ESG Initiatives

ZOZO, Inc. is implementing initiatives based on the belief that proactively challenge to solve issues pertain to ESG (Environment, Society and Governance) would lead to continuous coexistence and co-prosperity of the Company and the society.

Environment

Since more than 90% of our business is composed of ZOZOTOWN, an eCommerce operation for consignment sales of fashion items, it is one of our characteristics that environmental burdens are smaller compared to other in fashion industry. Major environmental loads are occurring at electricity use at the logistics centers and offices, and merchandise distribution; thus, we are putting in place a considerable emphasis on promoting energy saving.
It will be even more indispensable for us to take steps to protect the environment because of a full-scale operation of the private brand business, we will initiate our original ways of production methods to alleviate environmental burdens from now onward.

- Reduction of electricity consumption at logistics centers by replacing lighting to LED
As one of the “Energy Saving Project” to protect environment of the Earth, we have replaced all the lighting from fluorescent lamps to “Stella -X®LED XW” of STELLASIA LED Co., Ltd., from November 2015 at “ZOZOBASE” (a logistics center at Narashino-shi, Chiba) covering all the fulfillment operations. Monthly average electricity consumption with former fluorescent lighting was 180 thousand kW whereas with the replacement it was reduced to 70 thousand kW. Converting the reduced electricity consumption of 110 thousand kW into the amount of the CO₂ emissions, which is one of the causes of global warming, its reduction is equivalent to 692 tons per year. Since then, we have adopted LED lighting to all the logistics centers, considering the reduction of electricity consumption and negative effects of mercury to human body and environment, which is used for fluorescent lamps.

- Initiatives of ZOZOUSED (*as of the end of June 2018)
We are taking various measures for environmental protection also at ZOZOUSED, which purchases and resell second-hand apparel.
From July 2015 at “ZOZOTOWN Trade-in Service”, we have commenced to provide trade-in kits “reuse bag” which allows users to easily pack and dispatch unneeded fashion items. The reuse bags are made from non-woven textile requiring no packaging materials such as cardboard and tape, and are reusable after cleaning. In addition to the enhancement of user convenience, about 60% of all the reuse bags are recycled and resource consumption has prevented by improving resource utilization efficiency. From October 2014, we have started trade-in for item which cannot be resell at ZOZOUSED. Those items are handed over to recycling vendors instead of incineration or disposal. This effort leads to the promotion of recycling of about 5 million items annually, and if this number is converted into the CO₂ emissions when incinerated or disposed, it will result in a reduction of 9,410 tons per year. For items that are difficult to commercialize due to smear, taint, etc., we strive to maximize regeneration by cleaning and giving maintenance.

- Initiatives of the private brand “ZOZO”
“ZOZO” is the private brand of the Company, which offers basic items in reasonable price range, and realizes best fit for everyone regardless of age and sex based on the body size data measured from our body measurement suit “ZOZOSUIT”. The private brand does not take steps of what is called a mass production of ready-to-wear apparel, instead it has a few thousand size patterns for each item, enabling the Company to manufacture items that are placed orders only to have as small inventories as possible. By automating manufacturing processes, we are aiming to realize “Made-to-Measure”, a full order made method for every single person’s body. Through this achievement, we are expecting to alleviate environmental burdens of manufacturing and merchandise distribution by reducing the amount left over for disposal and preventing items to be returned due to unmatched sizes.

Society

- Relationship with Communities
Based on the idea to make Makuhari, Chiba where the company has been based for many years vital, we have been undertaking a raft of initiatives. Together with the local community we would like to contribute the region’s development.

Sponsorship for neighboring facilities and organizations

ZOZO Marine Stadium
From the acquisition of the naming rights of Chiba Marine Stadium, its name has been changed to “ZOZO Marine Stadium” from December 1, 2016. The name was given by the combination of “ZOZOTOWN” the fashion eCommerce website the Company operates, and “Marine” the name which is very familiar to local residents. Since then, we have been promoting exciting events by cooperating with Chiba city and Chiba Lotte Marines to make local residents and fans of Chiba Lotte Marines enthusiastic.

ZOZOPARK HONDA FOOTBALL AREA
As a main sponsor of a sport facility “ZOZOPARK HONDA FOOTBALL AREA” which is operated by “HONDA ESTILO Co., Ltd.” (the office which a professional soccer player Keisuke Honda belongs), the Company acquired the naming rights of the facility. The facility was named after the inner recruitment, wishing the place to become many people from children to adults gather in Makuhari, and the starting point to spark new talents.

Professional Soccer Team: JEF UNITED ICHIHARA CHIBA
In May 2018, we entered into an official partner agreement and a branding partner agreement with Professional Soccer Team JEF UNITED ICHIHARA CHIBA. We have been implementing various initiatives such as designing original uniforms for 3 years from 2015 and we are planning to strengthen collaboration with the team to support its branding for the future.

ZOZO Marine Stadium

ZOZOPARK HONDA FOOT-BALL AREA

JEF UNITED ICHIHARA CHIBA

ZOZOTOWN×CHIBA
We have opened a shop inside ZOZOTOWN to back up Chiba prefecture from June 21, 2018. At the shop, collaboration items with a variety of companies and organizations (Chiba City Office, Chiba Lotte Marines, JEF UNITED ICHIHARA CHIBA, CHIBA JETS FUNABASHI etc.) are sold. Collaborations with companies and organizations start from the planning phase of selling items, helping and hoping to become their promotion.

Makuhari Allowance (Internal Employee Welfare Program)
Makuhari allowance is aiming at vitalizing the area by giving 50,000 yen per month as a community contribution allowance for employees who live within the designated area. Approximately 80% of the employees are using this with following merits: For local: Tax payment to Chiba city and spending at neighboring stores, restaurants and service shops etc. For employees: Easier to commute to the office, encouraging communication between employees living nearby, etc.

ZOZO CONNE (Internal Employee Welfare Program)
“ZOZO CONNE” stands for “ZOZO CONNECTION” which is one of the internal employee welfare programs at restaurants, service stores etc. in Chiba city. By employees using the system, it will make returns to the local community and will help raising recognition of the company as Chiba-oriented. This has been able to continue with kindness and support by the cooperating stores, but through this we are aiming to become a part of exhilarating the local community with cooperative supports with the Company and local stores.

Sponsorship and Participation of Various Events
We are actively participating in grass-root events such as sponsorship of annual fireworks festival “Makuhari Beach Festa”, “Makuhari Clean” the cleaning activity around Makuhari area etc.


- Relationship with Customers
With approximately 7 million customers using ZOZOTOWN, it is significant for us to operate the service by proactively reflect voices of customers. Our customer support center operates under the philosophy of treating each customer as if they are a friend who is in need of help; therefore, we provide the best support possible to bring more smiles to our customers. In 2017, the center has received the best review, the “Five Star Recognition” in “HDI Five Star Recognition Program (*2)” certified by HDI-Japan (*1), which is the very first recognition within the apparel industry. The award was given due to the center’s well-developed policy and strategy, a high level supporting structure with strong determination of its objectives and goals, honest behavior and cooperative supports for any uncertainties of our customers and the ability to smoothly resolve issues. We will continue to provide superior quality of customer support going forward.
(*1) The world's largest membership organization in IT support services established in the United States back in 1989. A number of enterprises ranked in the US economic magazine Fortune and 500 global company companies are affiliated with 100 branch district associations worldwide. Hundreds of companies are members of "HDI-Japan", and evaluated by "HDI rating benchmark" for customers service with the aim of improving support services.
(*2) The "HDI five-star certification program" is aimed at companies that have won three stars in "HDI Rating Benchmark" that offers outstanding service from the customer's point of view, comprehensive evaluation of support centers operation and employee management etc. Winning the award will be a proof of the center both internally and externally that can contribute to the business.


- Relationship with Partnering Companies

With Brands
With the consignment sales business as the core axis, we have multitude of business transactions with brands. We evaluate fairly the various conditions such as brand image, products lineup, revenue size etc. to select business partners. At the time of starting business transaction, we require brands to make the representation and warranty for 1) products to be supplied are appropriately manufactured in accordance with the relevant laws, 2) no risk of unfairly harming the rights of the third party, and 3) brands have no relation with any antisocial forces.

With Delivery Company
We completely outsource the delivery operation of the “last-one-mile” which is requisite for eCommerce website operation. Recently in the delivery industry, challenges such as the shortage of labor, an increase in the number of redelivery inquiries etc. are emerging to the surface. Under this circumstance, we will cooperate with the delivery company to combat the challenges by any possible measures. In August 2017, we started to offer the service “Receive at Lockers” at the time of placing orders at ZOZOTOWN, in which we are the very first player in the eCommerce industry to adopt it. The service has been introduced with the expectation to reduce the number of redelivery inquiries along with enhancing convenience of the site reflecting customers’ voice. We will continue to dialogue with the delivery company and look for ways to help out each other.


- Relationship with Employees
We believe employees are the indispensable basis and driving force behind growth in the future. With the belief that personnel with versatile abilities and characteristics will contribute to raise, develop, grow the corporate value, we are putting in place the diversity management. Furthermore, for every employee to work naturally and the way they are, we also create a system to support various ways of working in line with lifestyles of individuals.

Flexible System for Shorter Working Hours
In order to improve work and private in a well-balanced manner, employees can work in time shortening of 2 hours a day at maximum to support those who employees recognize as “family” including pet and persons living together, in addition to childcare and nursing. Employees can set shorter working hours in units of 30 minutes.

Supports for Child-raising Employees
Within our company where average age of 32 years old and about a half of all the employees are female, there are a number of employees continue working using maternity and childcare leave. Maternity and childcare leave can be used from the period between 14 weeks before childbirth and up to the time when the child turns into 2 years old at maximum. Returning rate after maternity and childcare leave (*3) is currently 100%, total of 45 employees (*4) have used this system (as at June 30, 2018). Also, the rate of continuous employment after return (*5) is 98%, which remains very high level. We are concentrating on realizing the ideal workplace environment for working mothers and fathers.
(*3) The figure is calculated by the number of returned employees (including those in leave and expected to return) / the number of employees after childbirth during their employment
(*4) Started counting after 2011
(*5) Calculated based on the standard with years of continuous employment longer than 1 year

Realizing Ideal Workplace Environment/ Industrial Health and Safety
We are focusing on realizing the ideal workplace environment for employees. For instance, the refresh room at “ZOZOBASE” has colorful furniture and creating a bright atmosphere as if it is not a logistics center. This was created with the mind that employees working at the logistics center to have more relaxed breaktime and foster fashion sense for working at a fashion company. For the office where employees engage mainly in the desk work, creative solutions are devised for smoother communication between employees by take partitions between desks off and secure sufficient space for conducting meetings. In addition, we hold a monthly “Health and Safety Committee” where employee representatives and observers (industrial doctors) are present. The committee exchanges opinions and discusses by employees taking initiatives for matters such as the occurrence of labor accidents, working environment of each office, overtime hours and workloads of employees and its optimization.

Office at Makuhari1

Office at Makuhari2

ZOZOBASE

Governance

- Corporate Governance
We have the basic policy of management for continuous improvement of corporate value and establish better relationships with all stakeholders including shareholders by constantly focus on integrity, transparency, efficiency and promptness of corporate management. In order to realize this, we are enhancing the corporate governance centered on the Board of Directors and audit committees.
Regarding the Corporate Governance Code which was adopted from June 1, 2015, efforts for compliance are explained in below. For detail, please refer to the below link (Updated on June 26, 2018).

The Corporate Governance Code

As for the corporate governance report, please refer to the following link.

Corporate governance report (Japanese only)


- Internal Control System and Risk Management System
Our corporate governance structure is below.

We have developed and maintained the internal whistleblower system, in order to minimize the damage that may occur to the Company by discovering acts that could violate the law, the internal regulations, social credibility at the early stage, prevent scandals and take appropriate countermeasures. We made efforts to make the system to function properly by setting up the contact points both inside and outside of the Company. The external lawyer will help through the external contact point and established the reporting structure directly to the audit committee which is independent from the top management, allowing employees to make anonymous whistleblowing. Also, we treat the whistleblower and those who supported the investigations anonymously to preclude any repercussions. After the receipt of the report under the management of the compliance committee, whistle-blowing information will be strictly managed and conduct investigations and improvement measures.
In an effort to enhance an organization-wide risk management structure to function by identifying risks that may occur, the Company establishs the “Risk Management Regulations” to take appropriate approaches for various risks prevention and times of unexpected accidents.


- Information Security
As we are a company operating an eCommerce website as the core business, we recognize that it is extremely significant responsibility for us to work on information security to realize an appropriate risk management to protect information assets the Company possesses from any threats including information received from our customers. In order to maintain a security level that is appropriate for the company to be trusted by the society, we have established the “Basic Policy of Information Security” and thoroughly inform the related regulations inside the Company.
As a part of the personal information protection, we have established a personal information protection program which is conforming to JISQ15001:2006 and in October 2007, we have acquired the “Privacy Mark” given to the company properly handling personal information from Japan Information Processing Development Corporation(JIPDEC).
Regarding the security status of the system, we constantly monitor the access to personal information and implement a mechanism to block unauthorized request. In addition, we regularly conduct vulnerability diagnosis from external attacks by third parties. Moreover, strengthening of the security system is carried out as needed. We have been reducing the risk of unauthorized intrusion into the internal systems by applying IDs, passwords and encryptions.
From July 2018, we have commenced the global expansion of the private brand “ZOZO” at 72 countries over the world. Within the above countries, there are countries where GDPR (EU General Data Protection Rules) are applicable; thus, it is necessary for us to comply with the rules. Through a subsidiary in Germany, we are working with local lawyers and consulting companies having detailed knowledge of this rules. We will take appropriate safety control measures in processing and storage of personal data so that customers are able to use our service with security.