm air

reductions of approximately 655 tons.

I’m Justin Pike, Supervisor of the Environmental Depart-

2006 ETL was earning

is automatically exhausted and outside air is used for cool-

ment of Epson Telford Ltd. (ETL) in the UK. Epson’s zero

enough money from sal-

ing, saving energy and money. These actions have helped

emissions program began with an effort to recycle 100% of

vaging the waste to break

process wastes. In FY2003 all Epson Group companies in

even on its recycling op-

Japan and all of our overseas production sites achieved this

eration.

Andy Pigg

recycling target. Epson is now shifting to activities that conserve resources in production processes.

I’m Andy Pigg, Manag-

(1) L arry Halverson checking the operations of the air conditioning system on a monitor (2) Air conditioning system installed on the roof

er of the Environmental Department. In 2012, ETL received the first Zero Waste to

tivities at ETL, we have been work-

Landfill Award from Valpak, a leader in waste management

ing to achieve zero-cost recycling

and environmental compliance.

since January 2006. Toward that end, we strive to efficiently reuse

We display posters showing the results of our zero emis-

production waste materials to

sions activities as a way to raise employee awareness. We

make paper, plant materials,

also endeavor to produce as little waste as possible by re-

stationery and other every-

Manager Facilities

● Main Improvements to Reduce CO2 Since 2011

1

Manager Environmental Department

As part of our zero emissions ac-

Larry Halverson

The monitoring system allowed Facilities to observe and re-

Improvement

CO 2 Reduction

Production area temperature control with outside air (2011)

112 tons

Compressed air leak repair (2011)

67 tons

Reduced HVAC air volume (2012)

171 tons 66 tons

Reduced compressed air pressure (2012)

2

Installed variable frequency drives on six cleanroom fan motors (2014)

188 tons

ducing processing waste and unnecessary items.

day goods. By November Justin Pike Supervisor Environmental Department

VOICE

● Zero Emissions Activities at Epson

Cut electricity bill through efficiency Resource conservation

Recycling

Factory

Waste materials

Resource inputs

Closed-loop recycling

Non closed-loop recycling

11

Reduction of inputs Shift

Resource inputs

Product

Epson Group Sustainability Report 2015 Highlights

Recycled externally

Definition of recycling

Energy Trust of Oregon, a non-profit organization funded by customers of local utility companies,

• Recycling 100% of waste materials • Maximum of 50 g of burnable waste per

provides financial assistance to help businesses and homeowners save energy.

person per day

Closed-loop recycling Factory

Non closed-loop recycling

When Larry Halverson asked us about reducing energy in EPI’s cleanrooms, our energy professionDefinition of resource conservation Reduction of resource inputs • Reduction of wastes by using recycled resources •

Recycled in-house

Recycled in-house Recycled externally

A message from our partner

Product

als suggested ways to optimize indoor air pressure and increase energy efficiency. Energy Trust of Adam Bartini Senior Program Manager Energy Trust of Oregon

Oregon provided $21,000 in funding, and the improvements are expected to save EPI $30,000 or more a year.

Epson Group Sustainability Report 2015 Highlights

12

Individuality and Teamwork

Creating a Dynamic Workplace

A Small, Fun Printer Conceived by Women

Participation of Women in the Workplace

I have been serving as the leader of Project W (Women) for

whose members were in the same age group at target us-

a small, fun printer called the PF-70. Released in Japan in

ers, carried more weight with the engineers.

Epson actively engages women in the product design process to ensure that different perspectives

October 2014, the PF-70 mainly targeted females between

are reflected in products.

the ages of 10 and 40. You

Initially I did not know how to lead the team to generate use-

can use the printer to quick-

ful ideas or create proposals, but as a group we worked it

ly and easily print a variety

out. Ultimately, the ideas we proposed were used in product

of stickers for everyday use.

development, which gave us a huge confidence boost. This confidence and approach to challenges are something we

At the product development

want to remember for the future.

stage, one man on the PF-

Home Projectors That Appeal to Women

70 project suggested that

Recently, we created a new Project W with one new member

we needed to get young

to carry on this work and gather ideas from women that will

women involved in the idea

help shape future printers.

I am serving as the leader of the Women’s Working Group

that even idle chitchat

generation and evaluation

(WWG) for Home Projectors. The majority of home projec-

generated insights.

process if we were to meet the requirements of target-

tors are purchased by men. To entice more women to buy Mana Kamekawa

home projectors, we needed to take a different approach.

After exhaustive dis-

We needed more input from women. So, in October 2014,

cussions about prod-

we launched the WWG to collect information and ideas from

uct usability, size, and

made up of seven young

women that would help shape future products.

operability, the WWG

women from our printer de-

Project W leader Imaging Products Design Department

developed a broad As the leader of the WWG, I wanted a diverse group of 10

proposal for projec-

women that would represent different ages, family composi-

tors that would appeal

tions, and backgrounds.

to women. The next

ed users. This led to the creation of Project W, a group

sign and planning organizations. Tomomi Misawa Women’s Working Group Leader VP Planning & Design Department

step is to produce a Since this was a team effort, everyone was encouraged to

full-size mock-up and

contribute ideas and to tap into sensibilities as women.

pitch our proposal to the relevant departments. This WWG was made up exclusively of female employees in Japan, but

The WWG generated a large number of ideas in a fun and

we want to roll it out globally to engage women at our over-

free-thinking atmosphere. The participants found it easy to

seas operations to help develop projectors by women, for

participate and speak up in the WWG, whereas they may

women.

Most of our printer design engineers are men, and product specifications tend to reflect a male perspective. The PF-70 was different because the ideas proposed by Project W,

Offering more fun ways to print The PF-70 is a small, fun printer that is great not only for photos and documents but also for stickers, labels, photobooks and more.

have been more hesitant if men were present. We also found Easy and fun to use Easily print photos and create original stickers and labels for decorative and other uses.

Name stickers

13

Epson Group Sustainability Report 2015 Highlights

Address stickers

Multipurpose stickers

Decorative stickers

Epson Group Sustainability Report 2015 Highlights

14

Trusted Throughout the World

Socially Responsible Procurement

Efforts by ESL

Eliminating Conflict Minerals from the Supply Chain

Socially responsible procurement is a critical issue for Epson

suppliers understood the reporting requirements, so ESL

Engineering (Shenzhen) Ltd. (ESL), which manufactures and

engaged these suppliers to talk about the importance of ef-

Epson believes in building good supply chain partnerships based on mutual trust. This means working

ships Epson products around the globe. We want our cus-

forts to eliminate conflict minerals and to explain the survey

tomers to be happy with our products and to use them in

and reporting process.

with suppliers to ensure that we conduct our business activities in line with social ethics and norms.

good conscience, confident not only that our products meet

As part of this effort, we are working to address the problem of conflict minerals in the supply chain.

high standards for quality, reliability, value, and environmental

Ultimately, ESL received completed surveys from 135 suppli-

performance, but also that we as a company have remained

ers on more than 13,000 components. We continue to work

socially accountable and have not procured components or

with the one supplier that did not comply with our request to

materials produced using child labor or forced labor.

confirm its conflict-free status.

Eliminating Conflict Minerals Armed groups in the Democratic Republic of the Congo and

● Countries where conflict minerals are mined

adjoining countries have been using forced labor to mine minerals. Proceeds from the sale of these minerals are being

ESL conducted conflict min-

We realize that the cooperation of our suppliers is essential

eral surveys in the 2013 fis-

to keep conflict minerals out of Epson products, and we will

cal year. We did so again in

continue to seek their understanding and cooperation to fa-

fiscal 2014, surveying sup-

cilitate socially responsible procurement.

pliers from December 2014 Republic of the Sudan

used to fund further armed conflict. To avoid contributing to

through March 2015. Not all

Central African Republic

these groups either directly or indirectly, companies need to

Republic of Uganda

procure tantalum, tin, tungsten, and gold from organizations not related with the armed groups.

Republic of the Congo

Democratic Republic of the Congo

Republic of Angola

Republic of Rwanda Republic of Burundi

Yang Li Fang Division manager TP Center Vendor Management Division (former general manager of TP Center Production Control Department)

United Republic of Tanzania

Republic of Zambia

Explaining the conflict mineral survey to suppliers

Epson’s Approach to Responsible Sourcing

Epson Group Conflict Minerals Survey Results

Epson began addressing the problem of conflict minerals

Epson conducts supply chain surveys to identify smelters of

The answers to many of the completed surveys from com-

in electronic devices in 2005, before the establishment of

conflict minerals in products that we procure. Minerals ob-

ponents manufacturers indicated the difficulty of tracing

industry guidelines. Verifying that the components and raw

tained from smelters certified by the Conflict-Free Smelter

minerals back to a particular smelter. Some suppliers re-

However, we will continue to work with our suppliers to pro-

materials we procure do not contain conflict minerals is a

Program1 are judged to be conflict-free.

ported the names of smelters that have not been certified as

mote socially responsible procurement of conflict-free prod-

complex challenge that requires tracing the minerals’ origins

1

conflict-free under the CFS Program. We were thus unable

ucts.

back through the supply chain.

 he program created by the EICC/GeSI uses third parties to identify smelters T that source only conflict-free minerals.

● Supply Chain Overview and Epson’s Survey Supply chain

What is identified

15

Epson

Components manufacturers

Determination of whether Determination of whether products contain subject minerals are conflict-free minerals

Epson Group Sustainability Report 2015 Highlights

conflict-free (as of March 31, 2015).

to conclusively determine that components we procure are ● FY2014 Epson Group Survey

Metal traders

Smelters and refiners

Identification of smelters/refiners and mines

(current as of March 31, 2015)

Mining companies

Companies sent surveys

Companies completing surveys

Companies not completing surveys

Completion rate

No. of components covered by surveys

942

905

37

96%

50,858

Epson Group Sustainability Report 2015 Highlights

16

Prospering with the Community

Corporate Citizenship in the Community Epson strives to be a good global corporate citizen. We contribute to the communities in which

Taiwan Energy Patrol Team Expands to New Regions In 2010, borrowing know-how from the Shinshu Energy Pa-

covering south Taiwan

trol Team in Japan, we at Epson Taiwan Technology & Trad-

in 2013 and central Tai-

ing Ltd. (ETT), joined by other local companies and groups,

wan in 2014. To assist

launched the Taiwan Energy Patrol Team. The team visits

the various teams, we

we operate not only monetarily, through donations and sponsorships, but also physically, through

local businesses to provide free assessments of their en-

have held trainings and

volunteer efforts and the use of Epson technology.

ergy use and recommend improvements. There was a limit

shared information with

to what ETT could do by itself, so we are grateful for the

other participants. As of

help and cooperation of other companies and groups who

March 2015, we have

helped to make this program a success.

increased the number

Coco Wang General Manager BR & Corporate Affairs Center

of member companies

Global Initiatives

In the second year of the program, we, along with the Tai-

to 34 and have conducted 112 assessments.

wan Business Council for Sustainable Development (BCSD),

Beautification project (Japan)

Recycling event (USA)

Every year since 2007, Epson employees at the Shiojiri Plant

Every April for the last 14 years, Epson Portland Inc. (EPI)

have helped to beautify the local community by cutting

employees have held a recycling

weeds and picking up trash

event. In 2015, they joined forces

along a river that runs by the

with nearby businesses to collect un-

plant. As of August 2014, a

needed electronics, batteries, used

total of 3,168 volunteers had

paper, and other items.

formed the Taiwan Energy-Saving Patrol Association. This

With even greater corporate involvement and government

has prompted even more corporate participation and al-

participation, we hope to make this program sustainable.

lowed us to expand activities to new regions, with teams

2

1

The history of Epson energy patrols The catalyst for these patrols was a pamphlet that Seiko Epson Head Office

participated in this project.

distributed to local enterprises containing energy-saving tips. Reaction to the pamphlet was positive, and Epson be-

3

Blood drive (Philippines) the Philippine Red Cross and EPPI employees, has par-

In 2010, Epson (China) Co., Ltd. (ECC) entered an agree-

since 2000. This year (FY2014) 1,241

ment with a government agency and launched the Epson

employees donated blood.

ticipated in Red Cross blood drives

use. Epson responded by forming the Suwa Regional Energy Patrol Team in

Epson Precision (Philippines), Inc. (EPPI), in partnership with

Carbon Trading Model Forest Project (China)

gan receiving requests to assess energy

2000. In 2005 the name was changed to the Shinshu Energy Patrol Team. (1) Team member providing assessment feedback (2) (3) Teams on patrol

Carbon Trading Model Forest Project. ECC helps to maintain a 37,000 m2 area in Beijing’s Bai Wang Shan Forest Park,

VOICE

measure CO2 absorption, and educate the community about

A message from our partner

CO2 reduction. As of March 2015, a total of 360 employees and members of their families have participated in the project.

The patrol team helped us cut CO2 emissions

190 Days of Social Commitment (Germany)

The BCSD’s mission is to realize the sustainable development of businesses through environmen-

All employees of Epson Deutschland GmbH (EDG) take one

tal preservation and efficient resource management. Most government-run energy conservation

day off a year to serve the community in some capacity. This

programs focus on large corporations, so smaller companies and organizations have few op-

program, which began in 2008, was named “190 Days of

portunities to get help in increasing energy efficiency. This situation prompted ETT to propose the

Social Commitment” because EDG, at the time, had 190 employees. As of March 2015, EDG employees have provided more than 1,100 days of

Tony Mo Taiwan Business Council for Sustainable Development (BCSD)

Taiwan Energy Patrol Program, which was launched with the help of other like-minded organizations. The membership has been growing by the year. We want to urge more companies to get involved and help reduce CO2 emissions.

service. 17

Epson Group Sustainability Report 2015 Highlights

Epson Group Sustainability Report 2015 Highlights

18

To Our Stakeholders

In June 2015, the Epson brand marked its 40th anniversary. We at Epson would like to take this opportunity to extend our sincere thanks and appreciation to the countless loyal stakeholders whose loyalty and support have made this possible. Epson has always sought to provide unique products and services that bring surprise and delight to people around the world by leveraging the technologies that have long been hallmarks: technologies that maximize energy savings, compactness, and precision. Compact, energy-saving, and high-precision technologies are the source of Epson's technological strength. At the same time, these technologies also significantly help mitigate environmental impacts by, for example, reducing CO2 emissions and conserving resources. As stated in our Management Philosophy, we are committed to environmental conservation, and we believe that the use of products and services that feature our compact, energy-saving, and high-precision technologies can help to keep greenhouse gas emissions in check. As a member of society, Epson believes that corporate conduct is an essential element in fulfilling our corporate social responsibility (CSR). It is this belief that guides our initiatives to face and resolve social issues, whether they relate to corporate ethics, compliance, respect for human rights, environmental issues, or respect for employee diversity. A multinational corporation that conducts business around the globe, Epson declared its support for the United Nations Global Compact in 2004, and we continue to drive internal initiatives aligned with the ten principles of the GC relating to human rights, labor, environment, and anti-corruption. As a manufacturer, Epson aims to continue to be an indispensable company for its customers and society by delivering products and services whose value exceeds expectations. Through nonstop innovation and the delivery of peerless, unique value to more people in a wider range of markets, we intend to remain an indispensable company while at the same time fulfilling our social responsibility.

Delivering Peerless, Unique Value Minoru Usui President Seiko Epson Corporation

July 2015

19

Epson Group Sustainability Report 2015 Highlights

Epson Group Sustainability Report 2015 Highlights

20

Business Vision

The SE15 Updated Mid-Range Business Plan

Epson's vision for targeted business areas Penetrate every corner of the printing market with Micro Piezo inkjet technology.

The SE15 Updated Mid-Range Business Plan, established in March 2013, is a three-year plan that

Aiming to fill every printing need, we are revolutionizing printing in the office and improving work processes in the professional printing and textile industries by fully tapping into the power of PrecisionCore to provide amazing image quality at blazing speeds.

runs from FY2013 through FY2015.The plan reiterates the strategic direction of the SE15 Long-Range Corporate Vision while emphasizing profit over revenue growth. Under the next three-year plan, which starts in 2016, we aim to transform Epson into a company

Printing

that posts strong growth by creating and providing new information solutions and equipment for Change the way information is communicated using microdisplay technology.

businesses and professionals, as well as consumers. We are laying the foundation for achieving

We are changing the way information is communicated with a broad lineup of projectors for the office, home, and classroom. We are developing professional applications for Moverio eyewear and are transforming the way work is done.

this under the current plan by readjusting our product mixes and adopting new business models in existing businesses while aggressively developing markets in new areas. Visual communications Use precision sensing to help improve personal health and safety.

We are contributing to health, safety, and security with products that combine sensing and watch technologies to offer advice for improving health and sports performance and with sensing systems that monitor structural health.

The Updated SE15 Mid-Range Business Plan Direction under the SE15 Long-Range Corporate Vision

Basic Policy

Quality of life

Manage businesses so that they create steady income, and avoid the single-minded pursuit of net sales growth.

Innovate manufacturing by using robotics technology to further automate production.

We are innovating manufacturing by automating production in the electronics, auto, and other industries. By developing robots that virtually see, feel, think, and act, we are also automating tasks that have defied automation in the past.

Initiatives for achieving the SE15 Long-Range Corporate Vision

・Strengthen the financial structure with an emphasis on generating cash.

・Change the profit structure with an eye toward fresh growth.

Manufacturing

Corporate Vision FY18

Next mid-range business plan

A company that once again posts strong growth by creating and providing new information tools and equipment for businesses and professionals, as well as consumers. FY16

FY15

Updated Mid-Range Business Plan

Develop firm foundations

Transform existing business domains Develop new business domains

FY13

Epson today Primarily a consumer imaging product provider

Looking Looking Back back on on Fiscal fiscal 2014 The source of Epson’s competitive strengths is provided by core technologies (Micro Piezo inkjet printhead, microdisplays, sensing, and robotics) that help reduce the power usage of products, shrink their dimensions, and improve precision. We will actively expand our business domains by improving these core technologies and offering products and services that exceed customer expectations in printing, visual communications, quality of life improvement, and manufacturing innovation.

Epson Group Sustainability Report 2015 Highlights

Revenue

Working updated plan, Epson made signifiWorkingininline linewith withthethe updated plan, Epson made cant technological advances, launched new products, and

significant technological advances, launched new

introduced new business models. On the financial front,

(billions of yen)

products, and introduced new business models.

1,200

On the financial weaker yen and actions revenue and profitfront, while the actively investing in future growth.

1,000

the weaker yen and actions taken enabled us to grow both

taken enabled us to grow both revenue and profit

800

We willactively fuel strong growth by focusing management rewhile investing in future growth.

600

sources on the four targeted areas where we can leverage

400

our core technologies, spreading the scope of our opera-

200

We will fuel strong growth by focusing

management resources on the four targeted areas

tions, and building strong new businesses.

where we can leverage our core technologies, spreading the scope of our operations, and building strong new future businesses.

21

Revenue & business profit trends

Revenue

Business profit

Up

Up

7.7% Y/Y

1,008.4 849.6 90.0

12.4% Y/Y 1,086.3

Business profit

(billions of yen) 120 100

101.2

80 60 40 20

36.5

0

0

FY2012

FY2013

FY2014

* Revenue conforms to International Financial Reporting Standards. Business profit, which is calculated by deducting the cost of sales and SGA expenses from revenue, is essentially the same concept as operating income under J-GAAP.

Epson Group Sustainability Report 2015 Highlights

22

CSR Management

Epson Group Overview

Epson’s CSR

Company Profile (As of March 31, 2015)

At Epson, our Management Philosophy is key to how we run our business. Our mission is to build

Name

Seiko Epson Corporation

Capital

stakeholder trust as we grow and prosper with communities and to help create a better world. We

Founded

May 18, 1942

Employees Consolidated: 69,878

seek to do this through business activities that comply with the law, adhere to the highest standards

Head Office

3-3-5 Owa, Suwa-shi, Nagano-ken, Japan 392-8502

of business ethics, and create value that exceeds the expectations of our customers.

¥53,204 million Parent Company: 11,810

94 (including Seiko Epson Corp.) Group (21 in Japan and 73 overseas) Companies

Seiko Epson Corporation Head Office

FY2014 Performance by Business Segment

CSR and Principles of Corporate Behavior By creating customer value as guided by our Management

Printing Solutions Principles of Corporate Behavior

Philosophy, we aim to win the trust of every stakeholder now

1 Acting ethically, building trust ●

and in the future and to keep contributing to the develop-

We will abide by the law and conduct all our business with high ethical standards.

ment of society. We consider any action designed to realize the Management Philosophy to be a CSR activity. To make sure this happens, we established our Principles of Corporate Behavior in 2005. This is a Group-wide statement on

2 Protecting people, assets, and information ●

We will maintain systems to provide the security of people and all corporate assets, and will be prudent in handling information.

¥730.8 billion

Segment Profit

¥111.4 billion

total % of revenue

67.5%

Home and office-use inkjet printers

3 Pursuing customer satisfaction ●

total % of revenue

Revenue

¥177.1 billion

stakeholders.

Segment Profit

¥19.4 billion

In 2006, we revised the Epson Code of Conduct, based on

4 Creating a safe, healthy, and fair workplace ●

Wearable & Industrial Products

respect to our customers, shareholders, investors, and other

the Principles of Corporate Behavior and spelling out how employees are to conduct themselves. We frequently update the Epson Code of Conduct (most recently in April 2015) in response to social, legal, regulatory, and other changes.

NGOs/NPOs

Local communities

Employees

5 Fostering diverse values and teamwork ●

We will draw strength from our diversity, creating a positive synergy between the individual and the company. 6 Co-creating with our business partners ●

Conduct to Realize the Management Philosophy

Segment Profit

¥10.3 billion

Segment Profit

We will actively contribute to the communities in which we operate, as wel as the international community, facilitating mutually beneficial relationships.

Preserving the natural environment

Prospering with the community

Initiating honest dialogue with our stakeholders

Co-creating with our business partners

Fostering diverse values and teamwork

Creating a safe, healthy and fair workplace

Pursuing customer satisfaction

Protecting people, assets, and information

Acting ethically, building trust

We will integrate environmental considerations into our corporate activities and actively strive to meet high conservation standards in fulfilling our responsibilities as a good corporate citizen.

Epson joined the UN Global Compact in 2004. We pledged

Management Philosophy

to uphold the ten principles of the GC in human rights, labor, environment, and anti-corruption.

16.0%

Robot systems

Other

¥3.4 billion -¥39.6 billion

Revenue Segment Profit

¥1.3 billion -¥0.3 billion

total % of revenue

0.1%

Microdevices, Other

1. Segment sales: revenue, including from inter-segment transactions. 2. Intra-segment sales: revenue, including from sales between businesses in the same segment. 3. Consolidated revenue: external revenue from which inter-segment sales have been canceled out. 4. Epson has been disclosing its financial results based on IFRS since the 2014 fiscal year. 5. Financial results have been recalculated based on new reporting segments introduced at the start of the 2015 fiscal year.

Consolidated Financial Results Trends Revenue

Business profit

(billions of yen) 1,200

1,000 800

Participation in the United Nations Global Compact

total % of revenue

Wearable products

7 Initiating honest dialogue with our stakeholders ●

Principles of Corporate Behavior

Epson Group Sustainability Report 2015 Highlights

¥173.4 billion

Corporate & Adjustments

9 Preserving the natural environment ●

Suppliers

Revenue

Revenue

16.4%

Projectors, smart eyewear, etc.

We will expect our business partners to live up to the same ethical standards we observe and aim to work together to our mutual benefit while respecting applicable laws and our mutually independent business strategies and stances.

8 Prospering with the community ●

Shareholders/investors

Government

We will respect fundamental human rights and facilitate a fair, safe, healthy and pleasant work environment.

We will maintain open lines of communication with our stakeholders, thoughtfully considering their views and suggestions.

Customers Global environment

Commercial and industrial inkjet printers

Visual Communications

We will keep the customer in mind at all times and make the quality of our products and services our highest priority. From the quality assurance efforts of each employee to the quality of our company as a whole, we will devote ourselves to creating products and services that please our customers and earn their trust.

how we are to behave and what values we are to uphold in

23

Revenue

1,008.4

Profit from operating activities

(billions of yen) 120

1,086.3

(billions of yen) 150

100

849.6

90.0

101.2

80

100

600

60

75

400

40

200

20

0

36.5

2013

2014

(FY)

79.5

50 25

0

2012

131.3

125

29.2

0

2012

2013

2014

(FY)

2012

2013

2014

(FY)

1. Effective from the start of the 2014 fiscal year, Epson has prepared its consolidated financial statements in compliance with International Financial Reporting Standards (IFRS). For reference purposes, the financial figures for the 2012 and 2013 fiscal years have also been recalculated in conformance with IFRS. 2. Business profit, which is calculated by deducting the cost of sales and SGA expenses from revenue, is essentially the same concept as operating income under J-GAAP. Although it is not a defined indicator in the consolidated statement of comprehensive income, Epson discloses business profit because we believe this information is useful for evaluating Epson's financial performance.

Epson Group Sustainability Report 2015 Highlights

24

Epson Group Overview

Global Network

Environmental & Social Performance Indicators

Epson is a multinational company headquartered in Japan and with four regional head offices around the world. Epson Europe B.V. Est. 1990

Epson (China) Co., Ltd. Est. 1998

Environmental Indicators

Epson America, Inc. Est. 1975

CO2 emissions

PRTR1 emissions

578K t-CO

6.5 t

2

Reduced by

39%

Epson Singapore Pte. Ltd. Est. 1982

Water use

30,270 t

7,577K m

Reduced by

56%

Vs. FY 2006

2

Japan

25.3%

Percentage of revenue by region (April 2014 to March 2015)

Europe

21.3%

25.4%

Percentage of employees by region

66.2%

(as of March 31, 2015)

Americas

227K t-CO

Vs. FY 2006

+3% YoY

Consolidated revenue: ¥

1,086.3 billion

2.4K t

2

+45% YoY 3 3

-7% YoY

The increase in CO2 emissions in FY2014 resulting from a need to transport freight by air instead of ocean containers to avoid long delays caused by port bottlenecks in the Philippines and U.S. West Coast port labor issues.

The following targets are compared to FY2006 results. Targets 　●

CO2 emissions

4.2%

　●

PRTR emissions FY06 level (14.4 t)

Europe

　●

VOC emissions

　●

Waste emissions FY06 level (42,425 t)

Americas

3.0%

28.0%

Used cartridge collection

3

Pollutant Release and Transfer Register database Volatile Organic Compounds

26.6%

Asia & Oceania

+63% YoY

Global CO2 emissions from transport

Japan

Asia & Oceania

14.3K t

Vs. FY 2006

-10% YoY

Reduced by

+16% YoY 1

58%

Vs. FY 2006

-36% YoY

Waste emissions

29%

Reduced by

55%

Vs. FY 2006

Used product collection

163 t

Reduced by

+2% YoY Seiko Epson Corp. Head Office Est. 1942

VOC2 emissions

Employees:

69,878

34% reduction (629K t-CO2)

Social Performance Indicator

FY06 level (387 t)

　●

Water use

　 

Indicates the target was achieved.

Corporate citizenship expressed as a monetary value

¥

370

million

50% reduction (8,660K m3)

CSR History

1980s Established the Mizube Office (now Epson Mizube Corp.) (to promote employment of persons with disabilities)

1990

Seiko Epson Corp. introduced a caregiver leave program

1991

Seiko Epson Corp. introduced a childcare leave program

1983

Eliminated the gender pay gap

1992

Became CFC-free

1988

Issued CFC-free declaration

1994

Established a Basic Procurement Policy

1989

Founded the Epson Information Science Vocational School (to promote the development of local IT talent)

1994

Established an Environmental Policy

1996

Established a Human Resource Development Policy

1989

Established the Epson Management Philosophy

1999

Published an environmental report (later expanded and renamed the “Sustainability Report”)

1983

25

1990s

2000 to 2015 Established a Basic NESP Policy (an original program based on the three pillars of safety, health, fire and disaster prevention)

2005

Established a Human Rights and Labor Standards Policy

2005

Established Principles of Corporate Behavior

Established an Epson Code of Conduct

2007

Established a Basic Information Security Policy

2004

Established a Corporate Citizenship Policy

2007

Acquired the “Kurumin” next-generation accreditation mark

2004

Joined the UN Global Compact

2008

Established Environmental Vision 2050

2004

Established the Personal Data Protection Policy

2012

Hired outsiders to serve on the board of directors

2005

Formed the Shinshu Energy Patrol Team

2001

2001

1992

1999

2001

2005

2007

Received a Stratospheric Ozone Protection Award from the U.S. Environmental Protection Agency for CFC-elimination

Issued an environmental report to provide information to the public on the results of our environmental programs

Published the Epson Code of Conduct and a booklet to explain the company’s expectations regarding conduct

Formed a Shinshu Energy Patrol Team with other companies to provide free consulting for conserving energy

Acquired the “Kurumin” next-generation accreditation mark as a company that supports child-rearing

Epson Group Sustainability Report 2015 Highlights

Epson Group Sustainability Report 2015 Highlights

26