Aeon Report 2017

Aeon Report
Aeon Report
2017
2 017
Creating a future where
communities flourish
trees grow and
AEON Report 2017 1

Aeon Basic Principles
Pursuing peace, respecting humanity, and contributing to local communities,

always with the customer’s point of view as its core.
Peace
The Customer
People Community
The word (Aeon) has its origins in a Latin root meaning “eternity.”
The customers’ beliefs and desires comprise the central core of our philosophy.
At Aeon, our eternal mission as a corporate group is to benefit our customers, and our operations are thus
customer-focused to the highest degree.
“Peace” Aeon is a corporate group whose operations are dedicated to the pursuit of peace through prosperity.
“People” Aeon is a corporate group that respects human dignity and values personal relationships.
“Community” Aeon is a corporate group rooted in local community life and dedicated to making a continuing contribution
to the community.
On the basis of the Aeon Basic Principles, Aeon practices its

“Customer-First” philosophy with its everlasting innovative spirit.
Editorial Policy
Aeon Co., Ltd. believes its business activities contribute to a from the aspects of the environment and society. In addition,
sustainable society. To further deepen its stakeholders’ with regard to its seven priority issues, including the four
understanding of its business activities, from the current society-related priority issues newly specified in a materiality
fiscal year Aeon has decided to publish an Integrated Report assessment conducted during fiscal 2016, this section reports
that incorporates the Aeon Environmental and Social Report. in detail on management approaches, progress toward key
The first half of the Report introduces the orientation of performance indicators and individual activities.
management, its strategies and various initiatives, and also This Integrated Report is produced with reference to the
covers Aeon’s management itself from a variety of International Integrated Reporting Framework of the
perspectives. In addition, it comprehensively addresses non- International Integrated Reporting Council (IIRC), and the
financial information such as social contribution activities. knowledge of interdivisional project members within the
The second half of the Report deals with sustainability Aeon Group and external experts is incorporated throughout.
initiatives by Aeon Group companies, mainly Aeon Co., Ltd., Note: For the purposes of this Report, “Aeon” is used to refer to Aeon Co., Ltd.
and the approximately 300 companies that make up the Aeon Group.
which is a pure holding company, and the General
Merchandise Store Business and the Supermarket Business,
2 Aeon Report 2017

Contents
Introduction 4 Information Security 53

Snapshot 4 Compliance (Corporate Ethics) 54
Value Creation Model 6
Value Creation Overview 8
Our Sustainability 56
Celebrated 25th Anniversary of
Our Strengths 10
Aeon’s Tree Planting Activity 58
Business Overview 14
Feature 1: Dialogue with Stakeholders 60
Global Expansion 16
Feature 2: Promotion of CSR in the Value Chain 66
Highlights 18
Aeon Group CSR 70
Financial Highlights
Environmental Management 76
Non-Financial Highlights
FY2016 Activities 82
Our Strategies 22 Environmental Activities
Comments from the Group CEO 24
Realization of a Low-Carbon Society 84
Comments from the CFO 26
Conservation of Biodiversity 92
Aeon Group Medium-term Management Plan
(FY2017-FY2019) 28 Better Use of Resources 102
Medium-term Management Plan: Year One Social Activities
Completion of Earnings Structure Reforms at Responding to Diverse Consumer Issues 110
Aeon Retail and Daiei 32 Carry out Fair Business Practices 122
Aeon Retail Reforms Create Workplaces that Emphasize
Daiei Reforms Human Rights and Diversity 130
Aeon’s Product Mindset 38 Collaborate with the Community 140
Corporate Governance 40 Support After the 2016 Kumamoto Earthquakes 148

Features of Aeon’s Corporate Governance 40 Activities that Widen the Circle of Tohoku Creation 150
Comments from the Chairman of the Board 42 External Awards List (FY2016) 153
Comments from the Chairperson of the Initiatives by Aeon Public Interest
Audit Committee 44 Incorporated Foundations 154
Comments from the Chairpersons of the GRI Guidelines Indicators 160
Nomination and Compensation Committees 45
Board of Directors and Executive Officers 46 Financial Section 166
Status of Corporate Governance 48
Risk Management 52 Corporate Data 222
● Report Period ● Target Audience

Fiscal 2016 (March 1, 2016 – February 28, 2017)* Our customers, shareholders, investors, students, local residents
* For operating companies with different fiscal years and certain initiatives, of neighborhoods with Group stores, business partners, NPOs,
the relevant time periods are indicated in each report section.
NGOs, governments and Aeon People (Aeon employees)
● Scope of Report
● Reference Guidelines
This Report covers the pure holding company Aeon Co., Ltd.
• International Integrated Reporting Framework, International
and its 296 consolidated subsidiaries and 32 equity-method Integrated Reporting Council (IIRC)
affiliates (as of the end of February 2017). • Global Reporting Initiative (GRI) Sustainability Reporting
When information applies only to certain operating companies, Guidelines (G4)
• Environmental Reporting Guidelines (2012 Version), Ministry of
it is indicated as such. This Report also features information on
the Environment of Japan
the Aeon 1% Club Foundation, whose activities are funded by • Environmental Accounting Guidelines 2005, Ministry of the
donations made by major Aeon Group companies totaling 1% Environment of Japan
of their pre-tax profits, and the Aeon Environmental Foundation, • ISO 26000: Guidance on Social Responsibility
which takes part in activities to protect the Earth’s environment. Disclaimer
This Report contains plans and strategies for the future of Aeon, as well as
predictions and prospects regarding its performance. Such information is based
on our determinations and beliefs in accordance with facts and information
currently available to us.
Aeon Report 2017 3
SNAPSHOT (As of Februar y 28 , 2017 )
259
Years in Business
Okadaya, an Aeon predecessor, started business in Yokkaichi, Mie
Prefecture in 1758. Since then, Aeon has innovated constantly
years
under the Aeon Basic Principles of “Pursuing peace, respecting
humanity, and contributing to local communities, always with
the customer’s point of view as its core.”
8,210 billion
Operating Revenues
A highly competitive company that creates synergy among its businesses,
Aeon has achieved the highest operating revenue in Japan’s retailing
industry for six consecutive fiscal years. In fiscal 2015, its operating revenues
exceeded ¥8 trillion.
520 13
thousand
people countries
Number of Group Employees Asian Countries We Serve
Uniting over 300 Group companies in Japan and Since the launch of business in Malaysia in 1984, Aeon has
overseas as one, Aeon focuses on creating an begun operations in Thailand, Hong Kong and other
environment in which each employee can excel, countries in Asia, hoping to modernize distribution and
enabling its diverse human resources to take enhance lifestyles to help make society peaceful and
advantage of the differences in their values to prosperous. To help all people live better, Aeon is steadily
demonstrate their skills and capabilities. expanding the regions it serves, mainly in Asia.
4 Aeon Report 2017

21,1 1 3
AEON
stores and *
locations
Number of Stores and Offices
With a unique business model that encompasses seven
businesses centering on the retail industry, Aeon expands its
operations and develops each store in Japan and overseas to
help residents live safe, secure, comfortable and affluent lives
with new lifestyle support propositions closely attuned to local
communities.
* Consolidated subsidiaries and equity-method affiliates
38.9 1. 2
million billion
people people (annually)
Aeon Card Cardholders Aeon Mall Visitors in Japan and Overseas
Aeon initiated its financial services business in 1981 as a means In 1969, Aeon became an early developer of
to provide useful payment services for everyday purchases. The shopping centers in Japan, using its accrued
number of Aeon Card cardholders is approximately 38.94 million expertise to give customers more plentiful
and is increasing in Japan and other Asian countries. lifestyles in many regions.
11.4 trees
million
Trees Planted and Total Participants
1. 1 people
million
Aeon has been planting trees in collaboration with customers
since 1991. This activity embodies the Aeon Basic Principles,
and Aeon energetically plants greenery in Japan and other
regions worldwide.
Aeon Report 2017 5

VALUE CREAT ION MODEL
Toward 2025
Grounded in the Aeon Basic Principles of
“Pursuing peace, respecting humanity,
and contributing to local communities,
always with the customer’s point of view
as its core,” we at Aeon practice sustainable
management that achieves both the
growth of the Aeon Group and its
businesses and the development of local
communities, to realize each of our
customers’ dreams for the future. Toward
this end, we have established Aeon’s
unique corporate governance system, and
have formulated and implemented a Further growth for
Group Medium-term Management Plan the Group and
that anticipates our adaptation to the its businesses
changes in Aeon’s operating environment.
In addition, each of our businesses
formulates and implements its own
business strategy that conforms to the
common Group strategy, so that it can be
number one in its respective business field.
Aeon will continue to create new value Adaptation to environmental change
Macro environment/regulatory environment Aeon
as a constantly innovative corporate group
to provide happiness beyond its customers’
expectations.
Gro
Environment iss
Realization of a Conservation of
low-carbon biodiversity
society
Pursuing peace, respecting humanity, and contr
6 Aeon Report 2017

and a future of limitless promise
Shared
Group strategy
Retail
Shopping
mall Finance
development
Regional and community
Business
International strategies Services
development
Digital Shared
functions
Environmental change forecast

Group Medium-term Management Plan Technology/consumer psychology
wth strategy Financial strategy
Corporate governance
ues Social issues
Responding Create workplaces Collaborate

Better use of Carry out fair that emphasize
resources to diverse business practices with the
consumer issues human rights community
and diversity
Sustainable Management
ibuting to local communities, always with the customer’s point of view as its core.
Aeon Report 2017 7

VALUE CREAT ION OVERVIEW
Aeon responds to diverse customer

and community needs and structures
responsible value chains suitable for Asia’s
number one retailer to contribute to Community Local
sustainable community development. Governments organizations shopping
districts
Transportation
facilities
Discount
Supermarkets stores Shopping
malls
Financial
General institutions
merchandise Service and
stores specialty
stores
Aeon stores Stakeholders and the
Operation according to communities we serve
Aeon
business conduct Response to the diverse needs of customers and Customers
People
guidelines including communities based on a multiformat approach
the Aeon Code of Conduct
Net
• Aeon Basic Principles P. 2 supermarkets Finance
services Medical
• Aeon Code of Conduct P. 54 institutions
• Basic Policy on Corporate Governance P. 48 Drugstores Convenience
• Aeon Sustainability Principle P. 72 stores
• Aeon Basic Human Resources Principles P. 130
• Aeon Basic Policy on Human Rights P. 135 Educational
• Diversity Promotion P. 132 institutions
• Aeon Personal Information
Protection Policy P. 53 Companies
Producers
Creating a sustainable society with • Aeon Forest Circulation Program P. 98 • Aeon 1% Club Foundation P. 154
• Bustling Tohoku/Project Aeon Joining Hands P. 150 • Aeon Environmental Foundation P. 158
community residents
• Aeon Welfare Fund P. 144
We are addressing the new values of In April 2016, Aeon launched programs to construct Community Ecosystems as an initiative to actually implement the concept
community residents in the digital age by that the retail business is a community industry, based on the Aeon Basic Principles. Community Ecosystem initiatives involve
starting to build Community Ecosystems collaboration among community residents, governments, companies and other stakeholders to resolve issues facing the
community while increasing community appeal and competitiveness. We aim to structure lifestyle and industry platforms that
for new regional development.
enable continuous community development. The keywords are digitalization, health and wellness, mobility, and value. We
launched this initiative in Chiba Prefecture, home to the headquarters of Aeon Co., Ltd., and are taking on the challenges
of various new initiatives in collaboration with communities and governments in designated zones in Chiba to test future
urban concepts.
8 Aeon Report 2017

▶ P. 66
Raw Material
Procurement
▶ P. 67
Aeon’s global operations Manufacturing and
In China Distribution
Active overseas
expansion to become Creation of responsible
Asia’s number one retailer value chains in local
• United Nations Global Compact P. 71
In Japan communities in various ▶ P. 68
Sales
• SA8000 Certification
• Aeon Supplier Code of Conduct
P. 128
P. 124
Asian countries (Stores)
• Global Framework Agreements P. 137
• Aeon Environmental Policy/
ISO 14001 Certification P. 76
• Aeon BCM Project/ P. 52 In ASEAN
ISO 22301 Certification P. 53
• ISO 9001 Certification P. 77 ▶ P. 69
Use
(Consumers)
▶ P. 69
Waste and
Recycling
Aeon will expand the reach of regional ecosystems to contribute to

the development and future of communities.
Digitalization Mobility
Stress-free through digitalization Evolution of transportation and movement within regions
• Omni-channel for all regions • Information in multiple languages • On-demand transportation, • 1-hour delivery within the
• Evolution of net supermarkets • Various forms of payment etc. circulator buses region, same day delivery
• Hands-free shopping in shopping • Personal mobility • Park and fly etc.
malls and communities • Pick-up and logistics networks
Four pillars
Community
Health & Wellness ecosystems Value
Physically and emotionally fulfilling neighborhoods Expansion of local economy and value and benefits to the community
• Comprehensive health support • 24-hour healthcare and medicine, • Sixth phase of industrialization, • Use of big data
service through IT in-home services everything consumed is locally produced • Investment in regions, people,
• Mall walks, Health points (service) • Child-rearing support etc. • Support for tourism and visitors from overseas companies, donations etc.
• Concierge services, shopping support • Unique characteristics of each community
Aeon Report 2017 9

OUR STRENGTHS
Group Management of Our Multifaceted,

Retail-Focused Businesses
Economies of Scale Group Synergies
Approximately 300 companies in Japan and

overseas collaborate beyond business boundaries AEON Style
to capture economies of scale and generate

Group synergies. The Aeon Group deploys best
practices laterally at each of its companies, which
supports even more significant outcomes. In
addition, back office functions such as
information system development and accounting
are consolidated at the Group level to further
reduce costs.
More Efficient Back Shared Best Practices

Office Functions
Business Fields Where Aeon Is the Leader (Fiscal 2016)

Retail-related credit card
Food supermarket Domestic shopping mall and hire purchase
GMS operating revenues operating revenues operating revenues transaction volume
¥3,000 ¥2,900 ¥270 ¥4,500

billion billion billion billion
Amusement facilities
Drugstore operating revenues Property management fee revenues operating revenues
¥623 ¥267 ¥65

billion billion billion
10 Aeon Report 2017
Changes in New Business Creation to Serve the Next Generation
Social Conditions in Japan Aeon Innovations
1970s Establishment of chain stores, development of shopping centers

Structural change in Aeon reviews its approach to the retail business and continues to innovate consistently. Leading the transition from an age
consumption in Japan, when stores were run by individuals to the establishment of chain stores, Aeon actively expanded the scale of stores and
operations, and modernized distribution. Backed by rapid motorization, Aeon quickly began developing shopping centers to
rising status of the
offer one-stop shopping.
retailing industry
1980s Development of new businesses and formats, expansion in Southeast Asia

Increased consumption, Japan’s bubble economy of the 1980s changed lifestyles, and the consumer market expanded rapidly. In step with these trends,
better living standards Aeon developed convenience store and specialty store businesses and diversified operations with a focus on the retail industry in
ways such as conducting financial service businesses to provide settlement methods, and deployed the modern retailing
technology we had developed in Japan in Asian countries.
1990s Development of large food supermarkets, rollout of drugstores

Advent of the deflationary Sudden changes occurred in the operating environment of the retail industry during the 1990s, such as the collapse of the
economy, acceleration of the bubble economy and deregulation of the Large-Scale Retail Stores Location Law. Aeon therefore restructured its businesses
from scratch by accelerating its scrap-and-build strategy for existing stores and developed large Maxvalu supermarkets.
aging society and birthrate Furthermore, Aeon rolled out its drugstore business in light of changes in the operating environment such as the arrival of the
decline aging society and revisions to the national health insurance system.
2000s Accelerated store expansion and mergers, development of new business formats and
Accelerating globalization electronic money
and lifestyle diversification The growth of overseas business accelerated in the 2000s along with the globalization of Japanese companies. Aeon focused on
store expansion and mergers with influential retailers in each region to create a retail group that will gain acceptance worldwide.
To address the increasing urban population in Japan, Aeon developed small urban supermarkets. In addition, Aeon continued to
take on the challenges of anticipating customer changes, such as by introducing WAON cards.
2010s Accelerated global expansion, development of formats that meet diverse needs
Global expansion and In 2011, Aeon established an ASEAN headquarters and a China headquarters, and promoted Group-wide multiformat
diversifying consumption development throughout Asia. In Japan, Aeon developed Aeon Style, its unique general merchandise store model to deal with
diverse lifestyles resulting from increases in the senior population, single-person households and the number of working
environments women. To deal with the diversification of the consumption environment, Aeon was the first in Japan to introduce the Picard
frozen food supermarket and Bio c’Bon organic food supermarket formats from France.
Aeon Report 2017 11

Sustainable
Management Rooted
in Local Communities
Contributing to local communities is a pillar of the
Aeon Basic Principles. Aeon believes its mission is to
contribute to the development of local communities
through its businesses.
Management to
Make the Most of
Diverse People
Aeon believes that its people are its most important asset,
and consistently emphasizes personnel development.
Aeon also believes management that fully leverages the
capabilities and values of individuals supports growth.
12 Aeon Report 2017

Achieving Both Group Business Operations That Contribute to Building Community Ecosystems, a
Development and Contribution Community Development New Framework for Coexistence
to Communities with Communities
Aeon emphasizes a spirit of corporate Based on its commitment to putting With the digitalization of modern
citizenship that constantly considers customers first, Aeon responds quickly society, Aeon is building a new
the environment and supports the to consumer needs that differ by form of harmonious coexistence
development of local communities region and conducts activities and in cooperation with government
so that it can continue to offer the businesses rooted in the communities organizations, hospitals, universities
value of making customers happy. it serves. and other companies and institutions
involved in regional development.
Number of Comprehensive
Partnerships with Governments
Number of Groups Supported by (Total of prefectures, government-designated
the Happy Yellow Receipt Campaign cities, municipalities, districts, and wards) Total Gotochi WAON Contributions
25,300(As of February 28, 2017)

102
(As of February 28, 2017)
¥984 million
A Corporate History An Educational System to Human Resource Deployment That

of Mergers Nurture Ownership Leverages Diversity
Since the creation of JUSCO in 1969, The greatest benefit Aeon can Committed to equal opportunity
the Company has merged hearts provide employees is education. Aeon and the principle of fairness, Aeon’s
and minds with other companies therefore educates employees at personnel systems emphasize skill
that have a similar intention to serve every stage of their careers through and performance regardless of
communities through commerce means including Aeon DNA University, nationality, gender, educational
to grow while respecting each which develops the next generation background, or age.
company’s corporate culture. of directors.
Aeon Report 2017 13

BUSINESS OVERVIEW
International Business
5%
Services & Specialty
Store Business
9%
Shopping Mall
Development Business
4%
Financial
Services Business
4%
Operating Revenues General Merchandise
Drugstore & Store Business
Pharmacy Business
7%
¥8.2 trillion 34%
Small-sized Store Business

4%
Supermarket and
Discount Store Business
33%
Note: Fiscal 2016 business results and segments
General Merchandise Store Business* Supermarket and Discount Store Business*

This segment operates general merchandise stores to enrich This segment operates community-rooted supermarkets and
the everyday lives of customers with specialized product lineups discount stores while enhancing its lineup of everyday
and services. necessities focused on foodstuffs.
14 Aeon Report 2017

Drugstore & Pharmacy Business Financial Services Business
This segment operates drugstores and dispensing pharmacies to This segment offers integrated financial services that combine
help local residents maintain their own health. In addition to credit, banking, insurance services, and e-money WAON cards.
broadening the product lineup from medical products and daily In Asian countries, it mainly operates the credit card business.
necessities to health food products, it is expanding its services to
include dispensing for home care patients.
Shopping Mall Development Business Services & Specialty Store Business

This segment develops and operates community-friendly This segment provides services that make everyday life more
shopping malls in Japan and Asian countries. In cooperation with convenient and comfortable, and also operates an array of
other segments, it is working to enhance its services and facilities specialty stores tailored to diversifying customer needs.
in accordance with changing trends in society.
* Changes in Reportable Segments

As of the first quarter of fiscal 2017, Aeon has reclassified its business
segments. The Supermarket and Discount Store Business and Small-sized
Store Business have been unified as the Supermarket Business, and the
Digital Business, which had been included in Other, has been integrated into
the General Merchandise Store Business. With respect to changes in primary
Group companies, Origin Toshu Co., Ltd., which was included in the former
Small-sized Store Business, has been reclassified into the General
Merchandise Store Business given its close ties with such business.
International Business
This segment operates general merchandise stores, supermarkets,
discount stores and other businesses in China and ASEAN
countries. The stores, products and services are tailored to the
lifestyles of the respective countries.
Aeon Report 2017 15

GLOBAL EXPANSION
Number of Stores Operated by Consolidated Subsidiaries and Equity-method Affiliates, and
China South Korea

● GMS 49 ● Other Retail Store 43 ● CVS 2,362
● SM 22 ● Mall-type SC 21
● CVS 65 ● Financial Service 37
● Specialty Store 52 ● Service Business 165
● Drugstore 3 ● Other Business 5
Thailand Laos
● SM 77 ● Financial Service 1
● Financial Service 217
● Service Business 48
● Other Business 1
India Vietnam Philippines

● Financial Service 1 ● GMS 4 ● CVS 499
● SM 55 ● Financial Service 1
● CVS 72 ● Service Business 26
Myanmar ● Other Retail Store 2
● SM 14 ● Mall-type SC 4
● Financial Service 1 ● Financial Service 4
Malaysia
● GMS 32
● SM 5 Indonesia
● DS 23
● GMS 1
● Other Retail Store 49
● Mall-type SC 25 Cambodia ● Mall-type SC 1
● GMS 1 ● Service Business 8
● Mall-type SC 1
GMS (General Merchandise Store) 626 SM (Supermarket) 2,129 DS (Discount Store) 566
HC (Home Center) 119 CVS (Convenience Store) 5,261 Specialty Store 4,352
Drugstore 3,9801 Other Retail Store 883 Mall-type SC (Shopping Center) 3032
NSC (Neighborhood-type Shopping Center) 175 705 2,005
3
Financial Service Service Business
Other Business 9
1. Including affiliated companies
2. Including SCs operated under the name of AEON Mall as well as those with total leased area of over 20,000m2
Total 21,113 stores/locations
3. NSCs operated under the name of AEON TOWN
16 Aeon Report 2017

Overseas Offices Three Headquarters Structure
Aeon Co., Ltd.
Headquarters Headquarters Headquarters

Japan for Japan for China for ASEAN
● GMS 539
● SM 1,956 Location: Chiba City, Location: Beijing, China Location: Kuala Lumpur,
Chiba Prefecture Malaysia
● DS 543
● HC 119
● CVS 2,263
● Specialty Store 4,300
● Drugstore 3,977 Aeon’s Major Advances in China and the ASEAN Region
● Other Retail Store 789 1985 Jusco Stores (Hong Kong) established (currently Aeon Stores Hong Kong)
● Mall-type SC 251
● NSC 175 1985 Stores in Malaysia and Thailand opened
● Service Business 1,670 1987 First store in China (Hong Kong) opened
1991 Aeon Hometown Forests Program started

First store: Malaysia Jusco Malacca (currently Aeon Melaka Shopping Centre)
1996 First store in mainland China opened
1998 Tree planting project to revitalize the forests at the Great Wall of China initiated
(currently Aeon Environmental Foundation)
2001 School Construction Support Project for the Asian region started in Cambodia
(currently Aeon 1% Club Foundation)
2002~ Tree planting activities in ASEAN countries started, beginning with Cambodia
(currently Aeon Environmental Foundation)
2011 Headquarters for ASEAN established
2011 Headquarters for China established
2012 “Aeon Cheers Club” activities started in Malaysia
2012 “Aeon Happy Yellow Receipt Campaign” started in China
2014 The first store in Vietnam and Cambodia opened
2014 “Aeon Cheers Club” activities started in China
2015 First store in Indonesia opened
2015 “Aeon Happy Yellow Receipt Campaign” started in Thailand and Cambodia
Australia 2016 Supermarket Business started in Myanmar
Aeon Report 2017 17

HIGHLIGHTS
Financial Highlights
Operating Revenues
(Billions of yen)
10,000
8,176.7 8,210.1
8,000
7,078.5
6,395.1
6,000 5,685.3
5,167.3 5,248.1 5,072.1 5,114.6 5,223.3
4,000
2,000
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
Operating Income/Ratio of Operating Income to Operating Revenues

(Billions of yen) (%)
250 6
198.6 5
200 190.6 184.7
175.3 171.4 176.9
156.0 3.8 4
3.4 141.3
150 133.4 3.4
126.7
3.0 3
2.7
100 2.6 2.0 2.2 2.3
2.4 2
50
1
0 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
■Operating Income ● Ratio of Operating Income to Operating Revenues
Net Income Attributable to Owners of Parent

(Billions of yen)
80 74.5
66.7
59.6
60
43.9 45.6
42.0
40
31.1
20
11.2
6.0
(2.7)
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
18 Aeon Report 2017

Net Cash Provided by Operations (Excluding Finance Loans Receivable and Cash Loans and Bills Discounted in
Banking Business)1/Capital
Expenditures
(Billions of yen)
600
551.5
506.8
500
451.0
405.2
400 367.1 361.0
326.3 343.2
321.2
296.2 284.2
300 261.1
234.0
200.0 203.3
200 184.1 174.3 170.6
100 78.0
50.4
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
1
■ Net Cash Provided by Operations (Excluding Finance Loans Receivable and Cash Loans and Bills Discounted in Banking Business)
■ Capital Expenditures
1. Aeon Bank, Ltd. was included in Aeon’s scope of consolidation as a consolidated subsidiary in the fiscal year ended February 28, 2013. Net cash provided
by operations for subsequent fiscal years therefore excludes Aeon Bank’s finance loans receivable and cash loans and bills discounted in banking business.
Total Assets/Interest-Bearing Debt

(Billions of yen)
10,000
8,750.8
8,225.8
8,000 7,859.8
6,815.2
6,000 5,724.8
3,741.4 3,785.2 3,774.6 4,048.9

4,000 3,591.4
2,170.8 2,257.0
2,000 1,639.0 1,574.8 1,845.0
1,041.2 1,194.6 1,250.7 1,161.8 1,335.1
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
■ Total Assets ■ Interest-Bearing Debt
Return on Equity (ROE)/Return on Invested Capital (ROIC)2

(%)
8 7.6
7.3
6.9
6
4.9
5.4 4.2
4.8 3.8 3.8 4.9 4.6 3.6 3.7 3.8
4
3.7 4.0
3.1
2
1.0
0.5
0
(0.3)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
● ROE ● ROIC
2. ROIC = NOPAT ÷ Invested capital
NOPAT = Operating income × (1 – tax rate)
Invested capital = Average of shareholders’ equity during the period + Average of interest-bearing debt during the period
Aeon Report 2017 19

Non-Financial Highlights
Cumulative Trees Planted (See page 58) Tree planting is one of our activities that embodies the
Aeon Basic Principles, and we celebrated 25 years of
(Millions of trees)
planting trees in October 2016.
15
12
10.86 11.17 11.44
9.67 9.90 10.11
9.22 9.47
9 8.73
7.92
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
Value of Aeon Happy Yellow Receipt Campaign Donations (See page 142) Aeon has donated goods totaling ¥3.1 billion to volunteer
(Millions of yen)
organizations, representing 1% of the total value of
receipts since the campaign began in 2001.
400
330
300
300 270 270 280
270 260 270 270
210
200
100
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
Reduction of Plastic Bags Used/Percentage of Customers Who Decline Shopping Bags (See page 107)
(Millions of bags)
Aeon’s initiatives to reduce plastic bags (%)
have continued for over 20 years.
5,000 80
67.8 67.5
61.5 63.4 64.8 65.0
4,000 60.0 60.4
60
48.0
3,000 2,700 2,770
2,290 2,400 40
2,000 1,730 1,800
1,660
1,300
16.4 20
1,000 760
420
0 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
■Plastic Bag Reduction ● Percentage of Customers Who Decline Shopping Bags
20 Aeon Report 2017

Energy Use Reduction Rate (Basic Unit)1, 2 (See page 86) Food Waste Recycling Rate3 (See page 105)
(%) (%)
40 60 59.2
57.1
30 27.0 55
53.1
25.0
22.0
19.9 50.2
20 50
15.0
10 45
0 0
2012 2013 2014 2015 2016 (FY) 2013 2014 2015 2016 (FY)
1. Heat ÷ Total floor area 3. Calculated using a trial formula for actual food recycling rate pursuant to
2. Our goal is to reduce energy use in fiscal 2020 by 50% compared to the Law for Promotion to Recover and Utilize Recyclable Food Resources
2.783GJ/m3 in fiscal 2010.
Cumulative Number of Supporters for

Cumulative Total of Gotochi WAON Types (See page 142) People with Dementia (See page 120)
(Types) (Supporters)
150 70,000
63,688
126 60,000
59,362
109 49,975
100 50,000
100 43,662
82 86
40,000 35,783
30,000
50
20,000
10,000
0 0
2012 2013 2014 2015 2016 (FY) 2012 2013 2014 2015 2016 (FY)
Cumulative Total of Volunteers for the Great East

Japan Earthquake Disaster Area (See page 150) Ratio of Female Managers (See page 133)
(Number of people) (%)
250,000 237,9054 40
200,000 196,728
30 27.0
150,000 138,053 22.0
19.0
20
15.0
100,000
69,428
10
50,000
6,154
0 0
2012 2013 2014 2015 2016 (FY) 2013 2014 2015 2016 (FY)
4. Includes 3,100 “Aeon Future Co-creation Program” volunteers
Aeon Report 2017 21

OUR STRATEGIES
22 Aeon Report 2017

Our Strategies
Comments from the Group CEO 24
Comments from the CFO 26
(FY2017-FY2019) 28
Medium-term Management Plan: Year One
Completion of Earnings Structure Reforms at
Aeon Retail and Daiei 32
Aeon’s Product Mindset 38
Corporate Governance 40
Aeon Report 2017 23

Comments from the Group CEO
Becoming a True Global Retailer by

Pursuing Customer Delight
Motoya Okada
Director, President and
Representative Executive Officer,
Group CEO
Aeon is preparing to celebrate the 260th anniversary of turbulent times, we need to not only look a few years
its predecessor Okadaya and the 50th anniversary of its ahead, but also have a long-term perspective on ideal
predecessor JUSCO, which was established to modernize Group management. We need to transform the Aeon
Japan’s retail industry. As we do so, we are pleased to Group so that we can transcend past experience and
present Aeon’s first integrated report. anticipate various changes in the future to truly delight our
customers. Our goal is to become a global top-ten retailer
Customers First: The Starting Point of Our Basic Principles both in name and reality by 2025. We intend to do so by
innovating to become a group of companies that lead in
We have always been committed to putting customers first their respective regions and businesses.
in keeping with the Aeon Basic Principles of “Pursuing peace,
respecting humanity and contributing to local communities, Sustainable Management to Balance Group Growth and
always with the customer’s point of view as its core.” We Social Development
have had a corporate culture of taking on the challenge
of change undaunted by risk since day one, in step with People increasingly want to be physically and
contemporary needs and our changing environment. emotionally healthy and live in harmony with their
community. At the same time, companies are focusing
Strong Growth through Constant Innovation more on communities while grappling with – and taking
on greater responsibility to resolve – issues including
Major changes are taking place in our operating environmental degradation, labor shortages, and regional
environment at an unprecedented pace, from geopolitical economic disparities. The Aeon Group has been
risks and demographic shifts to technological innovation collaborating to solve global problems in order to meet
in IT and other areas. These changes have dramatically the expectations of customers and communities.
altered the operating environment of the retail industry, as Looking toward the 21st century, we established the
customers have come to seek not merely material Aeon Group 1% Club1 in 1989 and the Aeon Group
fulfillment, but also emotional satisfaction. Given these Environment Foundation2 in 1990. We maintain a long-term
24 Aeon Report 2017

perspective as a corporate citizen that protects the Health and Wellness Initiatives for Mind and Body
environment and contributes to communities.
We also recognize that we cannot do business without The future of the Earth depends on the intentions and
the living things that provide agricultural, fishery and other actions of each of us. Moreover, physical and emotional
products, and have therefore taken the lead in our industry health and wellness are essential to people because
with programs to protect ecosystems. In 2010, we health is crucial to happiness. Aeon is a leader in health
formulated the Aeon Biodiversity Policy and announced a and wellness because we are committed to our
variety of initiatives to protect ecosystems and preserve responsibility to protect the lives and lifestyles of our
and sustain nature’s bounty and resources. In 2011, we customers. We intend to create new value that includes
formulated the Aeon Basic Policy on Sustainability and in proposals for everyday life.
April 2017 we announced the Aeon Sustainable We will do all we can to create a prosperous future
Procurement Policy and targets to align procurement with with a long-term, sustainable perspective as we both
sustainable international standards and harmonize it with generate corporate growth and support social
nature, ecosystems and society. development.
At the same time, health is a prerequisite for the 1. Currently the Aeon 1% Club Foundation
2. Currently the Aeon Environmental Foundation
happiness of our employees, who are our most
important asset, as well as of our business partners and
all other stakeholders. Aeon Co., Ltd. therefore became
the first retailer in Japan to announce its participation in
the United Nations Global Compact in 2004. We have
expanded relevant activities by establishing the Aeon
Supplier Code of Conduct and acquiring the SA8000
international certification standard for human rights
and working conditions.
Aeon Report 2017 25

Comments from the CFO
We will execute innovative

financial strategies to generate
additional growth for the Group.
Akinori Yamashita
Executive Vice President and Executive Officer
Chief Financial Officer
The DNA of Innovation That Has Driven Aeon to approaches. Moreover, we developed our own
Constantly Take on New and Unprecedented financially disciplined approach to funding after we
Challenges Will Support Coming Generations listed our shares in 1974. We issued 20-year bonds in
2005, and in 2006 we were the first operating company
Aeon has a medium-to-long-term perspective on in Japan to issue hybrid bonds with an exceptionally
improving corporate value, and balancing assets and long 50-year term to redemption. Since issuing these
liabilities to generate earnings is the foundation of our bonds, collaboration with securities companies has
financial strategy. The saying “Give the central pillar enabled us to use funding methods unique to Aeon,
wheels” from Okadaya, one of Aeon’s predecessors, has and I am proud that we have pioneered the hybrid
remained part of our DNA and is a key feature of our market. In 2000, we were the first in Japan to use a
financial strategy, which is unlike that of other special purpose company to securitize the
companies. “Give the central pillar wheels” is the development of new stores.
linchpin that supports our stores, and thus we continue Creating these kinds of new value is in our corporate
to innovate to address changing times and customers. DNA, leading us to constantly tackle challenges and
This mindset led us to pioneer many financial initiatives innovations. I consider it my responsibility to pass on
that were unprecedented either in Japan or in our this DNA so that it leads to growth for the next
industry, ranging from our strategy for funding growth generation.
to our real estate strategy and approach to fund
settlement. Generating Growth with Unified Store Development
Our approach to fund settlement is representative. and Financial Strategies
We have consistently led our industry in introducing
new models, including credit transactions and firm Aeon’s fundamental financial strategy is to structure its
banking. The latter, in which businesses and banks finances to generate earnings while balancing assets
process various types of data via electronic links, is and liabilities. Aeon focuses on retail, so we must
standard today, but we were the first to introduce it in execute a financial strategy that contributes to our
Japan’s retail industry and were also the first in this growth strategy by balancing fixed assets such as real
industry to introduce automatic transfers for public estate with fixed liabilities, with a focus on return on
utility payments. Aeon significantly increased the capital from inventory turns and the cash-to-cash
efficiency of fund settlement operations through these cycle. Our real estate and investment strategies are
26 Aeon Report 2017

important for maintaining financial discipline and legal implementing financial strategies at each company
compliance while continuing to open stores to that contribute to growth. We do our utmost to focus
generate growth. Store development is inextricably on human resources who stay abreast of funding
linked with our financial strategy, so the Development demand and regulations in the regions and countries
Department and the Finance Department maintain we serve, in addition to enhancing the skills of the CFO
constant and close communication. of each company.
We have three main approaches to opening stores.
We may fund land and buildings ourselves, fund our Strengthening Group Governance to Enhance Our
own buildings on leased land, or lease both land and Earnings Fundamentals and Generate Synergies
buildings. We have traditionally scrutinized and studied
development projects with a balance among these The Group structural reforms we have been implementing
three approaches driven by the features of the have created the framework for generating earnings in a
community and market in which the store will be broad array of businesses. We will further strengthen
located while implementing overall cash management. governance as a holding company to ensure that the
Aeon Mall Co., Ltd. currently handles most of our store earnings structure reforms now under way in the GMS
development operations, but the fundamental mindset and Supermarket Businesses will be successful. We will
is the same. We listed Aeon REIT Investment Corporation then increase the level of consolidated net income
in 2013 to diversify the Aeon Group’s funding methods, attributable to owners of parent and improve capital
and to build a framework for increasing the efficiency to optimize our capital structure and thus
competitiveness of stores over the long term by increase ROE.
executing an energetic investment plan to raise the We will invest to fire up the GMS Business and
value of our properties. increase investment in growing businesses such as the
Supermarket Business to further enhance the earnings
Stronger Group Governance for Further Growth fundamentals of the Group. At the same time, we will
invest in IT and our logistics infrastructure to steadily
Aeon has grown through mergers with leading create Group synergies that increase earnings.
businesses in each area. Dialogue and the fusion of We are acting on our commitment to optimal resource
values are essential for mergers, because a merger is a allocation by making growth businesses an investment
union of the heart and mind of two corporations. I priority and improving investment efficiency. Another
worked at the forefront of the rehabilitation of Yaohan priority is controlling interest-bearing debt through
Co., Ltd. and Mycal Corporation. Mergers are not a one- improved cash flow from managing the Group’s capital
way street for Aeon. They will not be truly successful more efficiently and streamlining inventory. Inventory
unless we respect and integrate the values of the efficiency is particularly important for generating cash
employees who actually make the company go. I still flow, so we will improve our cash-to-cash cycle by
consider the employees of Yaohan and Mycal as enhancing management of average inventory and days
comrades in arms. inventory outstanding at the Group companies.
Through such measures, Aeon has come to Our shareholder return policy prioritizes an optimal
encompass a diverse array of businesses. While cash balance between increasing corporate value through
flow varies by business, we are expanding the regions medium-to-long-term growth and shareholder returns.
where we operate globally. Overall Group governance Our dividend policy is to reward shareholders for
and monitoring will therefore become even more providing capital by increasing dividends annually
important. Holding company finances require that we with a consolidated payout ratio of 30% or more. We
fully understand each business from a management will also continue to provide shareholders with special
perspective. We will fine tune the Group’s structure by shopping benefits and other perquisites as a
becoming more involved with companies undergoing component of shareholder returns. Our objective is to
rehabilitation and newly established companies that generate more growth for the Group by executing
need support from the holding company. innovative financial strategies.
Above all, human resource development is the key
to maintaining our approach to governance and
Aeon Report 2017 27

Aeon Group Medium-term Management Plan (FY2017-FY2019)
Overview of 10 Years and Final-year Target of the Medium-term Management Plan

Operating Revenues
¥9.5 trillion
¥5.1 trillion
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2019 (FY)
(Forecast)
Operating Income ¥290.0 billion

¥156.0 billion
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2019 (FY)
(Forecast)
We will restructure our management plan according to the

company we want to be in 2025 with the objective of restoring
earnings growth.
Operating Environment Analysis and Context of the technological progress and the diversification of values.
Medium-term Management Plan Major changes are certainly sweeping the retail industry,
exemplified by changes at discount stores in the United
Anticipating changes in the operating environment States and Europe. Previously, discount stores bought large
from 2020 onward, Aeon formulated the Aeon Group volumes of surplus and other items to offer low prices.
Medium-term Management Plan (FY2017-FY2019) to Now, however, they are keeping prices low while
achieve sustainable growth into the future. maintaining quality by eliminating redundant functions
Backing the formulation of this plan was the steady and decor and limiting product lines. Furthermore, people of
expansion of our business operations in the past. We all levels of income are making wider use of discount stores.
generated operating revenues of over ¥8 trillion yen for the Consumption is now polarized between discernment
first time in Japan’s retailing industry in fiscal 2015 during and thrift, which creates growth potential. In addition, the
the previous Medium-term Management Plan (FY2014- dramatic evolution of technology is eliminating the
FY2016). The operating environment of Aeon’s businesses, boundaries between virtual and actual stores.
indeed the entire world, is now undergoing a paradigm Given these significant social and economic
shift. We therefore need to respond appropriately and changes, we have realized we have to consider our
identify additional growth opportunities. During the new ideals for Aeon as a corporate group. We need to look
Medium-term Management Plan, we will restructure our beyond the changes now taking place into the social
businesses and implement other fundamental reforms. environment of 2025 and the consumers who will
The key is to evolve as a corporation so that we can answer populate it. In other words, we have realized that we
customer demands that have been changing due to will not be able to grow with a Medium-term
28 Aeon Report 2017

Key Reforms of the Medium-term Management Plan
1. Completion of earnings structure reforms of existing businesses Completion of earnings structure reforms for Aeon Retail and Daiei
Reform of the Group’ s business structure

2. Group-wide structural reforms toward new growth
Reform of business foundation
Medium-term Management Plan Road Map

2017 2018 2019 Future
structure reforms
Daiei regains profitability

Earnings
Aeon Retail completes earnings structure reforms

Toward
new growth
Reorient unprofitable companies Priority management and strategic restructuring
Group structure reforms
Specify and promote reforms – improve efficiency and optimize logistics and IT systems
Devise reform plan for logistics and IT systems in each business
Redefine businesses in growth markets and areas. Establish new businesses.
Management Plan that is simply an extension of the remarkable results by restructuring redundant businesses
one we were completing. and sharing the use of common infrastructure, but we
Therefore, we have announced our plan for the next need to make dramatic improvements in investment
three years and simultaneously continued the discussion efficiency and profitability. Restoring earnings at Aeon
to clarify once again our ideal for 2025 and how we will Retail and Daiei is a top priority we must resolve so that the
differentiate Aeon. Group can grow; therefore we will steadily reform their
earnings structure (see pages 32-37 for details).
Initiatives for the Three Years from Fiscal 2017 Moreover, reforms of the Group’s structure for new
through Fiscal 2019 growth will serve as the foundation for evolving into a
truly global retailer with world-class scale and
Our Medium-term Management Plan is the first stage profitability over the three-year period. Major initiatives
toward our ideal for 2025. Our two vectors will be will be reorganizing the Group’s business structure and
completing the reform of the earnings structure of reforming its business foundation.
existing businesses and reforming the structure of the In reorganizing the Group’s business structure, we
Group to generate new growth. We will significantly recognize that we need to target leadership in each region
evolve the Group’s operating structure to transform Aeon and business. We will redefine our existing businesses,
into a company that can generate strong earnings. review our business areas, and further accelerate the
We will focus on improving earnings at Aeon Retail Co., merger, splitting off or reorganization of the Group
Ltd. (hereafter, “Aeon Retail”) and The Daiei, Inc. (hereafter, companies to achieve an appropriate scale for prevailing in
“Daiei”) in reforming existing businesses. We have achieved intense competition and reinvent Aeon as a highly
Aeon Report 2017 29

Reform Group Business Foundation
Emerge as top conglomerate in each region and business
1. Redefine existing businesses and review business areas
2. Merge, split off or reorganize the Group companies
3. Combine community-centered economies of scale and community-rooted management
4. Evolve and transform Shopping Mall Development, Financial Services and Drugstore & Pharmacy Businesses
5. Strengthen initiatives for entertainment, wellness, healthcare and other service areas and markets
6. Establish the Discount Store Business as a new pillar of Group earnings
7. Strategic streamlining, consolidation or decommissioning of unprofitable companies
profitable company. We will raise the ratio of e-commerce core IT reform areas of customers, stores, products,
significantly and differentiate Aeon by developing unique back office operations, digital and logistics. IT platform
private brand products not found at other companies. We reforms to support the growth of the Group over the
also need to establish businesses in growth markets. We coming three years also include upgrading systems to
will therefore develop the Discount Store Business as a new use AI. Our four core logistics reform areas cover
pillar of earnings, and enhance initiatives in service sourcing and inventory, restructuring of our logistics
businesses and markets to capture growing consumer centers and network, operation of logistics centers and
expenditures on services. Given increasing consumer stores, and food processing centers and commissaries.
interest in health and wellness, we will expand the products We have established respective project teams and will
and services we offer in the pre-disease and disease reform our overall supply chain from production and
prevention market. logistics to store operations. In doing so, we intend to
Reforming our business foundation will involve the use pursue group synergies by maintaining a common
of platforms that encompass IT, logistics and supply chain Group base for shared services.
management to enable each business to maximize
earnings. We also plan to build systems that can supply the Toward 2025
products customers in Asia want without constraints. IT,
logistics, and supply chains are more important than ever Aeon’s goal for 2025 is to be in the global top 10 in the
as a source of competitiveness as they improve customer retail industry. We expect change in the structure of
convenience and help manage costs. We therefore intend our industry to accelerate as competitors in the retail
to build an infrastructure that completely transcends industry and in markets including the internet and
conventional frameworks and anticipates future changes services become borderless. In this environment, Aeon
in our operating environment. We have identified the six will delineate its ideal for 2025 more concretely and
30 Aeon Report 2017

Upgrade Operating Fundamentals

IT Reforms
GMS Business
Supermarket Business
Drugstore & Pharmacy Business
Financial Services Business
Shopping Mall Development Business
Services & Specialty Store Business

Customers Stores Products
Six Core
Reforms
Back office Digital Logistics
Logistics Reforms
Restructuring of
Sourcing and logistics centers
inventory
Four Core and network
Operation of Food processing
Reforms logistics centers centers and Upgrade the Group’s shared infrastructure
and stores commissaries
Upgrade operating fundamentals by implementing Use logistics and IT reforms to build a platform optimally suited to business
characteristics. Upgrade logistics and IT for next-generation social and customer
reforms with a medium-to-long-term perspective requisites from 2020 onward.
redefine its businesses over the three years of the must be the starting point for Aeon to be a corporate
current Medium-term Management Plan. Our goal is to group that responds to new community and lifestyle
have numbers for operating revenue and profit margins paradigms and contributes even more to society. The
that place us among the global top 10 retailers. experiment we launched in 2016 to demonstrate the
At the same time, achieving our ideals requires both feasibility of our Community Ecosystem concept is part of
three-year plans and major reforms of our organizational this initiative. A Community Ecosystem is designed to
culture. We failed to achieve many of the goals of the bring together Aeon’s facilities, products and services with
previous Medium-term Management Plan, primarily healthcare and government organizations, civil society
because of weaknesses in our corporate culture. We will organizations, companies and other entities to address
therefore work toward our goals by using the assets of the the new values of community residents in the digital age,
Group, uniting all our strengths and building our corporate and serve as a new framework for community development
culture anew. that increases the value of living in the ecosystem. We
How we contribute to society and the environment initiated the experiment in the Makuhari-Inage area, and
is extremely relevant to our consideration of the form have received positive feedback from the residents of
we should take, indeed to our very reason for existence Chiba City and neighboring areas. We will examine a
as a corporation. In retrospect, our response to social future horizontal rollout to other areas with core features
issues has been as important to management as our including collaboration with healthcare institutions and a
primary business initiatives. Our TOPVALU brand is regional currency concept.
representative. We have been working to develop Thus we will define our goals for 2025 and work
environmentally friendly products for this brand ahead together to reform the Group. We are committed to
of other companies, and will accelerate such initiatives. accomplishing these reforms as a corporate Group that
In addition, addressing diversification among customers constantly innovates.
Aeon Report 2017 31

Medium-term Management Plan: Year One
Completion of Earnings Structure Reforms at
Aeon Retail and Daiei
Reforms to Date
Aeon Daiei
Reorganization and Consolidation and Implementation of

Use of common
consolidation of decommissioning of private joint sales promotion
infrastructure
overlapping businesses brands and member cards campaigns
Key Themes for the Future
Expand sales Open new stores and refurbish existing stores
Review product lineups

Improve gross profit margin Nationwide promotion of Home Coordy, a large-scale home
furnishing unit (Aeon Retail)
Increase gross operating income Raise rent revenue by improving floor usage rate
Anticipate sales promotion expenses/reduce personnel expenses

Reduce selling, general and through workstyle reform
administrative expenses
Systems integration (Daiei)
Business structure able to generate stable profits following successful implementation

over the three years of the Medium-term Management Plan
32 Aeon Report 2017

The Daiei, Inc. (hereafter, “Daiei”) became a consolidated business format, products and structure. For business
subsidiary in August 2013. We have subsequently made format reforms, we are already moving forward with
full use of the Group’s expertise and reformed Daiei’s renewals into the new Aeon Food Style format, along
operating structure to meet the expectations of the with new services and sales floor layouts that address
customers who shop at Daiei stores every day. First, we customer needs. We intend to maximize Daiei’s appeal
launched initiatives to improve profitability that included while energizing stores and improving earnings.
reorganizing and consolidating redundant specialty Aeon Retail Co., Ltd. (hereafter, “Aeon Retail”) has been
businesses, initiating shared use of common infrastructure, reforming the GMS Business in earnest since fiscal 2015.
and introducing Aeon’s TOPVALU brand at Daiei stores. Initiatives have included the introduction of Aeon Style
We also integrated Daiei cardholders into the Aeon and stores that address diverse customer lifestyles and
WAON Point cards, and increased Daiei’s competitiveness requirements, and the development of G.G. stores that
by capturing economies of scale in product sourcing and address the rapidly growing senior market. Fiscal 2017 is
improving supply chain efficiency with logistics bases in the third year of Aeon Retail’s reforms, and it will keep its
the regions Daiei serves. Furthermore, we strategically product lineup focused on customers while staying close
created mechanisms and systems that enable the Group to communities to further deepen the reforms conducted
companies to benefit as well. so far. Customer lifestyles and everyday lives will be the
Daiei’s standout feature is that it is an urban core of a transformational model that enables discrete
supermarket chain with many stores in major metropolitan businesses to succeed in markets such as clothing, home
areas. Reforms since Daiei became a consolidated leisure, food, and health and beauty. Aeon Retail will also
subsidiary have concentrated Daiei’s resources in the further delegate authority so that its organization is able
metropolitan Tokyo and Keihanshin areas to focus on to quickly address the diverse needs of regional customers.
Daiei’s traditional strength in supermarkets that specialize Aeon Retail and Daiei generate a substantial share of
in foods. These reforms have included transferring store the Group’s earnings. We will therefore complete earnings
operations in Hokkaido, Nagoya and Kyushu to other structure reform for these two companies during the
Aeon Group companies. The new Medium-term Medium-term Management Plan we launched in fiscal
Management Plan targets Daiei’s return to profitability 2017 to improve the consolidated results of the Group.
during fiscal 2017 through reforms in the three areas of
Aeon Report 2017 33

Aeon Retail Reforms
Taking On New Challenges Only Aeon Can Handle to Generate

Sustainable Growth
A Medium-term Management Plan for a New Phase Reform Our Earnings Structure
of Growth 3 Aeon Retail is reviewing investment allocation as a result of various internal
and external changes.
Aeon Retail Co., Ltd. (hereafter, “Aeon Retail”), a core Aeon

company, operates in the General Merchandise Store (GMS)
Take on Challenges in the Prepared Meal Business
Business, offering customers a pleasant, convenient
The way people eat at home has changed dramatically
shopping environment and a complete lineup covering
because of increases in the number of single-person
food, clothing and household items. Yet along with changes
households and working women. Aeon Retail has addressed
in contemporary conditions, the lifestyles and values of its
these changes in ways such as developing delicatessen and
customers are changing dramatically. Aeon Retail is
other prepared meal* offerings. Kokode Deli is a key growth
therefore reviewing its conventional approaches in light
strategy. This name is a play on the Japanese words for “here”
of these changes and taking on the challenge of new
and “delicatessen” that expresses the ability to sit and have a
businesses to generate sustainable growth.
bite to eat while shopping. It is a new approach to eating out
Promote Aeon Style that maximizes Aeon’s store, product and functional assets.
1 Aeon Retail is implementing store and organizational changes to move

from a standardized store format nationwide to formats that enable it to
more effectively deliver optimal products and services to regional
Aeon Style Kobe Minami, Aeon Style Umie, and Aeon Style
Shinurayasu MONA have created spacious in-store areas for
sit-down meals where customers can enjoy a menu that
customers. Aeon Retail transformed 37 outlets to new Aeon Style stores as
of February 2017, and plans to complete reforms at 90 stores by 2019. includes salads, deli items and pasta dishes developed in-
house, as well as alcoholic beverages such as wine. Designed
Take on the Challenge of New Businesses for contemporary lifestyles, these outlets offer a fresh, safe,
2 Aeon Retail will take on the challenge of highly specialized new business
fields to address changing customer preferences and stay focused on
fast and smart instore dining option. An Aeon research
center is evolving this concept by investigating more food
technological evolution.
Promoting Aeon Style
Aeon Style is a format unique to Aeon. It

combines focused product lineups and
floor space into a single unit that tailors
aspects ranging from product offerings
and customer service to sales floor design
a n d store lay out to the region being
ser ved. Aeon Style differentiates itself
from competing stores by eschewing
standardized floor layouts to optimize sales
space for the regional customer base and
handling product procurement and other
decisions at each of its stores.
34 Aeon Report 2017

distribution centers, greater in-store efficiency and menu Operations Close to Communities
development.
* An eating style in which customers purchase delicatessen items, commercially
Aeon Retail has introduced a regional company system
prepared boxed foods, or other prepared foods to take home and eat
and delegates authority to respond promptly to
Senior Shift customer needs in the regions it serves. Companies in
six areas throughout Japan align their operations
Aeon’s Senior Shift strategy involves developing G.G. closely with their region by autonomously handling
stores, which offer goods and services that make daily life product lineup, price setting, hiring, and remodeling in
delightful for customers. G.G. stands for Grand Generation, step with the characteristics of their region.
in reference to the best time of life. It streamlined headquarters functions in fiscal 2015
The first G.G. store opened in Aeon Kasai with the to create a fast, flexible management organization, and
concept of fun, active mornings of exercise, table tennis reinforced organization, store personnel, authority and
and the game of “go” that get started early. It offers a functions in each area. In fiscal 2017, the company
lineup that responds to the trends toward single-serving eliminated the barriers that separated its traditional
and health-conscious dining, and has earned praise from clothing, food and home lines and defined 18 product
seniors and a broad range of other demographics for categories based on customer lives and lifestyles. Aeon
successes that include the creation of places for Retail is therefore able to respond quickly and precisely
community gatherings and communication. Aeon Retail to customer demand, which enhances its regional
will continue to open G.G. stores and plans to have more competitiveness and improves profitability.
than 100 nationwide by 2025.
Sales Floors with Specialized Units Drive Growth

Home Coordy
A home goods specialty store that serves all genders and ages with simple, timeless designs for
lasting use. It offers affordable, high-quality products that customers can easily mix and match.
Glam Beautique
These stores are bases that support customer health and beauty. They offer a range of products that
includes organic products, traditional Chinese medicine, and wellness foods along with salespeople
who draw on specialized skills to provide counseling.
Kids Republic
A specialized store for babies and children that is based on the concept of shaping the people who will shape
the future. A cooperative effort of communities, governments and companies that help communities raise
children, these stores offer a full line of products and services as a place for confidently nurturing children.
Aeon Report 2017 35

Daiei Reforms
Decisive Earnings Structure Reforms and a Transition to Aeon

Food Style Stores for a Return to Growth
Key Points of the New Medium-term Management Plan Three Reforms
The Daiei, Inc. (hereafter, “Daiei”) has implemented We have identified three specific types of reforms –
dramatic reforms to rebuild its management since “business format,” “product” and “structural” – and are
becoming a wholly owned subsidiary of Aeon Co., Ltd. in implementing these reforms to push forward the
January 2015. It made a first step toward becoming the transformation of Daiei’s earnings structure.
best store in each community it serves by transferring Regarding business format reforms, Daiei promotes
store operations in Hokkaido, Nagoya and Kyushu to rebranding outlets as Aeon Food Style Stores, a new
Aeon Group companies in September 2015, followed by category with the catchphrase of “delicious food for a
some stores in the Kanto and Kinki regions in March 2016. healthy spirit and body,” where it will actively develop
Completing the reform of Daiei’s earnings structure is a products and create sales floors to offer food and
key issue of the Aeon Group Medium-term Management peripheral products tailored to the lifestyles of urban
Plan (FY2017-FY2019). Our fundamental strategy is residents. Japan’s food market is contracting due to rapid
selection and concentration to ensure Daiei’s further demographic changes. Therefore, in addition to products
growth. We are focusing resources on store development for cooking at home, Daiei is enhancing its prepared-food
in the Tokyo metropolitan and Keihanshin (Kyoto, Osaka department. It is also building a full-scale eat-in and
and Kobe) areas, where Daiei enjoys popularity, while takeout grilled-dish business using its subsidiary Orange
restructuring Daiei’s food business, which is one of the Food Court to branch out into the home meal replacement
company’s strengths. Daiei is also targeting leadership in (HMR) and restaurant markets.
the food supermarket business in Japan. At some former Product reforms cover every process from
general merchandise stores, Daiei will retain responsibility ingredients to processing, delivery and sales so Daiei
for food products while turning over responsibility for can deliver fresh, high-value-added products. Focused
clothing, household and leisure products to other Group on livestock products since its founding, Daiei began
companies or finding tenants to handle them, thus producing Japanese black beef at directly owned farms
generating real estate income while focusing its resources in 1970. The company integrated this operation from
on food retailing. feedlot to store shelf, and began selling its Satsuma
Area Reorganization to Become the Number-one Food Supermarket Retailing Business in Japan
Daiei focused resources on the food supermarket business

in the Tokyo and Keihanshin areas. Other Group companies
took over Daiei’s operations in other areas and GMS operations.
* Completed restructuring in March 2016
… Daiei operating areas

… Operating areas transferred from Daiei
36 Aeon Report 2017

Himegyu brand of Japanese beef in 2006. Daiei’s Growth Strategy
directly owned farms are SQF* certified, and it is the
only company in Japan to ensure world-class food The expected outcomes of these reforms for Daiei are an
safety in Japanese beef production. In 2017, it also additional ¥5 billion in earnings in fiscal 2016 compared
acquired cattle breeding farms in Kagoshima Prefecture with the previous fiscal year and a rapid return to
and became the first in the industry to commercially profitability. Daiei will proactively incorporate health and
breed Japanese cattle. These initiatives will provide wellness, and will also further evolve Aeon Food Style
new value to customers by ensuring a stable supply of Stores while restarting new store openings to further
Japanese beef and reducing its cost. strengthen its competitive advantage in the Tokyo
The structural reforms are designed to create a metropolitan and Keihanshin areas.
management system suited to the food supermarket In addition, Daiei will steadily implement a balanced
business and a company where all employees can excel, localization strategy that also has a global perspective.
as exemplified by investment in education. In addition to Specifically, Daiei supermarkets are closely connected to
reviewing all educational systems, from officers to the communities they serve, so they will gather the
community employees, Daiei will create additional opinions of customers within a 500-meter to 1-kilometer
synergies through personnel exchanges, including the radius on a weekly basis to bring to light and sell timely
dispatch of personnel to Aeon Group companies. Daiei priority items that are unique to each area.
will also improve productivity by integrating all new IT Daiei celebrated its 60th anniversary in 2017.
and logistics systems of Aeon. Committed to putting customers first, Daiei will
* Safe Quality Food: An international standard for ensuring food safety and quality
continue to integrate its DNA since its founding with
Aeon’s DNA of innovation to evolve into the number-
one food supermarket retailing business in Japan.
The Value Aeon Food Style Delivers
Fun Exciting
Cuisine! Shopping!
Stores for Stores offer

experiencing the unexpected discoveries
fun of preparing and delight
and eating food
Delicious Healthy
Things to Eat Spirit
Right Now! and Body!
Stores offer Stores offer

good food and food for healthy living
good times, anytime
Delicious food for a

healthy spirit and body
For Your Health & Wellness
Aeon Report 2017 37

Aeon’s Product Mindset
Innovative Measures to Meet Diverse Customer Needs
A Thorough “Customers First” Policy As a matter of course, in November 2011 the Fair Trade
Commission found no evidence of violations by Aeon after
Since day one, Aeon’s approach to product development a six-month audit. We then ran an advertisement in August
has consistently put customers first. Hoping to make 2012 stating that Aeon has a consistent philosophy of low
customers happy, we offer an extensive lineup of value- prices based on legitimate business practices, and
priced products and constantly implement innovative reminding customers of our corporate stance and our
initiatives so that customers find it convenient and valuable mechanisms to keep prices low.
to shop at Aeon. Moreover, our commitment to consumer Moreover, in June 2017, amendments to the Liquor Tax
rights and freedom of choice in purchasing has led us to Act and other laws resulted in a series of beer price increases.
launch initiatives that break with preconceived notions and However, Aeon held the prices of major beer brands steady
industry norms. Events related to beer transactions are through its own capabilities to offer customers value pricing.
representative. Misleading news was reported in July 2012,
suggesting that Aeon was demanding that wholesalers
supply beer at prices below their cost. The fact was that
beer manufacturers had abolished a system of rebates on
sales of beer to wholesalers they had introduced in 2005.
Then, wholesalers asked retailers to raise their prices.
First of all, this price increase request resulted from a
change in the way manufacturers and wholesalers did
business with each other, so Aeon did not see a valid reason,
such as a sharp increase in the cost of raw materials, to
pass on higher prices to consumers. Committed to
putting customers first since day one, Aeon created a
system for shipping products from manufacturers directly
to its logistics centers. This unique system was a first
Newspaper advertisement communicating
among Japan’s retailers and added to Aeon’s capabilities our refusal to accept a beer price increase
to rationally reduce costs. As a result, we were able to for the convenience of wholesalers.
offer our customers reasonable prices without raising the

price of beer.
38 Aeon Report 2017

TOPVALU: Developed Using Customer Feedback cotton in Gurinai products is organically grown. Customer
support for these and other products is strong.
Corporate efforts such as these allow Aeon to source Moreover, we launched TOPVALU Yasashi Gohan
products at reasonable prices, and we are emphasizing (Rice) in November 2016. Planned and developed to be
product development within our TOPVALU private brand. safe and easy for all family members to eat, this product
TOPVALU embodies in product form the total customer does not contain seven designated ingredients we
commitment of the Aeon Basic Principles, and we believe identified through customer feedback from families
that all our stakeholders share that view when using the with members who have allergies. This product series
products. We have made good use of customer opinions now offers 17 items, and its popularity is evidenced by
in developing products. We gather customer opinions via the extensive feedback from customers stating that
multiple channels at the stores we operate, employ the these products have expanded their culinary and menu
results of large-scale monitor surveys in product options. We will continue to develop products while
development, and take responsibility for directly handling responding to the diverse needs of our customers.
customer inquiries. The result is one of TOPVALU’s greatest
strengths: our framework for immediately reflecting
customer opinions in product development.
The aging of society is expected to drive a social
transition toward an emphasis on both physical and
mental health. Given these changes, a key role for Aeon
will therefore be to offer customers protection in their
TOPVALU Yasashi Gohan
daily lives.
The development of TOPVALU Gurinai products for
customers concerned about health and wellness is a
specific initiative. Tasmanian beef sold under this brand is
raised without antibiotics or growth hormones, and the
J-Cup Instant Ramen Launched in 1974

The oil crisis of 1973 seriously affected the retail industry as manufacturers
took advantage of soaring raw material prices to raise their own product prices.
JUSCO, an Aeon predecessor, lodged protests with manufacturers of instant
ramen that unilaterally increased prices because it did not see a convincing
rationale for the price increase. JUSCO terminated sales of those ramen
products and launched its own J-Cup instant ramen product in 1974. Aeon has
always believed that the social mission of the retail industry is to act on behalf
of customers in purchasing products and services they need and offering
them at reasonable prices, and these actions fulfilled that function.
Aeon Report 2017 39

Corporate Governance
Features of Aeon’s Corporate Governance
1969 1989 2001
Group • Changed Group name to Aeon Group • Changed company name to Aeon Co., Ltd.
management • Established Aeon Basic Principles • Changed Group name to Aeon
organization
Diversification and Growth through

globalization consolidated Group management
Corporate
governance • Brought in outside officers (now called Outside Directors)
when JUSCO Co., Ltd. was established
• First retailer in Japan to bring in Outside Directors from
different industries
Our management priorities are to establish both our consolidated Group management. Aeon declared its
Group management organization and corporate commitment to thinking globally, acting locally, and
governance, while passing on our DNA of continuous putting customers first as a group of companies that
innovation in response to changes in customer needs innovates constantly to achieve further growth.
and the competitive environment. The scale of our business was expanding, so we
changed our existing management system by enhancing
Group Management Organization Reforms management by business when we transitioned to a
company with committees in 2003. We also transitioned
Aeon has a history of alliances and mergers with leading to an operating holding company management structure
regional companies that began with the formation of with the objectives of using the Group’s resources
JUSCO, while transforming Group management to effectively and increasing corporate value. We changed
increase the Group’s scale with a nationwide chain again in 2008, moving to a pure holding company to
of stores. clarify the holding company and operating company
We used a federated approach to management based organization framework as we developed mall-type
on an alliance and merger strategy after establishing shopping centers, operated retail stores, implemented an
JUSCO. Under this approach, we created streamlined M&A strategy, increased the Group’s scale, and diversified
management units at the head office to raise efficiency with a focus on the retail business.
and address issues common to the Group companies We have subsequently evolved our management
through Group management. We also largely delegated organization in line with changes in the external operating
authority to enable the Group companies to operate and competitive environment and the scale of Group
independently with close community relationships. We businesses while maintaining our commitment to putting
subsequently diversified and internationalized operations, customers first, close community relationships and a
leading us to revolutionize Group strategy in 1989 and frontline focus. Following these reforms, the Financial
change our name to Aeon Group from JUSCO Group. In Services Business, the GMS Business, the Supermarket and
this period of innovation, we formed a loose confederation Discount Store Business, the Shopping Mall Development
that brought the Group closer together while respecting Business, and the Drugstore & Pharmacy Business have
the autonomy of the Group companies and sharing reached a nationwide business scale, as Aeon has grown
expertise to support Group growth. into a corporate group with fiscal 2016 consolidated
In 2001, we changed the company name from JUSCO operating revenues of more than ¥8.2 trillion.
to Aeon Co., Ltd. and the Group name to Aeon with a
determination to prevail in full-scale competition with
global retailers and to accelerate growth through
40 Aeon Report 2017

2003 2008 2009 2016 2017
• Established a managemant structure as a

true operating holding company • Transitioned to a pure holding company
Establishment of
Growth from operation of mall-type shopping centers Basic Policy on
and retail stores, and M&A Corporate
Governance
• Transitioned to a company with committees • Outside Directors a majority on the
Outside Directors chair the three committees Board of Directors and the three committees
Corporate Governance Changes to Enhance Group of Japan and have extensive experience and knowledge
Management Transparency relevant to Aeon’s management decisions, while
understanding and sharing the Aeon Basic Principles
Since JUSCO was established, Aeon has recognized the and values. The management team benefits from their
importance to management of corporate governance independent judgment and participation in management
that incorporates the frank opinions and impartial, from an objective standpoint
objective perspectives of third parties, and therefore Group governance involves oversight of subsidiaries
appointed Outside Directors and auditors. by the Corporate Audit Office, which reports directly to
We were also among the first companies in Japan to the Audit Committee of Aeon Co., Ltd. As of February 28,
transition to a company with committees in April 2003 2017, a total of 415 employees worked in internal
following the revision of the Act on Special Exemptions to auditing departments at the Group companies. This
the Commercial Code Related to Audits, etc. (Commercial system for rigorously auditing corporate management
Code Exemptions Act). maintains healthy tension in corporate governance.
A company with committees is a governance system
that makes Group management transparent and impartial Establishment of Basic Policy on Corporate Governance
by separating management oversight by the Board of
Directors from business execution. Aeon established and The need to respond to the Corporate Governance
now employs its own governance structure that goes Code enacted in June 2015 was an opportunity to
beyond legally stipulated standards to further enhance further evolve our own corporate governance. The
governance transparency and supervisory functions. Its Board of Directors conducted multiple discussions that
features are as follows. had the Aeon Group’s ideals as their starting point, and
The chairperson of Aeon’s Board of Directors is not the Group then formulated its own Basic Policy on
an executive. Moreover, the chairpersons of the Nomination Corporate Governance in April 2016 to express its
Committee, Compensation Committee and Audit corporate stance and fundamental management and
Committee are Outside Directors. Since 2009, Outside governance ideals. It codifies the kind of corporation the
Directors have been in the majority, and currently five of the Group hopes to be and our basic approach to corporate
nine Board members are Outside Directors. All four members management and governance. Embracing the Aeon
of the Audit Committee are Outside Directors, and three of Basic Principles we have had from the beginning and
the four members of the Compensation Committee and designed to pass on the DNA of innovation we have
the Nomination Committee are Outside Directors. This nurtured by taking on challenges, our Basic Policy on
enhances management transparency and impartiality. Corporate Governance expresses our fundamental
Aeon appoints Outside Directors who are representative long-term approach to Group management.
Aeon Report 2017 41

Comments from the Chairman of the Board
We will conduct management unique to Aeon and increase corporate

value by employing a PDCA cycle that revolves around the Aeon Basic
Principles and constantly enhancing corporate governance.
Hiroshi Yokoo
Chairman of the Board
Continuously and Proactively Enhancing Corporate are Outside Directors, who are also the main committee
Governance Is a Top Priority members. Notably, the Audit Committee consists entirely
of Outside Directors. This framework enables sound
Since day one, a core mission of Aeon has been consistent, supervision of and constraints on officers. Our execution is
long-term contribution to communities as a caring also under intense external scrutiny, so our system of
corporate citizen with an approach to management governance is aligned with our Group philosophy of
grounded in the Aeon Basic Principles of “Pursuing continuous innovation because it allows us to boldly go
peace, respecting humanity, and contributing to local about our work. The institutions we designed have been
communities, always with the customer’s point of view the platform for continuously strengthening governance
as its core.” Management is essentially corporate using the rigorous and sincere guidance and advice of our
governance. Continuously enhancing corporate Outside Directors.
governance is therefore a top priority as we focus on
being an organization that earns the trust of society. The PDCA Cycle Improves Board Effectiveness
Acting on this mindset, in May 2003 Aeon was a
pioneer among Japanese companies in transitioning to a We are proud of our proactive initiatives to enhance
company with committees in accordance with amendments corporate governance, yet we intend to continue
to the Companies Act. A majority of our Board members enhancing it rather than complacently believing we have
42 Aeon Report 2017

done enough. Corporate governance is not simply a matter information needed for discussion, large though its
of institutional design. Our approach to implementing the volume may be.
system of corporate governance we have constructed and I consider this one of my most important roles as
what we do to improve its effectiveness are also important. Chairman of the Board of Directors. I conduct individual
This involves a PDCA cycle.* interviews in connection with the agenda of the Board of
The key issue in this context is improving the Directors, and energetically provide agenda background
effectiveness of the Board of Directors itself and the and supplementary materials prior to Board meetings.
validity of its discussions. We currently assess the We have also begun helping the two new Directors
effectiveness of the Board of Directors with regular, who took office in fiscal 2017 understand each of Aeon’s
systematic analysis of meeting proceedings and opinions. businesses and companies, including management
We had been assessing the effectiveness of the Board particulars to date and the course of discussions. Specific
through individual interviews and meetings conducted activities have included exchanging opinions with
exclusively with Outside Directors. However, in fiscal 2016 frontline employees at stores and participating in tree-
we began conducting individual surveys of issues not planting activities overseas.
covered in meetings and the perceptions of Outside
Directors to further enhance effectiveness. Strengthening Group Governance That Revolves
We have already formulated a fiscal 2017 agenda for around the Aeon Basic Principles and Continuing to
the Board of Directors that incorporates the priority items Innovate
pointed out through these efforts. Specifically, Group
company management oversight now encompasses Group company governance is an important future issue
detailed discussion of companies designated for close for Aeon’s governance. Aeon comprises approximately
attention for reasons including large deviation between 300 companies, so we need to strengthen governance at
budget and actual results or recent establishment. The each of them to strengthen Group governance. The
agenda also clarifies the organizational structures for Group companies are entrepreneurial and emphasize
developing the next generation of managers and their own contribution to customers and communities in
infrastructure management issues in areas such as IT and their day-to-day operations. The key here is that managers
logistics. at each Group company embrace the Aeon mindset and
In addition, Outside Directors have been involved from all employees always act according to the Aeon Basic
the start in formulating our recently announced Medium- Principles.
term Management Plan (FY2017-FY2019), which made I have taken the initiative to join meetings of the
our strategic planning process more effective. Aeon’s corporate auditors of main Group companies and visit
management is sure to play a key role in executing the Group companies as the opportunity arises to share and
Plan. Our key task now is putting our plan into action, so discuss best practices and case studies as well as Aeon’s
the Board of Directors will confirm progress and discuss management approach and concerns. These discussions
future directions. are also highly effective forums for discussing the Basic
* Plan-do-check-act cycle Policy on Corporate Governance we formulated in 2016,
which defined the kind of company we want to be and
Focus on Maintaining an Environment That Allows our management ideals. We will draw on the Basic Policy
Outside Directors to Exercise Their Capabilities on Corporate Governance as we proactively enhance
corporate governance.
We must allow Outside Directors to fully express their Our approach to management is unique to Aeon and
insights to ensure the effective functioning of our consistently innovative precisely because it draws on the
governance system. Outside Directors energetically Aeon Basic Principles. Holding true to these principles,
provide Aeon with guidance and advice. Our relationship Aeon will continue initiatives to innovate in order to
with our Outside Directors is a welcome mix of shared address constantly changing customer needs and
purpose and tension. However, understanding Aeon’s community concerns while increasing the contributions
diverse business portfolio is not easy for Outside Directors. we make through greater employment of a PDCA cycle.
Another priority is therefore constantly providing the
Aeon Report 2017 43

Comments from the Chairperson of the Audit Committee
We will solicit the valuable opinions of Outside Directors

to help Aeon grow with an independent, transparent
committee system.
I have served as an Outside Director since 2011 and hold Aeon’s governance
in high regard because the company’s committee system is purposeful and
functions effectively. Committee discussions including Outside Directors are
Ken Sato consequential because of the meticulous, straightforward information and
Outside Director support provided prior to meetings.
Chairperson of Audit Committee
The Audit Committee, as a completely independent organization
Compensation Committee
Member composed of Outside Directors, draws on information and analysis collected
by the Group Audit Office to discuss and ensure that Aeon’s business activities
are in accordance with the Aeon Basic Principles. Companies must be
committed to their basic principles to grow, and Aeon’s Audit Committee
considers them an essential component for monitoring and supervising
management. The Aeon Group encompasses some 300 companies, so
compliance is particularly important for sustaining growth. Cooperation with
the Group Audit Office, which coordinates compliance issues, and the
accounting auditor to rigorously identify and review risks is essential. To
accomplish this, we ask the accounting auditor to provide useful opinions
from its independent, expert perspective, accompanied by accounting audits
of quarterly reports. These reports give us a multifaceted understanding of
Aeon’s situation.
The Aeon Group had operating revenues of more than ¥8 trillion in fiscal
2016 and continues to expand. With the significant changes in the current
business environment, now is the time for Aeon to embark on a new phase.
This means Aeon needs to have a long-term, multifaceted perspective and
fundamentally address structural change specifically. Executive Officers are
responsible for day-to-day business operations and are fully committed to
improving performance. The significance of Outside Directors is that we have
varying backgrounds and can make long-term proposals developed from a
different perspective. To do so, Outside Directors need more opportunities for
dialogue with Executive Officers to further enhance the effectiveness of
Aeon’s governance. It is essential that Outside Directors share their views on
Aeon’s present status, awareness of problem areas, including initiatives for the
future such as globalization, and personnel development, by actively
discussing Aeon from a long-term perspective.
As chairperson of the Audit Committee, I will strive to create an environment
that allows Outside Directors to candidly express diverse opinions and do all I
can to enable meaningful discussions in a timely manner. I intend to take the
initiative in contributing to the growth of Aeon.
44 Aeon Report 2017

Comments from the Chairperson of the Nomination Committee
I will help Aeon change and grow by using management

mechanisms and addressing our critical objectives.
The Nomination Committee has two responsibilities: One is to appoint new

Directors; the other, to discuss selection of new Executives. Information technology
will be integral to improving the visibility of the standards and mechanisms we
employ when selecting new Executives and Senior Officers and addressing future
Yukako Uchinaga challenges. We also need to seriously confront transparency issues so we can
Outside Director
consider how to enhance the framework to nurture new candidates.
Chairperson of Nomination Aeon’s Board of Directors welcomes frank opinions, and functions effectively as
Committee a forum for exploring optimal solutions. All members of the Board are committed
Audit Committee Member to Aeon and to the dynamic discussions that are required to assure it continues to
improve. Encompassing some 300 companies, the Aeon Group faces a diverse
array of inherent risks, making Group governance a pivotal focus. Understanding
that overpowering governance strips businesses of the freedom to operate,
reaching a balance is necessary, but never simple. Consistent management is
paramount, so I will make information visible and available throughout the Group
to enable sustainable growth and maximize the use of Aeon’s resources. I am
dedicated to confronting the issues Aeon faces and applying my knowledge and
experience to contribute to its sustainable growth.
Comments from the Chairperson of the Compensation Committee
I will ensure the best management for Aeon to help increase

corporate value, including non-financial aspects.
The key to corporate governance is creating the most suitable system to enhance
its effectiveness. In Aeon’s corporate culture, Outside Directors freely and eagerly
advise Directors, who take that input seriously and reflect it in management.
Current priorities include strengthening Group governance and creating a shared
information infrastructure. Doing so entails intensive discussions that draw on
Toru Nagashima
Aeon’s Basic Principles and leveraging Aeon’s unique strengths from the close
Outside Director
Chairperson of Compensation relationships its companies and stores have with their communities.
Committee The Compensation Committee decides compensation for the CEO and other
Audit Committee Member Senior Executives. However, its essential role is structuring management’s approach
by designing evaluation mechanisms and standards unique to Aeon. We need to
add non-financial criteria to its performance-linked criteria. Aeon’s substantial ESG
initiatives represent significant non-financial value. Objectively evaluating
intangibles as a component of corporate value, for example, is in keeping with
Aeon’s management ideals.
There is still much that Aeon alone can accomplish. As an Outside Director, I will
work harder to promote discussion and help increase corporate value.
Aeon Report 2017 45

Board of Directors and Executive Officers (As of May 24, 2017)
Directors
Director
Chairman of the Board Number of company
Hiroshi Yokoo Date of birth: December 27, 1950 shares held: 13,000
Apr. 1974 Joins Aeon Mar. 2010 Appointed Executive Officer of Aeon and CEO of Strategic Small-sized
Apr.1989 Appointed Director of Ministop Co., Ltd. Store Business and Group Chief Officer for Merchandising and
Merchandising Reform
May 2000 Appointed Representative Director and President of Ministop Co., Ltd.
May 2014 Appointed Aeon Director and Chairman of the Board (current position)
May 2008 Appointed Chairman of Ministop Co., Ltd.
Aug. 2008 Appointed Executive Officer of Aeon and CEO of Aeon’s Strategic
Small-sized Store Business
Director
President and Representative Executive Officer
Group CEO, Member of Nomination and Compensation Committees Number of company
Motoya Okada Date of birth: June 17, 1951 shares held: 2,477,000
Mar. 1979 Joins Aeon

May 1990 Appointed Director of Aeon
Jun. 1997 Appointed Representative Director and President of Aeon
May 2003 Appointed Director and President and Representative Executive Officer
of Aeon (current position)
Mar. 2012 Appointed Group CEO of Aeon (current position)
Director
Executive Vice President and Representative
Executive Officer
Group COO Number of company
Yoshiki Mori Date of birth: September 16, 1950 shares held: 28,000
Mar. 1973 Joins Aeon Aug. 2008 Appointed Executive Officer of Aeon and CEO of Financial
May 1984 Appointed Director of Japan Credit Service Co., Ltd. (now Aeon Services Business
Financial Service Co., Ltd.) Mar. 2010 Appointed Vice President of Aeon and Representative Executive Officer
May 1995 Appointed President and Representative Director of Aeon Financial (current position)
Service Co., Ltd. Appointed Joint CEO of Aeon’s Financial Services Business
May 2003 Appointed Director of Aeon (current position) Mar. 2012 Appointed Group COO of Aeon (current position) and Joint CEO of
Apr. 2007 Appointed Chairman of Aeon’s Executive Committee for Financial Aeon Financial Services Business
Services Business Mar. 2013 Appointed Group CFO of Aeon
Director
Executive Vice President and Executive Officer
CFO, Business Management Number of company
Akinori Yamashita Date of birth: January 1, 1954 shares held: 10,000
Apr. 1977 Joins Aeon Jun. 2014 Appointed Representative Director and President of Aeon Financial
May 2004 Appointed Executive Officer of Aeon Service Co., Ltd.
May 2007 Appointed Managing Director of The Daiei, Inc. Appointed Director of Aeon Bank, Ltd. (current position)
Sep. 2013 Appointed Group CFO of Aeon Mar. 2016 Appointed Executive Officer and Vice President of Aeon (current position)
Mar. 2014 Appointed Senior Executive Officer of Aeon Appointed CEO of Financial Services Business
Appointed CEO of Aeon’s Financial Services Business and Group May 2016 Appointed Director of the Company (current position)
E-Money Business Officer Mar. 2017 Appointed Executive Vice President and Executive Officer, CFO,
Business Management of the Company (current position)
Director
Chairperson of Audit Committee
Compensation Committee Member Number of company
Ken Sato Date of birth: November 17, 1943 shares held: —
Apr. 1966 Joins Ministry of Finance Dec. 2009 Appointed President of Institute for International Policy Studies (current
Jun. 1985 Appointed Budget Examiner, Budget Bureau, Ministry of Finance position)
Jun. 1992 Appointed Deputy Director of Local Finance Bureau, Ministry of Finance May 2011 Appointed Director of Aeon (current position)
Jul. 1997 Appointed Director-General, Bureau of Defense, Japan Defense Agency Jun. 2011 Appointed Director of Nippon Television Network Corporation (now
Nippon Television Holdings Inc.) (current position)
Jan. 2000 Appointed Administrative Vice Minister of Japan Defense Agency
Oct. 2012 Appointed Director of Nippon Television Network Corporation
Jul. 2002 Appointed Vice President of Urban Development Corporation (now (current position)
Urban Renaissance Agency)
Jul. 2004 Appointed Vice President of Institute for International
Policy Studies
Total number of shares held by Directors: 2,530,000

Notes: 1. Directors Ken Sato, Yukako Uchinaga, Toru Nagashima, Takashi Tsukamoto, and Kotaro Ohno are Outside Directors.
Aeon is a company with committees operating three committees: the Audit Committee, Nomination Committee, and Compensation Committee.
2. The term of office of directors is from the conclusion of the regular General Meeting of Shareholders for the fiscal year ended February 2017 until the conclusion of the
regular General Meeting of Shareholders for the fiscal year ending February 2018.
46 Aeon Report 2017

Director
Chairperson of Nomination Committee
Audit Committee Member Number of company
Yukako Uchinaga Date of birth: July 5, 1946 shares held: —
Jul. 1971 Joins IBM Japan Jun. 2008 Appointed Outside Director of Sony Corporation
Apr. 1995 Appointed Director of IBM Japan Oct. 2009 Appointed Director and Executive Vice President of Benesse Holdings
Apr. 2000 Appointed Managing Director of IBM Japan Apr. 2013 Appointed Honorary President of Berlitz Corporation
Apr. 2004 Appointed Director and Senior Executive Officer of IBM Japan May 2013 Appointed Outside Director of Aeon (current position)
Apr. 2007 Appointed Technical Advisor of IBM Japan Jun. 2013 Appointed Outside Director of Hoya Corporation (current position)
Apr. 2007 Appointed President of Japan Women’s Innovative Network (current position) Sep. 2013 Appointed Representative Director and President of Globalization Research
Jun. 2007 Appointed Director of Benesse Corporation Institute (current position)
Apr. 2008 Appointed Director and Executive Vice Chair of Benesse Corporation Mar. 2014 Appointed Outside Director of DIC Corporation (current position)
Apr. 2008 Appointed Chair of the Board of Directors, President, and CEO of Berlitz Apr. 2014 Appointed Chair of Japan Diversity Network (current position)
Corporation
Director
Chairperson of Compensation Committee
Audit Committee Member Number of company
Toru Nagashima Date of birth: January 2, 1943 shares held: —
Apr. 1965 Joins Teijin Limited Aug. 2015 Appointed Director of Japan Corporate Governance Network (NPO)
Jun. 2000 Appointed Director of Teijin Limited (current position)
Jun. 2001 Appointed Managing Director of Teijin Limited May 2016 Appointed Director of Aeon (current position)
Nov. 2001 Appointed COO of Teijin Limited Jun. 2016 Appointed Audit & Supervisory Board Member (external) of Daikin
Jun. 2002 Appointed CEO of Teijin Limited Industries, Ltd. (current position)
Jun. 2008 Appointed Chairman of Teijin Limited
Jun. 2011 Appointed Outside Director of Sekisui Chemical Co., Ltd. (current position)
Mar. 2013 Appointed Outside Director of Kao Corporation
Appointed Director and Advisor of Teijin Limited
Director
Nomination Committee Member
Compensation Committee Member Number of company
Takashi Tsukamoto Date of birth: August 2, 1950 shares held: —
Apr. 1974 Joined The Dai-Ichi Kangyo Bank, Ltd. (now Mizuho Bank, Ltd.) Apr. 2009 Appointed President of Mizuho Financial Group, Inc.
Apr. 2002 Appointed Executive Officer of Mizuho Corporate Bank, Ltd. (now Mizuho Jun. 2011 Appointed Chairman of Mizuho Financial Group, Inc.; President & CEO of
Bank, Ltd.) Mizuho Bank, Ltd.
Mar. 2003 Appointed Managing Executive Officer of Mizuho Financial Group, Inc. Jul. 2013 Appointed Chairman of Mizuho Bank, Ltd.
Apr. 2004 Appointed Managing Executive Officer of Mizuho Corporate Bank, Ltd. Apr. 2014 Appointed Senior Advisor of Mizuho Financial Group
Mar. 2006 Appointed Executive Managing Director of Mizuho Corporate Bank, Ltd. Jun. 2016 Appointed Chairman of The Japan-British Society (current position)
Apr. 2007 Appointed Deputy President of Mizuho Corporate Bank, Ltd. Jul. 2016 Appointed Outside Director of Asahi Mutual Life Insurance Company
Apr. 2008 Appointed Deputy President & Executive Officer of Mizuho Financial (current position)
Group, Inc. Apr. 2017 Appointed Honorary Advisor of Mizuho Financial Group (current position)
Jun. 2008 Appointed Deputy President of Mizuho Financial Group, Inc. May 2017 Appointed Outside Director of the Company (current position)
Director
Audit Committee Member
Nomination Committee Member Number of company
Kotaro Ohno Date of birth: April 1, 1952 shares held: —
Apr. 1976 Appointed Public Prosecutor of Tokyo District Public Prosecutors Office Jul. 2012 Appointed Superintending Prosecutor of Tokyo High Public Prosecutors Office
Dec. 2001 Appointed Deputy Secretary-General of Cabinet’s Task Force on Judicial Reform Jul. 2014 Appointed Prosecutor-General
Aug. 2005 Appointed Director-General of the General Affairs Department of Supreme Nov. 2016 Registered as Attorney at Law
Public Prosecutors Office May 2017 Appointed Outside Director of the Company (current position)
Jul. 2007 Appointed Director-General of the Criminal Affairs Bureau of Ministry of
Justice
Jul. 2009 Appointed Vice-Minister of Justice
Aug. 2011 Appointed Superintending Prosecutor of Sendai High Public Prosecutors Office
Executive Officers
Motoya Okada Soichi Okazaki Motohiro Fujita Yuki Habu
President and Representative Executive Officer Executive Officer Executive Officer
Executive Officer GMS Business Senior Chief Officer Supermarket Business Senior Chief China Business Senior Chief Officer,
Chairman of the Board Officer Chairman & CEO of Aeon (China) Co., Ltd.
Eiji Shibata
Yoshiki Mori Executive Officer Hideharu Mizuno Kaori Miyake
Vice-President and Representative Merchandising Senior Chief Officer Executive Officer Executive Officer
Executive Officer Drugstore & Pharmacy Business CSR & Communication Chief Officer
Group COO Akio Yoshida Senior Chief Officer
Executive Officer Takeharu Takahashi
Akinori Yamashita Development Business Senior Chief Ippei Nakayama Executive Officer
Vice-President and Representative Officer Executive Officer Human Resources and
Executive Officer Services & Specialty Store Business Administration Chief Officer, Risk
CFO, Business Management Hidenori Osano Senior Chief Officer Management Supervisor
Executive Officer
Shinya Wako IT Senior Chief Officer Masaki Suzuki
Vice-President and Executive Officer Executive Officer
Business Planning Officer Financial Services Business Senior
Chief Officer
Aeon Report 2017 47
Status of Corporate Governance
Basic Approach
The Aeon Basic Principles of “Pursuing peace, respecting humanity and contributing to local communities, always with the
customer’s point of view as its core” guide all of Aeon’s corporate activities. The basic stance on corporate governance outlined
below incorporates the values, management stance and fundamental approach to corporate governance we value as a means to
sustain Aeon from generation to generation, with a long-term management perspective founded on the Aeon Basic Principles
and our DNA of innovation. Our basic stance on corporate governance is the nucleus of our Basic Policy on Corporate Governance,
which we announced in April 2016.
Basic Stance on Corporate Governance

Creating Value by Focusing on Customers and the Front Line A Long-Term Perspective and Incessant Innovation for
Customer delight is our most important mission. We create optimal Sustainable Growth
value aligned with changing customer needs by focusing on the Aeon Group management is committed to constantly increasing
front line of our business, which is our point of contact with Group value. We strive to take on the challenge of successive
customers, and by consistently putting customers first. innovation to sustain growth as we create value with a long-term
Respect for People, Our Most Important Asset perspective, which enables us to adapt to the changing operating
We believe people are our greatest asset. We therefore respect our environment and continue to meet the expectations of customers
employees, emphasize diversity and provide educational and communities.
opportunities to help employees develop themselves. Our goal is to Transparent and Disciplined Management
be a company that has strong ties with employees who take delight We endeavor to achieve transparent and disciplined management by
in helping customers. maintaining a proactive dialogue with stakeholders, taking their
Committed to Developing with Communities evaluation seriously, and exercising self-discipline at all times.
We are a caring corporate citizen and a member of communities. We
strive to develop each community we serve in cooperation with
other members of the community including customers, employees,
shareholders and business partners to contribute to community
prosperity, environmental sustainability and peace.
Corporate Governance Framework effectiveness. Outside Directors are in the majority to

Aeon management draws on the Aeon Basic Principles and is enhance the supervisory functions of the Board of Directors.
group oriented. We value transparency, sustainability, stability
and ceaseless innovation based on the customer’s point of view. Outside Directors
We put these concepts into practice with an optimal corporate Aeon is a company that has institutionalized the separation of
framework structured around the Nomination Committee and management supervision and business execution with a
other Committees. Nomination Committee and other Committees. Aeon’s Board of
We have separated management supervision and business Directors has nine Directors, five of whom are Outside Directors.
execution to largely transfer authority to Executive Officers and Management supervision involves outside perspectives to
construct a framework that enables rapid management make management highly transparent. For its Outside Directors,
decisions. To ensure transparent, objective management, we Aeon calls on individuals who represent Japan and share the
have three Committees – the Nomination Committee, the Audit Aeon Basic Principles and values to fully exercise their respective
Committee, and the Compensation Committee – composed of experience and knowledge from an objective standpoint. Aeon
a majority of Outside Directors. In addition, we continuously and its Outside Directors share no special interests, allowing
scrutinize and upgrade this framework with the goal of Aeon to notify the Tokyo Stock Exchange that it has designated
outstanding corporate governance. all five of its Outside Directors as independent Directors.
Role and Structure of the Board of Directors The Board of Directors in Action
The Board of Directors makes management decisions for The Chairperson of the Board of Directors ensures a framework
Aeon. It resolves legal issues and determines and approves at the Board meetings that facilitates lively discussion,
basic management policies and key business execution appropriate decision-making, and fair supervision. Outside
issues. The Board of Directors also supervises the performance Directors receive necessary explanation, meeting materials and
of Directors and Executive Officers. Aeon’s Board of Directors information crucial to general management prior to the Board
consists of executives with diverse experience, abilities and meetings so that their thoughts, ideas, knowledge and
specialized knowledge, which heightens the Board’s objectivity will be relevant. The Directors also have sufficient
48 Aeon Report 2017

opportunities and time apart from the Board meetings to Board of Directors’ Meetings and Committee Meetings (Fiscal 2016)
discuss important issues such as the Medium-term Management Times Convened Main Functions
Plan and key policies that the Board will take up. At the end of • Oversaw the execution of responsibilities by Directors and Executive Officers.
each fiscal year, the Board of Directors discusses the activities Board of • Handled matters that must be decided by the Board of Directors as
7
Directors stipulated by Article 416 of Japan’s Companies Act and matters that cannot
and results of the most recent fiscal year, shares the results be delegated to Executive Officers.
with managers, and presents a summary of outcomes.
• Audited the execution of responsibilities by Directors and Executive Officers.
Audit • Handled resolutions pertinent to the appointment, dismissal or
9
Committee reappointment of the Company’s accounting auditor for submission to the
Reasons for Appointment of Outside Directors (As of May 24, 2017) General Meeting of Shareholders.
Name Responsibilities Reason for Appointment
Nomination • Handled resolutions pertinent to the appointment and dismissal of Directors
3
Director; Committee for submission to the General Meeting of Shareholders.
Designated independent director who draws on his
Chairperson of
extensive career and expert knowledge to provide Compensation
Ken Sato Audit Committee, 3 • Determined the compensation of individual Directors and Executive Officers.
guidance that improves crisis management, management Committee
Compensation
Committee member transparency and objectivity.
Director; Designated independent director who draws on her Three Committees

Chairperson of
Yukako
Nomination
broad experience and expertise in information technology Outside Directors serve as the chairpersons of the Nomination
Uchinaga and extensive knowledge of diversity to provide guidance
Committee, Audit Committee, Audit Committee, and Compensation Committee
Committee member for sound, efficient management.
to further enhance the objectivity and transparency of these
Director; Designated independent director who draws on his Committees.
Chairperson of extensive experience in global corporate management Three of the four members of both the Nomination Committee
Toru
Compensation and his wide-ranging knowledge to provide guidance
Nagashima and the Compensation Committee are Outside Directors.
Committee, Audit that supports global management and enhanced
Committee member corporate governance. These Outside Directors hold all positions in the Audit
Designated independent director who has served as a Committee so that the Committee is completely separate from
Director; senior manager at a major financial institution and has business execution as it monitors the legality and validity of the
Takashi excelled internationally in economics and finance. He
Nomination
Tsukamoto execution of responsibilities by Directors and Executive Officers.
Committee member; draws on his acute insights and extensive experience to
(Newly
Compensation provide guidance that supports continued sound, Assistance from the Internal Audit Department, which is
Elected)
Committee member transparent management and enhanced corporate
governance.
independent of business units, and cooperation with the external
accounting auditor enhance the functions of the Audit Committee.
Designated independent director who is an attorney, and
Director; has served as Vice Minister of Justice, Superintending
Kotaro Ohno Audit Committee Executive Officers
Public Prosecutor and Prosecutor-General. He draws on
(Newly member;
his extensive experience with and insights into the law Representative Executive Officers make decisions on matters
Elected) Nomination
Committee member and compliance to provide guidance for compliance
management. delegated by the Board of Directors and are wholly responsible
for business execution on behalf of the Company. Executive
Officers report to the Representative Executive Officers, make
decisions on matters delegated by resolution of the Board of
Directors, and execute business.
Corporate Governance System (As of May 24, 2017)
General Meeting of Shareholders

Appointment/dismissal Motion to appoint or Motion to appoint or dismiss Appointment/
dismiss Directors the Accounting Auditor dismissal
Supervision Nomination Committee

Executive Officers Appointment/ 3 Outside Directors
dismissal
Accounting Auditor
Chief Executive Officer 1 Inside Director

15 other Executive Officers (Chairperson: Outside Director)
(3 serve concurrently as Directors)
Board of Directors
Determines Compensation Committee
compensation 3 Outside Directors 5 Outside Directors
Accounting Audit
Aeon Management Committee 1 Inside Director 4 Inside Directors
(Chairperson: Outside Director) (Chairman of the Board of Directors: Non-executive)
Audit
Direction Audit Committee
Cooperation
Group Management Audit Department 4 Outside Directors
Assistance (Chairperson: Outside Director)
Report
Supervision/Assessment
Aeon Report 2017 49

Business Execution Decisions 3.2: Performance-linked compensation
The Board of Directors delegates authority to Representative Performance-linked compensation shall account for 30% to
Executive Officers to enable quick decision-making, except for 50% of total Executive Officer compensation (base
matters the Companies Act and the Articles of Incorporation compensation + performance-linked compensation), and
require the Board of Directors to resolve. The Chief Executive the percentage of performance-linked compensation shall
Officer leads the Aeon Management Committee,* which increase as a function of rank. The percentage of
consists of Senior Executives and discusses important policies performance-linked compensation paid is based on
and matters relevant to business execution. The Chief Executive achievement of goals set at the beginning of the fiscal year.
Officer makes decisions pursuant to these discussions, and Performance-linked compensation paid may range from
delineates responsibilities and expedites management decision- zero to twice the standard amount depending on results for
making by clarifying the role and authority of each Executive the recently completed fiscal year and the evaluation of the
Officer. individual Executive Officer. Performance-linked executive
* The Aeon Management Committee is a deliberative body chaired by the
compensation consists of compensation linked to overall
President and Group CEO, composed of Executive Officers, the Chief Corporate
Planning Officer, and other members appointed by the President and Group corporate performance and compensation linked to
CEO. The Committee deliberates and decides important matters pertaining to individual performance. However, representative Executive
the management of the Aeon Group, including the Group’s business strategies
and investment plans. Officers only receive compensation linked to overall
corporate performance.
Organization for Internal Audits and Audits by 3.2.1: Compensation linked to overall corporate performance
the Audit Committee Standard rank-based compensation is adjusted using
The Board of Directors and the Audit Committee are central to a coefficient for the achievement of consolidated
management supervision because Aeon is a company with a performance goals in consideration of overall
Nomination Committee and other Committees. The Group performance.
Management Audit Office is as an organization that is 3.2.2: Compensation linked to individual performance
independent of business units and provides the Audit Standard rank-based compensation is adjusted using
Committee with operational and administrative support. It also a coefficient for individual achievement of divisional
coordinates among the full-time corporate auditors of the performance goals and management objectives.
Group companies, the Internal Audit Department, and the 3.3: Equity-linked compensation in the form of stock options
accounting auditor to conduct internal audits. This form of compensation allocates stock acquisition rights
as equity-linked compensation that reflects performance in
Policies for Director and Executive Officer Compensation the form of stock options. It intensifies the linkage among
The Compensation Committee consists of an Outside Director share price, performance and compensation because
as Chairperson and a majority of Outside Directors as members recipients share the benefits of share price increases and
to ensure highly transparent, objectively determined policies for the risk of share price decreases. It is therefore designed to
compensation of Directors and Executive Officers. increase the will and the motivation to consistently improve
performance and increase corporate value. The standard
1: Basic Compensation Policies number of stock acquisition rights allocable by rank is
1.1: Compensation shall be linked to Aeon’s management adjusted according to performance for the recently
strategy and operating performance, and shall motivate the completed fiscal year.
committed execution of management strategy.
1.2: The compensation system shall be transparent, equitable
and easy for customers, shareholders, employees and other
stakeholders to understand and support.
2. Director Compensation
2.1: Directors shall receive base compensation.
2.2: Directors concurrently involved in business execution shall
not receive Director compensation.
3. Executive Officer Compensation

3.1: Base compensation
Base compensation shall reflect individual evaluation
within standard compensation for each position.
50 Aeon Report 2017

Total Director and Executive Officer Compensation Dialogue between Senior Managers and Stakeholders
Director Compensation for Fiscal 2016 Aeon considers stakeholders, including customers, communities,
Amount Paid
shareholders and investors, as its partners in management, and
Recipients
(Millions of yen) maintains an active dialogue with them. We engage in
Base Director compensation determined constructive dialogue with a long-term perspective based on
7 121
through Compensation Committee deliberation appropriate, timely disclosure of information. We help
Base Outside Director compensation determined stakeholders understand our management strategies and
6 75
through Compensation Committee deliberation
financial information as well as non-financial information
including our environmental and social contributions and our
approach to corporate governance.
Executive Officer Compensation as of February 28, 2017
We have established a department responsible for investor
Executive Officer compensation for fiscal 2016 was based on the
relations (IR) under the Executive Officer in charge of IR as a
policy for determining the compensation of individual Directors
point of contact to support our constructive dialogue with
and Executive Officers in 3.2 above. Compensation linked to
shareholders and investors. We enhance this dialogue by
consolidated performance was 60% of the prescribed amount.
organically linking the department responsible for IR to relevant
Moreover, equity-linked compensation in the form of stock
components of our organization including public relations,
options was also based on the policy in 3.3 above, and was 56%
general affairs, environmental/social contribution, finance, and
of the prescribed number of stock options.
accounting, as well as the Group companies. The department
responsible for IR leads this dialogue, and Directors, Executive
Chief Executive Other Executive
Position Total Officers, and Senior Managers communicate directly with
Officer Officers
stakeholders for critical issues.
Number of officers 1 9 10
We also proactively disclose, explain, and carefully answer
Base compensation determined through questions related to our management policies at the General
Compensation Committee deliberation 36 223 259
Meeting of Shareholders. We have enhanced this dialogue and
(Millions of yen)
its relevant information disclosure to deepen understanding
Performance-linked compensation among shareholders and investors through information
determined through Compensation 26 92 118
Committee deliberation (Millions of yen) meetings for institutional investors, tours of business facilities in
Japan and overseas, and localized social gatherings and
Equity-linked compensation in the form of
6 34 40 information meetings for individual shareholders.
stock options (Millions of yen)
The Board of Directors and the Aeon Management
Total (Millions of yen) 68 350 418
Committee appropriately discuss the feedback we receive
Notes: through these channels in a timely manner to reflect it in the
1. The Compensation Committee determined Executive Officer performance-
dialogue we have with our shareholders and investors.
linked compensation on April 12, 2017 based on performance during fiscal
2016. Executive Officers received this compensation in May 2017.
2. The Compensation Committee and the Board of Directors determined equity- Response to the Corporate Governance Code
linked compensation in the form of stock options on May 24, 2017 based on
We addressed the Corporate Governance Code in May 2017 and
performance during fiscal 2016. The stock options were allocated on June 21,
2017. Stock acquisition rights totaled 241 and represented 24,100 shares. have responded to all of the Tokyo Stock Exchange’s rules and
Compensation paid is calculated based on the closing price on the Tokyo Stock regulations as required of listed companies under the Code.
Exchange on February 28, 2017.
Please refer to our Corporate Governance Report at https://www.
3. In addition to the above, three Executive Officers who retired during fiscal 2016
received base compensation of ¥45 million. aeon.info/en/investors/policy/governance.html for more details.
4. Directors concurrently involved in business execution do not receive Director
compensation.
Aeon Report 2017 51

Risk Management
Basic Approach Five Focus Areas of the Aeon BCM Project

Aeon regards risk management as a management priority that
is the responsibility of each department. Accordingly, the Group
Information
companies and departments handle day-to-day risk systems Information
infrastructure
management, while General Affairs and other departments upgrades
throughout the Group monitor the status of risk management Better, more Cooperation
systematic with external Facilities Improved
at each department. The Risk Management Committee, which collaboration organizations measures for
with external Aeon’s BCP facility safety
reports to the Aeon Management Committee, reviews and organizations (Business and security
Continuity Plan)
makes decisions regarding external risk factors, such as new
infectious diseases and large-scale earthquakes, which cannot
Training and Training Products and Enhanced
be addressed by individual companies, and risks embedded in drills to improve supply chains
and drills logistics
products, facilities and services throughout the entire Aeon business continuity
Group. We anticipate, predict, and preclude risks with the

potential for particularly grave impact by assembling
interdivisional task forces. Moreover, Aeon’s organizational 1. Information Systems (Information Infrastructure Upgrades)
response to eliminate the influence of antisocial forces includes We will prepare the information infrastructure that links our 315
in-house regulations and close cooperation with law Group companies for disasters. We will further strengthen
enforcement agencies. collaboration among the Group companies by switching to a
new Total BCM Aggregation System that centralizes disaster-
Response to Natural Disasters and Major Incidents and Accidents related information such as disaster information, safety
Aeon has created rules and procedural manuals to respond to confirmation results, and the status of stores afflicted by disasters.
large-scale natural disasters and major incidents and accidents,
as well as providing education and training to ensure swift and 2. Facilities (Improved Measures for Facility Safety
accurate responses. Since the Great East Japan Earthquake, we and Security)
have also introduced disaster prevention measures in each We will build disaster prevention facilities at 100 locations by
region in Japan, including areas affected by the disaster, based fiscal 2020 to enhance safety and security measures at our
on a Business Continuity Plan (BCP).1 Hypothetical risks have facilities. We have completed installations at 27 locations since
become more diverse in recent years, ranging from an increasing the launch of the program in 2012. We built new disaster-
number of natural disasters such as earthquakes and torrential prevention facilities at nine stores in fiscal 2016.
rain due to abnormal weather to terrorist attacks and bombings.
In light of these environmental changes, Aeon has 3. Products and Logistics (Enhanced Supply Chains)
formulated its Aeon Group Five-Year Business Continuity In March 2016, we launched a new system to use during
Management (BCM)2 Plan to build a management framework disasters that links approximately 50 companies such as
that can enhance the performance of the BCP. We launched the manufacturers of food and daily necessities. We use the BCP
Aeon BCM Project to execute this Plan in March 2016. Aeon aims Portal, which connects our partners using cloud computing, to
to establish an operational framework by promoting BCM in five visualize information with each Group company and our
areas: 1) information systems; 2) facilities; 3) products and partners and conduct centralized management of information
logistics; 4) training and drills; and 5) cooperation with external such as plants, warehouses and products ready for shipment.
organizations.
4. Training and Drills (Training and Drills to Improve
1. BCP: A strategic business plan to prevent business interruptions or allow key Business Continuity)
operations to resume within a targeted time frame in the event of disruptions
caused by risks including natural disasters. Aeon periodically conducts Group-wide disaster prevention
2. BCM: A comprehensive management process that involves a set of policies for and safety drills. We will conduct information gathering drills
addressing issues relevant to steadily implementing the BCP. BCM compares
progress versus plan to manage initiatives such as the switch to new systems or and training at stores and business offices, and improve our
efficient transportation of supplies to afflicted areas.
present business continuity capabilities to protect our
customers and employees from risk.
5. Cooperation with External Organizations (Better, More

Systematic Collaboration with External Organizations)
We are reinforcing links with external partners rooted in each
community from local government offices, hospitals, and
schools to private enterprises, and links to energy companies
required to sustain business should a disaster occur.
52 Aeon Report 2017

Information Security
Acquisition of ISO 22301 Personal Information Protection Policy

In February 2017, Aeon Co., Ltd. became the first company in Aeon has established a personal information protection policy
Japan’s general merchandise retail industry to acquire and a privacy policy to protect personal information properly
certification of its business continuity management system and safely. We conscientiously handle personal information so
(BCMS) under the international ISO 22301 standard. This that customers can purchase and use our products and services
initiative encompassed the head office and stores. with confidence. Our company, officers, and employees
ISO 22301 is a certification system published in 2012. It recognize the importance of personal information protection,
covers natural disasters such as earthquakes, floods, and and work to maintain and improve legal compliance and safe
typhoons, along with system problems and various risks handling of information.
including infectious disease epidemics, blackouts, and fires. It
serves as an international standard for BCMS for minimizing the Basic Policy
influence of these risks on businesses and responding efficiently We recognize the importance of protecting personal information
and effectively to them. The Aeon Group’s goal is to create and in line with Aeon Basic Principles of “Pursuing peace, respecting
operate mechanisms to ensure that activities related to business humanity, and contributing to local communities, always with
continuity management (BCM) are closely linked to the customer’s point of view at its core.” We handle personal
management, and that these activities are effective and efficient. information with great care to support affluent, confident
The scope of registered activities under ISO 22301 encompasses lifestyles. In addition, personal information forms each person’s
the Group’s crisis management operations, operation and identity and values, so we respect it the same as we respect
management of the shopping mall in Aeon Mall Makuhari New each person. We will manage the information entrusted to us by
City, the GMS Business, and integrated facilities management communities to build solid, trusting relationships.
services.
1: Initiatives to protect personal information

Overview of Certification We undertake the following activities to conscientiously implement our Basic Policy
for personal information protection.
Registrant Aeon Co., Ltd.
1-1: Officers and all employees shall comply with laws and internal regulations
Registration number JQA-BC0031 pertaining to personal information.
Certification standard ISO 22301: 2012/JIS Q 22301: 2013 1-2: We shall appoint people responsible for the protection of personal information,
assign responsibility and authority concerning the implementation and
Certifying institution Japan Quality Assurance Organization management of personal information protection, provide education and
Accrediting training, and rigorously manage personal information.
Japan Institute for Promotion of Digital Economy and Community
institution 1-3: We shall appoint people responsible for the protection of personal information
and audit the protection of personal information.
Date of registration February 20, 2017
1-4: We shall improve internal regulations and operations based on the results of
Group crisis management operations, operation and management of audits.
the shopping mall in Aeon Mall Makuhari New City, the GMS Business,
and integrated facilities management services 1-5: We shall ask suppliers and related parties for cooperation to protect personal
information.
Related business facilities
Scope of registered • Group General Affairs Department, Aeon Co., Ltd. 1-6: We shall make this policy available for viewing at any time by publishing it in
activities • Aeon Komaki Crisis Management Center media including our website and our corporate brochure.
• Aeon Mall Makuhari New City operated by Aeon Mall Co., Ltd.
• Aeon Style Makuhari New City operated by Aeon Retail Co., Ltd.
• Center Number One, Aeon Mall Makuhari New City operated by Aeon 2: Handling of personal information
Delight Co., Ltd. 2-1: We shall delineate the purpose of use when collecting, using or providing
personal information, and shall use personal information within this defined
scope.
2-2: We shall respond to requests to disclose, correct, or delete personal information
promptly within a reasonable period and an appropriate scope.
2-3: We shall implement safety measures appropriately to preclude problems such
as unauthorized access, loss, tampering, or leakage.
September 21, 2004

Motoya Okada
President and Representative Director, Aeon Co., Ltd.
Our personal information protection and privacy policies are available at https://www.aeon.info/
privacy/ (Japanese only)
Aeon Report 2017 53

Compliance (Corporate Ethics)
Basic Approach Promotion Framework

Aeon Code of Conduct The Corporate Ethics Team is responsible for promoting the
We established the Aeon Code of Conduct in 2003 to express Aeon Code of Conduct throughout the Aeon Group, and is
the Aeon Basic Principles through a specific set of guidelines. under the jurisdiction of the executives responsible for
We also began providing education and training relevant to human resource management and risk management. The
the Code, created an Aeon Code of Conduct Hotline as an Corporate Ethics Team develops and executes policies for the
internal reporting system, and initiated monitoring activities overall Aeon Group based on an annual plan, and proposes
(the Aeon Code of Conduct Survey) in 2003 in conjunction and recommends specific measures to address various
with establishment of the Code. The Aeon Code of Conduct problems and issues facing the Group. The Aeon Management
explicitly provides Group employees with criteria for action, Committee, an Aeon Co., Ltd. executive body, and the Audit
consideration, and judgment in line with the Aeon Basic Committee (Outside Directors) receive reports on the status
Principles to serve customers. It is a shared set of values for of compliance issues, initiatives to resolve them and Group-
the Aeon Group. Full-fledged training pertinent to the Code wide promotion of the Code of Conduct. The presidents and
for the Group companies in Japan began in 2004 to ensure all branch managers of each company in the Group serve as
employees share and understand the Aeon Code of Conduct. Aeon Code of Conduct Promotion Officers. They assign
The Group companies overseas have been providing the managers to the Aeon Code of Conduct Promotion Offices to
same training since 2006. Since fiscal 2011, we have been implement the Aeon Code of Conduct training, conduct
systematically disseminating and inculcating the Aeon Code fact-finding investigations for consultations reported
of Conduct at the Group companies outside Japan in line through the Hotline, address revisions, and report to Aeon
with our shift to Asian markets, which is one of the strategies Co., Ltd. Additionally, each store and business office selects
of our Medium-term Management Plan. one to three employees to serve as leaders in charge of
promoting the Aeon Code of Conduct. They work on
initiatives to disseminate and inculcate the Aeon Code of
Aeon Code of Conduct
Conduct at their worksites.
1. Aeon People are always grateful to the many other individuals who provide
support and help, never forgetting to act with humility. Aeon Code of Conduct Hotline
2. Aeon People value the trust of others more than anything else, always acting with The Aeon Code of Conduct Hotline has existed as an internal
integrity and sincerity in all situations. reporting system for employees since 2004. The Hotline is a
3. Aeon People actively seek out ways to exceed customer expectations. channel for reporting non-compliance and improprieties,
4. Aeon People continually challenge themselves to find new ways to accomplish and also for discussing various workplace issues that
the Aeon ideals. employees find troubling or difficult to discuss with their
5. Aeon People support local community growth, acting as good corporate citizens immediate managers. The Hotline handles a wide variety of
in serving society.
reports and consultations and is available to all Aeon Group
employees. There are two lines: one for internal consultations,
and one for reaching out to and consulting with external
parties. The Corporate Ethics Team provides reports and
consultations to the Group companies concerned as
feedback. We rigorously enforce the rule that an investigation
shall then take place within two weeks to ascertain the facts
associated with each report or consultation. The Corporate
Ethics Team receives a report of the results, including
corrective measures. In addition, the executive management
team of Aeon Co., Ltd. and the presidents of all the Group
companies receive weekly and monthly reports on all
consultation matters.
54 Aeon Report 2017

Education and Training Implementing the Aeon Code of Conduct Survey
Aeon conducts training to disseminate and inculcate the Since 2003, we have conducted an annual anonymous Aeon
Aeon Code of Conduct as the central component of Code of Conduct Survey of employee awareness to ascertain
corporate ethics, primarily through four programs: the extent to which the Aeon Code of Conduct has
compliance training for Aeon Executives, Aeon Code of penetrated the organization and to gather information on
Conduct training for senior management, Aeon Code of workplace issues, employee work styles, motivation levels
Conduct training for general employees, and training for and the like. This survey is a basis for assessing employee
new employees. Hiring examinations and promotion training awareness and corporate culture across the entire Aeon
also incorporate the content and curricula of the Aeon Code Group, including its overseas locations, through evaluation
of Conduct. of the visibility of promotional activities, the personal
commitment of employees and workplace conditions. We
Compliance Training for Aeon Executives (since 2014) also compile, analyze and share survey findings with the
All Group executives use case studies and other tools to Group companies, and use them to help resolve specific
reconfirm written laws, Aeon’s voluntary standards, and social issues. In fiscal 2016, we conducted the survey at 67
judgement and behavior that are illuminated by the Aeon Group companies overseas and received 40,000 responses. In
Basic Principles. The objective of this training is even more fiscal 2017, we plan to survey 45,000 employees at 69
customer-oriented management by highly resolute, ethical companies overseas, while conducting a survey of employee
and responsible officers who protect Aeon’s reputation. morale that will cover 74 Group companies and 130,000
employees in Japan. We will continue to strengthen our
Aeon Code of Conduct Training for Senior Management response to compliance risk by identifying current conditions
(since 2003) at each company based on an analysis of the responses and
Senior and mid-level executives from the Group companies building systems to draw up and implement measures to
learn about and share internal and external conditions for improve our corporate culture.
corporate ethics, risk management and compliance. The
curriculum is designed to empower participants to make Creating Support and Awareness-Raising Tools
their own decisions based on ethical standards. Aeon complements training programs by creating a variety
of awareness-raising tools to disseminate and inculcate the
Aeon Code of Conduct Training for General Employees Aeon Code of Conduct. For example, the Aeon Code of
(since 2003) Conduct Newsletter, published every other month since
Employees and hourly workers of the Group companies 2004, presents excerpts from the writings of our founder,
receive general training to confirm the basic precepts of the issues reported or consulted on via the Aeon Code of
Aeon Code of Conduct, designed to support actual conduct Conduct Hotline, reports on the results of training programs,
from the perspective of customers. and initiatives of each Group company. Every month, we
print and distribute approximately 300,000 copies to
Training for New Employees (since 2004) employees of Aeon Group companies. Employees have
This training is designed to give new employees of each responded well to the newsletter, prompting some to revisit
Group company a fundamental understanding of the Aeon the Aeon Code of Conduct and take advantage of the Hotline.
Basic Principles and the Aeon Code of Conduct and a shared
identity as “Aeon People.”
Highlight
Sharing and Encouragement at Overseas Companies Using an Illustrated Book to Share the
Aeon has been conducting the Aeon Code of Conduct Aeon Basic Principles
training, establishing hotlines, and instituting monitoring
Aeon uses an illustrated book titled Arigatou no Yakusoku
systems (the Aeon Code of Conduct Survey) at the Group
(The Promise of Thank You; text by Masato Ochi with
companies overseas since 2006. In fiscal 2016, we provided
illustrations by Soya Nagashima) as a tool to share and
the training at 63 Group companies overseas. A total of
encourage mutual understanding of the Aeon Basic
56,000 employees took part in grade-specific training for Principles among the employees of new Group companies.
management, promotion leaders, general employees, and The illustrated book covers the importance of being grateful
new employees. In fiscal 2017, we plan to provide training to and saying thank you in any situation and is designed to
about 60,000 “Aeon People” at 67 companies, including the enhance understanding of the essence of the Aeon Basic
Group companies where we plan to introduce the Aeon Principles in an intuitive manner.
Code of Conduct for the first time.
Aeon Report 2017 55

OUR SUSTAINABILI T Y
56 Aeon Report 2017

Our Sustainability
Celebrated 25th Anniversary of
Aeon’s Tree Planting Activity 58
Feature 1: Dialogue with Stakeholders 60
Feature 2: Promotion of CSR in the Value Chain 66
Aeon Group CSR 70
Environmental Management 76
Aeon Report 2017 57

Celebrated 25th Anniversary
of Aeon’s Tree Planting Activity
Aeon’s tree planting activity, which has been promoted along with our customers
around the world since FY1991, celebrated its 25th anniversary in October 2016.
From now on, as a Group, Aeon will focus even greater efforts on activities with the
objectives of “Plant,” “Nurture,” and “Thrive” for forest resources. 5
million
trees
Trends in number of trees planted and history of tree planting activity
130,000
trees
1991 1993 1995 1997 1999 2001 2004 2005

*The number of trees is the sum on the right, Through “Aeon Hometown Forests Program,” AEON Environmental Foundation tree planting, and “Aeon Tohoku Reconstruction Hometown Forests Program”
1991 1998
The first Aeon Hometown 1992
Forests Program store The first Aeon Hometown Aeon Group Environmental Foundation (currently
JUSCO Malacca Forest Program store AEON Environmental Foundation) launched project
(currently Aeon Malacca SC) in Japan JUSCO Shin Hisai Store to revitalize the forests at the Great Wall of China
(currently Aeon Hisai Store)
An Activity that Embodies Promoting Activities Around the World

the Aeon Basic Principles Together with Globalization of Business
Aeon has positioned the tree planting activity as one that When we open a new store, the Aeon Hometown Forests Program
embodies its Basic Principles, which state, “Pursuing peace, joins with local customers to plant trees on the site. The activity,
respecting humanity, and contributing to local communities, which began in Malaysia in 1991, has now expanded into 11
always with the customer’s point of view as its core.” countries around the world.
Building foundations for peace

Peace The environmental problem is a common
challenge for humanity, which poses a
threat to our healthy and peaceful lives.
Aeon, which operates a business that is
China
closely linked to people’s lives, is striving to 1,264,069trees
solve the environmental problem by Laos
People Community planting trees based on the awareness that
business only grows when there is a
148,250 trees Japan
peaceful society. 9,033,822 trees
Myanmar
34,000 trees Vietnam
Humanity communicating Growing together with people 88,607 trees
vibrantly from the community Kenya Thailand Cambodia
Tree planting brings many people Aeon aims to nurture forests that are 3,450 trees 225,720 trees
36,844 trees
from young to old together. Greetings rooted in the community by mainly
and conversations start, and smiles planting native tree varieties. Malaysia
spread. Aeon hopes to further expand Further, we hope to share the 523,963 trees Australia
such forms for vibrant communication wide-ranging awareness obtained through 200 trees
through tree planting. the tree nurturing process with many Indonesia
people and continue to grow constantly. 83,000 trees (as of February 28, 2017)
58 Aeon Report 2017

Total number of trees planted
10
million
11,441,925 trees
(as of February 28, 2017)
trees
2007 2009 2011 2013 2015 2016
Started Aeon Tohoku Reconstruction Hometown Forests Program

aimed at reconstruction of areas affected by the Great East Japan 2013
Earthquake. Plant 300,000 trees in Tohoku over the 10 years up Held unveiling ceremony for
2012 to 2021. Photo shows Aeon Town Shiogama. commemorative monument
at Aeon Mall Makuhari New City
marking ten million trees planted
Aeon Forest Circulation Program

– To Communicate Our Thoughts to the Future Aeon Hometown Forests Program
at Aeon Mall Nagakute
We launched the Aeon Forest Circulation Program with Planting the Next 10 Million
the themes of “Plant,” “Nurture,” and “Thrive” on passing Trees – for the regions and for
the ten million tree mark in 2013. the future
There are tree planting activities
through the AEON Environmental
Expansion of stores utilizing Plant Foundation that aim for the
regeneration of forests around the
domestically-produced FSC®
certified timber world along with carrying out “Aeon
Hometown Forests Program,” and
tree planting activities in areas
affected by the Great East Japan
Earthquake are also implemented.
Growth with Forests Enriches Lives

We are nurturing and managing the trees that
Construction Materials and Products
Letting Forests Grow
Plant, Nurture, Thrive
Nurture we have planted to date. In addition, we are
working with Mie Prefecture and NPO Miyagawa
Made from the Timber of Shinsengumi to raise the successors
properly-managed Forests Thrive to the forestry industry. We are also
Aeon has been operating Ministop stores aiming for cooperation with business.
that use 100% domestically-produced
FSC® certified materials. The number of stores has
increased to 206 (as of February 28, 2017). We aim Forest Transcend Project
to enrich people’s lives through the blessings that in forestry succession planning
nurturing forests and forest circulation brings. launched in 2014
Aeon Report 2017 59

Feature 1 Dialogue with Stakeholders
What role should Aeon play as a retail

business aiming for “sustainable
consumption behavior”?
The Dialogue with Stakeholders for 2017 was an exchange of views on how
we can spread environmentally- and socially-aware consumption behavior
or “sustainable consumption,” to even more ordinary consumers, which is
something we are actively addressing under the slogan “Change the future Yukiko Furuya
by shopping at Aeon.” Captain,
Consumer Affairs Specialist
Consumer Conference for Sustainability
recent years. In April 2017, we announced the “Aeon

Ten years since handling of Sustainable Procurement Policy” with regard to agricultural,
MSC-certified fish began particularly fishery, and livestock products as well as paper,
pulp, timber and palm oil, and the Sustainable Procurement
Kanamaru: Goals for 2020 as concrete action guidelines.
At Aeon, some 300 Group companies operate business in 13 Kanamaru:
countries. In carrying out business, we strive to practice Among these products, we led the industry commencing
sustainable management with the aim of “realizing a sales in 2006 of MSC-certified products that show natural
sustainable society” while solving environment and social seafood was obtained through sustainable fishing. In 2014,
challenges under the Aeon Basic Principles of “Pursuing peace, we were the first retailer in Asia to sell ASC-certified
respecting humanity, and contributing to local communities, products, which covers aquaculture fish. Moreover, in 2016,
always with the customer’s point of view as its core.” As part of we started deploying regular sales counters called “Fish
this, Aeon emphasizes above all the pursuit of sustainability in Baton” which sell only these certified fish. Incidentally, we
the global community in cooperation and partnership with have two goals in seafood. We aim for all Aeon’s general
local customers, taking advantage of the retail industry’s merchandise stores and supermarkets to acquire MSC and
distinctive feature of making contact with several million ASC certification for distribution and processing. We will
customers a day. also offer a private brand with sustainable endorsement for
Miyake: all the main fish species. It can be said that the Fish Baton
One of our actions to realize this is the “Aeon Sustainable store deployment is an initiative that will lead the way to
Procurement Principle,” which we formulated in 2014. The these goals.
Principle aims for the more certain achievement of “social Kuroda:
responsibility in the supply chain,” which has become I currently belong to an organization called CSO Network,
increasingly important in the international community in which is mainly active in social responsibility, community
building, and social evaluation with a focus on sustainability.
About 10 years ago, I was a fellow at SAI, the U.S. NGO that
formulated SA8000. SAI, like MSC and FSC, is a constituent
member of the ISEAL Alliance in the U.K. In an era when impact
evaluations of social responsibility standards and labels were
becoming more important, I was in charge of the impact study
for SA8000 at SAI. This was an era when most people in Japan
were unaware of MSC certification, but I was overcome with a
strong feeling that Japan was finally getting in with the times
on seeing the news that Aeon, which had already obtained
SA8000, was starting to handle MSC products. I’d like to pay
tribute to the persistent activities the company has developed
in the 10 years since then.
60 Aeon Report 2017

Kaori Kuroda Kaori Miyake Haruko Kanamaru
Executive Director, Executive Officer, General CSR Division Manager,
CSO Network Japan CSR & Communication, Corporate Citizenship Department,
Aeon Co., Ltd. Aeon Co., Ltd.
Furuya: on what future life will be like, what the challenges are and
I currently serve as a consumer affairs advisor at the Consumer how we should solve them seems to be a weakness.
Conference for Sustainability, which aims to resolve consumer Kuroda:
problems primarily with consumer problems experts. As such, I You mean that there is an emphasis on the form of production
believe that it is important for companies to work in and little awareness about changing the form of consumption.
partnership with consumers on initiatives for a sustainable Furuya:
society. I think that I can give a high rating to the activities Consumer groups should actively communicate information in
promoted by Aeon that enable many customers to raise their order to make consumers’ consumption sustainable in addition
awareness about sustainability through their daily shopping, or to consumer protection.
initiatives that popularize so-called “ethical consumption” Miyake:
among consumers. Although the safety and security of products is a strong
Kanamaru: consumer need, it is important to be aware that social
Your high rating is appreciated. However, although we have sustainability, including safety and security, will be
been working on MSC and ASC as well as developing Fish strengthened through the behavior of consumers themselves.
Baton, which communicates the significance of them in a way Furuya:
that is easy to understand, over the past 10 years, I really feel In fact, there is no end of misconduct that threatens the safety
that the interest of our customers in sustainability and and security of life. Consequently, while issues such as safety
“ethical” consumption behavior has not spread as we hoped remain important for consumers, there also is a need to strive
compared with Europe and the U.S., which are leading the for the solution of long-term, social issues going forward. On
way. I hope to get your opinions on the reasons around these this point, while it may be said that European and U.S.
issues and the solutions. consumers are more advanced, there are also many survey
results indicating that the awareness of Japanese consumers is
not low. In Japan, as I mentioned previously, I think that the
fact that adequate information for consumers to act is not
provided is an issue. In Europe and the U.S., civic organizations,
Solving social issues alongside such as consumer groups, actively communicate information
“safety and security” for consumers to select products from the perspective of
sustainability. As a result, boycott campaigns as well as the
Furuya: “buycott” movement to actively purchase products and
There seem to be several reasons why sustainable services from the perspective of sustainability have taken off
consumption is not quite taking off. One reason is that the among consumers.
issues of safety and security, which are important for Kuroda:
consumers, are not regarded as issues of the sustainable Undoubtedly, civic organizations in Europe and the U.S do not
society. Secondly, the information for social and global only make demands to government for stricter safety standards
sustainable behavior is not adequately communicated to but also actively communicate the environmental and social
consumers. In other words, the communication of information issues that arise in the supply chain to corporations and
Aeon Report 2017 61

consumers. As a result, they have had a big impact on the

formulation of corporate codes of conduct in addition to Supporting consumer behavior
significantly changing the awareness of consumers at the same throughout society
time. There is a process through which interest spilled over into
many fields such as the safety of raw materials, the human Miyake:
rights of employees and the conservation of the local What do you think we can do specifically to promote
environment at the time of production, and the handling of “consumer awareness” throughout society? I’d like to hear your
waste and then sustainable consumption behavior with an opinions.
impact throughout the supply chain came about from Kuroda:
consumers’ ideas about what they should do. Firstly, speaking of government, as Ms. Kanamaru has said, I
Furuya: think it is extremely positive that the Japanese government has
In Japan, the Consumer Affairs Agency is at the center of efforts brought achievement of the SDGs to the fore. Going forward, I
to develop a “Consumer Citizen Society” based on the Act on am also expecting that “sustainable procurement” will increase
Promotion of Consumer Education established in 2012, but it between the companies involved ahead of the 2020 Tokyo
cannot be said to have been developed sufficiently yet. The Act Olympic and Paralympic Games. In addition, as I touched on in
defines a Consumer Citizen Society as one in which “consumers the example of Europe and the U.S. earlier, I think that it is
actively commit themselves to the creation of a just and important that NPOs and NGOs not only ensure product safety
sustainable society with an awareness of how their own and security but also take a good look at corporate supply
consumption behavior could influence social and economic chains and speak out. Recently, many companies have made
trends both at home and abroad, and the global environment some kind of statement about sustainability, but I believe that
at present as well as over future generations,” which refers to a it is also vital to fulfill the checking function that has become
truly sustainable society. customary in Europe and the U.S., including properly checking
Kanamaru: such statements in addition to monitoring and reporting. How
Although I don’t have any disagreement with that, to be frank, do we respond to risks? Climate change is a major risk, but
the wording “Consumer Citizen Society” gives the impression initiatives aimed at mitigation and adaptation will also be
of being rather difficult to understand and of something that is business opportunities.
remote from sustainability. Kanamaru:
Furuya: What about corporations? As I said at the beginning of our
I certainly think that there is a significant issue with the discussion, we are focusing on “Changing the future by
wording. However, I do think that it is important that while shopping at Aeon” while constantly increasing our handling of
following Japanese law, we practice initiatives to build a MSC and ASC certification as well as full-cycle aquaculture tuna,
sustainable society from a global perspective. organic products and Fairtrade products, but I also feel
Kanamaru: frustrated that we have only been able to communicate its
Definitely, in Japan and overseas, significance to some customers.
the Japanese government is Furuya:
currently stressing its stance on This is an initiative that takes advantage of “solving issues in
working to achieve a sustainable partnership with customers,” which is a unique characteristic of
society in a partnership between the retail industry, and I would like you to strengthen it.
the public and private sectors, However, the problem is with how much it communicates, and
which includes the establishment the “Please buy this product because it is good for the
of the SDGs Promotion environment and society” approach often seen at Japanese
Headquarters. companies does not pave the way to communicating the issue
And though it is not necessarily for to customers and getting them to take action.
that reason, we are also trying to Kanamaru:
make the connection between the Because people certainly aren’t suddenly motivated to buy
activities we have been working on even if certified products are lined up in front of them.
to date and the SDGs clearer. Miyake:
Furuya: To stop that happening, we explained what kind of
I think that there is also questioning of how consumer groups environmental and social issues there are at point-of-purchase
will promote SDGs throughout society together with efforts and other places in ways that are easy to understand, but we
aimed at a Consumer Citizen Society. might need to check again whether it really is easy to
understand.
Furuya:
To make sure that it does not end up as a discussion of the
faraway world, the company communicating the information
needs the kind of narratives and strategies that make people
really feel that society will change through their own
62 Aeon Report 2017

consumption behavior. Also, if the information provided people who are particular about the place of origin. However,
includes how much of a result the behavior produces, it can rather than repudiating such consumers, I think it is important
bring about quite a lot of change. expand from there toward the perspective of sustainable
Kuroda: consumption. For example, I think that it would be a positive
The fact that everyday shopping and global sustainability are thing if there was a campaign that draws on the interest of
not connected is a matter of course for ordinary consumers, so consumers who have a strong focus on place of origin to point
it is a chance to show off how you can get them to use their out that it is also important to look at what the problems are in
imaginations. Incidentally, I saw in Aeon Sustainability Report the present process. What do you think about sending the
that more than 200 Ministop stores use 100% FSC® Japan message that it is important to check whether consumption is
certified lumber. I think that it would be effective if you sustainable, including human rights, the working environment,
informed people about this more actively through easy-to- environmental impact, and the problem of the food self-
understand communication in stores and other places, sufficiency rate in the case of Japan, at the same time as quality
including why FSC certification is an issue that involves the such as safety and security while looking over the process as a
global forest problem and Japan’s forestry industry. whole, or, in other words, the supply chain?
Kanamaru: Miyake:
As you point out, we are currently promoting instore displays Focusing on the supply chain to emphasize the diverse
that try to appeal in a way that is easier-to-understand. perspectives of sustainability seems like a very effective
method. That’s really helpful.
Promoting awareness of “process (supply

chain)” rather than place of origin Importance of collaboration between
information providers
Kanamaru:
This might be changing our discussion a bit, but there was just Furuya:
talk of domestically produced lumber so I will bring it up. I feel In terms of focusing on the supply
there are Japanese consumers who are particular about chain, I talked about the
domestically produced products due to an excessive focus on communication of information by
safety and security. Domestically produced lumber is good NPOs and NGOs in Europe and the
because it leads to the sustained growth of the domestic U.S. a little earlier, but the same
forestry industry, but, for example, as organic food which has applies to scientists, the media, and
obtained JAS organic certification is not always domestically educators.
produced, there has been some surprise about Aeon’s organic Kuroda:
food being produced overseas. There is not only the aspect The media also takes up supply chain
that organic is safe food that is good for health in the first place, issues quite a bit and actively reports
but it also includes the perspective of sustainability in terms of ratings of corporate CSR activities. In
maintaining the ecosystem, particularly in fields. However, we addition, consumer groups
have not been able to get that much interest so far. collaborate actively with NPOs and
Kuroda: NGOs to develop consumer citizen education, which is quite
Only the values of safety and security have been emphasized. different from my impression in Japan.
Therefore, the impression that such products are probably Miyake:
domestically produced tends to occur. I think that if you are What are the differences in terms of education? Do you know,
aware of the reality that the food self-sufficiency rate is about Ms. Furuya?
40% on a calorie base, you can imagine to some extent that Furuya:
there are more overseas produced foods, but this “awareness” In consumer education, I have the impression that knowledge
has not been well established. and countermeasures on important issues are emphasized in
Kanamaru: Japan. However, overseas, there is an effort to cultivate a
There are also people who only see the safety and security perspective of solving long-term global problems through a
aspect of domestically produced products with the expression sequential narrative that starts with the world food situation,
“local production for local consumption,” and I feel that they and, within that, asks where the food you eat comes from, what
are losing sight of the environmental and social sustainability kind of problems there are with it, what kind of life you want in
aspects in terms of increasing the food self-sufficiency rate the future, and what kind of consumption style is suitable to
through the revitalization of the regional economy and local achieve it. In addition, there is active research to promote
agriculture, forestry and fisheries industries. sustainable consumption by consumers not only by
Furuya: The safety and security orientation of Japanese people universities, but also by civic organizations, including consumer
is strongly entrenched, and it is a fact that there are many groups, and corporations among others particularly in Europe
Aeon Report 2017 63

and the U.S. What about Aeon conducting research on say about it, the criticism ends up being a generalization, so if
sustainable consumption as well? you have any hints for solving this, I’d like to hear your opinion.
Kanamaru: Furuya:
There are some points in common with our previous discussion Aeon participates actively in the efforts of relevant government
about focusing on the supply chain overall to raise the agencies and ministries and business organizations. The
awareness of consumers. company also collaborates with local governments and
Kuroda: interacts with elementary and junior high schools. I don’t think
As with consumer education, I think that a comprehensive that such things can be done by a single department alone. I
perspective for the topic of communicating information that think that there is a hint in the question of why you can do it. In
we discussed before is important. In Europe and the U.S., the other words, it is because senior management sends a strong
various sectors like government, NPOs, NGOs, corporations, message. Therefore, I think that there is an organizational
research institutions, and educational institutions each work on atmosphere in which there is repeated dialogue aimed at a
the problem of sustainability in a well-balanced way. In that single goal even between departments and organizations with
sense, Aeon has provided opportunities for environmental conflicting interests. What I sensed when taking part in a
education for elementary and junior high school students with certain corporate event in London this February is that senior
the Cheers Club, and I thought it was a very positive initiative management of companies anywhere which focus on
to see the company promoting activities in collaboration with sustainability send out strong messages, and each department
external organizations. collaborates internally and externally in accordance with its
Kanamaru: respective role. I wonder whether Aeon is like that.
At the moment, there are approximately 450 clubs around Miyake:
Japan, and about 7,800 children have taken part, and in We certainly might be. Our President Motoya Okada is pretty
discussing the current topic, I was thinking that since they are at clear about sustainability. “Going global” as he says. The
elementary and junior high school for nine years, it is important concept is that it is natural to promote our business based on
for them to learn about the overall picture of environmental global standards as Aeon’s customers are global. While many
and social issues as a continuum rather than individual points. Japanese companies are hesitant about whether they can be
Kuroda: assertive in the face of a lack of evidence or troublesome
What I would also like to emphasize is coordination of interests with stakeholders, Aeon has a
“collaboration.” Overseas, people with reputation for implementing sustainability-related activities
different backgrounds such as due to the clear stance of senior management, and such clarity
managers, researchers, labor unions, is much appreciated on the ground. Of course, it is difficult to
NPOs, and NGOs, started having send messages about every challenge in management, but our
discussions around the same table approach to sustainability is consistent.
and coming up with new things in Kuroda:
the 1990s. GRI and SAI were these An extremely interesting point is what motivated Aeon to initiate
kinds of groups, which at the time these kinds of activities. For example, Marks and Spencer, a British
were called multi-stakeholder retail business, is one of the leading companies in sustainability.
initiatives. It has been said that Japan But I heard that in the past it faced various problems, and it was
is not good at forming horizontal improved in some sense through the process of responding
relationships between people from individually to much criticism from NGOs and others, and the
different groups, but I think that awareness of senior management also changed.
multi-stakeholder frameworks have been increasing over the Miyake:
past few years. The occurrence of problems as a trigger for the process of
deepening awareness is pretty much the same at Aeon. In fact,
around 2000, the consumption of whales in Japan was
considered a problem, and Group companies in the U.S. faced
boycotts. There was a typical protest movement involving
Declaration of intent by senior pickets and so on. At the time, we thought that it would blow
management and dialogue stimulate over after a while, but President Okada understood the
CSR activities situation and visited himself to start direct talks with NGOs. It
was unprecedented in terms of corporate risk management,
Miyake: but I heard that he himself had strong intentions. For a full two
I think that the lack of collaboration between organizations in years after that, I also happened to be in the action team and
Japanese initiatives is very much a problem because Japanese often took the time to visit NGOs and talk with them. To be
companies and NPOs are vertically separated from each other honest, my feeling at the time was that it should be left alone
and, each of the organizations in and of themselves are because it is Japanese culture. But Mr. Okada’s policy was to
vertically organized. Because of this, they cannot draw on talk together anyway, so through this the other side also
diverse opinions that include outsiders. However, if that’s all we listened to us, and it became a constructive discussion in which
64 Aeon Report 2017

we made suggestions about what to do. small- and medium-sized enterprises to acquire international
Furuya: certification are high. In public procurement, a gradually
So a discussion in which repeated dialogue produced results. increasing number of local governments seem to be adopting
Miyake: and supporting a so-called comprehensive evaluation system
Yes. It was the trigger for the formulation of the Aeon Supplier in which for example they provide incentives and add points to
CoC in 2003, and our endorsement of the Global Compact in environmentally-friendly enterprises, so I think it is a positive
2004, leading to the acquisition of SA8000. In addition, the thing for Aeon to try to revitalize local industry from such a
NGO groups still visit Japan several times a year to exchange comprehensive perspective.
opinions while discussing what we can do together. Also, Furuya:
based on the experience of that time, I think that a corporate With regards to sustainable consumption, which is today’s
culture has been fostered in which dealing with stakeholders theme, environmental issues have been familiar to the young
such as NPOs and NGOs properly promotes growth. Of course, generation born between the 1980s and 2000s, the so-called
rather than just accepting anything, we divide up what we can millennials since they were born, so they are quite interested.
and cannot do as a company and make decisions on things we Also, these people have an affection for the area where they
will address straightaway and things we will consider over the were born and raised, and are a generation with a strong
medium-to-long term. entrepreneurial spirit. Therefore, I think you should increase the
Kuroda: handling of local produce and so-called social products involving
Listening to you speaking, I was thinking that there is a point these young local managers and actively stress its appeal to
that ties in with this. This point is what a change there has been implement activities that connect the company’s sustainability
in the relationships between corporations and NPOs and NGOs. initiatives with sustainable consumption by consumers.
It is well-known that there was a large-scale boycott campaign Miyake:
around 1997 about child labor and forced labor at Thank you for your opinions. Today,
manufacturing subcontractors for U.S. firm Nike. NPOs and we heard a discussion on the theme
NGOs had pointed out issues while going on the offensive of sustainable consumption from a
against companies, launching boycott campaigns and variety of perspectives such as what
opposition campaigns in the past. At many groups, this incident reasons are hindering its spread and
was an opportunity to reaffirm that our ultimate goal was not to what we should do to promote it. As
strike at corporations, but to create an environmentally-friendly part of this, the points about how we
society without human rights abuses, and we began ongoing should communicate information as
dialogues with corporations. This is exactly what our current a retail business with customer
discussion is, and we will look for solutions while building up connections, the points to stress as a
dialogue over several years. And if there are things wrong in the narrative for customers, and the
supply chain, we will solve them together. Such relationships points about emphasizing the effects
started happening from 2000 onward, and I was thinking that of sustainable consumption are very
this fits in with our current discussion. useful, and I would like to consider them with sales
departments straightaway. Going forward, Aeon will continue
to promote initiatives with an awareness of sustainability from
a global perspective in each region based on all of your
opinions. We would like to continue hearing your opinions in
Fostering the next generation, including the future. Thank you very much for today.
a local perspective
Miyake:
So let me bring up our final discussion. Some people say of our
initiatives that we can do them because we are a big company.
Earlier, I mentioned “global standards” as a statement of Mr.
Okada, but global standards are by no means always fulfilled.
For example, rather than not partnering with local agricultural
producers who have not acquired GLOBAL G.A.P. certification,
we promoted food artisan activities to emphasize the
distinctive local food culture nationwide. We call this
movement “global management” at Aeon, and I would like to
hear your opinion on this direction.
Kuroda:
I think that it should be rightly commended as an initiative that
is uniquely characteristic of a retail business rooted in the
community. On the other hand, it is a fact that the hurdles for
Aeon Report 2017 65

Feature 2 Promotion of CSR in the Value Chain
Expansion of people and

Raw Material environment-friendly TOPVALU Gurinai
Procurement
into three product lines.
A Private Brand Committed to Safety and Security and certification shows that farming takes care of the marine
Consideration for the Natural Environment environment and creatures, the community and human rights.
Amid mounting interest in health and the environment, in 1993 Further, we have been expanding the TOPVALU Gurinai Organic
Aeon began developing and selling the Gurinai private brand series since 2014. Aeon provides customers with a wide range of
(name changed to TOPVALU Gurinai in 2000), which is organic products.
committed to safety and security and consideration for the
natural environment. Strengthening Health & Wellness Products in Response
We began with agricultural produce that minimized to Need for “More Natural Food”
pesticides and chemical fertilizers as much as possible. Starting Today, customers increasingly have a “natural orientation.” They
in 1997, we expanded the products handled to include livestock want more organic products and food that contains as few
products and processed food and offered processed foods that additives as possible. Therefore, Aeon has positioned the
included Tasmanian beef and junkikei chicken, raised without strengthening of health & wellness products as a pillar of the
the use of antibiotics or growth hormones, organic tofu and Group’s growth strategy. In addition, we expanded the
organic miso. Further, we began selling MSC certified products TOPVALU Gurinai series into the three Organic, Natural, and Free
in 2006. MSC certification shows that fishing takes care of the From lines in November 2016. We began selling a total of 570
marine environment and creatures so as not to cause a decline products at the Group’s approximately 2,600 stores across
in the number of natural fish. In 2014, we were the first in the Japan, including Aeon, Aeon Style, MaxValu, and Daiei.
Asian retail industry to start selling ASC certified products. ASC
The Organic series consists The Natural series consists of products The Free From*1 series includes
of products cultivated developed and raised minimizing the use processed foods developed taking
organically without the use of chemically synthesized pharmaceuticals into consideration 109 types of
of pesticides and chemical and feed as much as possible. They include additives and ingredients*2 that
fertilizers that have received Tasmanian beef raised on Aeon’s own customers are concerned about
official organic certification. ranches and MSC certified and ASC certified when they shop.
fish caught using sustainable methods.
TOPVALU Gurinai Organic Cut Tomato TOPVALU Gurinal Natural Junkikei Salad Chicken TOPVALU Gurinai Free From Pain de Mie
*1 “Free” means “absent” or “non-existent,” and “free from” in food indicate that additives and ingredients that customers are concerned about are not used.
*2 29 synthetic colorings, 15 synthetic preservatives, 3 coloring agents, 5 fungicides, 10 artificial sweeteners, 23 flavor enhancers (amino acids), 6 flavor enhancers (nucleic acids), 3 anti-oxidants, 3 bleaching
agents, 6 manufacturing agents, and 6 foods that contain a lot of trans-fatty acids
KEY-WORDS
Aeon Sustainable Procurement Principle Aeon Forest Resources Procurement Principle/ TOPVALU Gurinai Halal certified products
Key Issue FSC® certified products/FSC® certified stores (Organic, Natural, and Free From) Key Issue
P. 94 Key Issue Key Issue P. 116
P. 96 P. 66
Aeon Sustainable Procurement Policy and Sustainable Traceability/Producer information
Procurement Goals for 2020 JAS Organic Produce and Processed Foods Fair Trade certified products/ retrieval system
Key Issue “Certified Importer” license Fair Trade procurement program Key Issue
P. 94 Key Issue Key Issue P. 115
P. 97 P. 128
Aeon Seafood Procurement Principle/MSC and ASC Green procurement
certified products/full-cycle aquaculture fish (construction materials)
Key Issue Key Issue
P. 95 P. 106
66 Aeon Report 2017

Trailer Relay Transportation Initiative
Manufacturing and by Aeon and Kao Received
Distribution
“Minister of Economy, Trade and Industry Award”
Promoting modal shift in partnership with company from of vehicles operated through enhancement of the ratio of
different industry trucks traveling with cargo loaded.
Aeon Global SCM Co., Ltd., which
is responsible for distribution at Received the Minister of Economy, Trade and
Aeon, has been studying Industry Award under Excellent Green Logistics Partnership
transportation initiatives together Commendation Program
with member companies In recognition of this initiative, in December 2016, Aeon and Kao
through the Modal Shift Study received the Minister of Economy, Trade and Industry’s Award
Unloading goods after delivery
Group being run by the under the Excellent Green Logistics Partnership Commendation
company with the aim of reducing CO2 emissions. In the area of Program of the Green Partnership organized by the Ministry of
freight transportation, Aeon Global SCM commenced trailer Land, Infrastructure and Transport, the Ministry of Economy,
relay transportation in partnership with Kao Corporation in June Trade and Industry and others.
2016. Aeon and Kao’s trucks transport their own merchandise This award is presented for excellent initiatives with particularly
on trailers from Kanto and Chubu, exchange cargo at the relay outstanding achievements in the construction of a sustainable
point and deliver their cargo to the other company. distribution system, and this is the second year in a row that
Trailer relay transportation began operation with the aim of Aeon has received the award following last year’s award
improving the working environment for truck drivers and presented for its initiative to reduce environmental impact by
reducing CO2 emissions. The relay transportation has enabled running the Aeon Rail Transport Study Group’s dedicated train.
truck drivers to make day trips, which improved operational Going forward, Aeon will continue to actively promote
efficiency and resulted in fewer working hours per driver. It has modal shift across industries as well as through means other
also reduced CO2 emissions by 27.5% by reducing the number than rail transport and strive to reduce CO2 emissions.
Aeon Chubu Regional Kao Kawasaki

Distribution Center Logistics Center
Kao raw Exchange trailers (loads)

Goods
material supplier delivery
Relay
Kao Toyohashi point Aeon Kanto Regional
Plant
(Shizuoka
Prefecture ) Distribution Center
At the awards ceremony (with joint recipients Mukohjima Co., Ltd. and Fukuyama
Transporting Co., Ltd; at center is Takayuki Sumita, Director-General for Commerce,
Distribution and Industrial Safety Policy, Ministry of Economy, Trade and Industry)
KEY-WORDS
Aeon Supplier Code of Conduct (CoC) TOPVALU quality control/ Food Safety Management Standard JFS-E-C Modal shift/
Key Issue ISO9001 certification certification Relay transportation of trailers
P. 124 Key Issue Key Issue Key Issue
P. 77/P. 112 P. 113 P. 89
SA8000 certification
Reduce Amount of Materials Used in
Key Issue
Packaging and Containers
P. 128
Key Issue
P. 104
Aeon Report 2017 67

Feature 2 Promotion of CSR in the Value Chain
Aeon Mall Tamadaira no Mori wins

Sales
ABINC Special Award for initiatives to
(Stores)
preserve biodiversity.
Implementing Store Development with Consideration Gaining Accolades as a “Pioneering Presence in Activities to
for Preservation and Creation of Ecosystems Preserve Biodiversity at Large-Scale Commercial Facilities”
Aeon implements store development with consideration for Of these stores, Aeon Mall Tamadaira no Mori, which opened in
preservation and creation of ecosystems in order minimize the 2014 with a concept of “a beautiful, lush green garden,” won the
impact of stores on the surrounding natural environment and first ABINC Special Award in the Urban Shopping Center
ecosystem as much as possible. These efforts include category in October 2016. On receiving the award, the store was
biodiversity assessments when establishing a store and the highly commended as being “a pioneering example of
planning of measures to reduce environmental impact. addressing the possibilities for preserving biodiversity in
As part of this, Aeon has been acquiring Creature symbiosis large-scale commercial facilities, including installation of a
office® certification (Urban/SC version) from the Association for rooftop biotope and a Rain GardenTM within the constraints of
Business Innovation in harmony with Nature and Community business.”
(ABINC) since fiscal 2013. This is an objectively positive Aeon will continue creating mechanisms to protect Local
evaluation of the preservation of biodiversity at our stores. So Ecosystem and contributing to the preservation of local
far, we have acquired certification at six stores: Aeon Mall Toin, biodiversity through these mechanisms going forward.
Aeon Mall Tamadaira no Mori, Aeon Mall Tokoname, Aeon Mall
Shijonawate, Aeon Mall Sakai Teppocho, and Aeon Mall
Nagakute.
Preserving Existing Trees and Creating a Walking Path Rooftop Biotope Rain GardenTM
Around 50 of the existing trees, including We installed a rooftop biotope on the open Substances contained in exhaust fumes and so
zelkova, gingko and others, have been retained hillock on the fourth floor. It is useful for on can be mixed in with rainwater, and there is
as they are. On the north and east sides of the environmental studies and environmental a risk that these substances may harm the
site, we established a green belt where we protection education. ecosystem if they flow into rivers and oceans. The
preserved the existing trees to secure a safe and Rain GardenTM reduces the negative impact on
healthy walking space that retains the look of the ecosystem by purifying rainwater as it
Tamadaira no Mori. permeates through the ground.
KEY-WORDS
Aeon Eco Project/Smart Aeon Eco-tuning business Fish Baton Aeon Food Sanitation Certification System
Key Issue Key Issue Key Issue Key Issue
P. 84 P. 78 P. 96 P. 115
Aeon Declaration on Natural Refrigerants Creature symbiosis office® certification

Key Issue (Urban/SC version)
P. 87 Key Issue
P. 101
68 Aeon Report 2017

TOPVALU fururi, an umbrella that
Use contributes to reducing CO2 emissions,
(Consumers)
received Eco-Products Award.
To enable customers to use vinyl
Using Green Polyethylene Derived umbrellas, which are usually
considered disposable, for as long
from Sugar Cane as Raw Material as possible, we came up with a
Aeon strives to develop and sell products that contribute to device to allow mixing and
matching vinyl fabric and umbrella
reducing CO2 emissions. One such product is a vinyl umbrella frames. It has been popular as
an eco-friendly and fashionable
called TOPVALU fururi. Green polyethylene derived from sugar umbrella.
cane, which reduces CO2 emissions, is used as some of the raw
material. Further, because each of the vinyl fabric, ferrule, and In recognition of these features, the umbrella received the
umbrella frame parts can be disassembled, it is easy to separate Chairperson’s Award, Eco-Products Awards Steering Committee
the garbage and encourages recycling. As the umbrella frame is at the 13th Eco-Products Awards organized by the Eco-Products
also made of glass fiber, it is flexible and not easily broken. As a Awards Steering Committee in November 2016.
result, it also leads to a reduction in waste because it can be
used for a long time.
KEY-WORDS
Reduction of plastic shopping bags/Bring Your Collecting Recyclable Resources at Stores Rolling stock Consideration for reducing waste at use stage
Own Shopping Bag Campaign (products) Key Issue P. 117 Key Issue P. 104
Key Issue P. 107 Key Issue P. 108
Store awareness raising activities
Collecting Recyclable Resources at Stores Reduction of food loss Key Issue P. 108
(containers and packaging) Key Issue P. 105
Key Issue P. 108
Commenced full-scale shipment of farm

Waste and products grown through food recycling loop
Recycling
using food waste for compost. Aeon and Daiei MaxValu
stores in West Japan, etc.
Farm Food
products scraps
Shipping 520 Tons of Vegetables Harvested Through Aeon’s Recycling
Complete Food Recycling Loop Loop
Aeon Agri Create Co., Ltd., an Aeon Group agricultural supplied again to
corporation, began full-scale shipments of cabbages grown Aeon Group stores.
through Aeon’s complete food recycling loop to Aeon Group In fiscal 2016, Aeon
stores in the Kansai area in June 2016. The food recycling loop is shipped around 520 Composting
an initiative to turn food waste including uneaten food from tons of these farm Miki Satowaki Daiei Kankyo’s
stores into compost which is returned to the soil to cultivate products, including Farm, Aeon Agri composting plant,
Create Co., Ltd. “Compost Factory”
farm products. Aeon’s food recycling loop is a “closed recycling daikon radishes,
loop” in which food waste from Aeon Group stores is recycled Chinese cabbages,
into compost with the compost used to grow farm products at spinach, and cherry tomatoes in addition to cabbages.
Aeon’s directly operated farms and the grown farm products
KEY-WORDS
Aeon “Waste Zero” Effort Concept Zero emissions malls Food recycling loop Reused hanger
Key Issue P. 102 Key Issue P. 104 Key Issue P. 105 Key Issue P. 106
Returnable containers Recycling of collected containers and packaging

Key Issue P. 106 Key Issue P. 108
Aeon Report 2017 69

Aeon Group CSR
Basing Actions on our Company mission statement of

“Supporting the Local Community through Commerce”
1989 – 2001
The Origin of Aeon’s CSR Activities
Engaging in “Responsible Initiatives” Building a CSR Promotion Framework and Launching New Initiatives
while Expanding our Business Starting with Trees—Embarking on Many Activities
Aeon’s predecessor company, JUSCO, Inc., came into Leading to Today’s CSR Initiatives
being in 1969, as the result of a merger between three
companies—Okadaya, Inc., Futagi, Inc., and Shiro, Inc. In order to carry out corporate activities befitting of a retailer
JUSCO expanded business with the mission statement at representing Japan as well as Asia, and to continue to be a
the time of ‘Supporting the Local Community through retailer consistently delivering vital value in the form of
Commerce.’ Since that time, the Aeon Group has grown “richness,” Aeon has proceeded to build a framework since the
its business and partnered with companies that share its latter 1980s for engaging in CSR activities as an organization.
aspirations for moving retail into more corporate, In 1989, the Aeon Group 1% Club (the present AEON 1%
modern, and industrial forms. In the past 46 years, sales Club Foundation) was established ( P. 154) and in 1990 the
have increased from 500 million JPY to 8 trillion JPY, the JUSCO Earth-Friendly Committee was formed, along with the
number of stores has expanded from 70 to 21,113, and Aeon Group Environment Foundation, the present AEON
the number of employees has increased from 4,000 to Environment Foundation ( P. 158).
approximately 520,000. Building on this framework, the Aeon Hometown Forests
While charting this course, Aeon has generated new Program was started in 1991, followed by the Bring Your Own
strength for responding to changes in the times by Shopping Bag Campaign and the Collecting Recyclable
bringing together a work force with a diverse array of Resources at Stores Campaign. In addition to receiving the
skills. In order to continue providing safe and reassuring international standard ISO 14001 certification for our environmental
products, we have constantly increased our emphasis on management system in 2000, we have launched many other
and recognition of “responsible initiatives” along with activities leading up to today’s CSR initiatives, including starting
business expansion. In alliance with our business partners the Aeon Happy Yellow Receipt Campaign when we used the
and many stakeholders, we have remained aware of the occasion of changing our company name in 2001 to also
importance of increasing value, such as the quality of designate the 11th of each month as “Aeon Day.”
products, and of the growing expectations from society
for our role in providing employment and protecting the
environment as the scale of our business increases.
The Origin of Tree Planting Activities 1989 Established the Aeon Group 1% Club Foundation
Carrying the Source of Wealth forward 1990 Established the JUSCO Earth-Friendly Committee
Established the Aeon Group Environmental Foundation
into the Future
1991 Initiated the Aeon Hometown Forests Program
In the 1960s, Takuya Okada, then president of Okadaya, Started Clean & Green activities
Commenced the “Bring Your Own Shopping Bag” Campaign on a
Inc. (present day AEON) and currently Aeon Honorary trial basis as well as launched the experimental “Collecting
Chairman and Advisor, noticed that the Nandina Recyclable Resources at Stores” Campaign
Heavenly Bamboo flowers in the garden of his home had 2000 Acquired the international standard ISO14001 certification for
stopped blooming. He assumed that was a result of the environmental management
earth’s changing environment. He also felt a sense of 2001 Started the Aeon Happy Yellow Receipt Campaign
crisis, realizing that the pollution accompanying

economic growth would create social problems and that
the loss of nature’s richness would be connected with a
loss of sources of wealth. In response, the Aeon
Hometown Forests Program was started in 1991 as a tree
planting activity around Aeon businesses and as an
initiative that leveraged the advantages of retailers to
bring them in close contact with their region. By planting Operating
trees with local customers, the Company was able to revenue
work side by side with local residents, deepen Group

employees
connections, and share a peaceful sense of joy while
recognizing the importance of nature. Mr. Okada’s idea
was to incorporate the Aeon Basic Principles by
expressing them through tree planting activities. Number of
trees planted*
(unit: 10,000) 1991 1993 1995 1997
70 Aeon Report 2017

2002 – 2007 2008 – 2010
Expanding Activities from a Global Perspective Promoting More Group-wide and Planned Activities
Launching Initiatives Incorporating the 10 Principles Formulating Aeon Group Principles Concerning Biodiversity
of the United Nations Global Compact and the Prevention of Global Warming
With a view to reinforcing its global perspective on CSR, Aeon in In 2008, we announced the Aeon Manifesto on the Prevention
2004 became Japan’s first retailer to sign the United Nations of Global Warming, the first Japanese retailer set specific targets
Global Compact. In the same year, we also acquired SA8000 for CO2 emission reduction. Through initiatives in our stores
certification ( P. 128), an international standard related to (developing Eco Stores, etc.), in our products (conserving
human rights and labor conditions. The “Aeon Supplier CoC” resources used in packaging materials and changing
(Code of Conduct), formulated the previous year (2003), is based transportation methods), and with our customers (planting
on the 10 principles outlined in the United Nations Global trees at Aeon stores), we were able to surpass the FY 2012
Compact and the requirements of the SA8000 Standard. reduction target of a 30% (1.85 million tons-CO2) cut, in
Building on these activities, Aeon and three labor organizations, comparison with FY 2006 levels, one year early in FY 2011, by
including the international labor body UNI Global Union, signed achieving a 2.08 million tons-CO2 reduction. At present, we are
the Global Framework Agreement on labor practices, human not only reducing CO2 emissions, but have also added the Aeon
rights, and the environment in 2014. Eco Project ( P. 84), as part of our effort for stores to be
emergency lifeline centers.
Furthermore, we formulated the Aeon Biodiversity Principle
in 2010, the year that COP10 (the 10th Meeting of the
Conference of the Parties to the Convention on Biological
Diversity) was held in Japan. Aeon continues to develop and sell
biodiversity-responsive products with MSC (Marine Stewardship
Council), ASC (Aquaculture Stewardship Council), and FSC
(Forest Stewardship Council) certifications, and creates stores
conscious of protecting ecosystems.
2003 Formulated the Aeon Supplier CoC (Code of Conduct) 2008 Formulated the Aeon Manifesto on the Prevention of Global
2004 Endorsed the United Nations Global Compact Warming
Acquired the international standard SA8000certification, an 2010 Formulated the Aeon Biodiversity Principle
international standard related to human rights and labor conditions
1999 2001 2003 2005 2007 2009 2010
* Combined total for the “Aeon Hometown Forests Program,” AEON Environmental Foundation tree planting, and “Aeon Tohoku Reconstruction Hometown Forests Program.”
Aeon Report 2017 71

Aeon Group CSR
Stepping Up Key Issue Initiatives Based on the Aeon

Sustainability Principle
2011 – 2013
Striving for Group Growth and Societal Development
‘4 Key Issues’ for Sustainable
Management Aeon Basic Principles and Sustainable Business
Societal Group
As the globalization of our business continues to make great Development growth
Realization of a Sustainable Society
strides and our impact on the environment and society rise to
new levels, we are more actively promoting CSR initiatives
Senior shift
Group-wide. In March 2011, we formulated and announced the
Aeon Sustainability Principle seeking to achieve sustainable Aeon Group Medium-term
Asian Shift Management Plan Digital Shift Mid-term
management that satisfies both group growth and societal initiatives
development. In March 2011, Aeon Co., Ltd. formulated and Urban shift
announced the Aeon Sustainability Principle.
In formulating the Principle, we took into account worldwide 4 key issues
Better Use of Mid- and
megatrends, the changing values of people, social issues Resources long-term
addressed in the UN Millennium Development Goals (MDGs), initiatives
guidelines regarding social responsibility, such as ISO 26000, as
well as the basic content of our new Medium-term Management Aeon Sustainability Principle
Plan. Deliberations took place by stakeholders inside and Aeon aims to realize a sustainable society
outside the company, such as our Environmental Advisory with stakeholders based on our basic
Board, outside Directors, and Aeon people involved with CSR principle of “pursuing peace, respecting
humanity and contributing to local commu-
activities. Along with determining the 4 Key Issues for the Aeon Realization of Addressing
a Low-carbon
nities, always with the customer’s point of
Group, we set Medium- and long-term key performance view at its core.” Social Issues
Society
indicators (KPI) for each Key Issue, and publicize our progress With “realization of a low-carbon society,”
every year in our Aeon Sustainability Report. “conservation of biodiversity,” “better use of
resources” and “addressing social issues” as
core principles, we will think globally and
advance activities locally.
2011 Established Aeon Sustainability Principle Conservation of

Biodiversity
2012 Started Aeon Eco Project
2014 Formulated the Aeon Sustainable Procurement Principle
Global Framework Agreements
Peace
Customers
People Community
Number of trees planted:
more than 10 million

Plant, Nurture, Thrive
2013
72 Aeon Report 2017

Materiality Determination Process
Leveraging the materiality assessment cycle to reflect

the voices of stakeholders inside and outside the Company
1
Priority Items for
All Stakeholders
Aeon draws out material issues concerning
ISO26000 CSR activities from the two perspectives of
GRI Guidelines “demands and expectations from society”
United Nations Global and “degree of importance for Aeon
Compact
management” and identifies key issues in
Environmental Reporting
Guidelines, Ministry of the Management Committee while taking
Priority Items for Aeon Growth
the Environment of Japan into account discussions with stakeholders
Customer Feedback and Aeon Basic Principles inside and outside the Company. Additionally,
Inquiries Medium Term Management Plan
in our Aeon Sustainability Report
published every year, we continue to
widely publicize the progress of various
2 Dialogue with initiatives based on the key issues.
Dialogue with the Environment
Advisory Board, Furthermore, we are using stakeholder
internal project teams
Outside Directors, input gained from these PR activities and
and others our daily operations to identify new
materiality. In this way, Aeon is leveraging
the materiality assessment cycle to
3 Regular
verification of
constantly raise the level of activities
related to CSR.
policies and
KPI KPI key issues
Materiality
1 Drawing out material issues
KPI
concerning CSR from two
perspectives
2 Determining key issues while
deliberating with key persons
SH inside and outside the
SH SH Company
4 3 Setting key issues and key
SH Business activities SH performance indicators (KPI)
CSR activities in the Aeon Management
Committee (Management
SH SH
meeting)
SH * SH=Stakeholders
4 Implementing projects/CSR
activities with stakeholders
5 Keeping up with new material
5 issues by publishing the Aeon
Aeon Reviews Sustainability Report and
(with experts, customers,
Sustainability students, and having daily dialogue with
Report other stakeholders) stakeholders
Aeon Report 2017 73

2014 – 2017 – 2020
Putting sustainability management into practice (1) Putting sustainability management into practice (2)
Launching “Big Challenge”— Reassessing basic principles, key issues, and the like while taking
Our Targets for 2020 into account demands from society and our stakeholders
In order to further advance our sustainability management At the UN General Assembly in September 2015, Sustainable
while responding to the changes in the social environment and Development Goals (SDGs) were adopted as new global targets
the business environment, Aeon assessed the results of its to replace MDGs. Furthermore, the Paris Agreement was
current CSR activity level as “Stage II” in 2014. This refers to a reached in December 2015 at the twenty-first session of the
three-stage classification system where Stage I denotes business Conference of the Parties to the United Nations Framework
management that controls risk in social, environmental, and Convention on Climate Change (COP21).
economic terms; Stage II denotes CSR activities as functioning In light of these developments, in June 2016, Aeon held
to solve social issues and providing the opportunity for growth; dialogues with experts on the topic of “social changes and
and Stage III denotes CSR activities and business activities being Aeon’s responsibilities.” Based on international circumstances
managed in a fully integrated fashion. Aeon announced its “Big and the opinions received through these dialogues, we also
Challenge” comprising 10 categories that need to be achieved re-implemented materiality assessments from the two
for Stage III by 2020. perspectives of the environment and society. After internal
Additionally, we hold regular dialogs with outside experts discussions, in April 2017, we reassessed the Aeon Sustainability
based on the progress of these activities. With the Corporate Principle and identified four key social issues as part of our
Citizenship Department as the administrative office, we have response to addressing social issues. At the same time, we also
stepped up our framework for reassessing materiality and for ad fleshed out the “Big Challenge” categories.
hoc reviews of “Big Challenge” categories. Additionally, in order to fulfill social responsibility in our
supply chain, which is receiving more emphasis as globalization
affects the world’s economy, we formulated Aeon’s Sustainable
Procurement Policy ( P. 94) as guidelines for action that are
more specific than the content of the Aeon Sustainable
Procurement Principle set forth in 2014.
The Results of CSR Activities Aeon will continue to promote dialogue with stakeholders
inside and outside the Company. While not settling for the
Fully integrated management of CSR
and business CSV (Creating Shared status quo, we will endeavor toward responsible corporate
Value) Stage
III conduct befitting Asia’s pre-eminent retailer.
Risk reinforcement generating strength
Initiatives toward addressing social Stage
issues (generating growth opportunities) II
Risk control (Corporate ethics and
compliance) Individual activities based Stage
on philosophy I
Review Expert opinions offered during 2016 stakeholder dialogues Sustainable Development Goals (SDGs)
I have high hopes for Aeon, as Asia’s pre-eminent retailer, to show an eager
attitude toward creating a new standard for sustainability in Asia. In order for that
to be possible, it is necessary to set long-term targets in light of activities to date,
while also enhancing activities going forward. Additionally, I hope that Aeon more
strongly showcases the appeal of Marine Stewardship Council (MSC) Certification,
etc. in stores. Since these are locations where many consumers congregate, I hope
that Aeon makes its stores more than simply places for connecting buyers and
sellers, but places for thinking together about sustainability.
Hidemi Tomita
Senior Project Principal, Lloyd’s Register Quality Assurance Limited
The retail industry is the key to the targets of SDG’s Goal 12: Responsible
Consumption and Production. I would like Aeon to show how it is making efforts
at each level of its value chain by carrying Fairtrade, organic, and other products.
In particular, society notices Aeon’s use of lumber that is domestically produced,
Forest Stewardship Council certified, etc., and fish that is Marine Stewardship
Council certified. I hope that promoting ethical consumption through these
types of activities will be a driving force for achieving the targets of SDG #12.
Mariko Kawaguchi
Chief Researcher, Research Division, CMA, Daiwa Institute of Research Ltd.
74 Aeon Report 2017

Aeon Group CSR
13 categories in
Energy management/
prevention of fluorocarbon
“Big Challenge 2020”
Demands and expectations from society
Preventing marine leakage/safeguarding

pollution/promoting the resources/prevention of forest 1 Realization of a low-carbon society
3Rs degradation/management of
Promoting the Aeon Eco Project
food waste
Setting post-2020 targets for
energy and fluorocarbons
Consideration for
Harmony with
the natural environment
ecosystems/management
Management of waste
disposal
2 Conservation of biodiversity
of chemical substances Implementing the Aeon “Forest
Circulation Program”
Sustainable procurement and
Prevention of soil
pollution/wastewater consumption of natural resources
Conservation of water management/prevention
resources of noise pollution/ 3 Better Use of Resources
prevention of odors/ Promoting zero waste in stores
lowering of gas emissions
and products
Degree of importance for Aeon management Promoting zero food waste
Setting post-2020 targets for
natural recycling
Realization of
4 Responding to Diverse
Conservation Better Use Consumers Issues
a low-carbon
of biodiversity of Resources Achieving health and wellness
society
5-year business continuity
management (BCM)
Aeon Sustainability Principle (revised April 2017)
5 Carry out Fair Business Practices
taking into account reviews and trends
Redefining basic principles and key issues while
Aeon aims to realize a sustainable society and Group growth based Expanding Fairtrade, etc.
on our basic principle of “pursuing peace, respecting humanity and
contributing to local communities, always with the customer’s point
of view at its core.” 6 Create workplaces that emphasize
human rights and diversity
“Big Challenge”
Reflecting key issues in our
From the dual perspectives of “environment” and “society,” we

will think globally and advance projects locally as we actively pursue Promoting diversity
initiatives alongside stakeholders. Promoting wellness management
7 Collaborate with the

Create Community
Responding
Carry out Fair Workplaces Collaborate
to Diverse Working together with Local
Business that Emphasize with
Consumers Ecosystems
Practices Human Rights the Community
Issues
and Diversity
Addressing human rights/securing Securing safety and

safety and security for stores/ security for products/
facilitating the function of lifestyle addressing needs of
infrastructure in regions during senior citizens/
times of disaster/addressing delivering health-
8,210.1billion yen
Demands and expectations from society
individuals with difficulties conscious products

shopping/dialogue with customers and services
Net sales:
Contributions to local
Support for disaster-
society/creating jobs/
No. of employees:
520,000
stricken areas/support Promoting diversity/
expanding ethical
for people with mental and physical
disabilities/support for
business transactions/
health for employees/
approx.
disclosing information to
childrearing/support for supply chain management
customers/information
the growth of children
security measures
Contributions to global
society/efforts to address
Spreading awareness of Work-life balance for No. of trees planted:
poverty/support for
environmental and social employees/
11,441,925
small and medium-sized
consciousness to skills development for
businesses/support for
customers employees
continuing cultural
traditions
Degree of importance for Aeon management

Aeon Report 2017 75

Environmental Management
Environmental Policy System

Aeon established the Aeon Sustainability Principle in line with Aeon Environmental Policy*
the Aeon Basic Principles as the fundamental policy that We strive to balance enriching lifestyles with environmental
governs the environmental and social contribution activities conservation by providing safe and comfortable stores,
that all Aeon Group companies should take part in. Following products and services to our customers. We also operate an
these policies, the Aeon Eco Project and the Aeon Biodiversity environmental management system to implement measures,
conduct periodical reviews, and promote continual
Principle also represent environmental goals and policies for
improvements.
the entire Group.
Effective measures are conducted following the
1. We will strive to reduce the emission of greenhouse gases
environmental policies and environmental management in all of our business activities in order to realize a low
systems established by each Group company based on their carbon society.
own unique characteristics. This is because the Aeon Group (1) We will continually improve the energy efficiency of our
encompasses a multitude of business areas and the challenges stores.
that each Group company faces may differ depending on their (2) We will strive to reduce the emission of greenhouse
operating format and sector. gases in all phases of our products’ supply chain.
As an example, Aeon Co., Ltd. undertakes environmental
protection activities based on the Aeon Environmental Policy, 2. We will promote conservation activities and ascertain the
benefits and impact of our business activities on natural
which sets targets and objectives for such activities pursuant to
ecosystems.
the key issues defined in the Aeon Sustainability Principle.
(1) We will strive to develop and procure products that use
Targets for the following fiscal year are determined by sharing
properly managed resources in consideration of
the status of activities undertaken across the entire Group sustainability.
under the guidance of the Aeon executive officer in charge of (2) We will promote tree planting and raising activities as
business planning* as well as by an evaluation of the progress well as undertake activities that safeguard the
toward meeting previous targets. ecosystems of local communities.
* From April 2017, we changed to a structure under which our environmental
and social contribution, public relations, and investor relations organizations 3. We will strive to implement resources conservation and
have become independent from the Corporate Planning Section, and the resources recycling initiatives in order to use resources in a
executive officer in charge of the environment, social contributions, PR, and IR
now oversees these organizations. sustainable manner.
(1) We will promote “reduce, reuse and recycle” for all the
resources we use.
Environmental Policy System (2) We will strive to select raw and general materials that
have less of an impact on the environment.
Peace
Aeon Basic
4. We will comply with legal requirements and with other
Principles requirements related to our environmental aspects, and
Customers
P. 2 strive to prevent pollution. In addition, we will
People Community
communicate this policy to all persons working for or on
behalf of the organization as well as making it available to
Aeon Aeon Eco Project
the public.
Sustainability P. 84
Principle
Group-wide Aeon Biodiversity Principle 5. W e will develop partnerships with many stakeholders,
Policy P. 75 P. 92 including our customers, and widen the reach of our
Aeon Zero Waste initiatives.
Initiative Concept
P. 102
Enacted March 1, 2011
Policy of Motoya Okada

Aeon Co., Ltd. Company B Company C
Individual Environmental Environmental Environmental President and Representative Executive Officer
Companies Policy Policies Policies Aeon Co., Ltd.
* The Environmental Guideline of Aeon Co., Ltd. is applied in the following group
companies:
Aeon Co., Ltd., Aeon Retail Co., Ltd., Aeon Retail Store Co., Ltd., Aeon
Supercenter Co., Ltd., Maxvalu Minami Tohoku Co., Ltd., Maxvalu Kanto Co., Ltd.,
Maxvalu Nagano Co., Ltd., Maxvalu Hokuriku Co., Ltd., Aeon Big Co., Ltd., Aeon
Integrated Business Service Co., Ltd., My Basket Co., Ltd., Aeonbike Co. Ltd., Aeon
Liquor Co., Ltd.
76 Aeon Report 2017

ISO Certification M axvalu Kyushu Co., Ltd. receives ISO 14001 (v. 2015)
As of February 2017, 36 companies in the Aeon Group have certification
acquired ISO 14001 certification, the international standard for In April 2017, Maxvalu Kyushu Co., Ltd. received a review of its
environmental management systems. Each company runs its transition to the 2015 version of ISO 14001 and was successfully
own Plan-Do-Check-Act (PDCA) cycle, achieving results in granted certification.
efforts to continually reduce environmental impacts. During the transition review, the Audit Department and
auditors were provided with training on the differences in the
List of ISO-Certified Companies (as of February 2017) new certification, while there was also training on changes to
Company Company manuals for stores and training for employees. Company
Aeon Co., Ltd. Aeon Ryukyu Co., Ltd. employees were informed that
Aeon Retail Co., Ltd. Maxvalu Kyushu Co., Ltd. achievement of environmental
Aeon Supercenter Co., Ltd. Maxvalu Hokkaido Co., Ltd. targets under the revised 2015
Maxvalu Minami Tohoku Co., Ltd. Aeon Delight Co., Ltd. certification is mandatory and
Maxvalu Kanto Co., Ltd. Laura Ashley Japan Co., Ltd. the company will continue to
Maxvalu Nagano Co., Ltd. Mega Sports Co., Ltd. pursue ISO 14001 going
Part of the review process for updating
Maxvalu Hokuriku Co., Ltd. Cox Co., Ltd. forward. certification
Aeon Integrated Business Service Co., Ltd. Maxvalu Tokai Co., Ltd.
Aeon Big Co., Ltd. Research Institute for Quality Living Co., Ltd.
Aeon Retail Store Co., Ltd. Aeon Hokkaido Corporation Wastewater Management
My Basket Co., Ltd. Head Office Aeon Global Scm Co., Ltd. Wastewater discharged from Aeon stores rarely if ever contains
Aeonbike Co., Ltd. Head Office Guangdong Aeon Teem Co., Ltd. hazardous substances. Sometimes, however, this wastewater
Aeon Liquor Co., Ltd. Head Office The Daiei, Inc. may contain large amounts of oils, which can exceed legal
Maxvalu Tohoku Co., Ltd. Aeon Market Co., Ltd. limits or clog up wastewater pipes leading to a leakage or other
Aeon Food Supply Co., Ltd. The Maruetsu, Inc. accident. As a result, Aeon uses DVDs and other teaching
Maxvalu Nishinihon Co., Ltd. Kasumi Meat Processing Center, Ltd. materials to conduct training for its employees and the
Maxvalu Chubu Co., Ltd. Aeon Credit Service (Asia) Co., Ltd. employees of its tenants to ensure day-to-day maintenance is
Aeon Mall Co., Ltd. Aeon Credit Service (M) Berhad correctly performed, including compliance with cleaning
Aeon Kyushu Co., Ltd. Aeon Thana Sinsap (Thailand) Plc. grease traps. We have been making improvements by
Aeon Store Kyushu Co., Ltd. Qingdao Aeon Dongtai Co., Ltd. strengthening day-to-day management, including regularly
Aeon Credit Service Co., Ltd. Aeon Topvalu Co., Ltd. taking photographs for use in providing instructions. We have
ISO9001 ISO14001 also included grease trap monitoring as part of the required
hygiene checks for our stores, and adopted a system where
third parties regularly perform these checks.
In 2015, the ISO 14001 certification was revised to emphasize Furthermore, Aeon Retail Co., Ltd. and several other Aeon
integration of business processes and environmental Group companies perform water quality testing concurrently
management systems, in addition to the improvement of top that includes sewage as part of annual voluntary inspections.
management’s leadership and performance. Stores where values exceed our voluntary standards, which are
Aeon saw this revision as an opportunity to strengthen our even stricter than legal requirements, are required to take
management framework and we are actively striving to make corrective actions which helps to improve our overall
the transition. wastewater management practices.
At Aeon Co., Ltd., we held seminars for managers (with
attendance by 209 employees) in order to support a smooth
transition for each Group company. Additionally, we are
providing teaching materials, in video format, to enable
on-going utilization of the training information.
At Aeon Retail Co., Ltd., we have held seminars since 2016
to train internal auditors following the 2015 certification
revisions, while also moving forward with other transition
preparations that have included educational efforts for
managers on site.
Certified Group companies will continue steadily proceeding
with a systematic transition by 2018 as we build an environmental
management system that is integrated with our business.
Aeon Report 2017 77

Environmental Education Group company initiatives
Aeon provides time in its various training sessions for learning
about Aeon’s environmental principles and policies in order to Aeon Retail Co., Ltd. initiatives
raise the awareness of employees regarding the environment. The company has established a web-based training tool and
Since FY 2008, we have encouraged employees to take the requires all employees to keep an ISO 14001 handbook with
Certification Test for Environmental Specialists® (Eco Test).* them.
Department managers at the head office and higher ranked
personnel as well as store managers are taking this certification. Aeon Mall Co., Ltd. initiatives
Companies that have acquired ISO 14001 certification provide The company’s medium-term environmental policy includes
training for their employees. For example, Aeon Retail Co., Ltd. the goal to have all employees pass the Eco Test. To that
has established a web-based training tool and requires end, the entire company is pursuing initiatives such as
employees to keep an ISO 14001 handbook with them. environmental training for employees.
Training seminars for internal environmental auditors led
by qualified instructors are also held every year to facilitate Aeon Financial Service Co., Ltd. initiatives
smooth operation of the environmental management With the goal of supporting the acquisition of certifications
system. As of February 2017, a total of 1,876 employees have that further employees’ careers, the company established a
attended the seminars since 2000, when the ISO 14001 subsidy program for various official certifications and exams,
one of which is the Eco Test.
certification was acquired.
* The Certification Test for Environmental Specialists is a certification program
sponsored by the Tokyo Chamber of Commerce and Industry. It was started in
Aeon Delight Co., Ltd. initiatives
2006 in order to develop human resources who possess broad-reaching basic 150 employees acquired the Eco Tuning Technician
knowledge of environmental issues and who can utilize their awareness of certification that addresses the maintenance of comfortable
these issues in everyday activities, and to help build a sustainable society with a
balance between the environment and the economy. and productive facilities, in addition to more the fine-tuned
utilization of machinery, equipment, and systems. The
company received official designation in March 2017.
Additionally, the company is carrying out environmental
training by, for example, training ISO 14001 internal
environmental auditors, while supporting employees’
acquisition of certification as energy managers, etc. The
company is also carrying out human resources development
in the form of employee mastery of techniques for reducing
environmental burdens.
Branshes Co., Ltd. initiatives

At the Eco Kentei Awards 2016, hosted by the Tokyo
Chamber of Commerce and Industry, Branshes received the
Award of Excellence.
The Eco Kentei Awards celebrate achievements by “eco-
people” and “eco-units” (companies and groups) that serve
as model efforts for environmental activities.
Branshes was recognized for several contributions,
including efforts to restore Sango Forest. This is the
company’s fourth year in a row to receive an Eco Kentei
award in the Eco Unit Division.
78 Aeon Report 2017

FY 2016 ISO 14001 Targets and Performance
[Company-wide Targets] =Achieved • =Did not achieve, but will continue to make efforts
Company-
Environmental Evalua-
Category wide Target Results Supervision
Policy tion
Targets
Target: 1,937,567,000kWh
Result: 1,957,000,000kWh
Realization Promoting Theme1 Energy Conservation Stated target: 101.0 %
Aeon Co., Ltd.
of a Low Reduce electric consumption to more than 1% Comparison last year: 99.8 %
Stores Each Group
carbon to 2% of FY 2015 * The total of Aeon Retail Co., Ltd., Aeon Supercenter company
Society * Target varies according to company Co., Ltd., Maxvalu Minami Tohoku Co., Ltd., Maxvalu
Kanto Co., Ltd., Maxvalu Nagano Co., Ltd., Maxvalu
Hokuriku Co., Ltd., and Aeon Big Co., Ltd.
Target: 838,347,000 JPY

Result: 808,114,000 JPY
Reduction of money used for materials Stated target: 96.4 %
Aeon Co., Ltd.
At least 5% reduction from FY 2015 Comparison last year: 92.2 % Each Group
* Target varies according to company * The total of Aeon Retail Co., Ltd., Aeon Supercenter company
Co., Ltd., Maxvalu Minami Tohoku Co., Ltd., Maxvalu
Better use
Stores
of resources
<Average>
Result: 0.521 %
Maintain food waste-to-sales ratio at below Stated target: 107.5 %
Aeon Co., Ltd.
0.50% Comparison last year: 98.6 % Each Group
* Target varies according to company * The total of Aeon Retail Co., Ltd., Aeon Supercenter company
Co., Ltd., Maxvalu Minami Tohoku Co., Ltd., Maxvalu
[Division Targets]
Company-
Environmental Evalua-
Category wide Target Results Supervision
Policy tion
Targets
Expand sales of LED light bulbs and ceiling lights Aeon Co., Ltd.
Expand sales of sustainable seafood (MSC, ASC) Aeon Topvalu Co.,
Low carbon,
Ltd.
resources, and Products — Expand sales of environment-friendly products Expand sales of organic and natural products
Aeon Retail Co., Ltd.
biodiversity Expand sales of water conservation toilets Each Group
Expand sales of SELF+SERVICE products, etc. company
336 stores out of the 453 stores conducted activities

more than four times/year. (Excluding new shops in
Promotion of the Aeon Cheers Club activity the latter half of the year; including retail stores)
Together 1. A ll GMS stores implement more than 4 Result: 74.2% Comparison with stated target: 92.8% Aeon Co., Ltd.
Partnerships with — activities/year More than 80% Each Group
Customers • Encourage utilization at stores with 0 activities; work company
2. Complete store wall newspapers More than
on measures to boost motivation
80%
• Implement programs linked to companies within the
Group
Implement simultaneous voluntary surveys

Rate of violations to initial voluntary standards 27.7%
(Decline)
Implement proper wastewater management • Create DVD teaching materials to step up measures
(comply with standards, prevent accidents)
Set up teaching tools
1. Implement efforts aimed at maintaining proper Aeon Co., Ltd.
Pollution • Proceed with adoption of equipment
Stores — values at all times Each Group
Prevention • M any violations occurred at stores other than
2. C ontinue individual measures for problem company
stores (non-correction of infringements/lack of those under focus. Tackle the issue of delays in
equipment) implementing training.
<Good Examples>
We take pictures of the cleaning process to make sure
cleaning is conducted correctly.
Aeon Report 2017 79

FY 2016 Aeon Group Environmental Accounting
Environmental Economic
Main Category Sub-category Accounting items conservation benefits CO2 reduction
costs (Thousand JPY)
(t-CO2)
(Thousand JPY)
Generating electricity Installation cost for photovoltaic power systems 335,722 194,316 5,751
Adoption of energy efficient equipment
Energy-saving
(Installation of LED lighting, visualization of energy usage, etc.)
8,363,502 1,636,970 46,876
Management of Adoption of natural refrigerant equipment, fluorocarbon

Realization of a Low- fluorocarbons filling and leakage management
1,966,940 7,975 432
carbon Society
Carbon offsets Carbon offsets (CO2 emission trading) 3,018 — 437
Distribution Adoption of modal shift, use of returnable containers 2,472,465 — 19,442
Subtotal 13,141,647 1,839,261 72,937
Aeon Hometown Forests Program Tree-Planting

Tree-Planting Ceremony, construction costs
219,855 —
activities
1,865
Conservation of Regular maintenance for planted zones 632,434 —
Biodiversity Production Research, etc. on certified products, procurement
certification guidelines
965 — —
Subtotal 853,254 — 1,865
Processing cost of recyclables collected in-store,

processing cost of recycling of food residue
1,180,018 435,720 103,262
Reduction of waste
Plastic shopping bag reduction 864,500 893,054 85,334
Reduce amount of
Third-party processing fees required under the Act on
materials used in
Better use of resource packaging and
the Promotion of Sorted Collection and Recycling of 1,308,090 — —
Containers and Packaging
containers
Home appliance
recycling
Operating costs for home appliance recycling program 102,175 — —
Subtotal 3,454,783 1,328,774 188,596
Contributions to local Contributions to the Aeon Happy Yellow Receipt

communities Campaign*
499,842 — —
Addressing Social Issues Human resources

Activities of the Aeon Cheers Club 119,217 — —
development
Subtotal 619,059 — —
Preparing the Aeon Sustainability Report, operating the

Media
environmental website
33,287 — —
Exhibiting at environmental events, advertising-related

Environmental Exhibits
publications
503,801 — —
Communication
Membership dues in and donations for environmental
Donations, etc.
organizations (donations, etc. to Local WAON)
1,020,381 — —
Subtotal 1,557,469 — —
Processing waste Processing waste generated by stores and offices,

generated adopting waste measurement equipment
11,712,294 192,034 —
Management of Cost of implementing the environmental management

waste disposal system (ISO), waste management seminars
84,045 — —
Environmental Maintenance of Maintenance and management of equipment for preventing
Management equipment and environmental pollution, prevention of environmental 4,399,197 — —
devices accidents, and restoration in case of an accident
Personnel costs Personnel costs 459,703 — —

Subtotal 16,655,239 192,034 —
Total 36,281,451 3,360,069 263,398
Applicable companies: 68 consolidated Group companies (General Merchandise Store Business, Supermarket & Discount Store Business, Drugstore & Pharmacy Business,
Financial Services Business, Shopping Mall Development Business, Services & Specialty Store Business, Shared Function Companies, etc.)
* Activities of volunteer groups receiving Aeon Happy Yellow Receipt Campaign proceeds: (1) promoting welfare, (2) promoting environmental conservation and education,
(3) promoting urban development, (4) promoting arts and culture, (5) promoting child health and safety
80 Aeon Report 2017

Environmental load in FY 2016 business activities

Output
[Aeon Retail Co., Ltd.]
Customer Packaging
Disposal
CO2 absorption
Input Output through tree
planting*2
1,865t-CO2
CO2 CO2
Products CO2 emissions*1
Electricity: 1,745,170,000 kWh CO2
collection boxes
Private power generation: 70,724,000 kWh 1,008,075t-CO2 CO2
Renewable energy power generation: 4,124,000 kWh
In-store
CO2 CO2
Energy*4 Discharge 216,191t
Utility gas : 31,371,000m3 Discharged into air
LPG : 1,655t Packaging
Heavy oil : 3,092kℓ Shopping bags : 5,288t
Light oil : 8kℓ Food trays : 4,885t Recycling
Stores
Gasoline : 159kℓ Wrapping paper : 884t 136,993t
Separated
collection
Kerosene : 126kℓ Paper bags : 1,002t
boxes
Food scrap recycling CO2 reduction
Styrofoam volume reduction through collection
Waste oil recycling of recyclable items
Cardboard 24,964.7t-CO2*3
Water
Waste products Recycling
8,577,662m3
Other materials*4 Products 79,198t
Well water Disposal
2,914,167m3 OA, photocopy paper : 1,014t
Recycling manufacturers
Input Output
Recyclable items
collected
CO2 emissions*5
Suppliers
Aluminum cans:
Energy*4 71,312t-CO2 1,202t
Light oil: 27,218kℓ Food trays: 600t
Waste products Products Paper cartons: 1,211t
Distribution center Cardboard PET bottles: 2,845t
*1 Calculations based on energy consumption of equipment at stores and business places. Calculated using the CO2 emission coefficient (2.62t-CO2/kl) for light oil.
*2 Calculated based on the group-wide total number of trees planted under the “Aeon Hometown Forest” program.
*3 Calculated based on the 3R basic unit method (Waste Management and Recycling Department, Ministry of the Environment; March 2013).
*4 Calculated by multiplying the ratio of Aeon Retail by the total energy used by Aeon Global SCM.
*5 Calculated using the CO2 emission coefficient (2.62t-CO2/kl) for light oil.
Aeon Report 2017 81

FY2016 Activities
Environmental Activities Collaborate with the Community 140
Realization of a Low-Carbon Society 84
Conservation of Biodiversity 92 Support After the 2016 Kumamoto Earthquakes 148
Better Use of Resources 102 Activities that Widen the Circle of
Social Activities Tohoku Creation 150
Responding to Diverse Consumer Issues 110 External Awards List (FY 2016) 153
Carry out Fair Business Practices 122 Initiatives by Aeon Public Interest
Incorporated Foundations 154
Create Workplaces that Emphasize
Human Rights and Diversity 130 GRI Guidelines Indicators 160
82 Aeon Report 2017

Aeon Group CSR
Aeon devised Key Performance Indicators (KPI) as part of its with all stakeholders.
commitment to achieving sustainable management. In In addition, taking into account environmental changes
conjunction with this, we have assigned a division and inside and outside the Company, we regularly review KPI. The
person in charge for each KPI field and established a system Aeon Management Committee receives proposals from the
for taking stock of and managing the results of activities on a division and person in charge of each KPI field and takes into
regular basis. Since FY 2012, we have been reporting on the account input from external experts, government affiliates,
state of KPI implementation and sharing that information and others before reviews are finalized.
CSR Promotion Framework

At Aeon, key issues concerning the environment, social and given responsibility for the Aeon Group’s CSR activities. The
contribution, and other CSR activities are reviewed and Corporate Citizenship Department is the central administrative
approved by the Aeon Management Committee (MC), of which office for activities and is in charge of reporting and
all Aeon executives are members. As the scale and geographic communicating with the Executive Officer in charge of Business
scope of our business expand, and as our effects on society and Planning. The Department publicizes and shares information
the environment increase, Aeon will continue to practice our with Group companies and plays a role in leading and
Basic Principle of “Pursuing peace, respecting humanity and supporting their activities. The Department regularly holds a
contributing to local communities, always with the customer’s corporate citizenship managers’ meeting, examines and
point of view as its core.” In order to achieve our objectives of considers countermeasures for challenges facing individual
‘Improved customer satisfaction,’ ‘Societal development,’ and Group companies, and collaborates with them to promote
‘Aeon Group growth,’ promoting sustainable management that execution of the PDCA cycle. Furthermore, as an ISO 14001-
shares growth with all of our stakeholders is indispensable for and 50001-certified office, the Department works to operate
identifying business opportunities in solutions to a variety of and ensure an environmental management system across the
challenges endangering a healthy society. entire Group.
Proposals and reports to the MC are brought forward by the Members of the Corporate Citizenship Department also
Executive Officer in charge of Business Planning,* and approved participate in internal gatherings such as the General Affairs
matters are publicized throughout the Group to share and Department managers’ meeting and the Area management
spread CSR awareness. planning meeting, while sharing information and collaborating
The Corporate Citizenship Department has been established with each Aeon Department.
CSR Promotion Framework Aeon Basic Principles and Sustainable Business

Societal Development Group Growth
Aeon Group Realization of a Sustainable Society
Aeon Management Committee (Highest level management committee) Senior shift

Executive Officer in charge of Business Planning*
Asian shift Aeon Group Medium-term Digital shift
Management Plan
Reporting and communicating
Medium-
General Sharing Sharing Urban shift term
Affairs Dept. information information Regional Initiatives
managers’ strategy
meeting Corporate meeting
Sharing Citizenship Sharing
Conservation
of biodiversity
Each information Dept. information Each Realization of Better Use
Meeting Meeting a low-carbon society of Resources
Aeon Sustainability Basic Principle Medium &

Information publishing and sharing, 7 key issues and the dual perspectives of Long-term
guidance, support
Responding “environment” and “society” Initiatives
to Diverse Collaborate with
Consumers the Community
Corporate citizenship leaders’ meeting Issues Create Workplaces
Carry out Fair that Emphasize
Business Practices Human Rights
Group Group Group Group Group and Diversity
company company company company company
Peace
Stakeholders Customers
* From April 2017, we changed to a structure under which our environmental and social People Community
contribution, public relations, and investor relations organizations have become
independent from the Corporate Planning Section, and the executive in charge of the Aeon Basic Principles
environment, social contributions, PR, and IR now oversees these organizations.
Aeon Report 2017 83

Realization of a Low-carbon Society
Key Issue
1 Management Approach
Recognition of Challenges
The problem of global warming has brought a large and is large and the use of alternative fluorocarbon refrigerants in
negative impact to the global environment. Aeon has expanded refrigerators and freezers is also implicated. A society with fewer
its business to 21,113 stores/locations in 13 countries around greenhouse gas emissions - “the realization of a low-carbon
the world, and as business activity has an impact on global society” is listed in the key issues, and we are working on a
warming, we believe that the use of energy in store operations variety of initiatives.
Aeon’s Approach
Aeon has set environmental targets for FY 2020, the Aeon eco community in disasters and emergencies.
Project. With current increasing needs for energy use efficiency The Aeon Natural Refrigerant Declaration was announced in
and power conservation, and with the experience of the Great FY 2011, and the introduction of natural refrigerant (CO 2)
East Japan Earthquake, Aeon has added perspectives of refrigerators and freezers with a small global warming potential
reducing energy use and developing renewable energy to is also being promoted.
environmental protection in September 2012 and has In addition, we are also working on the reduction of CO2
additionally taken on a role as a lifeline center protecting the emissions in products and logistics.
Future Initiatives
In July 2015, the Government of Japan finalized a goal to reduce alternative fluorocarbons are newly subject to the provisions of
domestic greenhouse gas emissions 26% compared to FY 2013 the Montreal Protocol with the establishment of clear reduction
by the year 2030. To contribute to reaching this goal, Aeon will targets for production and consumption of alternative
continue to engage in the Aeon Eco Project and will begin fluorocarbons, requiring a response. Taking this into account.
sharing its energy management expertise developed in Japan Aeon formulated a medium-to-long-term plan and aims to
at its subsidiaries in China and ASEAN. expand the introduction of natural refrigerant (CO2) equipment
Under the Kigali Amendment adopted in October 2016, at new stores.
Aeon Eco Project
In the form of our Aeon Eco Project, Aeon set environmental targets for FY 2020, and is carrying out Aeon
various initiatives to achieve those targets. The project incorporates a protection strategy in addition to
targets that aim to conserve energy and save power, such as strategies for reducing energy use that Projec t
promote smart use of energy to conserve it, and strategies for generating energy to produce renewable
energy, primarily solar power generation. This aims to turn stores into disaster prevention facilities to
Reduc tion Generation Protec tion
function as lifelines in times of emergency. Strategy Strategy Strategy
Smart Aeon is one of the initiatives for implementing the Aeon Eco Project. 10 stores have given birth
50% reduction in 200,000 kW from 100 disaster-prevention
to Smart Aeon up to the end of FY 2016. ( P. 88) energy consumption renewable energy sources facilities across Japan
FY 2016 Results Targets for FY 2020 Examples of Initiatives

Transition to LED lighting
Reduction Energy consumption 50% reduction in energy
Gradual change of basic lighting and
Strategy P. 86 Expected reductions of 27% consumption compared to
spot lights at 4,562 stores nationwide to
(compared to FY 2010) FY 2010
LED lighting (cumulative total to FY 2016)
Stores installed with solar panels

Generation 923 stores Electricity generation 200,000 kW from renewable Solar panel installation
Strategy P. 91 capacity 56,900 kW energy sources
(total up to FY 2016)
Disaster-prevention Make 100 Aeon stores

Protection 33 locations across Japan across Japan
Private power generation
Strategy P. 120 equipment installation
(total up to FY 2016) disaster-prevention facilities
84 Aeon Report 2017

FY 2016 KPI Progress
Main
Subcat- Summary of Actions/Initiatives
Cat- KPI Scope Covered Target FY 2016 Results
egory in FY 2016
egory
CO2 Emissions
Reduce Total
Total Annual CO2 Consolidated Group FY 2010: 0.103t/m2 (Performance) 1) Energy-saving equipment
Emissions Factor companies in Japan introduction/update:
0.075t/m2 (expected)
(CO2 Emissions/ and overseas (Japan, FY 2016: 0.075t/m or less
2
• S tore lighting LED conversion
Total Floor Area) China and ASEAN) FY 2020: 0.052t/m2 or less (basic lighting, such as
spotlights)
• Introduction/updating of
energy-saving refrigerated
cases, air conditioning
equipment
2) Energy saving through
operational improvement
(lighting, refrigerated cases, air
Improve Energy Efficiency
conditioning, etc.):
[Reduction Strategy]
• E ducation by energy advisor

FY 2010: 2.783GJ/m2
Total Energy Use Consolidated Group training
(Performance)
Factor companies in Japan •V erification of energy rational
2.032GJ/m2 (expected)
(Amount of Heat / and overseas (Japan, management techniques
FY 2016: 2.032GJ/m2 or less
Total Floor Are) China and ASEAN) • E nergy-saving operation
FY 2020: 1.392GJ/m2 or less
propulsion using an
Reduce CO2 Emissions in Stores
energy-saving checklist and

Procedure manual
•P romote eco-tuning
3) Energy management activities
utilizing ISO 50001
Equipment Introduction Promotion [Natural Refrigerant Declaration]
Preventing Leakage of Fluorocarbons and Natural Refrigerant
Comprehensively
assess Starting in FY 2016, fully
replenishment operated centralized 1) Simple and periodic
FY 2016: Operation of
volume of management system equipment inspection
Consolidated Group management system compliant
fluorocarbons in air introduced by Aeon Delight Co., 2) Fluorocarbon leakage amount
companies in Japan with the Fluorocarbons Recovery
conditioning and Ltd. , and implemented leakage management and periodic
and Destruction Law
cold storage management for each Group reporting follow up
equipment and company
prevent leakage
Installed at a total of 104 stores 1) Continue non-fluorocarbon

Number of Stores (cumulative total 146 stores) introduction project
Consolidated
Installing including 58 new small stores, 2) Information gathering for
companies in Japan Plan for installation at new stores
Refrigerated particularly six new general handling manufacturer
for GMS, SM and FY 2016: Introduction in all new
Display Cases that merchandise stores, 26 new expansion and consideration
Small-sized Store stores
use Natural drugstores, eight new of introduction expansion of
Business
Refrigerants convenience stores, one new built-in CO2 refrigerant
discount store, and other stores refrigerated cases.
Reduce CO2 Emissions in
visualization in logistics
Products and Logistics
Reduce CO2 through
1) Increase introduction of
CO2 Emissions per environmental vehicles
CO2 emissions per case in FY
Case during CO2 emissions per case in FY 2) C ontinue eco-driving courses
Aeon Global SCM Co, 2016: reduced by 11.9%
Shipment from 2016: reduce by 13% compared and driving
Ltd. compared to FY 2013 (131.1g
Distribution Center to FY 2013 (128.0gCO2/case) 3) E xcellent driver awards
CO2/case)
to Store 4) U se eco-tires, bio-diesel and
other measures
Generating Electricity in stores
Generating renewable energy

[Creation Strategy]
Power generation
Consolidated Group
capacity of
companies in Japan Generate 200,000kW of electricity Cumulative total output Installed solar panels in 7 stores
renewable energy
for GMS and SM by 2020 Approximately 57,000kW (Total 923 stores)
(purchased power
businesses
only)
* As figures reported in and before FY 2015
were incorrect, we have revised the
figures in FY 2016.
Aeon Report 2017 85

Key Issue 1 Realization of a Low-carbon Society
Obtain ISO50001
Reducing CO2 in stores In July 2013, Aeon Co., Ltd. became
the first retailer in Japan to obtain the
ISO 50001 certification, an energy
CO2 emissions reduction/energy efficiency improvement management certification defined by
[Aeon Eco Project: Reduction Strategy] the International Organization for
Aeon stores consume a large volume of energy*1, mainly in Standardization (ISO). ISO 50001 is an
air-conditioning and lighting as well as freezer and refrigeration international standard specification
cabinets. For Aeon, which has a store network spanning Japan that defines the requirements to be
as well as other countries in Asia, reducing CO2 emissions from met by business operators when they
stores*2 plays a key role in reducing emissions for the entire establish an energy management
company. That makes it all the more important for us to focus system. It is being adopted around the ISO 50001 certificate
on reducing CO2 in our stores. world, including in the U.S. and China.
Switching to LED lighting in stores continued and was Aeon Co., Ltd. has established an energy management
actively promoted in FY 2016, and basic lighting and spotlights system under which it works as an entire group of companies
were changed to LED lighting in 223 stores nationwide and to use energy more efficiently with the goal of attaining the
4,562 stores in total. In addition, we have worked on items such energy saving targets laid out in the Aeon Eco Project. The
as the introduction and updating of energy-saving equipment scope of Aeon’s ISO 50001 certification is blanket energy
and verification of rational energy management techniques. management activities covering the entire Aeon Group of
For example, facility managers from Aeon Retail Co., Ltd. companies.
Worked with store Energy Advisors to plan and execute
measures in an effort to improve the energy-efficient Framework for Promoting our Energy Management System (EnMS)
operations of stores that lacked energy consumption efficiency
in terms of energy used per basic unit. Based on these efforts, Aeon Co., Ltd. Group Companies
Aeon’s electricity usage in FY 2016 was approximately 27% Top Management
lower than in FY 2010. This is mainly effective through the
introduction of LED lighting, the introduction of each piece of Internal Auditing Team
energy saving equipment and measures, and operational
improvements. Energy Management Energy Management
Representative Control Officer
In FY 2017, we will work on reducing energy usage even
more by introducing new energy-saving equipment and by Energy Management Energy Management
improving energy-saving operations. Our efforts will focus on Secretariat Secretariat
measures at stores with air conditioning systems that use hot- Subcommittees on Business offices
and- chilled water generators in an effort to reach our targets Energy Strategy and stores
set for FY 2020.
*1 Looking at a breakdown of energy consumed on a heat conversion basis, Energy suppliers Tenants
around 94% is accounted for by electricity and the remainder by city gas, LP
gas and heavy oil.
*2 A ll CO 2 emitted from stores can be attributed to energy consumption. Energy management
Specifically, around 7% comes from direct emissions through city gas, LP gas subcontractors
and combustion of heavy oil (Scope 1) and around 93% comes from indirect
emissions through power consumption (Scope 2). The calculation of CO 2
emissions from power consumption uses calculation standards and an
emissions factor pursuant to the Act on Promotion of Global Warming Improving energy management practices
Countermeasures.
Aeon Co., Ltd. has systematized an in-house Energy Advisor
FY 2016 Results and Target of KPI
Program aimed at leveraging our Aeon Eco Project to further
develop human resources in our retail stores.
Total Annual CO2 Emissions Total Energy Use Factor The Energy Advisors help assess the status of energy usage
per unit (Amount of Heat / Total Floor Area)
in stores and work to propose and promote ideas for more
(CO2 Emissions / Total Floor Area)
efficient usage. As of the end of February 2017, a cumulative
0.103t/m2 2.783GJ/m2
2010 total of 582 Energy Advisors had been certified.
2015
0.077t/m2 2.109GJ/m2 In the future we will continue to develop more certified
Energy Advisors, enhance the capabilities of current Energy
2016 0.075t/m2 (expected) 2.032GJ/m2 (expected) Results Advisors, and work to expand the program to Group
0.052t/m2 or less 1.392GJ/m2 or less companies, including those outside of Japan..
2020
Target
* For companies newly joining the Group due to business reorganization and other
reasons, figures have been recalculated back to FY 2010
86 Aeon Report 2017

Preventing Leakage of Fluorocarbons and FY 2016 Results and Target of KPI
Promoting Use of Natural Refrigerant Equipment
More and more freezing and refrigeration units started using Measures for Ascertaining Replacement Amount and
non-ozone depleting alternatives to chlorofluorocarbons Preventing Leakage of Fluorocarbons used in Refrigerated
Display Cases
(CFCs) as refrigerant following the abolition of the production
and use of ozone-depleting CFCs under the Montreal Protocol 2014
Establishment a freon management system
adopted in 1987. However, these alternatives have extremely Centralized management system introduction through
Aeon Delight Co., Ltd. (running in 22 companies such
high global warming potential (GWP)*1 and the problem of as GMS, supermarkets, discount stores, etc.)
2015
leaking into the atmosphere, which prompted calls to switch
to natural refrigerants with low GWP. Further, under the Kigali Full-scale operation of centralized management
system introduced in FY 2015 through Aeon
Amendment adopted in October 2016, alternative 2016 Delight Co., Ltd., and implementation of Results
fluorocarbon leakage management
fluorocarbons are newly subject to the provisions of the
Montreal Protocol with the establishment of clear reduction 2020
targets for production and consumption of alternative

fluorocarbons, requiring a response.
Number of Stores Installing Refrigerated Display Cases that
In 2009, Aeon became Japan’s first retailer to start use Natural Refrigerants on a Trial Basis
introducing refrigerators and freezers that use a low-GWP
Introduced to the four new GMS stores and 13 stores of
natural refrigerant*2 (CO2). Following this, we announced the supermarket and small stores (Total 28 stores)
2014
Aeon Natural Refrigerants Declaration in 2011 and are planning
to install natural refrigerant-based refrigerators and freezers in Introduced to six new GMS stores and eight supermarkets
and small stores (Total 42 stores)
every new store to open from now on as well. 2015
As of the end of February 2017, we have installed natural Introduced to a total of 104 stores including
58 new small stores, particularly six new GMS
refrigerant-based refrigerators and freezers at 146 stores, 2016 stores, 26 new drugstores, eight new Results
convenience stores, one new discount store
including new GMS stores, food supermarkets, convenience and other stores (Cumulative total 146 stores)
stores, drugstores, and others. We will continue considering to 2020
switch to natural refrigerants even in existing stores on a
gradual basis.
Aeon faces certain issues ahead of the introduction of
natural refrigerants, including the lack of manufacturers and
high installation costs. We will do our utmost to overcome Installation of Recharging Stations for Electric
these issues and promote the industry-wide use of natural Vehicles
refrigerants by leveraging performance data accumulated to Aeon first set up a high-speed recharging station for electric
date to raise awareness going forward and build ties with vehicles at the Aeon Lake Town store located in Koshigaya city,
companies within the same industry and other industries. Saitama prefecture in 2008 in order to respond to the
*1 Global warming potential: Coefficient indicating the degree of influence to increasing use of electric vehicles and plug-in hybrid vehicles.
global warming. If CO2 is 1, the alternative for fluorocarbons that are being Since then, we have set up recharging stations at most of our
used in refrigerated cases are several thousand times larger
*2 N atural refrigerants: Substances known as natural refrigerants include new shopping centers as well as certain existing stores based
ammonia and carbon hydride as well as CO2. on demand.
In FY 2016, we aggressively moved forward with the
installation of recharging stations at existing stores, with the
grand total now standing at 482 stations at 207 stores as of the
end of April 2017 (of these 216 were rapid recharge stations
and 266 were ordinary recharge stations). Going forward, we
are continuing our proactive approach to installation.
tores installing recharging

S
stations for electric vehicles
Number of installed stations
Total number of stores
(as of the end of April 2017)
Aeon Style Shin-Komatsu 482 stations covering
207 stores
Aeon Report 2017 87

Aeon store development

[Smart Aeon development] Topics
Working to build environmentally friendly stores, Aeon has Participating in CO2 Reduction/
defined Eco Stores as outlets that achieve at least 20% lower Light-Down Campaign
CO2 emissions in comparison with conventional stores, and a
CASBEE*1 ranking of A or higher. Since the opening of our first Aeon has been taking part in the Carbon Dioxide (CO2)
Eco Store, the Aeon Chikusa Shopping Center, in May 2005, 12 Reduction/Light-Down Campaign developed by the Ministry
of the Environment as a measure to prevent global warming
such stores had been opened by February 2013.
since 2003. In 2016, which was the 14th year of the campaign,
In September 2012, we started working on further
approximately 1,600 facilities including Aeon Group stores,
developments for Next-Generation (Smart Aeon) Eco Stores. In
business sites, and distribution centers nationwide turned off
addition to building stores with lower environmental impacts some outdoor lighting between 20.00 and 22.00 on June 21,
than in the past, we also formulated five criteria, (Smart Energy, the summer solstice, and July 7, Cool Earth Day*1. Through
Integration of E-Money and the Internet, Traffic Situation (Smart this initiative, the Aeon Group as a whole was able to save
Mobility), Biodiversity and Landscape, Disaster Prevention and approximately 74,400 kWh of electricity. This is equivalent to
Regional Infrastructure), from the perspective of civic- and the electricity used by approximately 5,400 ordinary
community-building efforts carried out in cooperation with households in a day*2.
local regions. We have positioned this as a key initiative for An event to create strips that light up with a magnesium
implementing the Aeon Eco Project. battery, which does not emit CO2 when generating, was also
held at Aeon Mall Makuhari New City as an opportunity to
Starting with the opening of the 1st Smart Aeon store Aeon
think about reducing CO2 together with customers.
Mall Yahata Higashi in March 2013, there was an expansion of
Aeon is supporting the COOL CHOICE national movement
one more Aeon Smart store in FY 2016, Aeon Mall Sakai
to promote “wise choices” such as environmental products,
Teppocho, and 10 stores*2 have given birth to Smart Aeon up services and actions led by the Japanese government with the
to the end of February 2017. aim of achieving a low carbon society. The CO2 Reduction/
*1 CASBEE: Environmental performance evaluation system architecture that was Light-Down Campaign is one of the COOL CHOICE activities.
developed in 2001. It is used as an index to evaluate and display objectively
the performance whether you are conscious how the global environment and *1 Cool Earth Day: A day once a year for the Japanese people overall
surrounding environment, that there is no waste in running costs, such as, or to reaffirm the importance of the global environment while
comfortable for the user. looking at the Milky Way and be aware of the progress toward a
*2 10 stores: Aeon Mall Yahata Higashi, Aeon Town Shin-Funabashi, Aeon Mall low carbon society in addition to promoting environmental
Osaka Dome City, Aeon Mall Makuhari New City, Aeon Mall Nagoya Chaya, initiatives in the home and workplace
Aeon Mall Kyoto Katsuragawa, Aeon Mall Kisarazu, Aeon Mall Okinawa Rycom, *2 Electricity usage per day per household converted at 13.76 kWh
Aeon Mall Shijonawate, and Aeon Mall Sakai Teppocho based on the Family Income and Expenditure Survey News
Bulletin for December 2015, Statistics Bureau. Ministry of Internal
Affairs and Communications
Building f or Tomorrow Toge ther
Light-Down Campaign events
COOL CHOICE logo

Voice
Morito Inbe
Manager, Facilities Management Group,
General Affairs Department, Reduce CO2 Emissions in Products
AEON Retail Co., Ltd. and Logistics
It is extremely important as a retail business for power saving
Promote Visualization in Logistic
and energy conservation initiatives in stores to balance
providing a store environment where it is pleasant to shop with
Aeon defined “CO2 emissions per case in delivery from distribution
an awareness of power saving and energy conservation. We set centers to stores” in KPI, and we are working on emissions
numerical targets for FY 2020 in each strategy area of “Reduction,” reduction in “visualization” of CO2 emissions related to logistics.
“Generation,” and “Conservation.” Aeon brought together the The results of continued efforts in FY 2016 for items such as
diverse knowledge and ideas it has amassed so far, and the the relocation of distribution sites, promotion of eco-driving,
whole company is aiming to achieve the targets. reduction in total frequency of deliveries through improvements
to delivery vehicle load factors, and introduction of environmental
vehicles were that the CO2 emissions per case in delivery from
88 Aeon Report 2017

distribution centers to stores were reduced to 131.1g CO2, a initiative in collaboration with Kao Corporation on truck
reduction of approximately 1% compared to FY 2015. transportation. Aeon and Kao’s trucks carry their own merchandise
In FY 2017, the target is to reduce CO2 emissions per case in loaded on their trailers from Kanto and Chubu. At the relay station,
delivery from distribution centers to stores to 128.0g CO2, a they exchange loads and transport the received shipment to each
reduction of 13% compared to FY 2013. other’s companies. This has achieved shorter duty hours for drivers
In addition, along with participating in various research and a 27.5% reduction in CO2 emissions. These efforts have been
meetings related to the environment started by groups such as evaluated, and we were awarded the “Minister of Economy, Trade and
universities, automotive manufacturers, gas companies, logistic Industry Award” in the “Green Logistics Excellent Business Award” at
companies and governments, through an environmental the “Green Logistics Partnership Conference” held by parties such as
vehicle study group and Modal Shift Study Group (name the Ministry of Land, Infrastructure, Transport and Tourism and the
changed in 2017) sponsored by Aeon, we are promoting the Ministry of Economy, Trade and Industry held in December 2016
introduction of environmental vehicles and the expansion of a following on from our achievements in 2015. The same award is
modal shift, including coastal shipping. intended to honor initiatives with significant achievements in the
In addition to continuing these efforts, in the future, we are creation of sustainable logistics systems, such as the reduction of
promoting initiatives on both the hardware and software sides CO2 emissions through promotion of corporate collaboration.
for the expansion of a good driver award system and We are assertively promoting a modal shift beyond industry
implementation of Eco-drive* workshops (promotion leader as well as methods other than rail in the future and are working
training implemented at each company in 2016) and 100% to reduce CO2.
introduction of environmental adaptive vehicles. * Asahi Breweries, Ltd., Ajinomoto Co., Inc., Ezaki Glico Co., Ltd., Kao Corporation,
Nestle Japan Ltd., Procter & Gamble Japan Co., Ltd. (P & G), Sapporo Breweries
* Eco-drive: Efforts to save fuel such as trying gentle string or stopping wasteful
Ltd. (in alphabetical order)
idling, and driving to reduce CO2 emissions
Aeon Chubu Regional Kao Kawasaki
Distribution Center Logistics Center
CO2 Emission per Case during Shipment

from Distribution Center to Store
7.3% reduction compared with FY 2013

2014
Kao raw Exchange trailers (loads)
Goods
10.2% reduction compared with FY 2013 material supplier delivery
2015
11.9% reduction
2016 compared with FY 2013 Results
Relay
Kao Toyohashi point Aeon Kanto Regional
2017
13.0% reduction compared with FY 2013 Plant
(Shizuoka
Prefecture ) Distribution Center
Target
15.0% reduction compared with FY 2013

2020
Target
CO2 reduction communication with customers

Aeon is working on a “visible” carbon footprint (CFP) that is
Promote a modal shift in collaboration with companies in displayed on products where CO 2 emissions are generated
other industries through the entire life cycle of the product (raw materials,
Aeon Global SCM Co., Ltd., processing steps, distribution, consumption, disposal,
which is responsible for recycling). Through the “visualization” initiative, we are aiming
Aeon’s logistics, aims for the for reduction of CO2 emissions and further enhanced interest
reduction of CO2 emissions in the customers’ environment.
and studies rail transport We have participated in the “Carbon footprint (CFP) study
initiatives jointly with each group” sponsored by the Ministry of Economy, Trade and
member company through Aeon Modal Shift Study Group dedicated Industry since 2008, and we have been working on verification
trains
the Aeon Modal Shift Study of carbon footprints in about 20 products.
Group sponsored by the same company. We implemented “Bio My Basket” CO 2 calculation and
As for these efforts, with the cooperation of the Japan verification in March 2014. Based on the results, we also
Freight Railway Co., Ltd., seven member manufacturers* jointly implemented a carbon offset to compensate for CO2 reduction
participating in the same study group run a dedicated train activities in other places where CO2 was emitted in FY 2016 as well.
between Tokyo and Osaka, and this has been greatly expanded Carbon Offset Achievements
to 42,177 containers (12-foot equivalent) through Aeon’s • Target products: Bio My Basket
railway transport. • Period: January 2016 - April 2017
Further, Aeon has launched a trailer relay transportation • Amount: 800t-CO2
Aeon Report 2017 89

Developing and Selling Products that Help Tabulating CO2 emissions across the entire supply
Reduce CO2 Emissions chain
Aeon is working to develop and sell products that help reduce In addition to managing greenhouse gas emissions they
CO2 emissions. generate directly (Scope 1) and indirect emissions from the use
Our TOPVALU Gurinai Yukigura potatoes from Toya, of electricity (Scope 2), companies must now manage
Hokkaido are one example. These potatoes use the cooling emissions across their entire supply chain (Scope 3).
power of snow for preservation In response to this development, Aeon has been
after harvest, which reduces calculating* Scope 3 CO2 emissions since FY 2012.
electricity usage and also helps Verification by a third party was received in FY 2016 with
reduce CO2 emissions. In FY regards to emissions from transport and shipments (upstream)
2016, Aeon handled 25% of all out of Scope 3 emissions.
the potatoes shipped by In the future, we will further expand the precision of our
JA-Toyako, and CO2 emissions data, add more businesses for which we gather data, and use
have been reduced by about TOPVALU Gurinai Organic Food Series data analysis to pursue our reductions in CO2 emissions.
38 tons through this initiative. Hokkaido Toya produced Yukigura potatoes * F or calculations, we reference the Emissions Rate Index Database for Calculating
GHG Emissions, etc. in an Organization’s Supply Chain (Ver. 2.3).
FY 2016 Scope 3 Emissions

Topics
Category Scope 3 Emissions Categories Emissions (t-CO2e)
Launching “TOPVALU fururi” for kids, an 1 Purchased products and services 2,801,654
eco-friendly, changeable vinyl umbrella, to 2 Capital goods 1,850,520
contribute to the reduction of CO2 emissions Fuel and energy related activities not
3 353,178
included in Scope 1 and Scope 2
In November 2016, a “TOPVALU fururi,” a changeable vinyl
4 Transport and shipments (upstream) 231,540.4
umbrella that combines vinyl fabrics and umbrella ribs, was
5 Waste from business activities 113,813
launched for kids in addition to new pattern for adults in
about 380 Aeon and Aeon Style stores*1. 6 Business travel 77
This product uses sugar cane-derived green 7 Employee commutes 47,433
polyethylene and reduces CO2 emissions in part of the raw 8 Leased assets (upstream) —
material. In addition, the vinyl fabric, ferrule and each part of 9 Investments 15,861
the umbrella ribs can be disassembled and easily separated
10 Transport and shipments (downstream) —
as garbage, which will lead to recycling.
11 Processing of products sold —
You can “change” to your own style with up to 48 possible
combinations for adults and 46 for kids, and the umbrella 12 Use of products sold 126,297
can be combined with your favorite colors and patterns. We 13 Disposal of products sold 70,430
have developed a long plastic umbrella that has been taken 14 Investment leased assets (downstream) 645,067
for granted as disposable until now, and it is a fashionable, 15 Franchise —
ecological and next generation umbrella.
In addition, part of the sales of this product will be
donated to the Association for Aid and Relief Japan (AAR
Japan), an authorized NPO, through the activities of the AEON
1% Club. This is for the purpose of healthy development of
young people in Asia in order to support the education of
children in Cambodia, where the umbrellas are produced.
55cm umbrella (for kids) 60cm umbrella (new release for adults)
*1: About 380 Aeon and Aeon style stores in Hokkaido, Honshu,
Shikoku, Kyushu and Okinawa
* Products handled vary depending on the store. Aeon stores in
Hokkaido and Kyushu do not handle the kids’ umbrella.
90 Aeon Report 2017

Topics
Power generation capacity of renewable energy
Verification of Greenhouse Gas Emissions (Electricity sales only)
by Third Party
56,000kW
2014
In FY 2016, we conducted third party
verification of greenhouse gas 56,000kW
2015
emissions accompanying the
transport of Aeon Global SCM Co.,
Ltd., which is responsible for the core
2016 57,000kW Results
of the Aeon Group’s logistics. 200,000kW

2020
1. Scope of Verification Target
S o m e o f g r e e n h o u s e g a s e s
accompanying domestic transport of
products that Aeon Global SCM Co.,
Ltd. handled from March 1, 2015 to February 29, 2016.
2. Methodology
Initiatives Undertaken by Group Companies
We received third party verification based on the requirements of
ISO 14064 – 3 (2006): Greenhouse gases – Part 3: Specification with Aeon Retail Co., Ltd. Home Fashion Product Department
guidance for the validation and verification of greenhouse gas
assertions. Eco-Home (Uchi-Eco) Diagnosis Initiative
The Ministry of the Environment is implementing an initiative
Verified greenhouse gas emissions called Eco-Home Diagnosis in which accredited professionals
Scope 3 category 42,240t-CO2e with wide reaching experience in global warming and
energy-saving home electronics use specially developed
software to provide tailored advice for each household on
more effective ways to reduce CO2 and reduce energy usage
in order to reduce the greenhouse gas emissions of ordinary
households.
Generating Electricity at Stores Aeon Retail Co., Ltd., which maintains energy-saving
proposals for helping consumers reduce utility bills as an
important Company policy, completed its registration as a
Generating renewable energy home ecology diagnosis provider so that it can carry out this
[Aeon Eco Project: Generation Strategy] policy. The company received certification in July 2014, and
The goal of building electricity generation capacity of 200,000 155 people had passed the “Uchi-Eco” qualification test up
kW* by 2020 is part of the “Generation Strategy” in the Aeon to February 2017.
Eco Project. Furthermore, we conducted a diagnosis with 1,202
In FY 2016, we installed solar panels with electrical generation people up to June 2017 through stores and each local event.
capacity totaling 426 kW in 7 of our stores, including supermarkets In FY 2016, we put up over-the-counter appeals and
posters in the reform departments of 115 stores nationwide.
with flat roofs, new large-scale supermarkets, as well as
We also distributed Uchi-Eco Diagnosis leaflets at store and
convenience stores. This brings our total of stores with installed
Uchi-Eco events to continue our PR activities. In FY 2017, we
units to 923, and our total generation capacity to 56,900 kW*.
will continue to further promote energy saving, aiming for
In addition to leading to 500 Uchi-Eco Diagnoses.
reductions in electricity
usage, thanks to captive
consumption, electricity
from solar panels is also
being sold back to power
companies through the
fixed wholesale purchase
Solar panel installation
system. We are reinvesting
profit from electricity sales Diagnosis
to offset increased electricity rates, contribute to our BCP, invest
in the environment, and invest in renewable energy.
* 56,900 kW is equivalent to the ability to cover the annual power of approximately
13,000 households in the common household.
Aeon Report 2017 91

Conservation of Biodiversity
Key Issue
All companies harness ecosystem services, leveraging the to grow unabated. Also, Aeon’s business operations are based
resources produced by our ecosystem in each phase of the on the recognition that they cannot be sustained without the
lifecycle, from the sourcing of raw materials to production, sales, ecosystem services of agricultural produce and marine products,
use and disposal. At the same time, however, the world which is why Aeon continues to work on various initiatives for
continues to lose its tropical forests while the number of fauna the sustainable use of resources, with biodiversity conservation
and flora found on the red list of endangered species continues considered as one of the key issues.
Aeon’s Approach
Aeon established the Aeon Biodiversity Principle in FY 2010 in fishery products as well as paper, pulp, timber and palm oil.
order to continually promote the sustainable use of resources Aeon will continue to further promote the procurement of
while conserving biodiversity. We are promoting various efforts products produced in line with global standards.
in accordance with the Code of Conduct that was defined in “Aeon Forest Circulation Program” together with customers
this Principle. We have been planting trees with customers since FY 1991 as
Sustainable procurement an activity that embodies the “Aeon Basic Principles.” The
We formulated the “Aeon Sustainable Procurement Principle” “Aeon Forest Circulation Program” was started with the
in FY 2014 in order to aim for compatibility between the theme of “Plant,” “Nurture” and “Thrive” upon the planting of
continuous development of business and the sustainability of the 10 millionth tree in FY 2013. Since FY 2016, which marked
natural resources. In April 2017, we announced the Aeon the 25th anniversary of Aeon’s tree planting activities, the
Sustainable Procurement Policy and Sustainable Procurement program has been further accelerated.
Goals for 2020 with regard to agricultural, livestock and
Future Initiatives
Environmental agencies and the Conference of Parties (COP) through the familiar platforms of stores and products. In
under the Convention on Biological Diversity are working to particular, efforts based on the Aeon Sustainable Procurement
make biodiversity mainstream through various social and Principle are also profoundly connected to the Sustainable
economic activities promoting the protection of biodiversity Development Goals (SDGs) adopted by the General Assembly
and its sustainable use, from a worldwide to local community. of the United Nations in 2015, and we will promote further
Consequently, Aeon will utilize its business characteristic of efforts aimed at achieving the Sustainable Procurement Goals
coming into contact with vast numbers of consumers on a daily for 2020.
basis to continually highlight the importance of biodiversity
Aeon Biodiversity Principle
Aeon’s business depends on living products, such as agricultural and marine products. Recognizing this, Aeon formulated the “Aeon
Biodiversity Principle” in March 2010, towards the conservation of biodiversity are essential to form a sustainable society.
Basic Principle Action Guidelines (Excerpt)

Grasping the impact our overall corporate activities have on the 1. Products: We will set sustainability targets for resource managed
ecosystem, we actively focus on reducing the impact on the fresh seafood and processed products, engage in their purchase
ecosystem and conservation activities, working in collaboration and sale while sharing those targets with our business partners,
with our stakeholders, including our customers, local authorities and communicate related information to customers.
and non-profit organizations. We focus on the following points 2. Stores: We will continue to promote tree-planting campaigns
related to the ecosystem in our corporate activities: with local customers at new store sites and continue to develop
Eco Stores with less environmental impact than conventional
Through our corporate activities, we facilities.
1. Remain conscious of blessings and burdens. 3. With Customers: Through tree-planting campaigns and other
2. Engage in initiatives that protect and nurture. programs, we will share environmental awareness and learn
3. Disclose information on our activities. together with all of our customers.
92 Aeon Report 2017

Main
egory in FY 2016
egory
• Expanded MSC and ASC CoC

(Chain of Custody) certifica-
tion at Aeon Group compa- 1) A nalysis of the risks and
nies. Acquired certification at opportunities for sustainable
four general merchandise procurement based on input
Promoting Sustainable Procurement (products)
store companies and eight from internal and external

Expansion of initiatives based on supermarket companies. Two shareholders in the
Sustainable
the Aeon Sustainable companies preparing to Assessment Committee
procurement Consolidated Group
Procurement Principle and Aeon acquire certification. (Marine Products)
initiatives in companies in Japan
Sustainable Seafood MSC: 18 species, 38 items 2) Identify priority initiatives and
seafood
Procurement Policy ASC: 5 species, 10 items implementation feasibility in
• A permanent “Fish Baton” the Promotion Committee
corner to display only MSC (Marine Products), and
and ASC certified products is implement the breakdown of
installed in 51 Aeon Retail specific efforts
(Ltd.) stores (As of the end of
February 2017)
Use of Sustainable Resources
Launched 16 new products in

Establishment of unique logo and
TOPVALU Gurinai Organic
Sustainable Consolidated Series, increasing number of package design for Organic Series
procurement companies in Japan Expansion of organic product products to 190 (as of end of and clarification of products that
initiatives in for GMS and SM sales February 2017) have obtained official certification
produce Small companies * Expanded TOPVALU Gurinai into three through TOPVALU Gurinai
series, namely Organic, Natural, and rebranding
Free-From in November 2016
(Products)
• Sell about 130 FSC® certified
Promoting Sustainable Procurement
products in stationery and

H&BC generic items. Achieved
1) D
evelopment and publication
100% FSC® certification in
(products and stores)
of a sustainable procurement
three categories
policy for forest resources
• Take advantage of FSC®-
Maintenance and 2) D
evelopment of an
Consolidated Group Development of procurement certified paper in generic
Management organizational structure for
companies in Japan policies of forest resources items, even in food packaging
Situation of Forests sustainable procurement in
and hanging clothes tags
terms of products
(Stores)
3) P
ublication of initiative
• Total number of Ministop
contents in terms of products
stores in Japan that use
FSC-certified wood: 206 stores
(As of the end of February
2017)
1) Raising employee awareness in

conjunction with 25th
Preserving Biodiversity at Store Level
anniversary of Aeon’s tree

planting activity
2) C onfirm the progress and
• Focusing on GMS and SM,
thorough implementation of
Maintenance spread planting zone manage-
Companies to management plans at each
Promotion of Aeon Forest Circulation Program
management of 100% implementation of planting ment based on the manage-

implement the Aeon GMS store
Aeon Hometown zone management in Aeon ment manual
Hometown Forests 3) S pread weeding and cleaning
Forests Program Hometown Forests Program • Creating opportunities for
Program through Clean & Green
planting zones employees to experience tree
Activities carried out by
planting
employees at each GMS store
4) Increase competency of facility
management staff through
planting zone management
training
Community Contribution through
A Curriculum to Education
Forest Conservation Activities
Forest- Conscious People

Position the course as a
• Collaboration with “Mori no
Activity Status of beginner’s induction in a
Creation of a model for activities Sensei” (Forest Teacher) and
The Forest collaboration between the
to support domestic forestry “Moribito Juku” (Guardian
Transcend general public and a private
Aeon Co., Ltd. through collaboration between School) organized by Mie
Project—Educating enterprise as part of Mie
government, the general public Prefecture
Forest-Conscious Prefecture’s measures to
and private enterprise • Holding wood education events
People support people employed in
at stores using timber from
forestry
thinning harvested during the
course
Aeon Report 2017 93

Key Issue 2 Conservation of Biodiversity
Aeon Sustainable Procurement Policy and 2020 Goals
Sustainable resource usage Target

Aeon Sustainable Sustainable Procurement
Procurement Policy Goals for 2020
Agricultural
Promoting Sustainable Procurement products
Committed to procuring
agricultural products in a
• For the private brand, aiming
for 100% implementation of
Our natural resources face many threats today, from ecosystem sustainable manner that is in the GFSI* 1 -based Good
harmony with nature, natural Agricultural Practice (GAP)
destruction from overexploitation to poor agricultural harvests ecosystems and society. • Aiming to increase the sales
from abnormal weather caused by climate change. Whereas, Also cultivating and providing ratio of organic products to
safe and delicious vegetables, 5% of the total agricultural
with the supply chain now stretched across the entire world, thereby contributing to future products
Aeon must be conscious of human rights and working food safety and helping
people go about their daily
environments at suppliers as well as work to prevent corruption, lives with peace of mind.
including bribery and extortion.
The products manufactured and sold by Aeon are made Livestock Committed to procuring • For the private brand, aiming
products livestock products in a for 100% implementation of
possible by the bounty of nature and contain raw materials sustainable manner that is in the GFSI-based Food Safety
procured from producers and locations around the globe. harmony with nature, natural Management System (FSMS)
ecosystems and society. or the Good Agricultural
Efforts towards procurement guideline formulation have Also cultivating and providing Practice (GAP)
begun from 2011 towards the realization of even more safe and delicious beef,
thereby contributing to future
sustainable high-level procurement. Through the work of a CSR food safety and helping
Procurement Guidelines Committee comprised of managers people go about their daily
lives with peace of mind.
from related Aeon departments, and tasked with gathering CSR
procurement-related information, we formulated and published, Fishery Carrying out regular risk • Aiming for 100% acquisition
products assessments from a resource of MSC* 2 /ASC* 3 Chain of
in February 2014, our Aeon Sustainable Procurement Principle.
depletion prevention and Custody (CoC) certification
In April 2017, we announced the Aeon Sustainable biodiversity conservation by Aeon’s consolidated
Procurement Policy and Sustainable Procurement Goals for perspective. Also, in order to subsidiaries operating
mitigate risks, reviewing general merchandise stores
2020 with regard to agricultural, livestock and fishery products feasible countermeasures and or supermarkets
as well as paper, pulp, timber and palm oil. Aeon will continue striving to procure sustainable • P roviding sustainability-
seafood. (Note 1) proven private brand
to further promote the procurement of products produced in products in all major fish
line with global standards. species
Paper, pulp, Utilizing store materials and • A iming for 100% use of
and timber product raw materials made sustainability-certified (by
of lumber and pulp produced FSC*4 or equivalent) materials
from properly managed for the private brand in the
Aeon Sustainable Procurement Principle forests, and strive to prevent major product categories
1. Eliminating natural resource transactions, gathering, and deforestation. (Note 2)
fishing conducted illegally. Palm oil For palm oil used as a product • A iming for 100% use of
2. Establishing and managing Aeon standards from the material, aiming for procurement sustainability-certified (by
that gives consideration to the RSPO*5 or equivalent)
perspective of biodiversity preservation and preventing prevention of deforestation and materials for the private brand
the depletion of natural resources. conservation of biodiversity.
3. Minimizing use of non-renewable resources.
4. Establishing traceability, including place of production Note 1: Regarding the procurement of fishery products, Aeon formulated the
and fishing methods, for produce and marine resources. Aeon Sustainable Seafood Procurement Policy earlier in 2014.
Note 2: Regarding the procurement of paper, pulp and timber, Aeon formulated
5. P reventing the destruction of forest land with high the Aeon Forest Resources Procurement Principle (Paper/Pulp/Timber)
conversation value. earlier in 2016.
*1 G FSI (Global Food Safety Initiative): GFSI is an industry-driven global
collaboration to advance food safety powered by The Consumer Goods Forum
(TCGF, which is composed of global food manufacturers and retailers. GFSI
also recognizes food safety certification programs.
*2 MSC (Marine Stewardship Council): MSC is an organization that manages and
promotes the MSC certification program which certifies socially responsible
and sustainable fisheries.
*3 A SC (Aquaculture Stewardship Council): The ASC is an organization
implementing the world’s leading certification and labelling program for
responsibly farmed seafood.
*4 FSC (Forest Stewardship Council): FSC is an organization established to support
environmentally appropriate, socially beneficial, and economically viable
management of the world’s forests.
*5 RSPO (Roundtable on Sustainable Palm Oil): RSPO was formed to promote the
growth and use of sustainable oil palm products through credible world
standards and engagement of stakeholders.
94 Aeon Report 2017

Promoting the Procurement of Sustainable Seafood Sales and development of MSC-certified and ASC-certified
Aeon established the Aeon Seafood Procurement Principle in Products
February 2014 in order to help protect limited marine resources The MSC (Marine Stewardship Council) is a non-profit
and to hand down to future generations our traditional culture organization that manages and promotes the MSC certification
surrounding food sources from the water and sea. program which certifies properly managed, sustainable
We formulated the Seafood Assessment Committee fisheries and can put a “sea eco-label” on marine products
comprised of Aeon’s Environment Division and other Divisions caught by certified fisheries. Aeon engages in fisheries that
at Aeon Group companies, functional companies, and other consider the marine environment and resources in order to
companies. Based on input from external stakeholders (NGOs, leave natural fish for future generations. After beginning to sell
the government, seafood businesses), we analyzed risks and MSC-certified products in 2006, Aeon has gradually expanded
opportunities, reviewed feasible projects, and used the results the number of available items. As of February 2017, we offer
to plan key initiatives. customers 38 MSC-certified products across 18 species— more
than any other retailer in Japan.
Aeon Sustainable Seafood Procurement Policy

Carry out regular risk assessments from a resource depletion
prevention and biodiversity conservation perspective. Also, in
order to mitigate risks, review feasible countermeasures and strive TOPVALU
to procure sustainable seafood. Gurinai Natural
MSC-certified salt sockeye
Specific Measures
Aeon is constantly devising and implementing measures to shift In addition, Aeon sold ASC (Aquaculture Stewardship
from endangered seafood to seafood with a sustainable backing Council) certified salmon for the first time in Asia in 2014 and is
into the future. selling 10 ASC-certified products across five fish species as of
1. Provision of Sustainable Products
February 2017. It also aims for sustainable procurement
• Actively sell sustainable seafood such as MSC-certified and
ASC-certified products through the dissemination of “responsible aquaculture
• Strengthen handling of complete aquaculture fisheries” which also considered local societies and human
2. Elimination of Illegal Trade rights without imposing a heavy burden on the environment.
• Comply with international conventions, such as Washington
Convention
3. Establishment of Traceability Measures
• Promote strengthening of resource management in Indonesia
4. Regular Risk Assessments
• Launch organization to promote sustainable TOPVALU ASC-certified raw
Boneless, skinless white fish fillets
Procurement Measures in organization development as well such (Pangasiidae)
as “Assessment Meetings” and a “Sustainable Procurement
Promotion Committee” for promotion have begun.
As of the end of February 2017, four general merchandise
store companies and eight supermarket companies in the
Aeon Group had acquired Chain of Custody (CoC) certification.
Voice CoC certification ensures the reliability of MSC and ASC certified
Yasuyuki Yamamoto products and is a system for assuring consumers of the
traceability of certified products.
Group Merchandising Strategy Department,
AEON TOPVALU CO., LTD. Going forward, Aeon will promote procurement of
sustainable seafood by increasing the number of companies
that acquire certification.
Aeon has always conducted a wide range of initiatives from
the standpoint of sustainability in seafood resources. In 2001,
we formulated the Gurinai Seafood Production Standards
based on the organic EU standards. It began from the
development of TOPVALU Gurinai Roasted Eel.
We are expanding the handling of seafoods that consider
the environment including MSC-certified products,
ASC-certified products, and full-cycled aquacultured tuna.
In the future, Aeon anticipates changes of modern times
and keeps directly confronting challenges from the
environment and biodiversity to human rights and labor
issues in the product supply chain.
Aeon Report 2017 95

Development and sales of “Full-cycle Aquaculture Fish” Promoting the Procurement of Sustainable
Aeon started supply of full- Forestry Products
cycle aquaculture raised* Following the Aeon Seafood Procurement Principle, the Aeon
tuna that is not dependent Forest Resources Procurement Principle was established in
on natural resources in 2015 2016. We aim to contribute to the balance of utilization and
from the perspective of TOPVALU Gurinal Natural conservation of forest resources based on the principle.
resource depletion prevention Red sea bream produced in Kumamoto
Prefecture
and biodiversity conservation.
Aeon Forest Resources Procurement Principle
As of the end of February 2017, Aeon is selling four kinds of full- (Paper/Pulp/Timber)
cycle aquaculture raised fish. We will continue to utilize store materials and product raw
* Full-cycle aquaculture raised: Fertilized eggs are taken from adult tuna and materials made of lumber and pulp produced from properly
artificially hatched, then those eggs are raised in a full-cycle that does not rely managed forests, and we strive to prevent forest destruction.
on wild tuna stocks.
Initiatives through our Products
Identify risks and opportunities, consider viable methods, and aim
Expanding “Fish Baton” deployment for sustainable procurement through continuous improvement.
Based on the thoughts of “wanting to connect the next generation 1. Handling of Sustainable Products
to a rich food culture,” deployment of a permanent corner called Raw material from properly managed forests is authenticated and
“Fish Baton,” which is composed of ASC and MSC-certified products that have acquired FSC® certification are handled
assertively.
products indicating that they are sustainable marine products,
started from FY 2015. As of the end of February 2017, these corners 2. Effective use of domestic lumber in Japan
had been expanded to 51 stores. Moreover, we plan for all Aeon’s Efforts for the effective use of domestic lumber in order to have
sustainable recycling in Japan’s forests.
consolidated subsidiaries operating
general merchandise stores or 3. Ensuring Traceability Measures
supermarkets to acquire MSC and ASC For high-risk countries and regions, raw material confirmation
traceability to forests are handled on a priority basis.
CoC certification (distribution and
processing certification) by 2020. 4. Prevention of Illegal Deforestation
Going forward, Aeon will continue We confirm legal lumber, etc. based on laws related to promotion
of the use of legally harvested lumber.
to propose products and sales areas
that encourage our customers’ daily 5. Preservation of Areas with High Conservation Value
shopping to be environmentally We confirm if precautions were taken in order to maintain areas
with high conservation value.
friendly, striving to conserve biodiversity
in partnership with customers. Aeon Style Itabashi Maeno
* MSC-certified and ASC-certified products are also handled in stores where “Fish
Baton” corners are not installed. Efforts in products: Products using FSC®-certified paper
The Forest Stewardship Council® (FSC®) certifies wood products
and paper manufactured with timber from properly managed
sustainable forests.
Aeon has been selling notebooks and other FSC®-certified
Sustainable procurement initiatives in seafood paper products since 2008. From FY 2011, we have been using
Development of action plans based on the FSC®-certified materials for price tags and other widely used
2014 Aeon Sustainable Procurement Principle and Target
Aeon Sustainable Seafood Procurement Policy markers. Up to now, about 130 stationery and H&BC category
FSC®-certified products were sold, and we are also expanding
2015 Seafood
• Acquisition of CoC certification the use of FSC®-certified materials to packaging and other
Expansion of the MSC and ASC CoC (Chain
of Custody) certification at Aeon Group items. (FSC® C005942)
2016 companies. Acquired at four general
merchandise store companies and eight
supermarket companies. Two companies Results
2020 preparing to acquire certification.
• Handling of MSC and ASC-certified products
MSC: 38 products across 18 certified fish
species
ASC: 10 products across five certified fish
species
• A permanent corner to display only MSC and
ASC-certified products, the “Fish Baton”
corner installed in 51 stores in Aeon Retail
Co., Ltd. (as of end of February 2017)
TOPVALU Best Price tissue paper using FSC® certified paper
96 Aeon Report 2017

Efforts in stores: Stores using domestic FSC®-certified Developing and Promoting the Procurement of
domestic lumber Organic Products
Aeon practices store development with consideration to In the “TOPVALU Gurinai” organic series, a rich assortment of
preservation of the ecosystem. For example, Mini Stop Co., Ltd. environmentally friendly products that received certification
opened a Ministop store that used 100% FSC® Japan certified both in Japan and overseas are offered, and as of February
materials in 2009, as the first FSC-certified convenience store in 2017, we handle 190 items (food and H&BC), the largest
Japan. As of the end of February 2017, 206 Ministop stores are amount of any retail generic brand in Japan.
FSC® certified. Going forward, we plan to actively increase the In order to reflect increased consumer interest in healthy food,
number of environmentally-friendly stores using FSC Japan safety and security, as well as to respond to requests from
certified materials. customers for more organic products in our stores, we promote
development and procurement of organic products in Japan and
from other countries utilizing the Japanese Agricultural Standards
(JAS)* certification for importers of organic agricultural/processed
food products, a certification issued by the Ministry of Agriculture,
Forestry and Fisheries (MAFF) of Japan.
Not only food and H&BC products, we also stock an organic
series of TOPVALU ladies’, men’s and babies’ underwear.
Store under construction Ministop store Furthermore, we have installed organic corners in the
agricultural produce departments of Aeon Retail Co., Ltd.
stores. As of March 2017, the installation of organic corners had
been expanded to 140 stores.
Properly managed Yamanashi Prefecture FSC®-certified forests
Sustainable procurement policies of forest resources
2014 (Products)
• Sell about 130 FSC® certified products in stationery
and H&BC generic items. Achieved 100% FSC®
certification in three categories
2015 • Take advantage of FSC®-certified paper in generic
items, even in food packaging and hanging Results TOPVALU Gurinai
clothes tags Organic Series
2016 (Store construction)
• Number of Ministop stores in Japan that use
FSC®-certified lumber: total 206 stores (as of * Organic JAS logo
end of February 2017)
2017 Operators certified by certification organizations
Target Development of procurement registered by the MAFF are able to attach the organic
policies of forest resources JAS logo to their products. The logo is attached to
2020 agricultural, processed, or livestock products, as well
as livestock feed, produced with a method of organic
farming that uses natural power instead of pesticides Organic JAS logo
or chemical fertilizers.
Topics Voice
Aeon Fantasy Co., Ltd. official characters Yukinobu Minamino
Lala-chan and Io-kun have been appointed Business Planning Department,
2016 FSC Japan Goodwill Ambassadors. AEON AGRI CREATE Co., Ltd.
Aeon Fantasy Co., Ltd. official

characters Lala-chan and Io- The organic JAS logo officially certifies that a product has
kun have been observed in undergone testing in accordance with the Act on Standardization
activities up to now, and they and Proper Quality Labeling of Agricultural and Forestry
had been appointed as FSC Japan Goodwill Ambassadors in Products and passed the official standards. In developed
May 2016. They were active in various events so that even Western countries, the organic market has grown rapidly to
children can have a further awareness and understanding three to five times the size it was ten years ago. Even in Japan,
of FSC. there has been a steady increase in customers who choose
organic as a lifestyle in order to conserve environmental
resources and biodiversity. Aeon will continue to provide
products to meet customer expectations in the future.
Aeon Report 2017 97


Promoting the Aeon Forest
Appropriate products in private brand Circulation Program
A total of 120 organic products, one of the largest number
as private brand label products in Japan Expansion to 137
items as of February 2015 Aeon Forest circulation program
2014
When we open a new store, Aeon Hometown Forests Program
A total of 27 organic products, one of the largest number as
private brand label products in Japan Expansion to 185 joins with our customers to plant trees on the new site. Since
items as of the end of February 2016
2015 this Program began at our JUSCO Malacca store in Malaysia in
1991 (Currently renamed Aeon Malacca SC), customers have
“TOPVALU Gurinai” Organic Series expanding planted trees together with us, passing the 10 millionth tree
2016 to 190 products as of end of February 2017
Results
mark in 2013.
2020 With this opportunity, Aeon started the Aeon Forest
Circulation Program with the theme of “Plant,” “Nurture,”
“Thrive” in order to advance to a new stage. Specifically, we will
continue to promote this with our “plant” objective targets tree
planting that improves the quality of life in regions across the
globe, and tree planting that protects areas from tsunami and
Topics
disasters; our “nurture” objective targets activities to develop
Opening first Japan store of organic and managed planted trees and foster
supermarket Bio c’ bon successor forests; and our “thrive”
objective assertively promotes the
Japan’s first Bio c’bon Azabujuban Store opened in the
utilization of forest products such as
Azabujuban district of Minato Ward, Tokyo in December
lumber, etc. as resources for our products
2016. It features organic agricultural products, organic Letting Forests Grow
processed foods, and “Bio” (organic) wines and cheeses and building materials for our stores. Plant, Nurture, Thrive
imported directly from France and is working to create a
store where customers can enjoy a Bio lifestyle. Through
developing Bio c’bon supermarkets, Aeon will communicate Letting Forests Grow—Plant, Nurture
the attractions of Bio lifestyles to customers and promote Aeon Hometown Forests Program
the expansion of the organic market. So that new stores become a local community place and
spread the spirit of fostering green spaces to people in the
region as well. With these thoughts in mind, since 1991, when
Aeon opens a new store, “Aeon Hometown Forests Program” is
carried out with tree planting at the site of a store.
In addition, each store carries out cleaning and weeding of
its “Aeon Hometown Forests Program” planting zone based on
the management manual, primarily on Aeon Day on the 11th
of each month.
In 2016, marking the 25th anniversary of Aeon’s tree
planting activities, the cumulative total number of trees
planted stood at 11,441,925*. Aeon is deeply grateful to the
Bio c’ bon Azabujuban customers who have participated in our tree planting efforts
and we look forward to the next group of trees which we will
plant and nurture alongside our customers and local
communities.
* T otal tree planting through “Aeon Hometown Forests Program,” AEON
Environmental Foundation, and “Aeon Tohoku Reconstruction Hometown
Forests Program”
98 Aeon Report 2017

Voice
Voice of customer who attended

the Aeon Mall Tokushima Tree
Planting Festival
I took part in the tree planting festival so that every time I come
to Aeon Mall with my children in the future, we will be able to
say to each other, “We planted this tree.” I also thought that
would be great to be able to watch this tree growing with my
We marked the 25th anniversary of
Aeon’s tree planting activities.
children.
There has been a decrease in the number of “forest village

shrines” in the region, so I think it is really positive that Aeon is
“Aeon Hometown Forests Program” implementing initiatives to create new “forest village shrines” in
Aeon Mall Nagakute this form.
Maintenance and Management Situation of Forests
2014 Focusing on GMS and SC, spread planting zone

management based on the management manual
2015
Employee awareness raising in conjunction
with 25th anniversary of tree planting activity
Ensuring management of planting zone based
2016 on management manual, focusing on GMS
Results
Creating opportunities for store employees to

experience tree planting
2020
Total
11,441,925 trees China
(as of the end of February 2017) 1,264,069 trees
Japan
Laos 9,033,822 trees
148,250 trees
Myanmar Vietnam
34,000 trees 88,607 trees
Thailand
225,720 trees Cambodia
36,844 trees
Kenya
3,450 trees Malaysia
523,963 trees
Australia
Indonesia 200 trees
83,000 trees
Aeon Report 2017 99

Letting Forests Grow—Nurture Letting Forests Grow—Thrive

A Curriculum to Education Forest-Conscious Utilization of Forest Resource
People In addition to the deployment of FSC-certified product sales
In recent years, preventing global warming and conserving ( P. 96) and deployment of stores using 100% domestic
biodiversity are challenges joined by another urgent social FSC-certified lumber ( P. 97), we are working on the promotion
issue. That is, preserving and sustainably using forests, which of utilizing forest resources in a variety of measures. For
serve multifaceted roles for carrying on Japanese culture, example, in the “Aeon Mall Toin,” a permanent children’s
offering recreation, etc., and villages, which serve as places for playground, the “Mie Tree Plaza” was installed utilizing forests
humans and nature to coexist. from Mie Prefecture.
The Forest Transcend Project—Educating Forest-Conscious Moreover, we are promoting the introduction of desks and
People is a collaborative effort between Aeon, Mie Prefecture, chairs using FSC®-certified timber and building blocks made
and the NPO Miyagawa Shinsengumi, aiming to foster the from domestically produced wood at
future generation of forestry workers by offering various Aeon Yumemirai (Dreams for the
programs to deepen understanding of Japan’s forest Future) Nursery School ( P. 136), the
management. Group’s on-site child care facility, in
In FY 2016, our third year, the Project was held over the order to teach the children about the
course of about six months, from October 8, 2016 to March 26, positive qualities of wood.
2017, in Odai town, Mie Prefecture. The curriculum had lectures We aim to foster a richness of
and fieldwork related to forestry and forests (“Forest seminar” 5 spirit for thinking about the
days) and hands-on training and workshops (“Forest skills” 9 connections between people and Chair using FSC®-certified timber
days / Forest communication 5 days) for a total of 19 days. trees and forests through contact introduced at Aeon Yumemirai
(Dreams for the Future) Nursery
The nine-day “forest skills course” has been popular every with trees from early childhood. School
year as a forum for experiencing actual forestry. By focusing on
making a functional pathway for workers, the course teaches
forestry labor techniques and skills directly in the mountain
forests of Odai town. This year 12 students completed the
Topics
entire curriculum.
We offered Forest communication as new curriculum for Exhibiting at EcoPro 2016
this year. Customers can use play equipment, artwork items,
Aeon exhibited at EcoPro 2016 with a forest-themed booth.
and other things made by the students out of timber from
In the exhibit for the year which marked the 25th
thinning at Aeon stores. anniversary of Aeon’s tree planting activities, we introduced
One of the objectives of the project is a curriculum that is the Plant, Nurture, and Thrive initiatives we implement
also connected to the promotion of “wood education,” and we based on our Aeon Forest Circulation Program in addition to
will feed our efforts into the next fiscal year with an eye to the significance and history of our tree planting activities.
spreading and expanding the Mie model to other regions. Our exhibit appealed to the five senses and included a
reproduction of the Aeon Hometown Forests Program as
well as a wood education workshop for learning while
actually touching wood from thinned cypress and cedar by
making a wooden coaster. Many students and families
visited our booth.
We also displayed the TOPVALU fururi next-generation
vinyl umbrella that received the Chairperson’s Award, Eco-
Products Awards Steering Committee at the 13th Eco-
Products Awards.
Forest Transcend Project
Aeon booth at EcoPro 2016
100 Aeon Report 2017

Initiatives through our Stores
Developing and Evaluating Indicators

Aeon pays great attention to conservation and creation of
ecosystems in developing its stores through initiatives such as
planning and implementing biodiversity evaluation and
environmental burden reduction measures when opening
stores. The aim is to minimize the impact of our stores on the
surrounding environment and ecosystem. Examples of these
initiatives include the Aeon Hometown Forests Program and
installing biotopes at some of our shopping centers.
As part of the store biodiversity assessment, “Creature
symbiosis office® certification (Urban/SC version)” has been
acquired since FY 2013 through the “Association for Business
Innovation in harmony with Nature and Community” (ABINC).
In FY 2016, one shopping center “Aeon Mall Nagakute”
obtained certification, and “Aeon Mall Toin” obtained its three-
yearly renewal of certification. In addition, “Aeon Mall
Tamadaira Forest” received the ABINC Special Award (Urban SC
category) in October 2016.
Biotope
Biotope introduced on some store premises and rooftops helps
in environmental education and raising awareness about
environmental protection.
Rain GardenTM
Rain water is contaminated with substances contained in
exhaust gas and risks disrupting the ecosystem if it flows
directly into the rivers and sea. The Rain GardenTM reduces the
negative impact on the ecosystem by allowing rain water to
penetrate into the ground and purifying it.
Aeon Report 2017 101

Better Use of Resources
Key Issue
The world’s population continues to grow. Many believe it will used effectively and responsibly. Aeon generates waste through
increase from the current 7.2 billion to 9.8 billion by the year its business and is also tied to waste produced by customers
2050. Meanwhile, the issues of hunger and poverty continue to after the use of plastic bags and food containers. This is why we
plague developing countries. The only way to improve the are working on various initiatives for promoting the recycling of
living standards of people around the world in a sustainable resources as one of our key issues.
manner is to make sure that the earth’s limited resources are
Aeon’s Approach
Aeon launched the Bring Your Own Shopping Bag Campaign Disposal Law.
back in 1991 and has changed the specifications and formats of Aeon stated its aim for “Zero waste by FY 2020 (=disposal/
packaging materials as part of its ongoing efforts aimed at incineration/landfill of waste as is to zero)” in 2014, determines
promoting the recycling of resources. the “Aeon “Waste Zero” Effort Concept” and is promoting these
Societal demand for waste reduction has been increasing efforts. Even within these efforts, there are important themes
both in Japan and overseas. Goals related to the reduction of from the relevance of food waste to Aeon’s business, and efforts
waste and food waste were included as United Nations have been strengthened in these 3 sections: “In stores and
sustainable development goals (SDGs) and adopted in 2015. In products”, “Through communication with customers” and
addition, Japan is also expected to strengthen related “Together with local areas”.
regulations such as the Food Recycling Law and the Waste
Future Initiatives
Activities being worked on in each region and individual common group infrastructure through organizing items such as
company in Aeon are aggregated based on growing social cases, indexes and the basic ideas of the activities. Starting in FY
demand for waste reduction, which is listed in the goals such as 2017, Aeon’s subsidiaries will begin to set individual targets and
the UN’s SDGs, and we are committed to construction of a carry out efforts to achieve them.
AEON “Zero Waste” Initiative Concept
We will continue to reduce waste through disposal/burning and landfills to zero through the 3R method of “Reduce”, “Reuse” and “Recycle”.
In collaboration with stakeholders and customers through our efforts, we will contribute to the construction of a recycling-oriented society.
Through stores/products Through communication With local areas

Reducing food waste in the store and product with customers Reduction of food waste through donations to
supply chain through visualization, ISO14001, Reducing food waste along with customers food banks, etc. and construction of a recycling
disposal sales change reduction, separation through food education and campaigns at loop in cooperation with stakeholders in the
and recycling. stores. region.

Main
egory in FY 2016
egory
Reduce Amount of Materials Used
Amount for Third-Party

in Packaging and Containers
Processing to Remake into

Consolidated domestic Reduce the use of sales materials such as plastic
Product, Required under FY 2010: 1.175 tons
companies specified in the shopping bag reduction
the Law for the Promotion 1.127 tons
Law for the Promotion of • Specification change of packaging materials
of Sorted Collection and FY 2016: 20% reduction or compared to 4.1% reduction compared to FY 2010
Sorted Collection and • Review of providing method
Recycling of Containers and FY 2010
Recycling of Containers * Review of targets given change in business structure
Packaging (basic unit per
¥100 million in net sales)
<Group company examples>

1) Reducing waste generated by company
• Aeon Mall: Sorting 17 basic items into
Reducing Waste
Consolidated Group waste. We operate a system to weigh by

Initiatives Undertaken by Each Group Company
companies in Japan, China item in cooperation with stores. Aim for
Reducing Waste Emissions Expansion efforts Aggregation and information sharing (Ongoing
Initiatives for Zero Waste in Stores and Products
and ASEAN (Japan, China, “visualization” and work for reduction

efforts)
ASEAN) 2) Collecting and recycling sold products.
Contributing to reducing waste generated by
customers
• Aeon Retail Co., Ltd., Cox Co. Ltd. etc.
1) Selling price change reduction through

disposal of goods (food)
FY 2015 Results: 35.58kg/million JPY 2) Thorough sorting of the resources
Food Waste Emissions Domestic consolidated target FY 2016 Results: 34.27kg/million JPY (forecast) 3) “ Visualization” through introduction of a
FY 2016: Reduction from the previous
(basic unit per million yen of food-related companies Formulation of guidelines for establishing targets weighing machine, uniform management
year
in net sales) within GMS, SM companies on food waste for each company 4) Sharing information from companies where
Reducing Food Waste Emissions
* for food retail industry initiatives are advanced

5) Establishment of guidelines for setting
targets
FY 2015–FY 2019 55% (Abide by the 1) Waste oil, fish crude recycling, consignment
Domestic consolidated target FY 2015 Results: 57.1%
Food Waste Recycling basic policy related to promotion of food forwarding to play operators
of food-related companies FY 2016 Results: 59.2% (forecast)
Rate circulation resource recycling, etc.) 2) Construction of a recycling loop, investment
within GMS, SM companies * for food retail industry
* Year-on-year plus 1% promotion
Domestic consolidated target

Construction of Food Construction of recycling loop (1 place / Aeon Group Companies expand food residue
companies within food Food residue recovery implemented in 76 stores
Recycling Loop year) recovery stores
products Related companies
1) Provision of information to each group

Together with Customers
Reduce the Number of

Plastic Shopping Bags
company shopping bag refusal rate and

Percentage of Customers
Consolidated Group FY 2016: 65% shopping bag free distribution stopping
Declining Plastic Shopping FY 2016: More than 70%
companies in Japan for GMS (Stop Free Plastic Shopping Bags stores increased stores
Bags (Nationwide store FY 2020: More than 80%
and SM businesses 21 stores, 1,574 stores in total) 2) Active participation and outreach to the
average)
shopping bag free distribution abort
agreement in the region
Provide training by external specialist

Completing Internal Train- No. of people who attended training in FY 2016:
institutions. Double number of people who
ing Course to Improve Consolidated targets in Japan FY 2016: More than 360 people passed 1st course: 54, 2nd course: 46, Total: 100
attend training through use of teleconferencing
Management of Waste Group Companies (Total from FY 2010) 33 people out of 47 candidates passed test
and actively publicizing training in head
Emissions Cumulative total: 394
office-related departments
Management System for Waste Emissions
Strengthening the Management System
Adopting companies up to the end of FY 2016

(95% or more) 18 companies:
Aeon Kyushu Co. Ltd., The Daiei, Inc., Aeon Liquor Co., Ltd.,
Maxvalu Minami Tohoku Co., Ltd., Maxvalu Kanto Co., Ltd.,
Maxvalu Nagano Co., Ltd., Maxvalu Chubu Co., Ltd., Maxvalu
1) Increasing efficiency of operations through
Nishinihon Co., Ltd., Maxvalu Kyushu Co., Ltd., Aeon Market outsourcing to manager providers and
Co., Ltd., The Maruetsu, Inc., Aeon BIG Co., Ltd., Kasumi Co., introducing mechanisms that coordinate
Introduction rate of 50% by FY 2016 Ltd., Red Cabbage Co., Ltd., Origin Toshu Co., Ltd., My Basket contract management
Electronic Manifest Consolidated Group
(Country target: introduction rate of Co. Ltd., A-Colle Co., Ltd., Aeon Fantasy Co., Ltd. 2) Implementing review of division of roles and
Introduction Rate companies in Japan (50% or more, less than 95%) 9 companies:
50% by FY 2016) communication rules between stores, head
Aeon Retail Co., Ltd., Aeon Retail Store Co., Ltd., Aeon office and management contracting
Hokkaido Corporation, Aeon Store Kyushu Co., Ltd., Aeonbike company and building checking system for
Co., Ltd., Marunaka Co., Ltd., Sanyo Marunaka Co., Ltd., Aeon
Town Co., Ltd., GFoot Co., Ltd.
internal audits, etc.
(Less than 50%) 5 companies:
Maxvalu Hokkaido Co., Ltd., Maxvalu Hokuriku Co., Ltd., Aeon Mall
Co., Ltd., Ministop Co. Ltd., Welcia Holdings Co., Ltd.

Key Issue 3 Better Use of Resources
Packaging materials reduction case 2

Initiatives for Zero Waste in Stores In the past we attached both a product name sticker and a
and Products thermal sticker to bentos (boxed meals) and salads. We have
eliminated the product name sticker by putting the TOPVALU
Reduce the Amount of Materials Used in Packaging logo on the thermal sticker. As a result, this has led to a
and Containers reduction of about 15.4 million stickers in FY 2016.
Most of the rubbish discharged from the home is made up of
packaging and containers. It is therefore an important
responsibility of the retail industry to sell products used in
everyday life that contribute to less rubbish by recognizing and
minimizing them.
With this in mind, Aeon is working actively to reduce the
amount of packaging and containers we use. In addition to
focusing on reducing plastic shopping bags, we are also
promoting the use of thinner as well as more ecofriendly trays. TOPVALU bentos: product name sticker and thermal sticker combined into one sticker
When developing TOPVALU products, we closely examine
packaging and containers and after careful consideration of the Waste Reduction
impact on the quality of product contents and safety during As an enterprise that operates business in approximately
shipment, we work to make product containers lighter and 21,113 stores and locations in Japan and overseas, Aeon
more thin-walled and switch to recyclable material. generates a large volume of waste. The social demand for
Additionally, we are striving to develop refillable products and reductions in waste has increased in Japan and overseas. In
change packaging material based on customer feedback. addition to the targets for waste management and food waste
As a result of these efforts, we reduced the required amount reduction that were incorporated into the United Nations’
of packaging and containers for recycling by a third party (per Sustainable Development Goals (SDGs) and adopted by the UN
¥100 million in net sales) under the Law for Promotion of Sorted General Assembly in 2015, regulations are also being
Collection and Recycling of Containers and Packaging by 4.1% strengthened in the EU. Moreover, there are plans to
in FY 2016 compared with FY 2010, with a total of 1.127 tons. strengthen waste-related laws and regulations in Japan,
Moving forward, we plan to take further action in this area. including the Food Recycling Law and the Waste Management
and Public Cleansing Act.
In order to meet these demands, Aeon has decided to
further strengthen initiatives aimed at reducing waste and has
Amount for Third-Party Processing Required under the Law established a new target for zero waste by FY 2020 (=disposal/
for the Promotion of Sorted Collection and Recycling of incineration/landfill of waste as is to zero) to launch initiatives.
Containers and Packaging(basic unit per ¥100 million in net sales)
Currently, each Aeon Group company is implementing a
1.175 tons
2010 variety of initiatives aimed at waste reduction.
Base year
In Aeon Mall Co., Ltd., for example, the medium-term
0.88 tons: (25.1% reduction compared with FY 2010)
2014 environmental plan to FY 2020 was decided on in May 2017,
and for waste, they are aiming for zero emissions malls, with
1.080 tons: (8.1% reduction compared with FY 2010)
2015 maintenance of a waste recycling rate higher than 80% and
implementation of waste education to specialty stores as pillars
2016 1.127 tons (4.1% reduction compared to FY 2010) Results of this plan. With the cooperation of specialty stores, a system to
separate waste into 17 basic items and to measure each item is
2020 introduced, and this aims for waste “visualization”. In separated
waste, items that can be recycled are recycled, and the recycling
rate is aggregated in each item. The recycling rate in FY 2016
was 86.8%, maintaining a high level above the target.
In this way, many of the group companies are
Packaging materials reduction case 1 implementing various initiatives.
For our product named TOPVALU Also, the effort of each region about waste through the
BESTPRICE Buttered Roll, we tried to characteristics and legal constraints of waste itself is important.
save materials by eliminating the We are working with stakeholders in local areas such as
closure mechanism and shortening recyclers, producers, governments and NPOs to boost
the length of the product bag. As a collection at stores and promote initiatives that go as far as
result, we were able to cut the bag reuse with the aim of building local platforms in waste
weight to approx. 50% of the reduction and resource recycling.
benchmark national brands.
TOPVALU BESTPRICE Buttered Roll:
closure mechanism eliminated and packaging minimized

FY 2016 Results and Target of KPI Aeon Food Supply Ltd. Initiatives
Aeon Food Supply Ltd., a food manufacturer, has established
Emissions of non-food waste targets that include eliminating manufacturing loss,
strengthening management of raw material processing
2014 Aggregation and sharing of information
of group companies efforts deadlines and best-before dates, initiatives to extend use-by
dates with MAP packaging for livestock products, reducing
2015 quality defective products by strengthening receipt
inspections, and reducing product accidents (contamination,
Aggregation and sharing of information Results
2016 of group companies efforts improper labeling, and quality defects), and is striving to
reduce waste through its daily production activities.
2020

Food Waste Reduction
Aeon is working on the control of food waste emission Food Waste Emissions(basic unit per ¥1 million in net sales)
occurring in stores.
36.48kg/million JPY
As part of this, we are striving to set 2014
targets for the food waste-to-sales ratio* 35.58kg/million JPY
2015
and the selling price change rate at many
34.27kg/million JPY (forecast)
companies. In FY 2016, we issued the 2016 Formulation of guidelines for establishing Results
FOOD WASTE Best Practice Collection to targets on food waste for each company
share outstanding initiatives at individual 2020
companies and achieve overall improvement.
Further, in FY 2016, we formulated FOOD WASTE Best
guidelines for establishing targets on food Practice Collection Food waste recycling rate
waste. Specifically, we decided to set targets at a challenging
53.1%
level based on the current circumstances of each company, 2014
using the food waste recycling rate, including food waste 57.1%
recovery stipulated in the Food Recycling Law. 2015
In FY 2017, we will promote the establishment of targets for
each individual company, moving our reduction initiative even 2016 59.2% (forecast) Results
further forward.
2020
* Food waste-to-sales ratio: Food waste x Retail price / Sales

Construction of Food Recycling Loop
Aeon Retail Co., Ltd. Initiatives Aeon Agri Crete Co., Ltd., which manages Aeon’s directly
Based on the leadership of managers for each store and area, operated farms, and Daiei Kankyo Co., Ltd., engaged in
Aeon Retail Co., Ltd. is promoting the sharing of information recycling business, concluded an Agreement on the Promotion
through the implementation of detailed progress of Food Recycling Loop in September 2014. As a result, farms,
management of price change and meetings and has stores and composting treatment facilities are connected, and
implemented initiatives including clearances through taste they aim at the construction and expansion of a composting
testing and early sampling of products with degraded
recycling loop.
freshness. The company has established a food waste-to-
Daiei Kankyo processes food waste such as vegetables and
sales ratio target of 0.5% or less and has managed to improve
its food waste-to-sales ratio by nearly 10% since last year.
meat dregs gathered from the stores. The produced compost is
then used on the Aeon Miki Satowaki Farm. The vegetables grown
Aeon Ryukyu Co., Ltd. Initiatives and harvested using this compost will be sold in Aeon stores. In
Aeon Ryukyu Co., Ltd. is ensuring thorough inventory control, this way, Aeon will be able
including the establishment of an inventory turnover period to achieve a self-contained
for three fresh products and the delicatessen and food recycling loop.
implementing progress management for each store in Soil development started
addition to improving ordering accuracy with the aim of from January 2016, and group
achieving the target. Alongside securing sales and gross stores in Hyogo Prefecture
profit, stating an explicit target has increased motivation, started full-scale shipments Cabbage that has been shipped from the
translating into a reduction in waste. from June. Shipment of about Aeon Miki Satowaki Farm

520 tons of agricultural products is being planned for radish, Use of Returnable Containers
Chinese cabbage, spinach and cherry tomatoes in addition to Aeon is reducing the amount of cardboard thrown away at
cabbage. stores by using returnable containers and agricultural product
In addition, implementation scales, etc. as a closed recycling containers that can be used repeatedly when shipping
loop are recognized worldwide, and the system was introduced products.
as a best practice system at TCGF (The Consumer Goods In addition, our apparel departments conduct reused
Forum/the world’s largest consumer goods distribution hanger delivery in which clothing is brought to the store on
industry organization, with about 400 companies in 70 hangers and then displayed on the sales floor using the same
countries around the world) in April 2016. In June, the Miki hangers. This reduces the amount of cardboard boxes used
Environmental Festival, based on the concept of Education for when transporting the clothing and the amount of hangers
Sustainable Development (ESD) was held. It also works actively used only for transport.
on environmental education activities for children who are the In FY 2016 we used 85.04 million cases of returnable
next generation, including tours of the food recycling facility, containers*, and 24.62 million cases of agricultural product
environmental studies, and introductions to food recycling groups. containers, which helped us substantially reduce cardboard waste.
*A
eon’s own containers only.

Usage of Returnable Container, Agricultural Product Container
Construction of Food Recycling Loop
Stretch penetrating type food recycling loop operation
in Miki city Hyogo prefecture Production
2014 Site
Food residue recovery implemented in 12 stores Returnable Container Use

2015
85.04 million cases
Cardboard Agricultural
Food residue recovery Product Container Use
2016 implemented in 76 stores
Results
24.62 million cases
2020
Circulation flow Promoting Green Purchasing

Aeon started the Green Purchasing initiative from 1996.When
Approx. 1,241 t/year (food waste collection volume) to be increased gradually
purchasing stationery and other office supplies, we adequately
(Total of target Aeon stores and TOPVALU manufacturing factories)
consider their necessity and make purchasing decisions while
prioritizing products with low environmental impacts. This is
Food
waste
done as a matter of course for office supplies, but we are also
expanding the scope of green purchasing to include display
cases, shelving and other fixtures used on sales floors as well as
Aeon, Daiei, Daiei Kankyo Co., Ltd. construction materials and the like.
Maxvalu stores
Green procurement of construction materials started from
Recycling Loop 2001. When developing new general merchandise stores, we
strive to use products procured through green purchasing for
construction materials and to increase the range of items
TOPVALU
agricultural Compost subject to green purchasing.
products
Approx. 151 t/year

Aeon Agri Create Co., Ltd.
(compost production Voice
volume) to be
Miki-Satowaki Farm increased gradually
Fumio Kaneko
President and CEO,
DAIEI KANKYO Holdings Co., Ltd.
The Aeon self-contained food recycling loop, which is close to

the lifestyles that support food and farming, is a new initiative to
effectively use resources by directly linking to the safety and
peace of mind that is demanded by our generation. In the
future, we will take charge of a stable supply of safe and secure
compost that clearly recognizes the deliciousness of vegetables
for our tables while further expanding the volume we handle.

Stores Stopping Free Plastic Shopping Bags
Together with Customers Total number of stores

(FY 2016 Results)
Reduce the Number of Plastic Shopping Bags 1,574 Stores Reduction in the
number of plastic bags
For more than twenty years since 1991, Aeon has engaged in
efforts to conserve petroleum, the raw material of plastic bags,
(Total for 28 Aeon Group companies)
2,709.47
2,770.58
and cut CO2 emissions from the production of plastic bags. million reduction
million reduction
As of the end of February 2017, the reduction of plastic bags
2,408.25 CO2 reduction amount
at our 28 Group companies has totaled 2,770.5 million bags, 2,294.57
85,334 t-CO
million reduction
with 65.0% of customers declining plastic bags. This result million reduction
2
broadly out paces the 52.6%*1 average for retailing businesses
and has led to CO2 reductions of 85,334 tons*2. 1,804.44 Percentage of
Customers who also want to use plastic bags are provided
million reduction customers declining
plastic bags
them for a fee. These proceeds*3 help local environmental
conservation activities, such as through local governments.
63.4%
67.8% 67.5%
64.8%
65.0%
Proceeds in FY 2016 were 28.26 million JPY, and the total
proceeds from plastic bag fees since 2007 have been about
630.61 million JPY. 2012 2013 2014 2015 2016
*1 As of July 2016. Japan Chain Stores Association examination
*2 CO2 reduction rate index: 30.8g-CO2 per plastic bag declined by customers
(treated as 6.8g of unused HDPE plastic bags).
Source: Ministry of the Environment’s “Tools for Visualizing 3R Activities”
*3 Plastic bag profit = Sales price − (consumption taxes + material cost)
Percentage of Customers Declining Plastic Shopping Bags

(Nationwide store average)
67.5%
2014
64.8%
2015
2016 65.0% (21 store increase Total 1,574 stores) Results
More than 80%

2020
Target
Progress of plastic bag reductions
For use in regrowing

regional forests, etc.
2017
My Bag renewal launched
sales of My Bag manufactured
2013 from 100% recycled PET
bottle material
Introduced bio-mass
2009 certi ed plastic bags a
nd “My Baskets” (for a fee)
2007 Began an initiative to
direct pro t from plastic bag
charges into environmental conversation e orts
Began the “Stop Free
2000 Plastic Shopping Bags” Program
Bio-mass certified
Began the “My Basket” plastic bags
1991 Campaign
Began the “Bring Your Own Shopping

First for a nationwide
Bag” Campaign calling on customers retail chain in Japan
to bring their own shopping bags
Bio My Baskets

Reducing Waste by Collecting Resources in Stores Launching Recovery of Waste Paper and Plastic Bottles
For recycling valuable resources, Aeon has collection bins for Linked with WAON
drink cartons, food trays, aluminum cans, and PET bottles in our Aeon implements resource recovery (waste paper and plastic
stores. Drink cartons and aluminum cans are used as raw bottles) that provides WAON points to customers who take
materials for TOPVALU brand products. Through these efforts, part in resource recovery with the aim of promoting resource
Aeon is moving forward to the creation of a recycling society. recovery and increasing convenience for customers.
In the delicatessen sections in our stores, 100% of used oil is We are promoting the initiative with a focus on stores in
collected and recycled for soaps, feed, and fertilizer. municipalities where there are infrequent collections of
recycling waste. As of the end of June, 2017, the initiative had
been introduced at a total of 215 stores —including 74 Aeon
Retail Stores, 42 Aeon Kyushu stores, 15 MaxValu Tokai stores,
28 MaxValu Chubu stores — and has been welcomed by
customers. In introducing the initiative, we established a clear
division of roles with recycling businesses to create a system
that can carry out ongoing recovery.
“TOPVALU BEST PRICE Recycled toilet TOPVALU Oil Guard

paper single” An aluminum oil guard that prevents
Recycled toilet paper that uses 100% soiling due to oil splashing around the
waste paper pulp. gas range cooktop. It is made using at
least 80% aluminum remelted from
A recycling station (waste paper and plastic bottle
aluminum cans collected at stores.
collection equipment)
Aeon Retail Co., Ltd.

Collecting and Promoting Reuse in Clothing
Aeon Retail Co., Ltd. has established a system for regularly
Collection boxes placed in one of our stores trading in clothing in partnership with I:CO Japan,*1 and
commenced full-scale efforts in 2015. In FY 2016, there were
Results for FY 2016 (total for 26 consolidated subsidiaries) about 153,930 trade ins, which was about 386 tons.Traded-
in clothing is transported to I:CO’s partner plants without
Drink cartons Food trays being discarded in about one week and about 400 types are
subsequently sorted and selected at the plants of the
approx.155.07 million approx. 429.65 million company’s overseas partners. 60% of the clothing is reused
4,652 t
Recovered amount 3,007 t
Recovered amount as apparel with the remainder being recycled according to
CO reduced 2,326 t-CO2 CO reduced 18,948 t-CO2
condition and application. Aeon Retail Co., Ltd. will continue
2 2
the trade in campaign primarily for reuse as apparel with the
aim of achieving a recycling society.
Aluminum cans PET bottles
approx. 316.74 million approx. 169.49 million Cox Co. Ltd.
5,063 t
Recovered amount 10,677 t
Recovered amount Collecting and Promoting Reuse in Clothing
CO reduced 43,548 t-CO2
2 CO reduced 38,440 t-CO2
2
Cox Co. Ltd. has also teamed up with I-CO and has been
working on secondhand clothing collection in its stores all
Weight conversion: Conversion as Paper carton (1000ml) 1 carton = 30g, over Japan since 2011. As a
Food tray 1 tray = 7g, Aluminum can (350ml) 1 can = 16g, result of cooperation from
PET bottle 1 bottle = 63g
customers, the company was
* CO2 reduction rate index (per 1kg of collected material):
Paper cartons: 0.50kg-CO2, Food trays: 6.3kg-CO2, Aluminum cans: able to collect about 12 tons of
8.6kg-CO2 PET bottles (material recycling): 3.6kg-CO2 Source: Ministry of the secondhand clothing in FY
Environment’s “Tools for Visualizing 3R Activities”
2016, which is 20% more than
the performance in the previous
year. In FY 2017, it will continue
the secondhand clothing
campaign, increasing the
frequency to four times a year.

Talbots Japan Co., Ltd. & Aeon Retail Co., Ltd. For example, MaxValu Kanto Co., Ltd. has introduced an IT
Collecting and Promoting Reuse in Clothing system that can centrally manage contractors in conjunction
with the Electronic Manifest. At the same time, it has created a
Fashion shop Self + Service run by
Talbots Japan Co., Ltd. and Aeon
system that subcontracts operations to reliable management
Retail Co., Ltd. is participating in the companies and clarifies and checks the division of roles with
FUK U -FU K U Pr o j e ct fo r 1 0 0 % contractors. As a result, it has been able to strengthen the
clothing recycling and runs clothing compliance system while simultaneously succeeding in
collections*2 for unneeded ladies’ reducing the man-hours required for management and waste-
and children’s wear. Technology is related costs by approximately ¥10 million a year.
utilized to make ethanol and other As of the end of February, 2017, the Electronic Manifest system
products from the clothing fibers had been introduced at 28 companies, including those where it
collected from everyone. had been introduced at some offices. We will continue efforts to
have a target of introduction in half of the group companies.
G-Foot Co., Ltd. * Electronic Manifest: A manifest issued to ensure that processing has been
performed when discharging industrial waste. Traditional operation between
Collecting and Promoting Reuse in Shoes emitters and processing companies has been done in paper form, but
G-Foot Co., Ltd. is actively working on shoe recovery and reuse/ digitization of manifest information in recent years with electronic manifests
recycling. The company developed a system in cooperation that are exchanged through networks have become widespread.
with I:CO so that trade can be permanently carried out, and they
are working to contribute to recycling of resources. 1,909,310 FY 2016 Results and Target of KPI
shoes, or about 1,336 tons, were recovered as of the end of May
2017. In addition to providing shoes to those who need them Number of Employees Completing Internal Training
overseas as reuse of traded-in shoes that can still be used, shoes Course to Improve Management of Waste Emissions
that cannot be reused are recycled as road building materials,
Seminar participants: 53, Successful candidates: 30
and the reduction of waste is promoted. All members Passed
2014
*1 I:CO stands for I COLLECT, and it is a subsidiary of the world’s Seminar participants Total 361 people
largest fiber and shoe recycling company, SOEX. The company Seminar participants: 45, Examinees: 25,
name was changed to KK I-Collect Japan on March 1, 2017. Successful candidates: 21
*2 Collections run at limited stores. 2015
2016 Seminar participants Total 390 people Target
Seminar participants Total 461 people

Strengthening the Management 2020 Seminar participants: 100, Examinees: 47,
Successful candidates: 33
Results
System
Electronic manifest introduction rate
Management System for Waste Emissions
Companies that were introduced into the FY 2015 year-end
Aeon holds internal training courses on a regular basis aimed at (more than 95%) 15 companies: AEON KYUSHU CO., LTD., AEON
improving its management of waste disposal. Each year the Waste STORE KYUSHU CO., LTD., The Daiei, Inc., MAXVALU MINAMI
TOHOKU CO., LTD., MAXVALU KANTO CO., LTD., MAXVALU
Management Training Course, which was developed together NAGANO CO., LTD., Maxvalu Chubu Co., Ltd., Maxvalu Kyushu
Co., Ltd., AEON MARKET CO., LTD., The Maruetsu Inc., SANYO
with an external specialist organization, is held for environmental MARUNAKA CO., LTD., AEON BIG CO., LTD., ORIGIN TOSHU
CO., LTD., My Basket CO., LTD., A-Colle CO., LTD.
managers and waste management leaders of Group companies. (Less than 95%) 8 companies: AEON Retail Co., Ltd., AEON
2014
100 people attended waste disposal management training Hokkaido Corporation, AEONBIKE CO., LTD., Maxvalu Hokkaido
Co., Ltd., MAXVALU HOKURIKU CO., LTD., marunaka CO., LTD.,
in FY 2016. 47 of these people took the waste disposal manager AEON Mall Co., Ltd., AEON TOWN Co., Ltd.
2015
test, and 33 people passed. This result brought the cumulative
50% rate of introduction Target
total, since FY 2011, to 461 employees receiving the training
and 251 receiving official waste disposal management 2016 Companies that were introduced into the FY
2016 year-end
certification. Continuing to provide training will pave the way (95% or more) 18 companies: Aeon Kyushu Co.
2020 Ltd., The Daiei, Inc., Aeon Liquor Co., Ltd.,
to improvements in the Group’s level of waste management. Maxvalu Minami Tohoku Co., Ltd., Maxvalu Kanto
Meanwhile, we provide combined training and testing for Co., Ltd., Maxvalu Nagano Co., Ltd., Maxvalu
Chubu Co., Ltd., Maxvalu Nishinihon Co., Ltd.,
persons in charge, with the aim for them to acquire the Maxvalu Kyushu Co., Ltd., Aeon Market Co., Ltd.,
The Maruetsu, Inc., Aeon BIG Co., Ltd., Kasumi
requisite skills and knowledge, such as waste manifest Co., Ltd., Red Cabbage Co., Ltd., Origin Toshu Co.,
management at each respective company. Ltd., My Basket Co. Ltd., A-Colle Co., Ltd., Aeon Results
Fantasy Co., Ltd.
Also, in order to make Manifest management more efficient (50% or more, less than 95%) 9 companies: Aeon
Retail Co., Ltd., Aeon Retail Store Co., Ltd., Aeon
and precise, we are introducing the Electronic Manifest* in stages. Hokkaido Corporation, Aeon Store Kyushu Co.,
While introducing the Electronic Manifest promotes energy Ltd., Aeonbike Co., Ltd., Marunaka Co., Ltd.,
Sanyo Marunaka Co., Ltd., Aeon Town Co., Ltd.,
conservation and greater efficiency, it is necessary to check and GFoot Co., Ltd.
(Less than 50%) 5 companies: Maxvalu Hokkaido
confirm the entered content, and it is a challenge to establish Co., Ltd., Maxvalu Hokuriku Co., Ltd., Aeon Mall
Co., Ltd., Ministop Co. Ltd., Welcia Holdings Co.,
rules that suit the actual circumstances at each company, including Ltd.
communication with the management contracting company.

Responding to Diverse Consumer
Key Issue
Customer safety and assurance is always the top priority in any international community. In addition, the value that customers
era. As the supply chain has expanded globally in recent years, demand varies widely depending on the country and region. In
ensuring product quality and safety has become more and order to continue responding to their voices, it is essential to
more of a major challenge for society. The occurrence of actively create mechanisms for dialogue with customers as well
product accidents not only causes great inconvenience for as mechanisms for the development of products, services, and
customers, but also risks creating considerable anxiety for the stores that reflect the opinions of customers.
Aeon’s Approach
Aeon has set out Our Promise to Our Customers as part of the terms of our facilities, we are striving in tangible and intangible
AEON Code of Conduct formulated in April 2003. ways to create safe and pleasant stores.
In order to put this promise into practice, we promote the Moreover, in order to respond to diverse voices from a
creation of safe and reliable products in partnership with society that is changing with the times, we have created
suppliers inside and outside Japan for the Aeon TOPVALU mechanisms to periodically collect the opinions of customers
brand. Furthermore, we make efforts through such means as and have focused our efforts on the development of products,
establishing traceability systems and creating labeling rules for services, and stores with keywords that have included “the
ingredients so that customers can use products with security. In elderly,” “health,” and “local products” in recent years.
Future Initiatives
Responding to Diverse Consumer Issues will continue to be a customers, including the expansion of Health & Wellness
key issue in the future for Aeon, which positions “contribution products to respond to the aging of the global population and
to customers” as an enduring mission. health consciousness and the creation of stores that are ready
Going forward, Aeon will continue striving to develop for large-scale natural disasters.
products, services, and stores that originate in the views of
Aeon Code of Conduct – Our Promise to Our Customers
Aeon endeavors to provide its customers with assurance and trust in their daily lives, in keeping with the view that “everything we do, we do
for our customers.”
Aeon’s never-ending mission is to make a positive contribution to customer lifestyles.
At Aeon, our first priority is to ensure customer safety. Our customers enjoy a level of assurance only Aeon can offer.
We always conduct all of our business activities (products, services, hygiene, facilities, information, etc.) with customer safety as the top priority. If there is the
smallest doubt regarding customer safety, we will promptly ascertain the nature of the concern and work to resolve the issue.
At Aeon, we keep our promises to our customers, always behaving with integrity.
We take personal responsibility to uphold the promises in our flyers and in advertisements concerning deliveries and repairs with all of our customers. If any
incident or business problem should arise, we will disclose faithfully all relevant information and respond if there are further questions.
At Aeon, we offer high-quality products and services at reasonable prices.

We strive to offer high-quality products and services so our customers can enjoy enriched lives. At the same time, we are actively engaged in re-inventing our
business practices so we can offer our products and services at even lower prices. At Aeon, our goal is to be the retailer that leads the way in offering
customers high-quality products at reasonable prices.
At Aeon, we wrap our products and services in a warm greeting and a friendly smile.
In addition to products and services, Aeon customers can always look forward to a pleasant greeting and a caring, friendly smile. When we greet customers in
our store, in our offices and over the phone, they will know what we mean when we say “Aeon friendliness.”
At Aeon, the voice of the customer gives management its direction, and we strive to address customer desires in all business practices.
We consider all customer opinions, requests, and complaints to be the starting point for management decisions. We gratefully listen to and acknowledge our
customers’ voices as a valuable contribution to our uniqueness, and we work to quickly react to their input.

Issues

Main
egory in FY 2016
egory
Safe Food and Reliable
27 (apparel: 17; food: 6; living / Hold a TOPVALU customer voice

Number of Consolidated Group HBC: 4) committee meeting and
Products
FY 2020: 30 * Improvement results through

TOPVALU Products companies in Japan aggregate requests/comments,
(apparel: 12; food: 8; living / HSC: implementation of a challenge
Removed due to and overseas (Japan, and fix defects by concentrating
10) extraction meeting
Serious Incident China, ASEAN) * Significant improvement since last year
discussions with projects that
(2016 results: 48) need to be resolved in particular
Providing Products that Meet Diverse Expectations
Very many inquiries about

ingredients and additives among
the feedback from customers
that we receive by telephone and
Launched 22 products in
internet. In addition, successfully
TOPVALU Gurinai Free From
creating a range of products that
of Customers
series, which gives

Consolidated Group give consideration to additives
Health-Conscious Product development in line with consideration to 109 additives
companies in Japan and raw materials is a process of
Initiatives “Health & Wellness” concept and ingredients that customers
and overseas development at European and
are concerned about when
U.S. retail companies.
making purchases
Reflected the opinions of
(As of November 2016)
customers as much as possible,
including determining the
additives and ingredients to
consider through questionnaires.
In order to reduce the enormous

Store Safety and Security
damage during the earthquake,

there has been implementation
Consumer Issues
Consolidated Group Number of stores reinforced

Number of stores of work such as making ceilings
companies in Japan against earthquakes: Implementation completed in
reinforced against steady, preventing falls of items
for GMS, SM and DV Since FY 2013: Steadily complete 135 stores up to FY 2016
earthquakes such as hot and cold water pipes,
businesses work at 270 applicable stores
prevention of smoke vent ducts
falling out, and installation of
noncombustible wall sheets
Serving as a form of lifestyle infrastructure /
Implementation temporary
[Protection strategy]
shelter in the event of a disaster,

In a total of 6 new and existing
activity base of relief and rescue,
stores such as Aeon Mall Sakai
The number of Consolidated group towards the implementation of
FY 2020: Local temporary shelters Teppocho and the Aeon
local temporary companies in Japan the provision of daily necessities,
at 100 of its stores across Japan Sumoto Store
shelters for the GMS business energy security measures to be
Development has already been
able to open the food
implemented in 33 stores
department in the event of a
disaster
System of Dialog with Customers
Increase opinions through

Internet email
Number of service complaints
Number of Number of service complaints Analyzes the complaint content
Consolidated Group FY 2020: 2,420
Complaints and 13,890 and trend of customer feedback,
companies in Japan
Compliments Number of compliments and it is possible to carry out the
and overseas Number of compliments
Received 2,328 report and share to the relevant
FY 2020: 2,900
departments, review measures to
prevent recurrence, as well as to
implement correspondence

Key Issue 4 Responding to Diverse Consumer Issues
Product planning and design

Consumer Issues We do not develop products which may have issues with
Safe Food and Reliable Products product safety or the risk of health hazards.
In addition to achieving the expected product performance
Quality Management of TOPVALU Brand Products reflecting the voices of customers, our development staff,
Aeon developed its own TOPVALU brand of products to improve quality control staff, and customer service staff study issues
our customers’ daily lives. We are working to create products in such as the suppliers and safety of raw materials, the use of
the point of view of our customers, from the product planning additives, and appropriateness in the production process.
and design phase up to selection of subcontractors, determination Selection of manufacturers
of product specifications, production management and sales. We examine corporate soundness and whether manufacturing
processes are managed properly, which includes Aeon CoC
TOPVALU Brand System audits, product safety diagnosis, and plant hygiene
investigations, to select and contract plants that are able to
create the expected product.
Determination of the product specifications
“Customer monitors,” employees, and others evaluate finished
prototypes. In addition, we also reevaluate the selection of raw
TOPVALU pursues customer TOPVALU Best Price realizes the
satisfaction and enriches best prices in each trading area materials, use of additives, and manufacturing processes to
the quality of lives with product quality that exceeds finalize the product specifications and contract manufacturers.
customer expectations
Inspection of products
The product manufactured in accordance with the product
specifications is inspected to see whether it meets the initially
expected quality standards. Products that pass inspection are
delivered to each store to be provided to customers.
TOPVALU Select enhances TOPVALU Gurinai Organic offers Post-launch management
customers’ daily lives by offering products that have been cultivated
products of the highest quality organically and acquired official Based on the agreement with the manufacturer, we inspect
organic certification each production lot at the plant for the items agreed upon and
keep records. We also carry out product inspections periodically
to find out whether they meet the specified quality standards
in addition to implementing audits of manufacturers that
include plant hygiene investigations.
TOPVALU Gurinai Natural offers TOPVALU Gurinai Free From offers
marine and livestock products processed products with
produced, as a rule, without the consideration for additives, raw We are implementing initiatives aimed at ensuring product
use of chemically synthesized materials, and ingredients that
drugs customers are concerned about safety and security. In case a defect or flaw is discovered in a
product despite these initiatives, Aeon informs the public of
the fact as quickly as possible and recalls and withdraws the
The Five TOPVALU Commitments product in question. In FY 2016, Aeon reported 27 serious
1. We shall reflect the voices of customers in our products.
product accidents.
2. We shall offer safe, reliable, and environmentally friendly products.
3. We shall present product information in an easily understandable Aeon will strive to prevent product accidents through
way. efforts that include identifying problem areas based on
4. We shall offer products at affordable prices. customer feedback to avoid reoccurrence of an issue,
5. We shall guarantee our customers’ satisfaction. strengthening relationships between related departments and
reviewing problem areas at the production and shipment
phases of a product.
The Process of TOPVALU Products to Customers
The Process of Creating Products

TOPVALU creates products from the point of view of our customers in
each phase, from the product planning and design phase up to
selection of manufacturers, determination of product specifications,
product inspection and sales.
Deter-
Product Selection mination of Inspection Post-launch
planning and of the product of management
design manufacturers specifications products

Quality Control for Livestock Products
FY 2016 TOPVALU Product Accidents TOPVALU Gurinai Natural Tasmania Beef is raised without the
TOPVALU 100% Young Barley Leaf Green Juice use of antibiotics, growth hormones, and genetically modified
Accident description: Wheat not included in original ingredients feed at an Aeon farm on the island of Tasmania in Australia. The
detected safety of this method of rearing receives audits by a third-party
Action: Product withdrawal and voluntary recall (Over-the-counter
organization and has obtained SQF, which is one of the
POP recall announcement, website, newspaper advertisement)
international food safety standards recognized by the Global
TOPVALU Mixed Vegetables & TOPVALU Green Peas Food Safety Initiative (GFSI).
Accident description: Possibility of frozen vegetables contaminated
with listeria
Furthermore, TOPVALU Gurinai Natural Junkikei (wellness
Action: Product withdrawal and voluntary recall (Over-the-counter chicken) is raised without using antibiotics and synthetic
POP recall announcement and website) antibacterials. Some farms have also received the SQF
TOPVALU Randoseru (school bag) international food safety standard for Junkikei.
Accident description: Wobbly metal fitting part (shoulder strap)
Action: Product withdrawal and voluntary recall (Over-the-counter
POP recall announcement and website)
Number of TOPVALU Products Removed due to Serious Incident
103 (apparel: 25; food: 38; living /HBC; 40)

2014
48 (apparel: 17; food: 14; living / HBC: 17) Topics

2015
Aeon food manufacturing and processing
2016 27 (17 apparel; 6 food: 4 living/HBC) Results
center obtained food safety management
standard JFS-E-C certification
30 (apparel: 12; food: 8; living / HBC: 10)
2020 18 food related companies, including retailers such as Aeon
Target
and the food manufacturing industry, established the Japan
Food Safety Management Association (JFSM) in January
2016. The objective was to create a food safety framework
that is easy to use for Japan’s unique food products. As a
food safety management standard developed in Japan, the
Production Process Management for Perishables
JFSM created JFS-E-C.* The standard is composed of 57
Quality Control for Agricultural Produce requirements, which include good manufacturing practice
Aeon Agri Create Co., Ltd.,, which runs Aeon’s own farms, has (general hygiene control), hazard control, and food safety
obtained GLOBALG.A.P., the world’s most widespread management systems. The JFSM has begun issuing
certification of safe farm management, at all Aeon’s own farms. certification to food-related companies.
Farm management involves various risks, including residual In January 2017, the Nagaizumi Center (Shizuoka Prefecture)
pesticides, agricultural accidents, and environmental damage. of Aeon Food Supply Co., Ltd., which manufactures and
Therefore, GLOBALG.A.P. not only requires safe products, but delivers the perishable and prepared food sold by the Aeon
also includes the safety of the employees who work on farms, Group, met all the JFS-E-C requirements. It became the third
site in Japan and the first food processing company in a
the safety of the people who live nearby, and the conservation
retail group to obtain certification.
of Local Ecosystem. Aeon farms use GLOBALG.A.P. from the
* ”JFS” is an acronym for Japan Food Safety, “E” refers to the food
perspectives of environmental conservation, occupational manufacturing sector while “C” represents the highest level among A-
safety, and management in addition to food safety as a tool for to C-level standards, and is to be applied also to international trade.
the sustainable management of corporate agriculture.

Labeling and Disclosing Product Information Labeling of Nutritional Contents

Aeon is working to label and disclose information necessary for From years past, we have taken such initiatives as prominently
consumers to choose TOPVALU brand products in a clearer labeling food allergens on the outside of TOPVALU product
and easier manner to ensure they can be used and consumed packaging. Starting from 2014, we have been asking customers
by customers with peace of mind. what sort of labeling they thought was necessary, and have
been displaying nutritional content* such as energy and fat on
Labeling of Food Allergens the package. By arranging and printing nutritional contents
Aeon uses standardized icons on the outside of all food information in a fixed position on the outside of product
product packaging to ensure consumers can easily identify packaging, we aim to provide individual customers with a
food allergens contained in products.*1 yardstick for managing their health through diet, while
The information covers use of seven officially designated remaining conscious of healthy balanced meals every day.
ingredients that by law must be displayed on the outside of * Five nutritional contents of energy, protein, fat, carbohydrate, and sodium
product packaging.*2 The back label of products also contains
the 20 secondary items* 3 recommended for inclusion in
product labeling, bringing the total number shown to 27
ingredients. We also strive to include, where possible, food
allergens that are handled in the manufacturing process and
therefore could be found in trace amounts in the product.
Inspections are also conducted every year on applicable
products to confirm labeling accuracy.
*1 Icons are not used yet on certain products.
*2 The seven officially designated ingredients, which are the most common and
most serious allergens and must be displayed according to law, are eggs, milk,
wheat, prawns, crab, buckwheat and peanuts. Labeling of Genetically Modified Ingredients
*3 T he 20 secondary items: the 20 secondary items recommended by the In April 2001 legislation in Japan enacted a labeling system for
national government for inclusion on labeling are abalone, squid, salmon roe,
oranges, cashew nuts, kiwi fruit, beef, walnuts, sesame, salmon, mackerel, soy genetically modified ingredients, but even before this, in
beans, chicken, bananas, pork, matsutake mushrooms, peaches, yams, apples, September 2000, Aeon began labeling TOPVALU brand products
and gelatin.
that contain genetically modified ingredients in response to
urging from our customers. We have expanded the scope of
items labeled and strive to provide labeling even for items not
mandated by law.
Additionally, label accuracy of products subject to labeling
(separate items) is confirmed through certification of whether
production and distribution are properly separated (IP
handling) or testing for genetically modified DNA.
Labeling of Place of Origin of Ingredients for Processed

Labeling of Food Allergens
Foods
The labeling of the place of origin of 26 food items, including
dried mushrooms, green tea, and konjac, among others, has
been required by law in Japan since October 2006. In order to
address customer requests and inquiries, for TOPVALU brand
products, Aeon strives to provide the place of origin for the main
ingredients when the place of origin can be identified and not
just for those food items required by law.
In addition, we have established clear quality standards for
ingredients irrespective of their place of origin and investigations
that include testing of ingredient standards and residual pesticides.
At the same time, we sign agreements with manufacturers and
carry out our own verifications when necessary.
Labeling of Place of Origin of Ingredients

Disclosing Information on Agricultural Product Producer
In 2003 we established the Producers Data Search System for
Aeon’s TOPVALU Gurinai products to give customers online
access to information on producers.
Since 2004, we have also added a
barcode function that allows
customers to access producer data by
reading the QR code. The data
includes the place of origin as well as
the commitment of the producer and
Search screen of the Search System for Manufacturing Plant Codes
how the item was grown. Products labeled with QR codes
Disclosing Information on Domestic Beef Food Sanitation Control

Aeon established the Domestic Beef Safety Confirmation System Under the Aeon Food Sanitation Certification System
in 2002, prior to enforcement of the Beef Traceability Act,* in established in 1995, Aeon engages in a variety of activities to
order to provide peace of mind to customers buying beef. The prevent the occurrence of food-related incidents such as food
system allows customers to find out information about beef poisoning and contamination.
products from cattle raised in Japan, including where the cow At the end of February 2017, 26 companies from our GMS
was raised, who raised it and what feed it was raised on. The business and SM business have implemented the Aeon Food
system is available via a website. Sanitation Certification System, while a total of 9,882 sections
* E nforced in December 2004, the law’s formal name is the Act on Special had obtained certification.
Measures concerning the Management and Relay of Information for Individual
Identification of Cattle.
Quality Keepers
Aeon has assigned “Quality Keepers” at stores to verify store
Disclosing Information Related to Radioactivity and sanitation levels and product quality. Quality Keepers check store
Radioactive Material products and food preparation areas at stores, and if a problem
Aeon has been voluntarily inspecting radioactivity and is found, they order improvements. In addition, sales staffs
radioactive materials in Japanese beef, seafood, agricultural inspect a list of items related to sanitation and quality
goods, and other foodstuff since the Great East Japan management, including a temperature management chart that
Earthquake. The results of those inspections are published on is used to record temperature management for display cases,
our websites. refrigerators and freezers, sell by dates that are set for each
product, and to check the freshness of fresh produce.
Search System for Manufacturing Plant Codes
Aeon is ultimately responsible for all aspects of TOPVALU brand Sanitation Training for Employees
products, from planning to design and marketing and this is why Employees in the food departments of Aeon stores must
Aeon Co., Ltd. is labeled on all product packaging as the undergo sanitation training at least once a year. Employees
distributor.* review basic sanitation knowledge and rules for food preparation
Consumers can check the manufacturing plant and its areas. Practical skills tests are also conducted for each person
address for food items or food additives using a unique code based on a test booklet.
comprising numbers and letters labeled on the product and In FY 2016, we strengthened education concerning those
reported to Japan’s Consumer Agency. This system can be points that must be observed in the preparation of food with a
accessed from the TOPVALU website. Consumers can find the focus on the three principles of food poisoning prevention:
exact name and location of the manufacturing plant simply by avoid contact with bacteria, avoid allowing bacteria to multiply,
entering the code on the online form. sterilize bacteria.
* This is written on the cap of PET bottle drinks and other beverages. Please check
the package as the area including the labeling differs according to the product. Audits of Food Preparation Areas
Food preparation areas are audited at least twice a year. Audits
are continued until certain established standards are met.

Commencing Permanent Roll Out of Halal-

Consumer Issues Certified Food
Providing Products that Meet the Diverse
Expectations of Customers Aeon imports halal-certified food from Aeon TOPVALU MALAYSIA
and began the permanent roll out of halal food for Muslims in
Launch of Product Series Giving Consideration Aeon food departments in the Kanto area in March 2016.
to Additives and Ingredients Halal means “permitted (by Allah)” in Arabic, and for food
In FY 2016, we worked on developing TOPVALU Gurinai Free primarily indicates ingredients and cuisine permitted to be
From,*1 which gives consideration to 109 types*2 of additives eaten in Islamic law.
and ingredients that customers are concerned about when With the support of the Malaysian government, Aeon
making purchases. TOPVALU MALAYSIA has developed 147 halal food items that
There were very many inquiries about ingredients and have obtained JAKIM (the Malaysian government’s halal
additives among the feedback from customers that we receive certification body).
by telephone and internet. In addition, successfully creating a At present, the Muslim population in Japan is said to be
range of products that give consideration to additives and raw about 150,000 (includes Japanese nationals), but the need for
materials is a process of development at European and U.S. halal food is expected to increase further in the future coupled
retail companies. with the fact that places for Muslims in Japan to buy halal food
In development, we reflected the opinions of customers as have been limited in the past and the increase in Muslim
much as possible, including determining the additives and tourists associated with the rapid increase in foreign tourists
ingredients to consider through questionnaires. visiting Japan. In view of these challenges and needs, Aeon has
Since being launched in November, TOPVALU Gurinai Free commenced the permanent roll out of about 30 halal food
From has received support from many customers and is doing well. items at 25 GMS stores. Going forward, we will ask the views of
In addition, since March 2017, we have expanded the range customers as we expand the range in addition to increasing
of our efforts to daily household items such as shampoo, body the number of stores where the products are rolled out.
soap, and laundry detergent, which come into direct contact
with the skin. Considering that the need for daily household
items differs from food, we determine the components to
consider for each product category to work on development.
*1 “Free” means “absent” or “non-existent,” and “free from” in food indicate that
additives and ingredients that customers are concerned about are not used.
*2 2 9 synthetic colorings, 15 synthetic preservatives, 3 coloring agents, 5
fungicides, 10 artificial sweeteners, 23 flavor enhancers (amino acids), 6 flavor
enhancers (nucleic acids), 3 anti-oxidants, 3 bleaching agents, 6 manufacturing
agents, and 6 foods that contain a lot of trans-fatty acids
Examples of products sold in Malaysia
Voice
Izumi Sasaki
General Manager,
Communication Department,
Marketing Division,
AEON TOPVALU CO., LTD.
Aeon has restructured TOPVALU Gurinai into three lines,

namely “Organic,” “Natural,” and “Free From” in view of the
increasing demand for Health & Wellness products from
customers who want to insist on even more natural and
delicious food. “Free From,” which considers specific additives
and ingredients, is the first such product group developed by
TOPVALU, and we have worked on planning and development
to ensure customers can make purchases more freely. Going
forward, TOPVALU will continue to provide products with an
awareness of physical health and the natural environment.

places where customers not only buy “products” but can also
Topics have “experiences.”
“Same Menu for Everyone in the Family” In addition, Aeon is developing Aeon Pharmacy sections
Birth of Yasashi Gohan that Considers within “AEON” general supermarkets, attracting general clinics
Allergies From TOPVALU with medical facilities as tenants to respond to rising medical
needs against the backdrop of Japan’s aging society.
The TOPVALU Yasashi Gohan series was born in November Also, we are focusing on developing Food for Specified
2016 to meet the demands of customers relating to Health Uses (FOSHU) to meet the health needs of our customers.
products that consider food allergies. The series was planned
and developed without using seven specific ingredients*
based on the concept of “meals for everyone in the family
Enhancing the Shopping Experience
that are gentle on the body.” As of the end of February 2017,
Online shopping is becoming a familiar and convenient way to
there was a range of 12 varieties. With a rich variety that
includes powder mixes and white shop due to a diversification in shopping needs, which include
sauce that can be made into a variety customers who have difficulty getting to a store and those who
of dishes as well as easy-to-prepare wish to shop outside of normal business hours. Aeon Group is
gratin and pasta sets, we will present strengthening its omni-channel strategy by developing Aeon
meals that allow everyone to enjoy store e-commerce platforms through the “Aeon Square”
the same menu even in households website portal, taking advantage of the network of stores
that include people with allergies as nationwide and allowing link of store and Internet services, and
we strive to provide assurance and increasing home delivery service of goods bought in stores or
trust rooted in daily life.
pick up at stores of goods ordered by the Internet.
* Eggs, milk, wheat, peanuts, buckwheat, prawns, and crab Aeon is also promoting measures to meet diverse shopping
needs such as increasing openings of urban small size stores
stocking perishables and delicatessen items as well as
processed food and daily essentials, primarily in urban areas of
Tokyo and Kanagawa where there are few stores.
Topics
Commencing Operation of Mobile Sales
Car Shopping Aid in Hanamigawa Ward,
Chiba City
Rolling Stock Proposal
Aeon calls on customers to make preparations that they can In November 2016, Aeon commenced operation of its
continually practice in their daily lives without being excessive Mobile Sales Car as a shopping aid for people who
in order to even slightly reduce damage in the event of a experience inconvenience with daily shopping in the
Kotehashidai area of Hanamigawa ward, Chiba city. The
disaster. As it is said that a food stockpile for a minimum of
objective of this initiative is to provide a shopping aid
three days up to a week is required for an at-home evacuation
especially for the elderly in anticipation of the increasing
scenario immediately following a disaster, Aeon proposes
elderly population as part of “Health & Wellness: town
rolling stock using TOPVALU. Customers can use items they planning that enriches the body and the mind” in the Local
stock up on in their daily shopping in an emergency through a Ecosystem that Aeon is promoting. Twice in both the
cycle of regularly buying and keeping extras of items they eat morning and afternoon, Monday to Saturday, the Mobile
and always making additional purchases of what they have Sales Car stops for 30 minutes at a predetermined time and
eaten. Going forward, we will continue to propose disaster place to make sales in addition to making visits to deliver
reduction initiatives using our stores and products in order to products to customers who ordered in advance.
play a role as lifestyle infrastructure for customers.
Responding to senior generation

Aeon is using the name Grand Generation (G.G.) for seniors
who are active and aggressive consumers – and responding to
the shopping needs of seniors such as ‘G.G. Mall’ and ‘G.G.
Cards’ targeted to seniors. For example, at the Aeon Kasai Store,
which was renewed as a G.G Mall, we have established a fitness
studio to help with promoting health and the Aeon Culture
Club, which has two studios and six classrooms, to provide new

striking directly beneath Tokyo.

Consumer Issues Going forward, while adjusting our predicted scenarios, we will
Store Safety and Security hold recurring drills that rally the combined strength of Group
companies so that the local head of operations in the affected
Improving the Earthquake-resistance of Stores area responds swiftly when disaster strikes.
During the Great East Japan Earthquake many of our store
buildings suffered extensive damage, which in some cases
even caused loss of life. For this reason, Aeon is moving forward
with improving the safety and earthquake resistance of its
stores, giving utmost priority to protecting people’s lives and
those stores in areas where a major earthquake with seismic
intensity of at least upper 5 is expected to strike, in accordance
with its own set of standards that are even stricter than those
required by law. Since the 2016 Kumamoto earthquake, we
have expanded the scope of our efforts, and we will target all Aeon Komaki Crisis Management Center
of our stores for improved earthquake resistance.
At Aeon Retail Co., Ltd. work had been completed at 135 Fire Prevention Drills at Stores
stores by the end of FY 2016. In FY 2017, we plan to undertake Aeon stores check safety and disaster preparedness measures
safety work at 21 stores (including retail stores). on a daily basis, while security staff and store managers also
In addition, in light of the 2016 Kumamoto earthquake, conduct a final inspection after stores are closed.
Aeon Mall Co., Ltd. is planning further earthquake-resistance Fire prevention drills have been conducted twice a year and
safety measures at 35 existing malls in FY 2017. Going forward, earthquake response drills run once a year. Following the Great
we will examine and implement work at Aeon Kyushu Co., Ltd. East Japan Earthquake that struck in March 2011, however, we
and Aeon Hokkaido Corporation. have decided to increase the number of earthquake response
drills to two per year from 2012. We strive to make these drills as
realistic as possible by changing the scenario for each based on
a variety of possible disasters. Full-time store employees as well
Safety and Security Infrastructure Development as temporary, part-time and tenant employees participate in the
Implementation complete at 132 stores drills. They are conducted to help us respond quickly and ensure
2014 the safety of customers in the event of a fire or earthquake.
Implementation complete at 107 stores
2015
Crime Prevention Measures
Steadily complete work at 272 applicable stores Target
There have been a number of incidents at supermarkets over
2016 Completed in 135 stores as of FY 2016 Results
the past several years involving food products with needles or
other dangerous objects. Aeon has therefore installed security
2020
cameras in food departments and begun using needle
detectors at its stores. If a needle were to be discovered, it
would be promptly delivered to the police or healthcare center
and customers as well as local Group company stores would
be informed through an in-store display or announcement in
Fire Prevention and Disaster Preparedness order to prevent additional injury or damage.
Aeon, as a commercial enterprise with large numbers of We are also conducting crime prevention drills to ensure
customers, is implementing disaster prevention measures and the safety of customers in the event an incident or accident
drills to ensure quick action and the safety of our customers occurs in a store.
and employees in disaster.
Group-wide disaster prevention and safety drills

Taking lessons from the experience of the Great East Japan
Earthquake, Aeon has been conducting Group earthquake
disaster drills twice a year from FY 2011 to ensure quick action for
the safety of employees and customers in the event of a disaster.
In March 2014, we established the Aeon Komaki Crisis
Management Center at the Aeon Komaki Store in Komaki City,
Aichi Prefecture. In July, we conducted a drill with the Aeon
Komaki Crisis Management Center working as the alternative
head of operations based on the scenario that the Makuhari
Headquarters had been damaged by a major earthquake

Measures to Combat New Flu Viruses Installing Automated External Defibrillators (AED)
Aeon formed a project team in 2006 as a measure to address Aeon is promoting the installation of AEDs in each of its stores.
risks from the outbreak of infectious diseases such as the global These devices give electric shocks as a means of resuscitation
spread of highly pathogenic H5N1 avian influenza in humans. for people who have suffered a sudden cardiopulmonary arrest.
We established Rules for New Flu Viruses in September 2006 In addition, we are providing emergency lifesaving training for
and have since been readying infection prevention measures managers and security staff.
in order to ensure the safety of customers and employees. In FY 2016, we endeavored to increase the installation of
In 2010, we established the Aeon New Influenza Integrated AEDs in small-sized supermarkets, where the number of the
System and a framework for ascertaining the extent and spread devices installed is low. As a result, the installations reached
of the virus at Aeon Group stores and business sites across 1,587 devices at 989 stores throughout the entire Aeon Group.
Japan. In November 2010, we established the Attenuated
Virulence New Influenza Rules to clearly separate our response
based on the virulence of the new influenza virus. Creating a Convenient and Comfortable Store
From the end of FY 2013 to the second half of FY 2014 we Environment for Everyone
will apply for recognition as a registered business requiring flu Aeon developed its own building standards based on the
vaccines under the Act on Special Measures for Combating Heartful Building Law of 1994 (revised December 2006 as the
New Flu Viruses and strive to build a system that ensures Barrier Free Law*). We use these standards when building new
operations can be continued during an epidemic. stores or remodeling existing locations. As of the end of
February 2017, over 750 of our facilities had been certified as
compliant with the Barrier Free Law.
Raising Safety Levels of Store Facilities and Fixtures We are also committed to incorporating universal design
Aeon works to enhance safety for facilities and fixtures used in elements, to strengthen store function and design.
its stores to prevent accidents involving customers. Recognizing that the number of seniors among our
customers is increasing, we aim to incorporate universal design
Safety Measures for Escalators concepts in all of our stores.
There has been an increase in recent years in accidents * The Act for Buildings Accessible to and Usable by the Elderly and Physically
involving children getting caught in the gap between an Disabled, also known as the Heartful Building Law, was revised and renamed
the Barrier Free Law in December 2006.
escalator and the wall at shopping malls and department
stores. Aeon stores work to prevent escalator-related incidents
by setting up barriers or dividers to prevent exposure to
such gaps.
In addition, at our new stores
we have reduced the speed of
down escalators from 30 meters
per minute to 20 meters per
Step-free entrance (Aeon LakeTown) Easily visible in-store sign
minute as a means to prevent falls
by senior citizens. Safety Measures for Escalators
Care-Fitters
Establishing Parking Lot Guardrails We encourage Aeon employees to acquire the Care-fitter*
Accidents often occur in the parking lots of retail complexes certification to help ensure that seniors and people in need of
caused by drivers mixing up the assistance can shop in our stores with total confidence.
gas and brake pedals. We have Certified Care-fitters in the Aeon Group numbered 10,067 as of
therefore established parking lot the end of February 2017.
guardrails in order to prevent cars * C are-fitter: A certification administered by the Nippon Care-Fit Education
from crashing into stores and Institute (a public interest incorporated foundation)
ensure the safety of customers. Parking Lot Guardrails
Care-fitter Training Session

Supporters for People with Dementia

Since 2007, the Aeon Group has been participating in the
Consumer Issues
Serving as a form of lifestyle infrastructure that
Dementia Supporter Caravan being jointly promoted by the protects the local community
Ministry of Health, Labour and Welfare and the non-profit
organization Community-Care Policy Network, in order for our Establishing local temporary shelters
employees to correctly understand dementia and provide [Aeon Eco Project: Protection Strategy]
appropriate support. Aeon has established a goal to set up 100 disaster-prevention
So far, we have run Dementia Supporter training courses to facilities across Japan by the end of FY 2020 as part of the Aeon
educate Dementia Supporters* in addition to training instructors Eco Project ( P. 84).
(in-house Caravan Mates) for the courses. Employees also undergo The role of disaster-prevention facilities is to provide a
training at the preparation phase for opening a new store and temporary refuge during a disaster, to serve as a hub for rescue
become Dementia Supporters before the store opens. and first-aid activities, and to provide access to daily essentials.
In FY 2016, this training course was held before opening To fulfill this role, stores serving as a local temporary shelter
general merchandise stores, including Aeon Style Imabari Shin- feature back-up generators and water tanks to prepare for a
toshi (Ehime Prefecture), Aeon Style Izumo (Shimane Prefecture), power outage and/or water stoppages that will likely occur
Aeon Style Yukarigaoka (Chiba Prefecture), and Aeon Style during and after a disaster.
Nagakute (Aichi Prefecture). Employees gained the knowledge In FY 2016, we established disaster-prevention facilities at
necessary to approach customers with dementia. six stores in total which were new and existing stores, including
As of the end of February 2017, there are a total of roughly Aeon Mall Sakai Teppocho and Aeon Sumoto Store. As of
63,688 Dementia Supporters, the largest number among February 2017, a total of 33 stores have already been outfitted
companies in Japan, and 899 “Caravan Mate” instructors for the with disaster-prevention facilities.
training course. In the future, Aeon will expand its efforts to In FY 2017, we plan on establishing disaster-prevention
provide support to people with dementia and their families facilities at an additional 18 stores, with the goal of reaching
with the aim of building communities where they can live more than 100 by 2020.
alongside local people with peace of mind.
* Supporters for People with Dementia: People certified through a prescribed
curriculum course implemented by municipalities and other groups. Supporters
have an understanding of dementia and are able, within their abilities, to give
care to, watch over, and give support to people with dementia and their families.
Private power generation equipment installation
The dementia supporter mark and orange band

The number of local temporary shelters
Installed in a total of 16 stores, at Aeon Town Kamaishi, Aeon

Mall Tendo such as new 8 stores and Aeon Omiya and Aeon
Sagamihara store, etc. existing 8 stores (total 20 stores)
2014
Installed in a total of seven new and existing stores
such as AEON Mall Okinawa Rycom and Aeon Komaki
Store for a cumulative total of 27 stores
2015
Lectures and role playing in the dementia supporter training program Outfitted a total of six stores including new stores
2016 such as Aeon Mall Sakai Teppocho and Aeon Results
Sumoto Store and existing stores (total 33 stores)
2020 Local temporary shelters at 100 of its stores across Japan

Target

Consumer Issues
System of Dialog with Customers Number of Complaints and Compliments Received
Number of service complaints: 6,895 /

2014
System for Listening to the Opinions of Customers Number of compliments: 1,900
Aeon puts the customer’s perspective at the heart of Number of service complaints: 10,381 /
2015 Number of compliments: 2,060
management. We strive to create conditions in which
customers feel free to provide suggestions and to promptly Number of service complaints: 13,890 /
2016 Number of compliments: 2,328 Results
Results
incorporate customer comments into product lineup and
service improvements, environmental conservation activities Number of service complaints: 2,420 /
2020 Number of compliments: 2,900
and other areas. Target
Suggestion Boxes and Communication Boards

Each Aeon store has set up a box for customers to put their
opinions in and a board disclosing the opinions and Aeon’s
Topics
response. Comments and suggestions provided by customers
are replied to directly by a store representative and posted for Examples of Product Development and
others to see. We receive many suggestions from customers Improvements Made Based on Customer
about things that are difficult for Feedback
stores and employees to notice. The
As we received many inquiries about the lycopene content
suggestions are utilized to improve
of Koi (Thick) Tomato Ketchup in 2016, we have stated the
product lineups and services and in
content in a way that is easy to understand. In addition, in
environmental conservation activities
response to a complaint that the bottle leaked if placed on
and other initiatives. its side, we improved the inside of the cap. As there were
also many customers who open the cap with one hand
Suggestion Box and
Communication Board when opening, we also improved the shape of the cap so
that it can be opened even with a weak force. Ease of use is
Customer Service Department a TOPVALU development principle, and we have made
The Customer Service Department at Aeon headquarters various improvements based on customer feedback.
receives product and service related comments and requests
from customers who visit our stores. Comments and requests, Koi (Thick)
How much lycopene does it contain?
Tomato
which come in via the phone, Internet, letters and other Ketchup
channels, are responded to after checking with the relevant We stated the lycopene content about which
inquiries had increased in a way that is easy to
departments. In addition, for TOPVALU products, we have set understand. Keeping the classic flavor that is easy
for children to eat, we increased the volume of
up a call center and collect customer suggestions. This tomatoes used from the previous product to put
information is reported to directors and executive officers, as the finishing touch on a product that delights
customers with both quality and price.
well as shared with employees of relevant departments
through systems that manage customer feedback. 2 tablespoons Lycopene
A total of 108,804 opinions (service complaints) were Equivalent to content:
1 tomato 26mg/tablespoon
received in FY 2016 from our customers, which was up by 2%,
or an increase of 1,883 opinions, compared to FY 2015. In
particular, inquiries and complaints made by phone and Liquid leaks out when you put it on its side,
so could you improve it?
electronic mail increased.
The number of service complaints grew to 13,890, which Before After
We improved it by making
was up by 33.8%, or an increase of 3,509 complaints, compared double plug for the nozzle
so that it is difficult for
to FY 2015. In addition, the number of compliments grew to contents to leak.
2,328, which were increased 268 compared to the previous year.
We improved it by
Going forward, we intend to listen carefully to the opinions eliminating the cuts
of each and every customer to provide them with better in the hinge making
it difficult to leak out.
services and products.
Plus
Easy-to-open cap
even for people with
weak hands
We widened the brim of the
cap to make it easy to grasp
Improvement
and also made the grooves
on the side bigger to make
it easy to apply strength.

Carry out Fair Business Practices
Key Issue
Amid the expansion of a borderless supply chain, it is important important theme. In such circumstances, it is essential for every
for companies to comply with laws and regulations and social company to build a responsible supply chain that is conscious
norms in the countries where they do business and to ensure of local resources and environments, human rights, quality,
fair transactions in order to continue to grow soundly. Against a labor practices and other issues in order to achieve a sustainable
background of global population growth and economic society in each country and region.
development, securing energy and food resources is also an
Aeon’s Approach
Aeon has set out “Its Business Partners and Aeon” in the Aeon for TOPVALU, Aeon’s private brand. The content of the Aeon
Code of Conduct. Supplier Code of Conduct (CoC) formulated in 2003 is based on
One aspect of the implementation of the Code is the the 10 principles of the U.N. Global Compact and the
acquisition of SA 8000, the international standard on human requirements of SA 8000. Aeon aims to build a sustainable
rights and the working environment, in supplier management supply chain in partnership with suppliers in Japan and overseas.
Future Initiatives
Going forward, Aeon will continue striving for fair and industry which links producers and consumers, we plan an
sustainable business activities together with business partners expansion in Fairtrade products and increase our range of
based on both the Supplier CoC and SA 8000. In addition, products and services that support sustainable consumption
taking advantage of the special characteristics of the retail with the aim of solving social issues on the business front.
Aeon Code of Conduct – Its Partners and Aeon – Its Business Partners and Aeon
Aeon respects innovative business partners* who help the company achieve its objective of “Customer Satisfaction.” We strive to work as
equals with our business partners, dealing fairly and working for our mutual prosperity.
* The term “business partner” refers to all of the partners with whom we conduct business, including those who provide retail products, facilities services, and our
retail tenants.
At Aeon, we cooperate with our business partners, all of whom are important to us, moving forward together to develop
innovative business models that will open the gate to the next era.
We cultivate strong relationships with our partners, together pursuing innovative business practices, better products, better services, and our mutual success.
At Aeon, we clearly document agreements with business partners, and strictly follow the letter of such agreements.
We maintain equality with our business partners, connected through formal agreements. Both parties strictly adhere to all agreed-upon contract provisions.
At Aeon, we respect business partners whose top priority is safety and customer peace of mind/assurance.
We and all of our business partners share the common goal of “Customer Satisfaction.” If the smallest doubt exists regarding the safety or trust of a product or
service, we work with our business partners to promptly ascertain the nature of the concern and resolve the issue.
At Aeon, we require our business partners to comply with both the letter and spirit of international standards and to practice
them fully.
AEON complies with and respects all generally recognized international standards, including those related to ISO, labor, environmental conservation, and
quality management. We also require our business partners to strictly observe these same standards.
At Aeon, we do not tolerate the acceptance of gifts, money, or special favors from our business partners.
We select business partners based on their ability to offer better products and services at fair prices. Individuals do not accept any gifts, money, or special
treatment from a business partner designed to secure our business in any situation. All efforts must go toward benefits to the customers.

Main
egory in FY 2016
egory
1) Strengthened updating of
information and education
Promote the Aeon Supplier Code of Conduct
on-site in order reflect change

in social environment in
communication with overseas
plants
Trained auditor leaders in each
Construction of for region to build a system to
sustainable supply Aeon second-party quickly and cordially respond
FY 2016: 12 in Japan, 32 overseas 12 in Japan, 33 overseas
chain building audit certified auditors to evaluations for audits and
audit system the education of auditors
2) In Japan, planned and
achieved 1.5-fold increase due
to anticipated 1.25-fold
increase in number of audits
Fair Business Practices
from initial time because of

second-party audits by
Aeon-certified auditors
Trading volume of
(International) Fairtrade-
certified cacao: 35.7 tons
Practicing Fair Trade
Participate in both Fairtrade

Trading volume of (International) Launch of economy chocolate International’s Fairtrade Sourcing
Strengthening of Fairtrade-certified cacao: 40 tons through Fairtrade Sourcing Program and Fairtrade (full
TOPVALU products
fair trade products by FY 2020 (10 times compared Program (Almond in September certification) to expand the fair
with FY 2012) 2016, Creamy in November trade raw material procurement
2016) amount
Post-launch sales performance:
¥133 million (up to February
2017)

Key Issue 5 Carry out Fair Business Practices
Auditing Our Manufacturing Partners

Fair Business Practices Aeon audits its manufacturing partners to make sure they are
Promoting the Aeon Supplier Code of Conduct (CoC) in full compliance with the requirements of the Aeon Supplier
Code of Conduct (CoC). Audits include third-party audits
Aeon Supplier Code of Conduct* carried out by professional auditing firms that objectively
The products we deliver to customers are procured an evaluate conformity with standards, second-party audits
manufactured around the world and made after undergoing performed by Aeon auditors who monitor suppliers while
various processes. As the distributor, Aeon recognizes that it encouraging dialogue, and first party audits carried out by
has a responsibility through the entire supply chain, from raw suppliers to maintain and improve their management systems.
materials to commercialization. Based on this, we are working Different levels of audits are performed based on the results
closely with suppliers to ensure the safety and security of the and we provide various forms of support to improve the
products we carry. management practices of suppliers.
Based on the Aeon Supplier Code of Conduct (CoC) We had been implementing initial third-party audits for all
formulated in 2003, we check to make sure that the employees final processing plants both in Japan and overseas starting in
and workers of suppliers are working in sanitary workplaces 2003 and ran until FY 2015 (as of the end of February 2016).
and that suppliers are in compliance with all relevant laws, and However, because the environment and issues differ overseas
we encourage improvements be made where necessary. and in Japan, third-party audits are only being conducted at
Currently, we require suppliers of TOPVALU and TOPVALU plants overseas from FY 2016. At plants in Japan, we are
Collection products to comply with the CoC. facilitating communication and confirming the state of things
As of the end of February 2017, 1,567 suppliers have with second-party audits through Aeon-certified auditors. Even
submitted documentation verifying they are in compliance at plants overseas, we are conducting second-party audits as
with the CoC. We are continuously working with our suppliers monitoring audits for subsequent audits.
to build a sustainable supply chain. The Aeon Supplier CoC does not call for surprise audits
because its primary goal is to foster trust and cooperation with
suppliers. Third-party audits are checked by an evaluation
organization different from the auditing firm to ensure the
Aeon Supplier Code of Conduct objectivity and reliability of audit results.
Conform with legally stipulated social responsibility standards in In terms of raw materials, currently we have yet to begin
countries where manufacturing and procurement takes place confirmations using direct audits, but our manufacturing
Conform with national laws and regulations
partners have been asked to require and check that their
second and third tier suppliers comply with the CoC. In this
1. C
hild labor: Illegal child labor is prohibited
manner, the final goal of the Aeon Supplier CoC is to build a
2. F
orced labor: Forced, prison and bonded labor are prohibited
supply chain where management practices and competencies
3. H
ealth and Safety: Provide safe, healthy workplaces are continually improved.
4. Freedom of Association and Collective Bargaining: Respect
employee rights
5. Discrimination: Discrimination on the basis of place of origin
or creed is prohibited Voice
6. Disciplinary Practices: Cruel punishment of employees is Noriko Kimura
prohibited
Manager, Aeon Supplier CoC Secretariat,
7. W
orking Hours: Comply with laws related to working hours Group Quality Control Department,
8. Wages and benefits: Comply with laws related to wages and Product Management Division,
benefits AEON Retail Co., Ltd.
9. Management responsibility: Pledge compliance with the
The distinctive feature of the Aeon Supplier Code of Conduct
Aeon Supplier Code of Conduct
(CoC) is that rather than making audit results themselves the
10. Environment: Work to prevent environmental pollution and condition for immediate transactions, it is a mechanism for
damage
resolving problems together leading to capacity building for
11. Trade: Comply with local laws on commercial transactions suppliers. Aeon supports suppliers to manage CoC
12. Certification, Audit, and Monitoring and Renewal: Accept compliance independently in addition to aiming to expand
certification, auditing and monitoring under the Aeon the circle of CoC compliance throughout the supply chain to
Supplier Code of Conduct secondary and tertiary suppliers. Going forward, we will
13. B an on Gifts: Gift-giving between Aeon and suppliers is continue working on audits with the aim of sustainable
prohibited growth in partnership with suppliers.

Procedure of ‘Aeon Supplier CoC’ Certification and Audits Developing Accredited Auditors for Second-Party Audits
There are 12 internally certified auditors in Japan and 33
New Supplier Briefing
overseas. (As of the end of February 2017)
These auditors not only conduct audits but also support
Aeon Supplier Code of Conduct Pledge Compliance Submission improvements.
As the social environment changes year after year, these
changes must be meticulously reflected in our communication
Second-Party Audit Third-Party Audit with factories, and information and education must also be
updated on-site, particularly overseas.
Therefore, we train leaders in each region to build a system
Second-Party Audit to quickly and cordially respond to evaluations for audits and
the education of auditors.
In Japan, audits had been conducted using the same initial
First-Party Audit Second-Party Audit First-Party Audit third-party audits as overseas, but these evaluations were
conducted by second-party audits as of FY 2016. For this
reason, the number of second-party audits increased, which
required a greater number of auditors. In FY 2016, four new
Continuous Management auditors were certified.
Third-Party Audit * As of the end of February 2017

Report auditing results Assess and
Audit Confirm Construction of for sustainable supply chain building audit
Third-Party Improvements system
Auditor GermanyNGO
Initial questions 8 in Japan, 30 overseas
2014
Conduct audit Report improvements
Plant 8 in Japan, 31 overseas
2015
Manufacturing
partners
(Support)
Second-Party Audit
2016 12 in Japan, 33 overseas Results
Conduct audit
Plant 2020
Aeon
(Audit,Evaluation, Guide
Confirm modifications)
Report
Manufacturing
improvements partners
(Confirm, Guide, Report)
Third-Party Audit
For the first ‘third-party audit,’ an external audit agency checks over 350
universally recognized items and assesses anything differing from the standards
at factories outside of Japan.
The evaluating agency points out items in need of correction and confirms
improvements. In this process, there may be dozens of interactions to not only
check results, but also to assure that proper management mechanisms are in
place. When corrections are finalized, a certificate of CoC compliance is issued. By
the end of FY 2016, 2,938 production plants (including plants in Japan) had been
Developing Accredited Auditors for Second-Party Audits
certified as meeting the standards.
Second-Party Audit
Following authentication of CoC compliance, a certified Aeon auditor will do
checks through factory visits once in two years or, in the case it is deemed
necessary, once in six months, as a ‘second-party audit.’ 4,556 second-party audits
were conducted between FY 2004 – FY 2016.
First-Party Audit
Factories that have established good management through third and second-
party audits are given a check-list to carry out a ‘first-party audit’ themselves.
Between FY 2009, when the system was instituted, and FY 2016, there have been
146 factories (up 30% YoY) doing ‘first-party audits’ and the level of supply chain
management overall has been steadily improving.

Audit results of FY 2016 year-end
Third-Party Audit Second-Party Audit
Factories which carried out Factories which carried out Factories which carried out Factories which carried out
Third-Party Audits (by region) Third-Party Audits (by industry) Second-Party Audits (by region) Second-Party Audits (by industry)
1%
7% 10% 16%
28%
45% 46% 21%
37% 56%
68%
9% 56%
China Asia (excluding Japan, China) Apparel Food Living / HBC / Other Japan China Asia (excluding Japan, China) Apparel Food Living / HBC / Other
Other Other
Points indicated by third-party audits of factories (by item) Points indicated by second-party audits of factories (by item)
3%
11% 5%
6%
4%
4% 31%
38%
10%
1% 41%
4% 8%
14%
16% 1%
3%
Child labor Forced labor Health and Safety Child labor Safety and health
Rights to freedom of association and collective bargaining Discrimination Punishment Rights to freedom of association and collective bargaining
Working time Wages and benefits Management responsibility Environment Discrimination Working time Wages and benefits Environment
The number of the Third-Party Audits enforcement factories The number of the Second-Party Audit enforcement factories
（件） Overseas Japan （件） Overseas Japan
600 700
500 600
500
400
400
300
300
200
200
100 100
0 0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (FY)
First-Party Audit
Factories which carried out Factories which carried out The number of the First-Party Audit enforcement factories
First-Party Audits (by region) First-Party Audits (by industry) （件） Overseas Japan
160
3%
8% 10% 140
18%
120
100
80
60
89% 72%
40
Japan China Apparel Food Living / HBC / Other
Asia (excluding Japan, China)
20
0
2009 2010 2011 2012 2013 2014 2015 2016 (FY)

Reference: Actual Auditing Examples
1.全体的に増加した指摘項目
Top priority management: Private TOPVALU brand suppliers （件） FY 2015 FY 2016
300 300
Management method: 2.
250 In Japan, points indicated in safety and health, wages and 250
Confirmation of status and improvements with third-party and 200 benefits, and the environment increased.
second-party audits at all final processing factories. Reasons: 200
150
Factories satisfying the standard evaluation implement audits by - B ecause new plants implemented audits by Aeon-certified
100 150
manufacturers and confirm improvements. auditors and more detailed areas of law were checked
Make overseas plants subject to third-party audits from FY 2016 - 50
Because waste-related checkpoints in light of an industrial waste 100
and confirm plants in Japan through second-party audits by diversion
0 incident increased
Aeon-certified auditors - B ecauseWorking
checkpoints
time related
Wagesto
andemployee
benefits health andhealth
Safety and safety 50
increased
0
Scope of manufacturers: 2.国内で増加した指摘項目
（件）
Japan 578; Overseas 457; Total 1,035 FY 2015 FY 2016
200
(Conducting business as of the end of February 2017)
150 200
Scope of plants: 1.全体的に増加した指摘項目
Japan 2,148; Overseas 2,084; Total 4,232 （件） FY 2015 FY 2016
100 300
(As of the end of February 2017) 300 150
250
50 250
Audits conducted in FY 2016: 200 100
Third-party audits: Total 115 0 200
150 Safety and health, Wages and benefits Environment
By region: China 65; Asia (excluding China) 42; Europe 7; North
100
and health 150
50
America 1
By industry: Apparel 53; Food 10; Living/HBC 52 3.海外
50 （中国および他のアジア各国）で増減が大きかった指摘項目
（件）
100
3. Overseas (China and other Asian countries), FY points
2015 indicated
FY 2016
80 0 0
Second-party audits: Total 607 in working hours
Working time and wages and benefits
Wages and benefits increased and
Safety and health 50
70
By region: Japan 411: China 129; Asia (excluding China) 62; 60 points indicated in environment decreased compared with
the previous year and earlier 80
0
Europe 5 2.国内で増加した指摘項目
50
By industry: Apparel 97; Food 341; Living/HBC 169 （件）
Reasons:
40 FY 2015 FY 2016 70
200
Japan: Apparel 8; Food 319; Living/HBC 84 - 30
Because overtime per employee increased at many plants in an 60
Overseas: Apparel 89; Food 22; Living/HBC 85 20effort to increase production capacity and hold down personnel
150 50
200
10expenses in light of soaring personnel expenses and raw material
costs 40
First-party audits: Total 146 0
100
By region: Japan 130: China 4; Asia (excluding China) 12 - BecauseWorking hours
while minimum Wages increased,
wages and benefitsnot providing
Environment
benefits 30
150
By industry: Apparel 15; Food 105; Living/HBC 26 50such as social insurance, maternity leave, and paid leave, etc. was 20
Japan: Apparel 7; Food 101; Living/HBC 22 common
10
100
Overseas: Apparel 8; Food 4; Living/HBC 4 - B0ecause China’s new environmental laws were enforced,
strengthening
Safety andmanagement
health, ofand
Wages compliance
benefits withEnvironment
national laws 0
and health
and regulations 50
Points indicated in FY 2016 audits: 3.海外
（中国および他のアジア各国）
で増減が大きかった指摘項目
（件） FY 2015 FY 2016
80 0
1. Points indicated in working time, wages and benefits, and 70
safety and health increased overall 60
1.全体的に増加した指摘項目 80
（件）
50
FY 2015 FY 2016
30040 70
300
30 60
250 25020
50
200 10
200 40
150 0
Working hours Wages and benefits Environment 30
100 150
20
50 100
10
0
Working time Wages and benefits Safety and health 50 0
0
2.国内で増加した指摘項目
（件） FY 2015 FY 2016
200
150 200
100
150
50 Aeon Report 2017 127
100
SA8000 Certification
In 2004 we acquired SA8000 certification, an international Fair Business Practices
standard, becoming the first Japanese retailer to do so. The Practicing Fair Trade
standard establishes normative guidelines for protecting the
human rights of workers in international labor markets. It Fairtrade-Certified Products
requires compliance in eight areas that include protecting Responding to customers’ desire to do something through their
human rights and nondiscriminatory employment practices as purchases for the world’s underprivileged, Aeon has developed
well as development of a related management system and and begun marketing Japan’s first Fairtrade*-certified coffee (in
ongoing improvement to it. 2004) and Fairtrade-certified chocolate (in 2010), both under
The contents of the Aeon Supplier Code of Conduct (CoC) the private brand.
established in 2003 are based on the requirements of SA8000. In order to make these products available to a greater
The SA8000 certification applies to head office operational number of customers, Aeon has been participating in the new
management of Aeon Co., Ltd., Aeon Retail Co., Ltd., and Aeon Fairtrade Sourcing Programs launched by Fairtrade International
Topvalu Co., Ltd. as well as supplier management of the since January 2014. We have also announced a plan to increase
TOPVALU Aeon brand. The certification is renewed after the purchase of Fairtrade-certified cocoa beans up to ten times
receiving a renewal audit every three years and a maintenance the trade volume of 2012, by 2020.
audit every six months. In the fall of 2016, we renewed our product line using cocoa
Aeon will continue to pursue appropriate business bean ingredients certified by Fairtrade International, which is
processes together with suppliers on the twin basis of the in-line with our projected plans for procurement through 2020.
Aeon Supplier Code of Conduct and SA8000. In the future, we plan to expand Fairtrade-certified products
even more broadly by acquiring certifications for other products
as well such as raw cane sugar certified by Fairtrade International.
Objectives of Aeon SA8000 In addition, Aeon has been visiting junior high and high
1. We will respect the basic human rights of employees at the schools across Japan so that the younger generation has a
workplace and establish comfortable working conditions by
better understanding of Fairtrade.
ensuring safety, security and health.
* Fairtrade: An initiative for doing business with producers in need of support in
2. Along with our suppliers, who are equal business partners, we developing countries and setting product prices at levels appropriate to the
will respect laws related to human rights and labor standards labor involved. The initiative helps producers attain economic and social
and will continue to make improvements to help build a autonomy and also supports environmental conservation.
society where universal human rights are protected and efforts
are constantly made to improve working conditions.
Policies for Promoting Aeon SA8000

1. We will respect international norms and laws related to human rights
and labor standards and will make improvements on an ongoing basis.
a. C
hild Labor: We will prohibit child labor and take remedial measures.
TOPVALU
FLO (Fairtrade International)
b. Forced and Compulsory labor: We will reject forced labor in certification mark
Fair trade chocolate milk
all its forms.
c. Health and Safety: We will ensure the health and safety of
employees and provide healthy work environments.
d. Freedom of Association and Right to Collective Bargaining:
We will ensure freedom of assembly and the right to
collective bargaining.
Fairtrade Sourcing Program
e. Discrimination: We will not discriminate on the basis of nationality, label (cocoa)
race, sex, academic background, religion, physical disability or age.
• R egistered for the European Union at
European Union Intellectual Property
f. D isciplinary Practices: We will not engage in corporate Office (EUIPO) with registration No.
punishment, psychological or physical force, or verbal abuse. 012422143.
• R egistered at the World Intellectual TOPVALU
g. Working Hours: We will observe laws and labor agreements Property Organization (WIPO) according smooth mouth-melting bite-sized
to the Madrid Contract and Protocol with
related to working hours, breaks and days off. registration No. 1231866. milk chocolate
• Registration under application in Japan
h. R emuneration: We will observe laws related to payment of fair wages.
2. We will conduct training programs to fully educate all employees in
order to make this policy a reality, conduct regular reviews of this
initiative and work to make improvements on an ongoing basis.
3. We will encourage business partners (suppliers) to create and
observe a code of conduct related to human rights and labor
standards and to work together with Aeon to make improvements
on an ongoing basis.
4. We will work to broadly disclose this policy and provide appropriate
information and we will practice corporate social accountability.

Trading volume of fair trade products
4.2 tons procurement (planning ratio 83.8% achieved)

2014
Five times trading volume of the International Fair Trade
certification cacao (compared with FY 2012)
2015
Trading volume of International
Fairtrade-certified cacao beans Results
2016 6 times compared with FY 2012
Trading volume of the International Fair Trade certification
cacao: 40 tons (10 times compared with FY 2012)
2020
Target

Create Workplaces that Emphasize
Key Issue
In tandem with the globalization of business activities, huge based on the United Nations Guiding Principles on Business and
supply chains have been built linking many countries and Human Rights (commonly known as the Ruggie Framework).
regions, primarily by multinational companies. These supply In addition, in recent years, at the same time as respecting
chains also include countries and regions where the legal system people with diverse backgrounds, including nationality and
is underdeveloped. In order to engage in sustainable business in place of birth, taking advantage of this diversity and translating
such countries and regions, it is not only necessary to observe it into new value creation has become established as a human
local laws and regulations but also to promote business activities resources strategy which is indispensable to corporate growth.
Aeon’s Approach
Aeon has set out the Basic principles on personnel and the Aeon environment is maintained, human rights are respected, and the
Basic Human Rights Policies in order to achieve management working environment and wages are guaranteed.
based on respect for human rights, which is a basic principle. In terms of promoting diversity, we employ human resources
In order to implement these Principles and Policies, Aeon has in Asian countries in addition to establishing opportunities for
rolled out human rights enlightenment education globally. In exchange of human resources. We also employ mature age
addition, we are working to steadily resolve issues at the Group workers and provide LGBT training. With regards to promoting
by holding regular meetings of the Human Rights Enlightenment women’s participation, which is considered to be a major
Education Committee. Furthermore, we make use of the Aeon challenge in Japan, we have established the Diversity Promotion
Supplier Code of Conduct (CoC) for TOPVALU manufacturing Office to work on the work-life balance problem and the
partners to confirm that a safe and healthy workplace promotion of women managers.
Future Initiatives
Human rights are an issue which forms the foundation for all In the area of promoting diversity, we will also continue with
other social issues, and a variety of international guidelines measures aimed at achieving our 2020 targets, which include
require corporations to take proactive initiatives on human increasing the rate of female managers to 50%.
rights problems. Aeon will aim for a system in which the In 2016, we made the Aeon Health Management Declaration.
departments concerned collaborate to take action across the We will promote health management based on the belief that
organization not only on the human rights of our own promoting employee health is cornerstone of corporate activities.
employees but also human rights throughout the supply chain.
AEON Code of Conduct – Together with AEON People

AEON respects human rights, and will not discriminate against anyone based on nationality, race, gender, age, educational background, religion,
sexual orientation, physical handicap, or anything else not related to desire, hard work, and talent. AEON people respect and listen to their
co-workers. Our goal is to be recognized as the friendliest, people-oriented company to work for in the world.
Basic principles on personnel

With the primary objective of management based on respect for human rights, Aeon’s basic principles on personnel revolve around listening to employees’
aspirations, understanding employees’ feelings and making the most of what employees have to offer, based on the guiding philosophy of ensuring that all
Aeon people lead a full life at work, at home and in the community.
Basic approach to personnel

• Creating a corporate environment in which human resources can Fundamental Principals of the Aeon
continue to grow as they work over the long term. Basic Human Rights Policies
• D ealing with personnel based on ability and achievement, not Management
nationality, age, gender or job category. based on respect 1. Respect human rights
for human rights
Listening to employees’
2. Prevent discrimination
Five Human Resources Principles aspirations, understanding 3. Establish a friendly working environment
employees’ feelings and
1. Fairness making the most of what 4. Conduct fair employment
2. Respect
employees have to offer 5. Introduce human rights enlightenment
3. Openness to change Ensuring a full life at work,
training
at home and in the community
4. Rationality (Details on P. 135)
5. Ability Development

Human Rights and Diversity

Main
egory in FY 2016
egory
1) Hold a seminar for women and

managers in order to solve
common group issues
2) Hold awards to commend
initiatives of each company
3) Expanding installation of
Female Manager Ratio: 27%
Consolidated Group workplace childcare facilities
Female Manager FY 2016: 30% 9,366 people
companies in Japan (now 12 locations + 2 locations
Ratio FY 2020: 50% (As of the end of February,
and overseas (partnership))
2017)
4) Implement “IkuBoss” testing
aimed at nurturing “IkuBoss”
Approximately 10,000 people
equivalent to about 40% of
Group management passed
(As of the end of February, 2017)
Promoting Diversity
Group 1) Review of Japan training menu

International Consolidated Group (introduction of technical
FY 2016: Total 600 people, Total 404 people
People to People companies in Japan training, etc.)
FY 2020: Total 1,500 people (FY 2013 – FY 2016)
Exchange and overseas 2) Discover human resources
Programs through open recruitment
Human Rights / Labor Practices
1) Regularly carry out progress

Employment Rate for People management of the
Employment Rate with Disabilities: 2.19%, employment situation
for People with Consolidated Group FY 2020: More than 3.0% Number of people with 2) Challenges and measures in
Disabilities and the companies in Japan 10,000 people disabilities employed: 6,795 the employment of people
Number of People people with disabilities to share in the
(As of June 1st, 2017) Group companies, and lead to
adoption and fixing
Creating company-wide “General

Business Action Plan” for Japan’s
Act on Promotion of Women’s
Creating Pleasant, Comfortable Workplaces
Participation and Advancement

in the Workplace enforced on
April 1, 2016, “General Business
Companies that acquired Action Plan” for Japan’s Act for
Promote initiatives under the
Kurumin: 14 companies Measures to Support the
“General Business Action Plan” for
Number of Companies that acquired Development of the Next
Japan’s Act for Measures to
Companies Consolidated Group Platinum Kurumin: 1 company Generation Children, and
Support the Development of the
Certified to Use the companies in Japan Companies that acquired Daimanzoku plan to bring
Next Generation (expand number
Kurumin Logo Eruboshi: 23 companies (15 together Aeon’s initiatives aimed
of companies certified to use the
companies with Stage 3 and 8 at promoting diversity
Kurumin logo)
companies with Stage 2) Promoting Group-wide
acquisition not only of Kurumin
logo, but also “Eruboshi”
certification based on Japan’s Act
on Promotion of Women’s
Participation and Advancement
in the Workplace

Key Issue 6 Create Workplaces that Emphasize Human Rights and Diversity
Building Diversity Promotion Systems — Daimanzoku Summit

Human Rights / Labor Practices Aeon has designated a person responsible for diversity
Promoting Diversity promotion, a leader to realize a corporation offering
exceptional opportunities for women, and a leader to achieve
Promoting Diversity an excellent workplace for women in each of 65 Group
Since being founded, Aeon has respected human rights and companies. All Aeon companies are now analyzing their status,
aimed to be a company where diverse human resources can identifying issues, and implementing their own ideas to solve
play active roles without any discrimination on grounds such the issues. Four times a year the Daimanzoku Summit is held. It
as nationality, race, sex, academic background, religion, mental is attended by leaders and people responsible for diversity
or physical disability, or any other attribute. promotion to share information between Group companies for
Amidst business globalization and the requirement to utilization in activities at their own companies.
respond rapidly to differences, Aeon established the Diversity The Daimanzoku Summit was held four times in FY 2016.
Promotion Office in July 2013 as an organization under the One time was designated as a review meeting for the open
direct control of the Group CEO to continually create new presentation of the Group’s diversity awards at which we
value by leveraging its diverse pool of human resources and formed networks and shared the initiatives at each company.
respecting the unique traits of each individual employee. As
the first step in this process, we have launched efforts to reach
our goal of becoming recognized as the best employer for
females in Japan and the company where female workers most
want to work.
In April 2014, we established systems to encourage this at
around 70 Group companies, and the Group is working
together to promote diversity.
“Daimanzoku” is the key word in Aeon’s activities to
promote diversity. Daimanzoku is about realizing satisfaction Running Diversity Training — Daimanzoku College
for employees and their families, customers, and the company, In FY 2016, we started a new senior management course with
who all create diversity. To realize “Daimanzoku” in FY 2016, we the aim of training female officer candidates.
held diversity promotion seminars and internal group awards In FY 2017, we will further develop the four courses which
as well as furthered the expansion of ran until last year and continue to provide them incorporating
nurseries for Group companies. We joint courses with companies from other industries.
also put efforts into training for current
managers, such as implementing
“IkuBoss” testing with the aim of newly
nurturing “IkuBoss” ( P. 136).
Career advancement course
Management course
Career design course

Establishing a Commendation Program — The Daimanzoku Hiring Employees of Foreign Nationality, Group International
Award People to People Exchange Programs in the Group
Aeon has set up a Daimanzoku award to recognize the Group Aeon is actively hiring young talent who will shoulder the
company that has most promoted diversity. For the 3rd awards, future in the Asian countries of Japan, China, Malaysia, Thailand,
we established category awards for the four categories out of Indonesia, and Vietnam based on the Asia Shift strategy
the six areas that are key initiatives in promoting diversity, stipulated in the medium-term management plan.
excluding the two categories that are already completed While proactively hiring talent that can take active roles on the
company-wide. Gfoot Co., Ltd., Kohyo Co., Ltd., and Aeon global stage and beyond borders,
Ryukyu Co., Ltd., and Aeon Big Co., Ltd. received category Aeon encourages greater international exchanges within
awards, and Gfoot Co., Ltd. received the Best of Action Award the Aeon Group with a target of exchanging a cumulative total
as the company with the most outstanding initiatives in the of 600 people between FY 2013 and FY 2016, and 1,500 people
four categories. Furthermore, Aeon Kyushu Co., Ltd. received by FY 2020. The cumulative total for FY 2013 through FY 2016
the Diversity Promotion Company Award as the company was 404 people exchanged.
where diversity is most advanced overall rather than in just a
category.
Training atmosphere overseas (Hong Kong)
Receiving awards
Appointment of Female Managers

Aeon has established targets for the female manager ratio of
30% by FY 2016 and 50% by FY 2020. Training atmosphere overseas (Malaysia)
As of the end of February 2017, the female manager ratio
stood at 27% (includes consolidated subsidiaries). FY 2016 Results and Target of KPI
Aeon will make positive efforts to appoint women aimed at
definitely achieving the target for FY 2020. Group International People to People Exchange Programs
Total 168 people

2014
Total 288 people
Female Manager Ratio 2015
Total 600 people Target
18.2%
2014 2016 Total 404 people Results
22% 5,887 people Total 1,500 people

2015 2020
30% Target Target
2016 27% 9,366 people Results
50%
2020
Target

Employment for People with Disabilities Improving the System for Employing the Elderly
Aeon is working to establish conditions Group-wide that allow Aeon Retail Co., Ltd. instituted a mandatory retirement age of
people with disabilities to work with a sense of purpose. 65 starting in 2007 in order to meet the needs of the company,
Abilities JUSCO Co. Ltd. established in 1980 has expanded which wants to continue employing people over the age of 60
to 4 Scrum CD/DVD & Books stores where people with who are highly motivated, and the needs of the workers, who
disabilities are working alongside able-bodied staff, and 10 want to continue working in a stable environment utilizing
business establishments for employment transfer support. their knowledge and experience.
Furthermore, Aeon Supercenter Co., Ltd. has adopted a As of the end of February 2017, a total of approximately
telecommuting system for people with disabilities as one part 26,700 employees (including part-timers) were working taking
of its diversity promotion action plan in cooperation with advantage of the experience, skills, and knowledge they
Abilities JUSCO. acquired in the past.
As of June 2017, the total number of people with disabilities
employed at Group companies was 6,795 with an employment
ratio of 2.19%. Human Rights Training
This employment rate We have built a human rights enlightenment system as the
exceeds the statutory Aeon Group to promote the Aeon Human Rights Basic Policies
employment rate of 2.0%, and in an effort to improve human rights awareness through a wide
we will continue to advance our range of internal training.
efforts in order to reach a 3.0% Aeon holds enlightenment training programs of a variety of
employment ratio for people issues, including issues pertaining to social discrimination,
with disabilities, or 10,000 foreign residents, abuse of power, diversity, people with
people, as a target for 2020. Employees working at Scrum disabilities and work-life balance, to facilitate correct
understanding and deepen awareness in all of our employees.
Employment ratio for people with disabilities and 1) Human Rights Enlightenment Committee (convened
number of people with disabilities employed once every six months)
Committee to define the direction of human rights
2.11% 5,279 people enlightenment at Aeon, assess and make decisions regarding
2014
issues, and train individuals responsible for promoting human
2.16% 6,341 people rights at each Group company
2015
2) Human Rights Enlightenment Study Group (convened
once every six months)
2016 2.19% 6,795 people (as of June 1, 2017) Results
Study group to educate individuals responsible for promoting
3.0% more than, 10,000 employees human rights at each group company.
2020
Target 3) Human Rights College (convened four times a year)
College to define courses to teach the basic human rights
principles originating at Aeon. This college is primarily a place for
fundamental education for the participation of managers and
individuals responsible for or in charge of administrative education
Promoting Equal Opportunities for Part-time Employees as well as individuals responsible for or in charge of promotion.
We have developed various programs that allow part-time
employees to thrive at the workplace.
For example, Aeon Retail Co., Ltd. has a system that makes it Human Rights and Aeon Code of Conduct Training has provided
possible for all employees to utilize the same training and guidance to each company conducted under themes selected
hiring programs. Based on the Community Employee Program, to be in-line with the training needs of each Group company
it is eliminating differences in roles, expectations and treatment while linking to the Aeon Human Rights Enlightenment Office
depending on employee classifications (permanent employee and Corporate Ethics Team.
or part-time employee) and enabling the continued growth of We also published a Human Rights
all employees depending on ability, performance and Enlightenment Guidebook in 2015 as
motivation. The program eliminates differences in educational a tool to promote basic knowledge
and hiring opportunities. It also makes it possible for anyone to about human rights. We will continue
take on the challenge of a permanent employee or higher to strive to build tools and develop
position, including willing Community Employees if they fulfill training materials that utilize this
certain conditions set by the company. guidebook. In FY 2017, we plan to
continue conducting Human Rights
and Aeon Code of Conduct Training
with all of our employees. Human Rights Enlightenment
Guidebook

Aeon Basic Human Rights Policies Human Rights / Labor Practices
1. Respect human rights Creating Pleasant, Comfortable Workplaces
In accordance with the Aeon Code of Conduct and the
principles of the UN Global Compact joined in 2004, Aeon not
Supporting the Balance between Work Life and
only adheres to Japanese laws related to human rights and
labor but also the human rights standards that are set out in Child Raising
the International Bill of Human Rights and the conventions of Aeon is a strong advocate of helping employees balance work
the International Labour Organization (ILO). life with child raising needs. Specifically, we strive to encourage
2. Prevent discrimination employees raising children to reduce their overtime work, take
Aeon respects the diverse values, personalities, and privacy of childcare leave (including fathers), and take annual paid leave.
individuals and never discriminates on grounds of human
We promoted initiatives at each Aeon Group company, of
rights, nationality, ethnicity, gender, age, place of birth, religion,
educational background, physical or mental disability, sexual our general business action plan developed under the Act for
orientation, or gender identity. Measures to Support the Development of the Next Generation.
3. Establish a friendly working environment As a result, as of May 2016, Aeon Co., Ltd. has been certified
Aeon fosters a working environment that respects human with the Platinum Kurumin. 14 Group companies have also
rights in which all Aeon people listen to the views of colleagues been certified to display the Kurumin logo.*
working alongside them and accord them equal respect. Aeon Going forward, we will continue to implement measures aimed
establishes a friendly working environment that is free from
at achieving a balance between work life and child rearing.
sexual harassment and power harassment, which are acts that
undermine personal identity and dignity. * Companies that have acquired Platinum Kurumin:
Aeon Co., Ltd. Companies that have acquired the
4. Conduct fair employment Kurumin certification: Aeon Credit Service Co., Ltd.,
Aeon practices impartial and fair selection in employment Aeon Global SCM Co., Ltd., Aeon Topvalu Co., Ltd.,
based entirely on the abilities and aptitude of the individual Aeon Big Co., Ltd., Aeon Kyushu Co., Ltd., Aeon Mall
concerned. Co., Ltd., Aeon Retail Co., Ltd., Aeon Ryukyu Co., Ltd.,
The Daiei, Inc., Kasumi Co., Ltd., Maxvalu Chubu Co.,
5. Introduce human rights enlightenment training Ltd., Maxvalu Nishinihon Co., Ltd., Origin Toshu Co.,
Aeon strives to provide human rights enlightenment training Ltd., and Sunday Co., Ltd. (in alphabetical order)
to deepen a correct awareness and understanding of human
rights by all Aeon people in order to resolve issues concerning
human rights. FY 2016 Results and Target of KPI
Creating Pleasant, Comfortable Workplaces

12 companies certified to use the Kurumin logo
2014
Workshop on LGBT 13 companies certified to use the Kurumin logo
Responding to increasing attention to human rights of sexual 2015
1 company certified as Platinum Kurumin
minorities (LGBT: Lesbian, Gay, Bisexual, and Transgender), 14 companies certified to use the Kurumin logo
1 company certified as “Platinum Kurumin”
Aeon is holding workshops on LGBT to provide the latest 2016 23 companies with “Eruboshi” certification Results
knowledge on human rights and to create a workplace where (15 companies with Stage 3, 8 companies with
Stage 2)
individual employees can work in their own ways. 2017
Since FY 2015, this training has also been incorporated into Target Promote initiatives under the “General Business
Action Plan” for Japan’s Act for Measures to
the new employee orientation with roughly 8,000 new 2020 Support the Development of the Next Generation
(expand number of companies certified to use the
employees taking the program. Group-wide, an approximate Kurumin logo)
total of more than 20,000 employees have taken the program.
In FY 2016, Aeon Co., Ltd. and Aeon Topvalu Co., Ltd. both
received a Silver Award in the PRIDE Index, formulated by work
with Pride* as Japan’s first index for
the evaluation of LGBT initiatives.
We aim for further penetration to
all Group companies in the future
while collecting examples from
companies who are actively
engaged in these efforts.
* A private organization that supports the promotion and consolidation of LGBT
diversity management.

Creating Infrastructure to Support the Balance between

Work Life and Child Raising Topics
We installed Aeon Yumemirai Nurseries at Group business Gained Top Ranking for Active Use of
establishments so that not only our employees but also Women’s Ability in “100 Best Companies
employees working at tenants inside of Aeon Mall as well as Where Women Play Active Part” 2017
the locals can be assured of both work and childcare.
For the purposes of In May 2017, Aeon Co., Ltd. gained the top ranking out of 4,300
employees’ smooth return to companies for Active Use of Women’s Ability in the “100 Best
work from childbirth and Companies Where Women Play Active Part 2017*” published
based on the Survey on Female Workers’ Workplace
subsequent child rearing, and
Opportunities conducted jointly by Nikkei Woman and Nikkei
to support employees working
Womenomics Project. This was due to the high rating received
while raising children, the
by the establishment of a dedicated organization for women to
nursery opens from 7:00 AM to participate actively in rewarding work, the implementation of
10:00 PM almost every day, activities to promote diversity in partnership with Group
including Saturdays, Sundays, companies, the provision of organization-wide training for
national holidays, and year-end female employees, the revision of the personnel system, and
and New Year holidays. The the fostering of IkuBoss. As a top-ranking company, Aeon
childcare fees are calculated received a commendation at the ceremony held on May 19.
from hours of care regardless Aeon Yumemirai Nursery Going forward, Aeon will continue to promote human
of the day or time period in Chigasaki Nursery resources development and the establishment of the
workplace environment, implementing diversity management
order to reduce the burden
to enable diverse human resources to play an active part.
on employees from paying additional fees or arranging
* In the Survey on Female Worker’s Workplace Opportunities
secondary childcare. implemented from January to February Japanese companies are
In addition to opening nurseries at Aeon Style Shonan scored in four categories: promotion to managerial positions,
Chigasaki and Aeon Lake Town mori in April 2016 and Aeon active use of women’s ability, work-life balance, and penetration of
diversity, and an overall score is calculated.
Mall Saga Yamato in June, we also opened nurseries at Aeon
Mall Natori, Aeon Mall Nagoya Chaya, Aeon Mall Nagakute, and
Aeon Mall Mito Uchihara in November. In FY 2017, we will also
open nurseries at Aeon Mall Shin-Komatsu and Aeon Mall
Fukuoka Higashi. Going forward, we will continue to support
employees working while raising children.
Furthermore, in April 2015,
we opened Aeon After-school
Class at the Aeon Marinpia
Annex and at Daiei Narimasu Store. The classes, which offer a
comprehensive after-school care program with physical,
academic, moral, and dietary education, are located near train
stations, making it convenient for parents to drop off and pick
up their children and for children to come to the class.
Moreover, based on the
belief that the existence of
bosses and organizations that
recognize diversity and make Award ceremony held on May 19
use of it in management is key in achieving a balance between
work life and child raising, Aeon Co., Ltd. and The Daiei, Inc.
became the first retailers to join the IkuBoss* Alliance in June
2015. 39 Group companies have joined the IkuBoss Alliance as Voice
of April 2017.
Hitoshi Ishikawa
* IkuBoss: The ideal advocated and promoted by non-profit organization
Fathering Japan. It refers to a boss who considers the work-life balance of Deputy Manager,
subordinates and staff working with him or her in the workplace and supports The Big Extra Tamaki Store,
their career and lives while producing outcomes for the organization and being AEON BIG CO., LTD.
able to enjoy his or her own work and private life.
In October 2016, I received the Grand Prize in the “IkuBoss-san
Irasshai” category at the third Father of the Year in Mie organized
by Mie Prefecture. I think this was in recognition of my efforts to
streamline work to achieve work-life balance for my subordinates
based on the idea that work is dependent on family. In the
future, I will continue working to create an environment that is
easy for my subordinates to work in as even more of an IkuBoss.

Securing Work-Life Balance Welfare Programs
Aeon Retail Co., Ltd., which accounts for about one quarter of The Aeon Good Life Club, Aeon’s mutual aid society, in which
all Group employees, introduced a personnel system in 2017 some 275,000 Aeon Group employees are enrolled. Programs
based on the concepts of “fairness” and “challenge.” include the payment of gift money for celebratory occasions or
The system aims for an environment in which employees condolences (mutual assistance), subsidies for childcare and
with diverse abilities feel more active participation and nursing care, various forms of insurance (self-help support), and
fulfillment with a career style that capitalizes on their own support for leisure activities and health (motivational
desires and aptitudes and can continue to work with assistance). We aim to administer various programs
enthusiasm and grow in accordance with their own lifestyle. contributing to the achievement and enhancement of
Moreover, the system includes the Career Style Plan as a common welfare to enable Group employees to have a sense
program to support independent career development and the of security, solidarity and pride.
Lifestyle Plan as a program to support the ability to keep
working long-term in the midst of changes in life stage.
Going forward, we will further develop our programs and Health and Safety Committees
systems so that female employees in particular have a Health and Safety Committees are organized at the store and
workplace environment where they can thrive professionally, business office level in order to ensure the safety and health of
while achieving a work-life balance between their job and employees and promote the creation of pleasant, comfortable
marriage or childcare. working conditions. For example, at stores of Aeon Retail Co.,
Ltd., store managers, managers of personnel and general affairs
departments, employee representatives and labor union
Aeon Retail Co., Ltd. representatives attend the committee meetings, which are held
“3 career paths” “Employee working area”
once a month. Points for improvement in employee working
Career paths
conditions and the workplace environment are considered by
General path
A path which aim for career development across a wide area labor and management, paving the way for improvements.
while building up diverse experience
Unit path
A path which aims for specialization while advancing specialist Labor Union Status
knowledge and skills Aeon emphasizes dialogue between labor and management, and
Professional path discussions are held with the labor union through Safety and
A path which aims for an advanced profession Sanitation Committees and the labor management council.
Employee duty area The labor union has encouraged part-time employees to
Category N employee: Basically, nationwide transfers, including become members, and as of the end of April 2017, the labor union
overseas
had roughly 265,000 members, including 216,000 part-time
Category R employee: Transfers within a certain block
Category L employee: No transfers that require moving house employees. We actively work to incorporate employee feedback
Community employee and part-time: No transfers that require through workplace meetings participated in by union members
moving house/part-time only and promote efforts to resolve issues with labor and management.
Global Framework Agreements

Childcare and Nursing Care Support Programs In November 2014, Aeon Co., Ltd. signed the Global Framework
Aeon Retail Co., Ltd. makes childcare leave available for up to Agreement on labor, human rights, and the environment with
April 20 of the year the child enters middle school. While the UNI Global Union, which is an international labor organization,
legal requirement under Japan’s Child Care and Family Care UA zensen, and Federation of Aeon Group Workers’ Union. The
Leave Act is to attempt to make this available until the child agreement is a commitment acknowledging that the
enters elementary school, we have provided extra time multinational enterprise and the labor union are mutual partners
because workers often want to take time off after that for other and will work together as the enterprise expands business
events in their child’s life. globally.
For employees with families for which nursing care is More than 100 companies worldwide have entered into the
deemed necessary, we have established a nursing care leave Global Framework Agreement,
program and a nursing care work program that provide time and the four parties are jointly
off or shortened working hours. promoting their efforts on
labor, human rights, and the
environment so as to become
a role model for the labor-
management relationship in
Asia.
Interview on conclusion of Global
Framework Agreements

Aeon’s Health Management

Aeon promotes health management based on the belief that Topics
the promotion of employees’ health is a cornerstone of Aeon Co., Ltd. and Aeon Retail Co., Ltd.
corporate activity and that we will be able to provide services Certified as White 500 Outstanding Health
to local customers because employees are healthy. and Productivity Management Organization
In FY 2016, we made the Aeon Health Management
Declaration, aiming for the physical and mental health of our Aeon Co., Ltd. and Aeon Retail Co., Ltd. were certified in the
employees and their families and continuously growing human first fiscal year for the new Outstanding Health and
resources able to continue working over the long term. Productivity Management Company (White 500)
commenced jointly by Japan’s Ministry of Economy, Trade
and Industry (METI) and Nippon Kenko Kaigi.*
Aeon Health Management Declaration
hite 500 Outstanding Health and Productivity
W
Aeon will support the health of employees and their families
Management Company
Aeon will achieve health and happiness in the local community
It is a new program that Japan’s
together with employees
Ministry of Economy and Industry
and Nippon Kenko Kaigi initiated
jointly in 2016 to certify corporations
Aeon is working to ensure that all of its employees receive that practice outstanding health
regular health exams and that it thoroughly conducts management with plans to certify
follow-up, which includes recommendations for additional 500 companies by 2020.
medical screenings and work schedule adjustments based on * N ippon Kenko Kaigi: an action group organized to implement
effective activities related to extending the healthy life expectancy
the results of the exams, in order to properly manage of individual citizens and appropriate health care in collaboration
employees’ health in compliance with the provisions of Japan’s with private sector organizations with full administrative support.
The aim is for private sector organizations, such as economic
Industrial Safety and Health Act. To help employees maintain groups, health care groups, and life insurers, to collaborate with
or improve their health, we also have developed an insurance local governments and achieve concrete measures in the
program to provide more comprehensive health exams to workplace and the community.
employees aged 40 and over that are enrolled in Aeon’s

corporate health insurance society. We also hold an annual
Health Challenge Campaign for all enrolled members and have
implemented initiatives to make activities to improve health Employee Satisfaction Survey
into a habit in everyday life. Aeon conducts an employee satisfaction survey on morale
A counseling office is provided to support good mental targeting all Aeon Group employees every other year. The
health as part of the member services provided by the Aeon results of this survey and employee feedback will be utilized to
Good Life Club, Aeon’s mutual aid society. develop our organization and systems to improve motivation
Going forward, Aeon will build a system for promoting and make our workplaces more employee-friendly to enhance
health management led by Group health managers and move employee and customer satisfaction.
forward with further initiatives, establishing key areas such as Aeon objectively identifies the situation and works to
visualization of employees’ health condition, prevention of further enhance employee satisfaction by drafting and
lifestyle diseases, promotion of mental health, and promotion implementing concrete measures to enhance satisfaction
of health for older people. based on the results of the survey.
Training Programs Supporting the Growth of

Employees
Aeon believes that the greatest form of welfare is education.
This phrase embodies the thought that education, in addition
to wages and benefits, is key to enriching the lives of its
employees. Given this, we have created a wide range of
training programs that support the growth of employees and
their desire for advancement.
In addition, we have created a system for employees to
meet twice a year with their supervisors to discuss and reflect
on their work performance and work challenges, and to look
ahead to their future aspirations. There are also regular
assessments of individual work results and career
achievements.

Aeon Fundamental Education Internal Certifications and Number of Holders*
(As of the end of February 2017)
This is provided for the first three years following employment
with the same content Group-wide. Besides sharing Aeon’s Fresh fish master (grade 1) 19
basic philosophy and set of values, the education aims to get Fresh fish master (grade 2) 1,815
employees to completely master the corporate culture and Fresh fish master (grade 3) 3,304
basic skills as Aeon people. • Baby advisor 781
• Fashion advisor 1,215
• Liquor advisor 743
Aeon Group Self Declaration Form System
• Fish advisor 442
This system encourages transfer within the Aeon Group • Digital advisor 290
beyond the framework of the company amid the many • Home appliance advisor 83
different business domains covered by the Aeon Group. In FY • General appliance advisor 63
2016, the system was implemented targeting the senior • Cycle advisor 1,257
management level at 43 Group companies. • Senior cycle advisor 297
• Beauty advisor 875
Sending Personnel to Graduate Schools in Japan • Handcraft advisor 595
Under this system, Aeon selects employees from Group • Senior care advisor 64
companies to enter graduate school in Japan (MBA course) as a Hot deli master 2,562
Sushi master 2,445
means to develop human resources that will take charge of
Farm product master 1,327
managing the Aeon Group in the future. The aims are for them
Greenery master 687
to learn specialized knowledge related to management and Gardening master 365
build networks outside of the company. • Energy Advisor 474
Global Trainee System denotes qualifications accredited by the Ministry of Health, Labor and Welfare.
* Total for Aeon Retail Co., Ltd., Aeon Supercenter Co., Ltd., Aeon Hokkaido
Under this system, Aeon posts outstanding human resources Corporation, Aeon Kyushu Co., Ltd., Aeon Ryukyu Co., Ltd., Maxvalu Hokkaido
across national borders to Group companies in Japan, China Co., Ltd., Maxvalu Tohoku Co., Ltd., Maxvalu Chubu Co., Ltd., Maxvalu Kyushu
Co., Ltd., Maxvalu Minami Tohoku Co., Ltd., Maxvalu Kanto Co., Ltd., Maxvalu
and ASEAN in order to train the future leaders of the overseas
Nagano Co., Ltd., Maxvalu Hokuriku Co., Ltd., Maxvalu Nishinihon Co., Ltd. Aeon
business and human resources with the ability to act at the Big Co., Ltd, Kohyo Co., Ltd., Aeon Liquor Co., Ltd., Aeonbike Co., Ltd., Aeon
global level. The aim is acquisition of essential knowledge and Retail Store Co., Ltd., Aeon Store Kyushu Co., Ltd. (20 companies)
skills through operational experience and training overseas.

Aeon DNA University
Aeon Business School In September 2012, Aeon instituted the Aeon DNA University
The Aeon Business School provides courses for personnel to to train the next generation of Aeon management by instilling
learn the knowledge necessary for the jobs they aspire to. The the philosophy and values of the company passed down since
system supports self-actualization of motivated personnel. 13 its founding. The Group CEO himself is an instructor at the
courses were held in FY 2016 and up to 452 people attended. university.
In FY 2016, we started with guidance for 19 eighth term
Group Recruitment System students in April and 20 ninth term students in October.
This system enables personnel to challenge the business and Approximately 160 employees have trained and are active in
job position they aspire to without being restricted by the each Group company as of the end of April 2017.
domain or company they belong to. In FY 2016, we introduced
staff recruitment (including global trainees) at Aeon Marketing
Co., Ltd., Aeon Insurance Service Co., Ltd., Aeon IBS Co., Ltd.,
Aeon Topvalu Co., Ltd., and overseas businesses (China/
ASEAN).
Internal Certification Systems

Aeon has established a wide array of internal certification
systems for specific jobs. Eight of these certifications have been DNA University Class
accredited by the Ministry of Health, Labour and Welfare and
recognized for their high quality.
Sengyo-shi skill competition

Collaborate with the Community
Key Issue
Each region faces distinctive social challenges, such as poverty, resources such as technology, knowledge, information, funds,
education, food, healthcare, health, low birthrate, and aging and management know how.
population. Under these circumstances, in many countries and Meanwhile, there has been a growing recognition among
regions, local governments, NPOs and NGOs, and international corporations that the development of local communities is
organizations have been working together to solve these essential for stable business operations, including the
challenges. However, in recent years, there have been more development of products and services that respond to social
active moves attempting to continuously demonstrate even challenges and smooth business operations through human
greater power through the effective harnessing of corporate networks.
Aeon’s Approach
Aeon has established “rooted in local community life and which aims to stimulate industry in the regions where we do
making a contribution to the community” as a basic principle, business, including actively developing and selling products
and set out The Local Community and Aeon in the Aeon Code that match the local food culture.
of Conduct formulated in 2003. We have been working to solve Aeon aims to be a good corporate citizen, working together
social challenges in each region by interacting with people in with the community for its growth and the improvement of
Japan, China and the ASEAN region over many years. quality of life.
We have also put our efforts into developing a value chain
Future Initiatives
Aeon will continue to communicate with local people through through mechanisms to jointly develop the appeal and
business activities in order to put into practice our belief that “the competitive edge of a community while various community
retail industry is rooted in the local community” going forward. members, including local people, government administration,
One of these initiatives is the construction of Local Ecosystem and corporations, work together to the solve the challenges the
(P. 9). This aims to achieve a lifestyle and industry platform that community faces.
supports the sustainable development of local communities
Aeon Code of Conduct – Its Partners and AEON – The Local Community and Aeon
Aeon aims to set an example as a good corporate citizen, working together with the community for its growth and the improvement of
quality of life.
At Aeon, we promote management practices that are in step with the local community.
We believe that AEON forms a “partnership” with the local community. We proactively exchange information with local partners about the lifestyles of our
customers in the community, reflecting local community values in our business practices.
At Aeon, we respond to the needs of the local community, and provide a place where people can come together.
We conduct business that anticipates the wide variety of our customers’ lifestyle needs, offering high-quality products and services, in convenient and
pleasant facilities. At the same time, we provide a place for the local community to gather for educational and information-sharing opportunities.
At Aeon, we work in partnership with the local community to promote environmental conservation activities.
We endeavor to bring about clean streets with lush greenery, and support a recycling society by reusing resources and reducing the amount of garbage we
produce to as great an extent as possible. Our objective is to be the leading corporation working beyond local and national borders, showing the world how
to preserve our beautiful planet Earth.
At Aeon, we actively support volunteer activities together with the citizens of local communities.
We actively support welfare and other volunteer activities, working together with others in the local community who share the AEON philosophy. We believe
that both locally and internationally, contact and interaction with others is an important, worthwhile activity.
At Aeon, we respect the culture and traditions of local communities, offering support whenever and wherever we can.
We respect the oral traditions and culture handed down over generations in individual local communities. We support local efforts to discover and preserve
these valuable cultural links with the past.

Main
egory in FY 2016
egory
FY 2016:
Submission rate of 20 % or more
in the GMS all stores GMS companies: Submission
Making Contributions to Local Communities
1) Strengthening communication
Consolidated Group Submission rate of 15 % or more rate of 20 % or more in 384
Aeon Yellow in stores
companies in Japan in the SM/DS all stores stores (Entire rate 62.7 %)
Receipt Campaign 2) Strengthening communication
for GMS, SM and DS FY 2020: SM/DS companies: Submission
Submission Rate utilizing media
businesses Submission rate of 30 % or more rate of 15 % or more in 534
3) Proper management
in the GMS all stores stores (Entire rate 49.4 %)
Submission rate of 20 % or more
in the SM/DS all stores
Expand handling of region-

specific products Local goods such as Kokubu
Consolidated Group “Food Artisan products”: Ninjin (carrot) produced in
Handling of region- companies in Japan Expand handling of Food Artisan ASC: 27 prefectures, 37 items Takasaki city, Gunma Prefecture
specific products for GMS and SM Products (As of the end of February, and Aizu Mishirazu Persimmon
Community Involvement
businesses 2017) produced in Aizuwakamatsu city,

Promote sixth industrialization Fukushima Prefecture are sold.
using Food Artisan ingredients
1) Strengthening of basic and

thorough management
Develop the Human Resources of the Future
foundation of
• Implementation of “Aeon
Cheers Club start expression”
in all stores
• Implementing trial of
upgraded version of
Consolidated GMS
Number of Conducted more than four times Stores with more than 4 coordinator training (Kyushu
companies and some
activities by the the activities in all stores to carry activities/year: area, June 23 and 24)
SM companies in
Aeon Cheers Club out the activities 336 stores (overall 74.2 %) 2) In addition to the one-off Aeon
Japan
TOPVALU Agricultural
Eco-experience Project and
Aeon Agri Experience Farm
Program, initiating new
Farmers Program, an ongoing
program, at two locations in
Tokai and Kinki areas
3) Strengthening of publicity
Tree planting in affected areas
Implement tree planting activities

Regeneration of to reproduce coastal forests lost
Consolidated Group 300,000 tree planting in 10 years 56,403 trees
coastal forest in the in a tsunami in cooperation with
companies in Japan (FY 2012–FY 2021) (Total 202,682 trees)
affected area governments (country,
Tohoku earthquake reconstruction assistance
prefecture, municipalities)
Volunteer activities participation of Group
1) Conducted local volunteer

activities in affected areas
2) Each Group company
conducted volunteer activities
Volunteer Activities
employees
300,000 employees participated in each company and region

Promotion of Consolidated Group 41,177 people
in volunteer activities in 10 years to enable support without
Group employees companies in Japan (Total 237,905 people)
(FY 2012–FY 2021) going to Tohoku
as disaster relief
3) Promoted Aeon Future
Co-creation Program with aim
of supporting solution of local
challenges through interaction

Key Issue 7 Collaborate with the Community

Community Involvement
Making Contributions to Local Communities Aeon Yellow Receipt Campaign Submission Rate
32.4% of stores had submission rate of greater than 20%
(GMS: 51.9% / Supermarkets: 16.6% /Discount stores: 12.8%)
Aeon Happy Yellow Receipt Campaign 2014 GMS: Submission rate of 20% or more of the stores 366 stores
(overall 62.4%) SM/DS: Submission rate of 15% or more
Countless volunteer organizations* throughout local communities of the stores 3,175 stores (overall 35.5%)
2015
in Japan are in need of support. At the same time, countless
GMS companies: stores with submission
Aeon customers would like to support organizations devoted rate of 20% or more 384 stores (62.7%)
to their local communities. Aeon, as a local community
2016 SM/DS companies: stores with submission rate Results
of 15% or more 534 stores (49.4%) Results
member, launched the Aeon Happy Yellow Receipt Campaign 2020
to link customers and volunteer organizations. The “Aeon Target Submission rate of 30% or more at all GMS company stores
Submission rate of 20% or more at all SM/DS company stores
Happiness Yellow Receipt Campaign” started from these
feelings. Customers participate in the Campaign simply by
taking the yellow receipts they receive when making purchases
on “Aeon Day,” the 11th of every month, and placing them in a
box labeled with the name of an organization or a particular
Voice
activity. Aeon then contributes goods accordingly at a value of
1% of the total amount of the receipts. Kiyomi Omori
In FY 2016, the Campaign had expanded to include 1,690 Environmental and Social Contribution Staff,
stores, and we contributed goods worth approximately 331.180 Aeon Funabashi Store,
AEON Retail Co., Ltd.
million JPY to a total of around 25,300 organizations. Of
participating stores, 54.2 % had a submission rate of at least 20 % I feel that the Aeon Happy Yellow Receipt Campaign is really
for GMS companies and at least 15% for supermarket and discount worthwhile in that it allows me to feel the wonder of bonds and
store companies, targets which have been established as a KPI. mutual aid with local people. I always work with the feeling of
Since the Campaign’s inception in 2001, 267,900 organizations “togetherness with the volunteer groups.” The volunteer groups
have received support totaling around 3,115.4 million JPY. help with PR activities at stores on Aeon Day on the 11th of every
The campaign was also launched at Aeon (China) in 2012, month. In the future, we will continue to cooperate with each
and Aeon (Thailand) and Aeon (Cambodia) in 2015. other while connecting through our aspirations for local
We encourage our customers to participate in the Aeon communities and activities.
Happy Yellow Receipt Campaign. Among other efforts, we
offer volunteer organizations a chance to come into stores to
talk about their activities. We plan to actively pursue new Clean & Green Activities
initiatives that will allow participation by as many of our Aeon is actively involved in community landscaping projects
customers as possible. around its stores. Clean & Green Activities, conducted since 1991,
* Volunteer organizations’ activities should fall under one of the following five consist of employees volunteering to clean up parks and rivers
categories. around stores and areas surrounding public facilities. These
1. Activities to promote welfare
2. Activities to promote environmental preservation and environmental education activities have been conducted every month on the 11th, Aeon
3. Activities to promote urban development Day, since 2001 at all General Merchandise Stores and
4. Activities to advance arts and culture
5. Activities to enhance the health and safety of children
supermarkets as well as head office and other business offices.
We began collecting garbage and removing weeds from
the area where trees were planted for the Aeon Hometown
How Aeon Happy Yellow Receipt Campaign works Forests Program as part of the Clean & Green Activities.
Cumulative total of Issuing Local WAON Cards

3,115.40 million JPY WAON is a system of e-money pre-paid cards available at over
in goods donated as of 286,000 participating stores throughout Japan. In the case of
February 2017
Aeon’s Local WAON cards, a part of the proceeds from sales goes
to social contributions for communities.*
The social contributions that result from Local WAON card
Volunteer
Customers organizations use are wide-ranging, and include community environment
conservation efforts, promotion of tourism and sports,
preservation of cultural assets, and animal welfare. As of the
Place yellow receipts Stores calculate the Receive goods worth 1% of
in the box for the total value of receipts the total value of receipts end of February 2017, there are 126 different Local WAON card
organization they wish for each organization contributed to the cause
to support of their choice programs featuring wonderful local color. The aggregate
amount of local contributions comes to about 980 million JPY.
Aeon can offer customers the convenience of an e-money
prepaid card while at the same time actively contributing to
the support of local communities.
142
* Some exceptions exist
Aeon Report 2017
Types of Local WAON Cards Supporting the revitalization of local industries
Current as of the end of February 2017
and preservation of traditional food culture
Aeon actively contributes to Local Ecosystem and the
126 preservation of local traditions.
different types
of local WAON
Direct Business Dealings with Fishery Cooperatives
Aeon has done business directly with fishery cooperatives since
2008 in an effort to raise customer satisfaction by providing
even fresher fish while at the same time helping maintain
cultural practices associated with consuming fish through a
sustainable fishing industry. As of the end of February 2017, we
directly deal with four fishery cooperatives.*
Provision of “fresh fish caught in the morning” started from
July 2013. By arranging fresh fish that landed in the morning
over-the-counter in the afternoon of the same day, we enjoy
giving fresh fish to homes. We provide delicious menu
suggestions for children who don’t
Concluding Comprehensive Cooperation like to eat fish as well.
Agreements We also began an initiative in
Aeon has entered cooperation agreements with local which we will freeze freshly caught
governments to effectively combine respective resources for seasonal fish in order to ensure
expanding sales of local products, disaster preparedness, public consumers can enjoy them during
health, social welfare, and environmental conservation, and, other times of the year. We do
through Local WAON cards, to stimulate commerce and minced fish processing of rockfish
tourism. The first Agreement was concluded in June 2010 with caught in season, and also sell
the Osaka Prefectural government. The first agreement was minced fish products using small All fish caught by this fishing
concluded in June 2010 with the Osaka prefectural fish that do not meet standards vessel is purchased by Aeon
government. At the end of February 2017, we had agreements and cannot be shipped to market.
with 44 prefectural governments, 16 government ordinance- Through dialogue with the
designated cities, and 42 cities and towns. National Federation of Fisheries
Through these agreements, we are, providing emergency Cooperative Associations, Aeon
supplies and emergency shelters for times of disaster upon intends to continue conducting
request, holding local product fairs and promoting local initiatives that benefit our
tourism through our stores, customers, and continue to help to
and working with local solve problems in marine products.
governments to plan and * JF Shimane, JF Hiroshima, JF Ishikawa, JF Fresh fish caught in the morning
market boxed lunches Katase-Enoshima
made with local foods. In this

way, we are also helping to Promoting Food Artisan Project
stimulate local communities Aeon has conducted the Food Artisan Project since 2001 with
and improve daily life services. Signing ceremony (Kahoku city) many producers across Japan dedicated to preserving local
flavors. The project seeks to preserve and build local culinary
cultures as brands. Everyone involved pools their wisdom and
works to publicize the ingredients and traditional techniques
that support exceptional local culinary cultures in an effort to
protect, preserve and create new brands.
As of the end of February 2017, food artisan
activities have covered 27 prefectures and 37
dishes, whose unique local flavors are being
delivered to the dinner tables of people across
Japan.

Signing Disaster Prevention Agreements

Aeon strives to ensure that employees working at our stores
constantly act as members of the community. The same applies
during natural disasters. We continue to sign disaster prevention
agreements with local authorities throughout Japan, pledging
cooperation and support in the event of an emergency in an
Kokubu Ninjin (a traditional variety of
carrot) effort to be of use to people in the local community.
Kokubu Ninjin cultivated in Takasaki city, As of the end of May 2017, disaster prevention agreements
Gunma Prefecture. The carrots are long
at around 60cm and sweet with a have been signed with about 750 municipalities around Japan,
strong fragrance and a soft texture. and they will provide parking spaces as evacuation sites or
provide relief supplies during a disaster. We are also
Aizu Mishirazu Persimmon strengthening cooperation and cooperating in local disaster
Cultivated in Aizuwakamatsu city, prevention activities such as implementing disaster prevention
Fukushima Prefecture. The origin of the
name comes from being praised as “a training in addition to joint activities.
persimmon of yet unknown taste”
when presented to the shogun during
the Tokugawa period.
Introducing Balloon Shelters
Aeon has promoted installation of “balloon shelters”— large
FY 2016 Results and Target of KPI tents for use in emergency evacuations—since 2004 to be ready
in the event of an earthquake or other major natural disaster. The
Handling of region-specific products
tents have been placed
Food Artisan Products: 23 prefectures 35 item
2015 at a total of 29 locations,
primarily shopping
Food Artisan Products: As of end of February
2016 2017: 27 prefectures 37 items Result centers around the
country (as of the end of
2017 Expand handling of Food Artisan Products February 2017). The tents
Target Promote sixth industrialization using Food Artisan
ingredients are lightweight and
2020 easy to carry, so those
A balloon shelter
stored close by can be Balloon shelters can be easily inflated with a
brought to locations special blower and be ready for use in around 40
minutes. They come two to a set and one set has
affected by disasters. room for around 100 people to lie down.
Aeon Welfare Fund

The Aeon Welfare Fund was established in 1977 to promote Community Involvement
the welfare of persons with disabilities and to support their Develop the Human Resources of the Future
independent participation in society. Aeon has carried out
various projects, focusing on donating special vehicles and Aeon Cheers Club
contributing to volunteer activities, through 50-JPY monthly The Aeon Cheers Club provides hands-on opportunities for
employee contributions matched by the employer. As of the first through ninth-grade students to learn about the
end of February 2017, 66,240 Aeon employees from 90 environment. Young people can come together once a month
companies are participating in this program. or once every two months to participate in Aeon Cheers Club
In FY 2016, neighborhood welfare facilities for people with environmental activities.
disabilities were presented with welfare vehicles upon opening The theme for FY 2016 was “Animals.” Around 450 clubs and
new stores. This brings the total number of donated special around 7,800 students from all over Japan participated in the
vehicles to 75 since the activities. In July and August 2016, the Aeon Cheers Club
inception of the Welfare National Meetings were held in Okinawa and Hokkaido,
Fund. In addition, our respectively. A total of 50 clubs, representing the top clubs
volunteer activities included selected at regional meetings, and 235 awardees gathered,
roughly 1,000 visits to with each club reporting on learning outcomes for the year
welfare facilities, with events and participating in nature experience programs.
such as Christmas parties. A collaborative program was also implemented with Group
About 11,110 facilities have company Aeon Pet Co., Ltd. as an educational program with
Welfare vehicle presentation ceremony
been visited so far. the “Animals” theme. Students learned about conditions for
pets in Japan and a society that allows people and animals to
coexist as well as Aeon Pet Co., Ltd.’s LIFE HOUSE activities
through which it helps to find new families for dogs and cats in

cooperation with local government administrative Running a Farming Experience Program
organizations. Approximately 80 members of Cheers Clubs at Since 2012, we have been running the Agricultural
seven stores around Japan took part in the program. Eco-experience Project for children who belong to the Cheers
In FY 2017, we will be working on activities under the theme Club. The aim is for children to learn about environmentally
“Recycling Garbage.” friendly vegetable production, innovations for safety and
security, and the commitment to taste while having fun by
visiting TOPVALU production sites around Japan to experience
farming, including vegetable harvesting and packaging. In FY
2016, 534 children, including Cheers Club member from a total
of 42 stores, took part, with a total of 26 visits to 19 production
sites. A cumulative total of 4,856 children have participated in
visits at 112 production sites up to FY 2016.
Further, in FY 2016, we initiated the Aeon Cheers Club
Farmers Program for consistent learning about the agricultural
product development process. In its initial fiscal year, we ran the
Observing insects near a store program a total of seven times
at Aeon Mie Inabe Farm and
Aeon Hyogo Miki Satowaki
Farm operated by Aeon Agri
Create Co., Ltd. with 127
participants from six clubs.
In FY 2017, we will expand
the program to six areas
Learning about the workings of the
around Japan. roots of Chinese cabbage
Observing organisms on farmland Aeon Sukusuku Laboratory

The Aeon Sukusuku Laboratory has been carried out every year
since FY 2007 in order to assist those raising children. This is
directed to families raising children in areas across Japan and
Number of activities by the Aeon Cheers Club includes seminars on childcare led by experts in the field, as well as
Stores that implemented more than 4 activities: 328 the singing of Japanese nursery rhymes and songs, with children
(73.5% of all stores)
2014 and parents enjoying a meaningful chance to sing together.
Stores that implemented more than 4 activities: 343
(77.8% of all stores) In FY 2016, Aeon Sukusuku Laboratory was held in four cities
2015
across Japan. A total of 657 attended the four sessions, including
Stores that implemented more 394 adults and 263 children. As of the end of March 2017, the
2016 than 4 activities: 336 Results
Aeon Sukusuku Laboratory had been held a cumulative total of 46
(74.2% of all stores)
2020 Stores that implemented more than 4 activities: 100% times with a cumulative total of approximately 9,300 participants.
Target In FY 2017, we plan on holding three sessions nationwide.
Expansion in China and ASEAN

The Aeon Cheers Club began activities at Aeon Malaysia in
2012 and at Aeon China in 2014.
At Aeon Malaysia, approximately 1,600 children have
participated in activities at about 30 clubs and at Aeon China
Child-raising Seminar by Prof. Katsumi Ms. Saori Yuki and Ms. Sachiko Yasuda
approximately 1,600 children have participated in activities at Tokuda, professor in the Faculty of holding a nursery rhyme concert
about 60 clubs. Medicine, University of Tsukuba

TOPVALU Rice Project

The TOPVALU Rice Project was conducted at four schools in
four prefectures with the hope for the children to learn about
the nature we are blessed with and the importance of food
through the cultivation of rice. This is an ongoing effort
undertaken with local agricultural cooperatives, government
administration, and educational committees to teach children
Rice retail marketing experience Observation of nigorobuna fish
about food and sustenance by letting them experience the (Akamatsu Elementary School, Saga (Hayami Elementary School, Shiga
production process, from planting through harvest, and, Prefecture) Prefecture)
ultimately, the sale of rice at a retail store with activities tailored
to each region of each prefecture.
At Hayami Elementary School in Shiga Prefecture, students
also learn the importance of protecting and raising living
creatures, by raising juvenile nigorobuna fish (Lake Biwa’s
endemic crucian carp) in rice paddies.
We will mark the 10th year of activities in Shiga Prefecture
and Akita Prefecture in FY 2017.
Rice harvesting experience Rice retail marketing experience
(Kyowa Elementary School, Akita (Shibutami Elementary School, Iwate
prefecture) prefecture)
Aeon and AEON 1% Club Foundation’s training initiatives for the next generation
We provide a host of programs to support the learning development

of youth in various life stages, from infants to university students.
Aeon Sukusuku Aeon Cheers Club Teenage Ambassadors Aeon Scholarship The Asian Students
Laboratory P. 144/154 Program Program Environment Platform
P. 145/157 P. 155 P. 156 P. 159
Primary school Junior high High School University

Infants students school students Students Students
Aeon eco-1 Grand Prix

Junior high school P. 154 Asia Youth Leaders
TOPVALU student Environment P. 156
Rice Project Essay Contest
P. 146 P. 154

PET Bottle Cap Collection Campaign Nutritious food for children in Vietnam
© Save the Children in Vietnam
Aeon collects PET bottle caps from customers at its stores from
2008. The caps are converted into money as recycling
resources, which is then donated to three international support
organizations.* 1 This effort plays a role in supporting the
children in developing Asian countries. Children in Vietnam receiving training about
In FY 2016, 4,918,131 JPY from 383.12 million bottle caps*2 using the library
© Plan International
was donated to these organizations. The funds will provide
vaccines, nutritious food, and books to children in Asia.
*1 The three international organizations are:
Plan International Japan
Save the Children Japan
Vaccinations to children of Mon people in Laos
Vaccines to children around the world Japan Committee © JCV
*2 Caps collected from March 1, 2016 through February 28, 2017.
Fundraising Activities (FY2016)

Number of Funds raised from
AEON 1% Club
Activity period participating stores customers and Total Amount Donees
Contributions
and locations employees
Donation to the school April 2, 2016 ADRA Japan specified non-profit
6,525 6,892,752 JPY 51,107,248 JPY 58,000,000 JPY
establishment support in Myanmar to April 15, 2016 Corporation
June 11, 2016 24-Hour Television Charity
24-hour television 39 fundraising 12,641 297,657,897 JPY — 297,657,897 JPY
to September 4, 2016 Committee
Aeon and UNICEF Safe Water October 4, 2016
6,781 12,331,492 JPY 13,205,092 JPY 25,536,584 JPY The Japan Committee for UNICEF
Campaign Fund to October 30, 2016
Fundraising for Support for People November 5, 2016 Association of Aid and Relief, Japan
8,134 15,558,751 JPY 15,558,751 JPY 31,117,502 JPY
with Disabilities in Asia to December 4, 2016 (AAR Japan)
Fundraising for Support for Ground January 28, 2017
346 3,421,560 JPY — 3,421,560 JPY Charity.org
wo Tsukuro Project (limited area) to February 28, 2017
Disability manufacturing February 11, 2017 Association of Aid and Relief, Japan
7,850 17,989,762 JPY 17,989,762 JPY 35,979,524 JPY
supportfund to March 12, 2017 (AAR Japan)
Total 353,852,214 JPY 97,860,853 JPY 451,713,067 JPY
Emergency Relief Fundraising Activities

Number of Contributions
Funds raised from
participating AEON 1% Club from Aeon Co.,
Activity Activity period customers and Total Amount Donees
stores and Contributions Ltd. and Group
employees
locations Companies
Kumamoto Earthquake Emergency April 15, 2016
8,683 176,069,640 JPY 100,000,000 JPY 276,069,640 JPY Kumamoto prefecture
Relief Fund Round 1 to April 24, 2016
Kumamoto-Oita Earthquake
April 25, 2016 *1 *2 Kumamoto and Oita
Emergency Relief Fund 10,120 — 333,449,314 JPY
to June 22,2016 264,750,779 JPY 68,698,535 JPY prefectures
Round 2
September 3, 2016
2016 Typhoon No. 10 Rain Damage
to September 20, 354 4,098,096 JPY 10,000,000 JPY — 14,098,096 JPY Iwate prefecture
Emergency Relief Fund (limited area)
2016
Central Italy Earthquake Emergency September 6, 2016 *3
957 8,822,751 JPY 10,000,000 JPY 23,460,672 JPY Embassy of Japan in Italy
Relief Fund (Italy Fair companies) to October 2, 2016 4,637,921 JPY
Kitami city, Ikeda town,
September 8, 2016 Memuro town, Shimizu,
Hokkaido August Typhoon Damage
to September 25, 174 3,796,599 JPY 5,000,000 JPY — 8,796,599 JPY Shintoku town, Makibetsu
Emergency Relief Fund (limited area)
2016 town, Minamifurano
town (1 city, 6 towns)
Itoigawa Large-Scale Fire Damage December 24, 2016
1,567 6,283,220 JPY — 3,716,780 JPY 10,000,000 JPY Niigata prefecture
Emergency Relief Fund (limited area) to January 9, 2017
Total 463,821,085 JPY 125,000,000 JPY 77,053,236 JPY 665,874,321 JPY
*1 Includes WAON point funds
*2 Donations from Group companies through Kumamoto Oita Reconstruction Support Aeon Yellow Receipt Campaign
*3 Donation of 1% from sales of Italy Fair products
Continuous Fundraising Activities

Funds raised from customers and
Activity Activity period Accumulated funds Donees
employees
October 1, 2016
Red Feather Community Chest 19,396,703 JPY 293,864,704 JPY The Central Community Chest of Japan
to December 31, 2016

Support After the 2016 Kumamoto Earthquakes
— Initiatives Evolved from Experience After the Great East Japan Earthquake —
The 2016 Kumamoto earthquakes that struck Kumamoto and Oita prefectures on April 14, 2016 recorded a maximum
magnitude of 7, which devastated the region greatly. We share our deepest sympathy with everyone who was afflicted by
the disaster. Aeon has strived with all of its capabilities in the reconstruction and recovery of afflicted areas which have been
influenced by its experience after the Great East Japan Earthquake by combining the strengths of the Entire Group to fulfill
our duty as a lifeline center in our retail businesses.
As a Member of the Local Community As Local Lifestyle Infrastructure

roviding emergency relief supplies according to
P Aiming to Resume Business as Quickly as Possible
comprehensive agreements Aeon aims to resume business unified as a Group to return
According to comprehensive agreements with each usual lifestyles for everyone in the local area afflicted by the
municipality ( P. 143), we have taken advantage of Aeon disaster as soon as possible. We suspended or limited operations
product procurement capabilities and distribution network. We at 84 of our stores in Kumamoto and Oita prefectures right after
took charge of roughly 5.3 million emergency relief supplies the earthquake
that were required from 11 organizations that included afflicted struck, but we
areas of Kumamoto prefecture, Kumamoto City, Ozu, Mifune, have worked to
Oita prefecture, the Ministry of Economy, Trade and Industry, resume business
Japan Self-defense Force, and Japanese Red Cross Society to with the support of
deliver daily necessities immediately after the earthquakes 1,017 employees
struck. fr om our Gr oup
We entered into external partnerships through shipping companies in the
memorandums for emergency relief supplies with Japan Airlines afflicted areas.
Co., Ltd., the Japan Self-defense force, various municipalities
and other organizations to facilitate smooth and fast shipping. Introducing Mobile Retailers and Opening Temporary
Japan Airlines Co., Ltd. Stores
transported emergency We introduced mobile retailers from May 20th to July 13th in
relief supplies and Aso, Kumamoto prefecture where recovery of major roadways
store goods for sale by was uncertain. We also opened temporary stores on
u s i ng a t ot al of 49 September 6th at the
aircrafts over five days Tekuno temporary housing
from when the disaster site in Mishiki, Kumamoto
struck. prefecture, which is
the largest temporary
housing site in Kumamoto
prefecture.
Offering Temporary Shelter
The Earthquake that struck on April 14th left Mifune in the Other Initiatives
Kamimashiki District of Kumamoto prefecture in need. We We provided assistant by utilizing our Group as a whole from
worked with Japan Airlines Co., Ltd. to transport balloon installing mobile Aeon Bank ATMs (automated teller machine)
shelters ( P. 144), which are large tents for use in emergency through Aeon Financial Service Co., Ltd. to caring for pets
evacuations, from Haneda Airport to Nagasaki Airport. We affected by the disaster through Aeon Pet Co., Ltd.
quickly provided temporary shelters with the help of the self-
defense force in Nagasaki prefecture to transport these balloon
shelters by truck to the Mifune Fureai Square where they were
installed by our Group company, Aeon Delight Co., Ltd.

As a Company Expanding Stores Throughout Japan Aeon Happy Yellow Receipt Campaign

Hosting a Special Revitalization Support Project The Aeon Happy Yellow Receipt Campaign to Support the
The Support Delicious Food from Kumamoto and Oita special Recovery of Kumamoto and Oita was held at approximately
revitalization project was hosted at approximately 510 Aeon 600 stores in Japan from Aeon and Aeon Style to Aeon Super
and Aeon Style stores in Japan at the end of May fueled by our Centers over two days from May 29th to May 30th in order to
passion and the passion of our customers in Japan to deliver our and our customer’s hopes and wishes for quick
encourage all of the producers in afflicted areas. reconstruction and recovery. 1% of the total value of receipts
mailed by customers was donated to Kumamoto and Oita
prefectures, which was equivalent to 68,698,535 JPY.
Supporting Manufacturing of All People with Disabilities

In August 2016, The AEON 1% Club Foundation endowed the
Kumamoto Prefecture Vocational Aid Center Conference with
30,000,000 JPY in funding to offer for offices aiding in the
employment of people with disabilities that were afflicted by
the 2016 Kumamoto Earthquake.
This earthquake results in devastation that included damage
to buildings and production equipment at offices that aid in
the employment of people with disabilities in Kumamoto
prefecture. We provided funding to 51 offices that aid in the
employment of people with disabilities in Kumamoto
Fundraising Activities prefecture to assist in constructing ran environment where all
We accepted donations for the people with disabilities are able to work in manufacturing. Each
Kumamoto Earthquake Aeon Group company also strives to secure and support the
Emergency Relief Fund at our provision of routes to deliver manufactured goods produced
stores and businesses in Japan by people with disabilities to an even greater number of
from April 14th to May 31st. A total customers.
of 540,820,419 JPY was donated to Through this type of support, we are contributing to the
Kumamoto and Oita prefectures sustainable growth for the future of disaster afflicted areas
with the money raised by Aeon while hoping to further promote the independence and social
Co., Ltd. and our overseas Group participation of everyone with a disability.
companies as well as the money
raised with WAON points.

Update Report
Activities that widen the circle of Tohoku creation
Activity Report for Second Period of Project Aeon Joining Hands (FY 2016)
Project Aeon Joining Hands was launched in March 2012. In the next ten years leading to 2021, we will aim to drive creativity and
contribute to recovery after the Great East Japan Earthquake by utilizing diverse resources gained in the management activities of
all Aeon employees.
In the second period from FY 2015 to FY 2017, we are working with local communities in the Aeon Future Co-creation Program,
which is a community-exchange support activity, while understanding that the sustainable recovery of local communities is a
social challenge facing the disaster afflicted areas of Tohoku. We are advancing this project to connect learning and networks
through project activities energizing the local industry of Aeon.
Project Aeon Joining Hands 10-year Project

First Period of Establishing Partner with non-profit and other organizations, Second
Period Initial Structures support planned activities that meet local needs, Period
Expanding Independence
Objective: To ensure that everyone within the and encourage the recovery of people’s lifestyles Objective: Our Group companies, management and workforce will
Group is aware of and understands Build links with local people by having Aeon people build relationships with different communities through
the details of our project activities. periodically visit the same areas throughout the year interaction with local residents, supporting them over
the long term, and implementing continuous support
2012 2013 2014 2015
Aeon Tohoku Reconstruction Hometown Forests Program

Outline of Second Period Initiatives
Outline of First Period Initiatives
Promote interaction with local communities through
Conduct tree-planting activities on the costs of Iwate, tree-planting activities in each region of Tohoku
Miyagi, and Fukushima Plant fruit and shrubs in addition to trees and support
Engage with everyone in the local community through reconstruction of industry and tourism
tree-planting activities with the objective to revitalize a Conduct recovery of the woods in the village shrine, a
richly natural homeland favorite spot of local people, and plant trees in squares
in front of stations, many of which were washed away
Deployment of Volunteers to Disaster Afflicted Areas

Outline of First Period Initiatives Outline of Second Period Initiatives
Continue activities currently underway in Rikuzentakata city, Confirm the challenges in disaster-afflicted areas
Iwate prefecture, since FY 2012, and active in Minamisoma on-site through activities in Hamadori, Fukushima to
city, Fukushima prefecture since FY 2013 regenerate the local community and bring people
Conduct volunteer activities for many Aeon people to visit back from the places they dispersed to after the
disaster-afflicted areas to engage through their own efforts nuclear accident
and experience what is happening on the ground first hand. Utilize this experience gained through these activities
Work in a manner that is able to best match the hopes of in the social lives and work of each Aeon person
everyone in the community
Aeon Future Co-creation Program

We will strive together with regions afflicted by the disaster and
our Group companies in the Aeon Future Co-creation Program,
engaging in community exchange and support activities by
understanding that the sustainable recovery of local communities
is a social challenge facing the disaster afflicted areas* of Tohoku
Volunteer Activities Conducted by Each Group Company

Outline of Second Period Initiatives
Outline of First Period Initiatives Promote ongoing support able to be conducted from
Allocate a person in charge of advancing activities at each a distance in order for Group companies to generate
company within our Group, and continually implementing recovery in Tohoku
local training in the disaster-hit areas Advance support encompassing local communities
Develop our own unique activities at each of our Group companies, with voluntary and independent thinking toward
and with each member of our management and workforce generating recovery in areas afflicted by the disaster
Conduct Tohoku Recovery Markets and communicate the start of the at each Group company
project both inside and outside the company through activities such
as the screening of the Utagokoro documentary -film in each region

“Project Aeon Joining Hands”
Basic Concept The Purpose of Supporting Recovery
Based on the three principles of Aeon, which are “Peace,” “People” We are supporting the sustainable recovery of local communities, in which people and industry
and “Community,” Aeon people throughout the world are committed coexist with nature, and where individuals feel connected with one another.
to utilizing the diverse resources made available through Aeon’s
business activities, exercising their creativity and contributing in The Project Vision
creative ways to the recovery of the areas affected by the Great East By combining the three principles of Aeon, which are “Peace,” “People” and “Community,” with the
Japan Earthquake disaster. For Aeon people, this is an opportunity to purpose of supporting recovery, we are able to objectively consider what we want to do and what we
both realize and experience firsthand Aeon’s principles, as well as an are able to do in order to achieve our aims. We will continue to contribute by being creative, engaging
opportunity for personal growth. By extension, it is also an in activities, and walking alongside people living in disaster-affected areas, who are standing up to
opportunity for them to grow as business people. rebuild their communities.
Utilize the unique ideas and characteristics that our Group Third Organization and Deepen crisis management awareness as a lifeline with
companies, management, and workforce learn in this exchange Period Fulfillment measures to limit disasters that includes prevention
to create and conduct autonomous activities able to contribute Objective: Systematize the results of the Utilize the knowledge and resources gained through
to the communities afflicted by the disaster project, and link them to further practical activities toward the revitalization of the
Follow the key concepts of “Interaction and Creativity” activities Tohoku region, which is the same as the revitalization
of society in Japan
2016 2017 2018 2019 2020 2021
Support performance as of the end of February 2017

The number of trees
planted in the affected
area
trees
Support targets
April 2016 March 2016 by FY 2021 trees
Tree-Planting Ceremony at the Soma Tree-Planting Ceremony to grow woods
Matsukawaura coastal disaster prevention forest around Hayama Jinja Shrine

Employees
who participated
in the disaster area Total employees
as volunteers
October 2016
3rd volunteer gathering
*6 regions in Iwate, Miyagi, and Fukushima prefectures

1. Kamaishi city and Ootsuchi town, Iwate 4. Marumori town, Miyagi prefecture
prefecture 5. Namie town (Nihonmatsu city), Fukushima
2. Kome-dori, Tono city, Iwate prefecture prefecture From September 2016
3. Ooshima, Kesennuma city, Miyagi 6. Odaka, Minamisoma city, Fukushima Aeon Future Co-creation Program in Kamaishi city and
prefecture prefecture Ootsuchi town, Iwate prefecture
234,805employees
Employees who participated
in volunteer activities in and Total
around the Company
December 2016 “100 Santas Visit!” Christmas

event for reconstruction support (Aeon Support targets
Retail Co., Ltd. Tokai & Nagano Company, by FY 2021 employees
Aeon Kyushu Co., Ltd., Aeon Credit Service
Co., Ltd.) August 2016 Rikuzentakata Tanabata Festival
Experience 2016 (Kasumi Co., Ltd.) *Includes number of full-time employees who participated in volunteer activities in disaster-hit areas

Update Report
Activities that widen the circle of Tohoku creation
“Bustling Tohoku—connect with hometown power”

Main FY 2016 Tohoku reconstruction support activities
Aeon carried out various support activities for disaster-stricken areas immediately
after the Great East Japan Earthquake. In March 2012, one year after the calamity, 4 policies toward Recreating Tohoku
Aeon commenced recovery and reconstruction activities under the slogan, “Making Activation of local industry through business
our wishes for recovery from the 3.11 disaster come true.” From March 2016, with Creation of employment and creation of an
environment that is easy to work in
five years having passed since the catastrophe, Aeon aims to move from
Environmental and social contribution
“reconstruction assistance” to the next stage of “creation of local areas (hometowns),”
activities that “mutually make” the future
and has started efforts, under the catchphrase “Bustling Tohoku,” to help connect
of the region
the energy of Tohoku throughout Japan and around the world. With these thoughts Development of towns where people can
of wanting to create the future of Tohoku with “bustling energy,” and with four live with safety and peace of mind
policy pillars, we will walk together with everyone towards creation in Tohoku.
1. Activation of local industry through business 3. Environmental and social contribution activities
In order to make Tohoku even more vibrant than in the past, that “mutually make” the future of the region
we are engaged in projects to bring amazing products We are also working in environmental and social contribution
developed by local Tohoku producers into the hands of activities with the people of local communities in activities such as
customers in Tohoku, across Japan, and around the world, Project Aeon Joining Hands ( P. 150). This is supporting the healthy
while stimulating a robust cycle of vitality. growth of Tohoku, urbanization, and the children of the region.
Expand sales of Tohoku products by holding Bustling Tohoku Fairs Support Tohoku Aeon Happy Yellow Receipt Campaign
Group companies centered in Tohoku are planning Bustling Tohoku We would like to encourage everyone affected by the earthquake in
Fairs in order to expand sales routes of Tohoku products. In March Iwate, Miyagi, and Fukushima with our customers throughout Japan.
2017, fairs included a Fukushima Fair at the Aeon Lake Town store, a On the 11th of every month, which is Aeon Day, we conduct the “Aeon
Miyagi Fair at the Aeon Itabashi store, a Shiogama Fair at the Aeon Happy Yellow Receipt Campaign.”
Atsuta store, and an Iwate Fair at the Aeon Natori store. Beginning in 2012, we extended our
March campaign to three days, from 9th
to 11th. During this campaign period, we
will donate 1% of the total amount on
receipts given to us by our customers.
The total accumulated donations given to
the areas afflicted by the disaster through
this campaign by the spring of 2017 was
815.92 million JPY.
March 2017 Miyagi Fair at Aeon’s Itabashi store
Supporting children through Tohoku Reconstruction Support WAON

2. Creation of employment and creation of an In May 2012, we issued the Tohoku Reconstruction Support WAON to
environment that is easy to work in donate 0.1% of the amount used to scholarship funds to support the
We are creating employment by opening stores in areas lives and learning of children in the three prefectures of Iwate, Miyagi,
afflicted by the disaster. and Fukushima who were affected by the disaster. The total amount
We are also working to build an environment anyone can donated was 25,893,683 JPY by the spring of 2017.
work easily in, including employees who are raising children,
with initiatives such as the installation of nursery facilities at our
business establishments.
Nursing facility opens at the Aeon Mall Natori

We opened an Aeon Yumemirai Nursery at Aeon Mall Natorishi in the 4. Development of towns where people can live
fall of 2016 in light of the increasing number of children on waiting lists
with safety and peace of mind
in Natorishi due to factors
such as families moving from
We are aiming to build safe and secure place for people to live
other areas. We are working by enhancing preventative measures based on our experience
to build a secure environment after the Great East Japan Earthquake.
everyone in the region can
Expanding local temporary shelters
work in with peace of mind
Aeon is strengthening safety measures that include securing energy
now and into the future.
supply systems such as independent power generation facilities, which
Aeon Yumemirai Nursery in other communities allows shopping centers to be used as disaster prevention centers
during a disaster. We have already completed the installation of these
facilities at 33 locations and aim to have 100 locations outfitted by 2020.

External Awards List (FY 2016)
Date Awards
MAR, 2016 Certified with Eruboshi certifications by the Minister of Health (Aeon Hokkaido Corporation)
MAY, 2016 Certified with Eruboshi certifications by the Minister of Health (Aeon Mall Co., Ltd., Aeon Fantasy Co., Ltd.)
JUN, 2016 Certified with both Eruboshi and Platinum Kurumin certifications by the Minister of Health (Aeon Co., Ltd.)
JUN, 2016 Certified with Eruboshi certifications by the Minister of Health (Aeon Retail Co., Ltd.)
JUL, 2016 Ranked 4th overall in the Nikkei BP Eco Brand Survey 2016
Shizuoka WAON receives a Medal with Dark Blue Ribbon in recognition of its contribution to the public good through vegetation
JUL, 2016
preservation and other activities in the foothills of Mt. Fuji (Aeon Retail Co., Ltd., MaxValu Tokai Co., Ltd.)
SEP, 2016 Selected by the Dow Jones Sustainability Indices for inclusion in both the DJSI World and the DJSI Asia Pacific (Aeon Co., Ltd.)
Deputy manager of The Big Extra Tamaki Store (Aeon Big Co., Ltd.) receives the grand prize in the “IkuBoss-san Irasshai!” division of the
OCT, 2016
3rd Father of the Year in Mie awards
OCT, 2016 Awarded a silver medal by the Pride Index, Japan’s first LGBT index (Aeon Co., Ltd., Topvalu Collection Co., Ltd.)
Department manager of the Ministop Overseas Headquarters’ Overseas Division recognized as an “IkuBoss” (caring boss) by the Chiba
NOV, 2016
IkuBoss Corporate Alliance Award 2016
DEC, 2016 TOPVALU fururi receives the grand prize of the 13th Eco-Products Award (Aeon Topvalu Co, Ltd.)
Eight Aeon Group companies receive Dark Blue Ribbon Medals in Mie Prefecture for initiatives in support of the Mie Citizens’ Council
DEC, 2016 for the Ise-Shima Summit (Aeon Co., Ltd., Aeon Bank, Ltd., Aeon Credit Service Co., Ltd., Aeon Delight Co., Ltd., Aeon Mall Co., Ltd.,
Aeon Retail Co., Ltd., Maxvalu Chubu Co., Ltd., Ministop Co. Ltd.)
“Junction transportation of trailers” initiative by Aeon and Kao awarded the METI Minister’sAward by the Ministry of Economy, Trade
DEC, 2016
and Industry’s Excellent Green Logistics Commendation Program (Aeon Co., Ltd.)
Aeon Malaysia’s Aeon Hometown Forests Program receives the Best Volunteer Initiative in the Private Sector at the VOLUNTEER
DEC, 2016
MALAYSIA AWARDS 2016 (Aeon Co., Ltd., Aeon Co. (M), Bhd.)
JAN, 2017 First retail group certified under the JFS-E-C standard for food safety management (Aeon Co., Ltd., Aeon Food Supply Ltd.)
Aeon Sustainability Report wins in the “Environmental Reports” category at the 20th Environmental Communication Awards (Aeon
FEB, 2017
Co., Ltd.)
Recognized in the “White 500” (large enterprise category) of the Certified Health and Productivity Management Organization
FEB, 2017 Recognition Program newly inaugurated by the Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi (Aeon Co., Ltd.,
Aeon Retail Co., Ltd.)
MAR, 2017 Earned the highest rank in the Development Bank of Japan’s environmental rankings; received a special award as a retailer (Aeon Co., Ltd.)
MAR, 2017 Acquired ISO 22301 certification, the international standard for business continuity management (Aeon Co., Ltd.)
In the 2017 Best 100 Companies with Active Female Employees joint survey by Nikkei Woman and Nikkei Womenomics Project,
MAY, 2017
received first place for degree of promotion of female participation (Aeon Co., Ltd.) Overseas Japan
Primary environmental conservation and social contribution activities

1965 D onation of 1,000 cherry trees to Okazaki city at the opening of the Okazaki Okadaya agreement on initiatives towards the establishment of a recycling-oriented society
Store with the Japanese Ministry of the Environment
1977 E stablished the JUSCO Company Welfare Fund (present day the Aeon Welfare Fund) AEON 1% Club started Aeon Sukusuku Laboratory
1979 Established Cultural Foundation of Okada 2008 AEON CO., LTD. formulated the Aeon Manifesto on the Prevention of Global Warming,
1989 A eon Group 1% Club (present day AEON 1% Club Foundation) was established becoming the first retailer in Japan to name a specific goal for reducing output of CO2
1990 Launched the JUSCO Earth-Friendly Committee AEON 1% Club started the Small Started Aeon Clean Japan Campaign
Ambassadors (present day Teenage Ambassadors) Program Started PET Bottle Cap Collection Campaign
Established the Aeon Group Environmental Foundation (present day the AEON Started Rice Paddy Activities for Elementary School Students
Environmental Foundation) 2009 Trial sales of Carbon Footprint product labeling for nine varieties across seven
1991 Launched the Aeon Hometown Forests Program, at JUSCO Malacca Store (present TOPVALU products
day Aeon Malacca Store) in Malaysia as its first store Started Clean & Green activities AEON Environmental Foundation established Japan Awards for Biodiversity
Started Clean & Green activities Participated in Japan Climate Leaders’ Partnership as a founding member
Commenced the Bring Your Own Shopping Bag Campaign on a trial basis Opened a FSC® certified store for the first time as a convenience store in Japan
(Began trial operation of the food tray collection and recycling campaign) 2010 Established Aeon Biodiversity Principle
1992 Planted trees at JUSCO Shin Hisai Store (present day Aeon Hisai) the first sore in AEON 1% Club started ASEAN University Students Environmental Forum (present
Japan under the Aeon Hometown Forests Program day Asia Youth Leaders) and Aeon-UNICEF Safe Water Campaign
1993 Started development of organic and other agricultural produce as the Gurinai The Tree planting project to revitalize the forests at the Great Wall of China by the
(present day TOPVALU Gurinai) private label AEON Environmental Foundation, the number of seeding planted reached one million
1994 Formulated the independent Aeon Heart Building Design Standards based on the The MIDORI Prize for Biodiversity established by the AEON Environmental
Heart Building Law (the Barrier Free New Law from December 2006). Opened JUSCO Foundation
Minamikata Store as the first building in Japan certified under the Heart Building Law 2011 Established Aeon Sustainability Principle
1995 Introduced returnable food container and reusable hanger systems Announced Aeon Natural Refrigerants Declaration
1996 Launched the Environment Committee 2012 Developed KPI System
1997 Founded the JUSCO Children’s Eco Club (present day the Aeon Cheers Club) AEON Environmental Foundation started Asian Students Environment Platform
1998 A EON Environmental Foundation conducted the 1st tree planting project to AEON 1% Club started Aeon Eco-1 Grand Prix
revitalize the forests at the Great Wall of China Twelfth Eco Store, Aeon Mall Funabashi, opened
2000 Launched the My Basket and My Bag Campaigns Established the Sustainable Management Committee
Commenced development of SELF+SERVICE ecology shops Started Aeon Eco Project
Acquired ISO 14001 certification across the entire company Started Project Aeon Joining Hands
2001 Changed company name to AEON CO., LTD. and started the Aeon Day 2013 The first store of Smart Aeon, Aeon Mall Yahata Higashi, opened
Started the Aeon Happy Yellow Receipt Campaign Obtained ISO 50001 for the first time in the Japanese retail industry
AEON 1% Club started support for the construction of schools Total number of tree planting exceeded 10 million
2002 Started Aeon Clean Road Activities in partnership with the Volunteer Support 2014 Formulated the Aeon Sustainable Procurement Principle / Aeon Sustainable Seafood
Program of the Ministry of Land, Infrastructure, Transport and Tourism Procurement Policy
2003 Began use of biomass packaging materials Started sales of Aquaculture Stewardship Council (ASC) certified products
Formulated the Aeon Supplier Code of Conduct Seventh Smart Aeon, Aeon Mall Kisarazu, opened
2004 Formulated the Basic Policy for the Prevention of Global Warming Global Framework Agreements
Announced participation in the Global Compact advocated by the United Nations 2015 Eight and ninth Smart Aeon, Aeon Mall Okinawa Rycom and Aeon Mall Sijonawate,
Achieved SA8000 certification for TOPVALU supplier management and Aeon opened
headquarters operations Aeon Yumemirai Nursery in Aeon Mall Makuhari New City acquired certification in
Commenced sales of TOPVALU Fairtrade Coffee under the TOPVALU label Chiba City
2005 First Eco Store, Aeon Chikusa SC (present day Aeon Town Chikusa), opened The first Completely Farm-Raised Bluefin Tuna Japanese private brand product
2006 Stores and shopping centers acquired chain of custody certification for processing commenced sales
and distribution of MSC-certified products (MSC-CoC), the first such certification by a 2016 25 years of Aeon tree planting activities
general retailer in Japan AEON 1% Club started Aeon Scholarship Program Opened our 10th Smart Aeon store: Aeon Mall Sakai Teppocho
2007 Stop Free Plastic Shopping Bag Program began with the JUSCO Higashiyamanijou Store “Organic,” “natural” and “free-from” products launched by TOPVALU Gurinai
AEON CO., LTD. became the first company in the general retailing industry to sign an

Initiatives by Aeon Public Interest Incorporated Foundations
Aeon is contributing environmentally and socially through business operations, and also through promoting initiatives of
the AEON 1% Club Foundation and the AEON Environmental Foundation.
AEON 1% Club Foundation
Held Biodiversity Training Program on Yakushima

AEON 1% Club Foundation for Winners of the Environmental Essay Contest
The AEON 1% Club Foundation held a Junior High School
The AEON 1% Club Foundation was established in 1989
Student Environmental Essay Contest for students across Japan
with the philosophy that Aeon is a company that makes
and invited the top participants to attend a training program
proper use of the benefits received from customers for
about environmental issues and biodiversity. Training programs
the future and for the community. Our activities are
centered around the sound upbringing of children who have been held in Germany, home to advanced environmental
will lead the next generation, the promotion of initiatives, and Tasmania Island in Australia, home to vibrant nature.
international friendship and goodwill, and sustainable Following FY 2014 and FY 2015, this training was conducted
development of the local community. Major companies in FY 2016 in Yakushima town (Kumage county, Kagoshima
in the Aeon Group contribute 1% of pre-tax profits. Prefecture), which has been designated as a World Natural
Heritage Site. In addition to the 35 contest winners, 4 junior high
school students selected from children who are doing Aeon
Cheers Club activities in Malaysia also participated. The program
taught the children about biodiversity through hands-on
The Sound Upbringing of Children Who Will Lead the experience with the
Next Generation natural surroundings,
which include Japanese
Aeon Cheers Club cedar trees that are
The Aeon Cheers Club provides hands-on opportunities for first more than 1,000 years
through ninth-grade students to learn about the environment. old and primordial
Young people can come together once a month or once every old growth forest.
two months to participate in Aeon Cheers Club environmental In front of Oko Falls
activities.
The theme for FY 2016 was “Animals.” Around 450 clubs and Aeon eco-1 Grand Prix
around 7,800 students from all over Japan participated in the The Aeon eco-1 Grand Prix recognizes commendable
activities. In July and August 2016, the Aeon Cheers Club eco-activities by high school students. The event offers a forum
National Meetings were held in Okinawa and Hokkaido, for high school students from across Japan to report results
respectively. A total of 50 clubs, representing the top clubs and share information on their environmental activities. The
selected at regional meetings, and 235 awardees gathered, Grand Prix was started in 2012 with the hope that it would be
with each club reporting on learning outcomes for the year an opportunity for the young people who will lead the next
and participating in nature experience programs. generation to think about and act on environmental issues.
In FY 2017, we will be working on activities under the theme In addition to the Grand Prix, an “Environmental Ring” school
“Recycling Garbage.” registration system and an Easy Entry System were established
to support on-going activities at schools and to further proliferate
ecological activities.
Observing insects Observing organisms on farmland
Planting a “green curtain” using gourds, Recipients of the top prize, the “Prime
a popular local plant (Gifu Prefectural Minister’s Award”
Ogaki Yoro High School, FY 2016 Grand
Prix contestants)

School Construction Support Project Aeon and UNICEF Safe Water Campaign
Under the belief that “enhancing basic education is indispensable In some areas of Cambodia, Laos, and Myanmar, it is difficult to
for achieving a peaceful society,” school construction support obtain clean water, so water for daily use is drawn from
projects have been taking place since 2000 in five Asian unhygienic ponds or from groundwater that may contain
countries with lagging educational infrastructure. unhealthy substances. Furthermore, children have to spend
Donations from Aeon customers across Japan and funding valuable time walking long distances to collect water, with
from the AEON 1% Club have been utilized to build a total of some of them unable to attend school. The Aeon and UNICEF
401 schools in five countries: Nepal, Vietnam, Laos, Myanmar, Safe Water Campaign was started in 2010 in order to support
and Cambodia. Some 370,000 students are studying at the the health and education of children in this situation. Through
schools that have been constructed. the Japan Committee for UNICEF, donations from Aeon
In addition to physically building the schools and customers across Japan and funding from the AEON 1% Club go
establishing plumbing facilities, we are also offering less to supply safe water and build water supply infrastructure. To
tangible support in the form of faculty education and so on. date, the campaign has brought safe drinking water to
Part of the opening ceremonies have included a concert approximately 493,000 people in three countries (Myanmar, Laos,
featuring children’s songs performed by sisters Saori Yuki and and Cambodia), while it
Sachiko Yasuda, in addition to visiting schools with participants has also lessened the
who came from Japan in order to share in the joy of the events. labor required to collect
In FY 2017, we plan to support the construction of schools water, which thereby
in Myanmar and Cambodia. allows more children to
attend school.
In FY 2017, we plan to
carry out the campaign
in Cambodia and
Myanmar. A sink set up to supply clean water (Myanmar)
Happy children smiling in their new Visitors from Japan spending time with Promoting Friendship with Foreign Countries
classroom (Vietnam) students making paper balloons and
origami creations (Myanmar)
Teenage Ambassadors Program
The Teenage Ambassadors Program facilitates school visits for
Nepal
Japanese and foreign students and builds international
57 schools Vietnam
30 schools understanding and friendship through exchange. Interaction
takes place through ambassador activities, exchange activities,
and history/culture activities that bring together students of
Myanmar
similar age but different cultures, traditions, and lifestyles. This
42 schools program has been carried out every year since 1990, with 2,256
students from 18 countries (including Japan) participating to
Laos
date. The bonds of friendship between Japan and foreign
122 schools countries continue to spread through activities including a
2009 reunion that invited past participants from around the
Cambodia world to come to Japan.
150 schools
Japan – ASEAN Teenage Ambassadors
Since the first Teenage Ambassadors Program was held in
Malaysia in 1990, exchange programs have included the eight
ASEAN countries of Indonesia, Cambodia, Thailand, the
Philippines, Vietnam, Myanmar, and Laos. In each country, the
program has been able to step outside its specific boundaries
by, for example, visiting schools built with the support of the
AEON 1% Club and observing welfare facilities of international
NGOs receiving support through fundraising activities inside
Japan. This provides ambassadors with the opportunity to
deepen their understanding of social circumstances in each
country. In FY 2016, exchange was carried out with Myanmar
and Vietnam. Plans for FY 2017 include conducting exchange

AEON 1% Club Foundation
programs with high school Aeon Scholarship Program

students from Indonesia and The Aeon Scholarship Program is a subsidy program for college
Cambodia. students from countries throughout Asia, as well as privately
financed international students from Asia coming to study in
Japan. The program started in 2006 with the hope that
recipients would serve as a bridge between Japan and
A visit by the Republic of the Union of
students’ home countries by helping these students actively
Myanmar’s Vice Minister of Education engage in their future fields of specialty. In addition to
economic support throughout the year in Japan, scholarship
Japan – China Teenage Ambassadors recipients are provided with assistance for furthering their
The Teenage Ambassadors Program held with China in 2009 growth as global human resources by holding training
brought students together from Japan and Beijing. The seminars and offering opportunities to participate in volunteer
exchange received high praise from both the governments activities. At certificate award ceremonies in each country,
involved and from the participants. To facilitate further scholarship students present speeches highlighting their
friendship between Japan and China, the program has been dreams and aspirations.
held every year since 2009, with the program area expanded to To date, the program has
include Wuhan and Qingdao, thanks to cooperation between supported 5,047 students at 34
the Chinese Ministry of Foreign Affairs, the People’s universities in 7 countries.
Government of Beijing Municipality, and the Chinese Embassy In FY 2017, we plan to hold
in Japan. To date, a total of 1,050 high school students from certificate award ceremonies in
Japan and China have become Japan, China, and each ASEAN
Thai students smiling with their
small ambassadors for building country. certificates
bonds of friendship.
Th e pr o g r a m w as al s o
selected by Japan’s Foreign
Ministry as one of the activities Sustainable Development of Local Communities
commemorating the 45th
anniversary of the normalization C h i n e s e h i g h s c h o o l s t u d e n t s Hometowns and Future Support
of diplomatic relations between experiencing class in a Japanese high As a member of local communities, the AEON 1% Club works
school (Tokyo)
Japan and China. to spread traditional culture and historically significant customs
that deserve to be handed down to children in future
Asia Youth Leaders generations, while providing opportunities for local people to
Asia Youth Leaders is a program for bringing together youth deepen ties and form better communities.
from different Asian countries to address social problems in the
host country by taking part in discussions after doing field work Supporting Local Traditional Events
and listening to lectures by experts. Students with different Aiming to carry on traditional culture and history rooted in
backgrounds from six countries (Indonesia, Thailand, China, local communities, Aeon supports festivals and citizen events
Japan, Vietnam, and Malaysia) use debates in English and across Japan. In FY 2016, we provided support for 33 events,
dialogues exploring solution ideas to foster global sensitivity while also assisting with hosting
and mutual understanding of diverse values. a Traditional Handicrafts
In FY 2017, the program is scheduled to be held in Japan Exhibition whose theme was
with the theme of “Food & Health.” “Look, Use, Enjoy, and Buy.” The
event helped serve to bring
traditional handicrafts closer
into people’s lives.
Sansa Festival (Morioka city)
Hometowns and Folktales

Seeking to help reacquaint children who will lead the next
generation with the appealing aspects of their hometowns, we
Students working out campaign Submitting a written proposal to the
proposals for improving water quality Bangkok Metropolitan Administration enlisted actress Atsuko Asano to perform readings of local folktales
in Bangkok on stages erected at shrines and famous historical sites throughout
Japan. The project started as a restoration support effort in the
Tohoku region in 2012, then branched out to other regions.
Currently, junior high school students are invited to attend local
performances across Japan. The event took place in 2016 at two
shrines, Kurosaki Jinja in Rikuzentakata city, Iwate prefecture, and

Togakushi Jinja in Nagano prefecture. In FY 2017, we plan on Supporting Disaster Recovery
holding sessions in the Tohoku and Sanin regions. The AEON 1% Club earnestly wishes for recovery and greater
development for disaster-affected areas. Support is being
provided for restoration and recovery so that people in
disaster-stricken areas can resume their normal lives as quickly
as possible. Furthermore, support efforts are being
implemented to assist with further future development in areas
affected by the Great East Japan Earthquake.
Reciting a story about the god © Tokai Shinposha Fukushima Kids Forest Project
enshrined in Gosha-Suwa Jinja Shrine An animated reading by actress Atsuko After the Great East Japan Earthquake, there has been concern
(Hamamatsu city) Asano
that children in Fukushima Prefecture are not getting enough
playtime outside and are not receiving enough experience
Aeon Sukusuku Laboratory with nature. In response, children were invited to Shinano
The Aeon Sukusuku Laboratory has been carried out every town, Nagano Prefecture, and
year since FY 2007 in order to assist those raising children. the Afan Woodland in the
This is directed to families raising children in areas across Kurohime area of this town,
Japan and includes seminars on childcare led by experts in because these locations are
the field, as well as the singing of Japanese nursery rhymes known for their advanced forest
and songs, with children and parents enjoying a meaningful therapy. The program provides
chance to sing together. children with the opportunity
In FY 2016, Aeon Sukusuku Laboratory was held in four cities to exercise and come in closer Fukushima children experiencing
across Japan. A total of 657 attended the four sessions, contact with nature. nature at Afan Woodland
including 394 adults and 263 children. As of the end of March

2017, the Aeon Sukusuku Laboratory had been held a Emergency Relief and Recovery Donations
cumulative total of 46 times with a cumulative total of In order to be of service to recovery efforts in disaster-stricken
approximately 9,300 participants. areas inside and outside Japan, we are quick to seek contributions
In FY 2017, we plan on holding three sessions nationwide. for emergency relief and recovery
donations. In FY 2016, we sought
contributions for emergency relief
and recovery donations for areas
affected by the Kumamoto
earthquake, the central Italy
earthquake, and Typhoon No. 10 Presentation ceremony at the
(in Iwate Prefecture and Hokkaido). Italian Embassy
Child-raising Seminar by Prof. Katsumi Ms. Saori Yuki and Ms. Sachiko Yasuda
Tokuda, professor in the Faculty of holding a nursery rhyme concert Support Fund for Manufacturing by People with Disabilities
Medicine, University of Tsukuba
Aeon started this project in 2011 to support recovery efforts and
revitalization in Tohoku. Through an NPO called the Association
Supporting Food and Agriculture for Aid and Relief, Japan, donations have been provided to
Support for Food and Agriculture is an effort, in collaboration Iwate, Miyagi, and Fukushima Prefecture facilities that support
with groups striving to revitalize farming, to support the employment opportunities for people with disabilities.
providers of Japan’s food and agriculture in the future. This The aim is to be of assistance in
project began in 2016 in order to help promote agriculture, further independence and social
which is facing a period of transition brought on by various participation for people with
factors as the number of farmers decreases, Japan’s society disabilities.
ages, and Japan’s level of food self-sufficiency declines. In the Additionally, from 2016, we
first year of the project, we held a Grand Prix to recognize started fundraising activities for
innovative agricultural ideas from women and young p e o p l e w i t h d i s a b i l i t i e s i n A business that manufactures
people, while also hosting an countries throughout Asia. sweets
agricultural summit led by

university students. In FY
2017, we will continue the AEON 1% Club Foundation
project’s support efforts for
groups striving to revitalize Awards ceremony of the Daichi-no http://aeon1p.or.jp/1p/en/
farming. Chikara competition

AEON Environmental Foundation
AEON Environmental Foundation Giving Grants for Environmental Activities

The AEON Environmental Foundation was founded in
Since its establishment in 1990, the AEON Environmental
1990 to provide support to like-minded groups actively
Foundation has awarded grants for activities related to
developing projects to protect the global environment.
sustainable use and the preservation of biodiversity in Japan
The Foundation has planted trees around the world and
promoted a variety of joint environmental protection and developing countries.
initiatives, such as the development of human resources In FY 2016, 97.97 million JPY was awarded to 99 organizations
in the fields of the environment and conservation of in Japan and overseas that are engaged in tree planting and
biodiversity. forest improvement, anti-desertification, regeneration of
mountain villages and the nearby woodlands and ocean,
cleanup of lakes and rivers, wildlife protection, and endangered
species conservation. A total of 2,744 organizations were given
grants, with a total of 2,497 million JPY in grant money.
AEON Environmental Foundation’s Tree Planting Activities We will also continue in FY 2017 to provide grants toward
environmental activities.
The AEON Environmental Foundation, with cooperation at the
national and local government level of each country, conducts
tree-planting activities that aim to regenerate forests
devastated by natural disasters. The Foundation’s current tree-
planting initiatives are being carried out in different parts of the
world, particularly in Asia, in addition to Japan.
In FY 2016, tree planting was carried out in Chiba city, Chiba
Prefecture; Atsuma town, Hokkaido; Watari town, Miyagi
Prefecture; Taketa city, Oita Prefecture; and Okazaki city, Aichi
Prefecture in Japan, and Phnom Penh, Cambodia; Yangon,
Myanmar; Miyun District in Beijing, China; and Hanoi, Vietnam
overseas.
In FY 2017, tree planting was carried out in Atsuma town,
Ikaw-Ako NPO: tree planting activities with local high school students in the
Hokkaido; Iwaki city, Fukushima Prefecture; Watari town, Miyagi Philippines
Prefecture; Taketa city, Oita Prefecture; and Itoman city,
Okinawa Prefecture in Japan, and Phnom Penh, Cambodia;
Yangon, Myanmar; Miyun District in Beijing, China; and Hanoi,
Vietnam overseas. Excellence in Biodiversity Maintenance Award
The AEON Environmental Foundation inaugurated the
“Japan Awards for Biodiversity” in 2009 to promote biodiversity
conservation and sustainable use of biodiversity in Japan, as
Tree planting activities in Atsuma Tree planting activities in Watari town,

town, Hokkaido (July 2, 2016) Miyagi Prefecture (October 1, 2016)
Alfonso Aguirre-Muñoz Yury Darman

(Mexico) (Russia)
Tree planting activities in Phnom Penh, Tree planting activities in Yangon,

Cambodia Myanmar Vandana Shiva Smiles from the award recipients
(June 11, 2016) (July 16, 2016) (India)

well as the MIDORI Prize for Biodiversity in 2010 (with the latter Donating Solar Systems to Junior High Schools
award being an international prize). Honoring excellent projects Since 2009, the AEON Environmental Foundation has been
by recipients, these two awards are given in alternate years. In FY donating solar systems to elementary and junior high schools
2016, the 4th MIDORI Prize for Biodiversity (International Prize) was with the aim of promoting and spreading the use of renewable
given to three awardees: Alfonso Aguirre-Muñoz (Mexico), Yury energy, and to provide schools with the opportunity to utilize
Darman (Russia), and Vandana Shiva (India). In FY 2017, the 5th the systems for environmental studies. In 2016, systems were
Japan Awards for Biodiversity (Domestic Prize) will be conferred. donated to a total of 40 schools in Japan, Malaysia, Vietnam,
and China.
Plans for FY 2017 are to provide systems to five elementary
and junior high schools in the city of Wuhan, China.
Promoting Environmental Education
The Asian Students Environment Platform
The Asian Students Environment Platform (ASEP) has been held
since FY 2012, following the 2011 United Nations Decade on
Biodiversity. The objective of this forum is to develop human
resources who will be active globally in the field of the
environment. University students from across Asia gather to
exchange views on biodiversity while learning about
differences in the natural environment, history, culture, and
values of each other’s countries.
FY 2016 was the fifth year for ASEP and followed the theme
Donation of a solar system to commemorate the 20th anniversary of Aeon’s entry
of “Biodiversity – Wisdom.” A total of 84 students, from the into the Chinese market at Wuhan Guanggu No. 9 Elementary School
Royal University of Phnom Penh (Cambodia), Tsinghua (October 16, 2016)
University (China), Universitas Indonesia (Indonesia), Waseda

University (Japan), Korea University (South Korea), the University
of Malaya (Malaysia), and Vietnam National University, Hanoi
(Vietnam), gathered for the Platform hosted in Japan.
At the gathering, they took part in discussions on the status
of environmental preservation and living in harmony with
nature, engaged in fieldwork in Shiretoko, Hokkaido, listened to
expert lectures, and interviewed people in the community.
In FY 2017, the forum is scheduled
to be held in Japan with the theme of
“Biodiversity & Renovation.”
Forum participants posing in front of Waseda University’s Okuma Auditorium

(August 3, 2016)
AEON Environmental Foundation
https://www.aeon.info/ef/en/

GRI Guidelines Indicators
GENERAL STANDARD DISCLOSURES
Strategy and Analysis

Indicator Description Page
Provide a statement from the most senior decision-maker of the organization (such as CEO, chair, or equivalent se-
G4-1 nior position) about the relevance of sustainability to the organization and the organization’s strategy for address- - Message from the CEO
ing sustainability
- Message from the CEO
- Aeon Group CSR
- Special Feature1: Promotion of CSR in the Value
G4-2 Provide a description of key impacts, risks, and opportunities
Chain
- Special Feature 2: Dialogue with Stakeholders
- Risk Management
Organizational Profile
G4-3 Report the name of the organization - Aeon Group Overview
G4-4 Report the primary brands, products, and services - Aeon Group Overview
- Aeon Group Overview
G4-5 Report the location of the organization’s headquarters
- Back cover
Report the number of countries where the organization operates, and names of countries where either the organi-
G4-6 - Aeon Group Overview
zation has significant operations or that are specifically relevant to the sustainability topics covered in the report
G4-7 Report the nature of ownership and legal form - Aeon Group Overview
Report the markets served (including geographic breakdown, sectors served, and types of customers and benefi-
G4-8 - Aeon Group Overview
ciaries)
G4-9 Report the scale of the organization - Aeon Group Overview
a. Report the total number of employees by employment contract and gender
b. Report the total number of permanent employees by employment type and gender
c. R eport the total workforce by employees and supervised workers and by gender
d. Report the total workforce by region and gender
G4-10 e. Report whether a substantial portion of the organization’s work is performed by workers who are legally recog- - Aeon Group Overview
nized as self-employed, or by individuals other than employees or supervised workers, including employees and
supervised employees of contractors
f. Report any significant variations in employment numbers (such as seasonal variations in employment in the tour-
ism or agricultural industries)
G4-11 Report the percentage of total employees covered by collective bargaining agreements - Labor Union Status
G4-12 Describe the organization’s supply chain -
Report any significant changes during the reporting period regarding the organization’s size, structure, ownership,
G4-13 -
or its supply chain
Commitment to External Initiatives
- Risk Management
- Compliance
G4-14 Report whether and how the precautionary approach or principle is addressed by the organization - Aeon Supplier Code of Conduct
- Quality Management of TOPVALU Brand Prod-
ucts
List externally developed economic, environmental and social charters, principles, or other initiatives to which the
G4-15 - Aeon Group CSR
organization subscribes or which it endorses
List memberships of associations (such as industry associations) and national or international advocacy organiza-
G4-16 -
tions
Identified Material Aspects and Boundaries
- List all entities included in the organization’s consolidated financial statements or equivalent documents
G4-17 - Report whether any entity included in the organization’s consolidated financial statements or equivalent docu- - Aeon Group Overview
ments is not covered by the report
a. Explain the process for defining the report content and the Aspect Boundaries
b. Explain how the organization has implemented the Reporting Principles for Defining Report Content
G4-19 List all the material Aspects identified in the process for defining report content - Aeon Group CSR
G4-20 For each material Aspect, report the Aspect Boundary within the organization - FY2016 KPI Progress in Key Issue 1–7
G4-21 For each material Aspect, report the Aspect Boundary outside the organization -
Report the effect of any restatements of information provided in previous reports, and the reasons for such restate- - The Number of the Third-Party Audits Enforce-
G4-22
ments ment Factories
G4-23 Report significant changes from previous reporting periods in the Scope and Aspect Boundaries Not applicable
Stakeholder Engagement
G4-24 Provide a list of stakeholder groups engaged by the organization - Aeon Group CSR
- Editorial Policy
G4-25 Report the basis for identification and selection of stakeholders with whom to engage
- Aeon Group CSR

Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and
G4-26 by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of - Special Feature 2: Dialogue with Stakeholders
the report preparation process
Report key topics and concerns that have been raised through stakeholder engagement, and how the organiza-
G4-27 tion has responded to those key topics and concerns, including through its reporting. Report the stakeholder - Special Feature 2: Dialogue with Stakeholders
groups that raised each of the key topics and concerns
Report Profile
G4-28 Reporting period (such as fiscal or calendar year) for information provided - Editorial Policy
G4-29 Date of most recent previous report - Editorial Policy
G4-30 Reporting cycle (such as annual, biennial) - Editorial Policy
G4-31 Provide the contact point for questions regarding the report or its contents - Back cover
GRI Content Index
a. Report the ‘in accordance’ option the organization has chosen
G4-32 b. Report the GRI Content Index for the chosen option - GRI Guidelines Indicators
c. Report the reference to the External Assurance Report, if the report has been externally assured
Assurance
a. Report the organization’s policy and current practice with regard to seeking external assurance for the report
- If not included in the assurance report accompanying the sustainability report, report the scope and basis of any
external assurance provided
G4-33 -
c. Report the relationship between the organization and the assurance providers
d. Report whether the highest governance body or senior executives are involved in seeking assurance for the or-
ganization’s sustainability report
Governance
Governance Structure and Composition
a. Report the governance structure of the organization, including committees of the highest governance body - Corporate Governance
G4-34
b. Identify any committees responsible for decision-making on economic, environmental and social impacts - CSR Promotion Framework
Report the process for delegating authority for economic, environmental and social topics from the highest gover-
G4-35 - CSR Promotion Framework
nance body to senior executives and other employees
Report whether the organization has appointed an executive-level position or positions with responsibility for eco-
nomic, environmental and social topics, and whether post holders report directly to the highest governance body
Report processes for consultation between stakeholders and the highest governance body on economic, environ-
G4-37 mental and social topics. If consultation is delegated, describe to whom and any feedback processes to the highest - Corporate Governance
governance body
G4-38 Report the composition of the highest governance body and its committees - Corporate Governance
Report whether the Chair of the highest governance body is also an executive officer (and, if so, his or her function
G4-39 - Corporate Governance
within the organization’s management and the reasons for this arrangement
- Report the nomination and selection processes for the highest governance body and its committees
G4-40 - Corporate Governance
- Criteria used for nominating and selecting highest governance body members
G4-41 Report processes for the highest governance body to ensure conflicts of interest are avoided and managed. - Corporate Governance
Role of Highest Governance Body in Setting the Purpose, Value and Strategies
Report the highest governance body’s and senior executives’ roles in the development, approval, and updating of
G4-42 the organization’s purpose, value or mission statements, strategies, policies, and goals related to economic, envi- - CSR Promotion Framework
ronmental and social impacts
Ability of the Highest Governance Body and Evaluation of its Performance
Report the measures taken to develop and enhance the highest governance body’s collective knowledge of eco-
nomic, environmental and social topics
- Report the processes for evaluation of the highest governance body’s performance with respect to governance
of economic, environmental and social topics. Report whether such evaluation is independent or not, and its fre-
quency. Report whether such evaluation is a self-assessment
- Report actions taken in response to evaluation of the highest governance body’s performance with respect to
governance of economic, environmental and social topics, including, as a minimum, changes in membership and
organizational practice
Role of the Highest Governance Body in Risk Management
- Report the highest governance body’s role in the identification and management of economic, environmental
and social impacts, risks, and opportunities. Include the highest governance body’s role in the implementation of
G4-45 due diligence processes - Risk Management
- Report whether stakeholder consultation is used to support the highest governance body’s identification and
management of economic, environmental and social impacts, risks, and opportunities
Report the highest governance body’s role in reviewing the effectiveness of the organization’s risk management
G4-46 - Risk Management
processes for economic, environmental and social topics
Report the frequency of the highest governance body’s review of economic, environmental and social impacts,
G4-47 -
risks, and opportunities

Role of the Highest Governance Body in the Sustainability Report

Report the highest committee or position that formally reviews and approves the organization’s sustainability re-
port and ensures that all material Aspects are covered
Role of the Highest Governance Body in the Evaluation of Social, Environmental and Social Performance
G4-49 Report the process for communicating critical concerns to the highest governance body - Risk Management
Report the nature and total number of critical concerns that were communicated to the highest governance body
G4-50 -
and the mechanism(s) used to address and resolve them
Remuneration and Incentives
G4-51 Remuneration policies for the highest governance body and senior executives - Corporate Governance
Report the process for determining remuneration. Report whether remuneration consultants are involved in deter-
G4-52 mining remuneration and whether they are independent of management. Report any other relationships which - Corporate Governance
the remuneration consultants have with the organization
G4-53 How stakeholders’ views are sought and taken into account regarding remuneration - Corporate Governance
Report the ratio of the annual total compensation for the organization’s highest-paid individual in each country of
G4-54 significant operations to the median annual total compensation for all employees (excluding the highest-paid indi- -
vidual) in the same country
Report the ratio of percentage increase in annual total compensation for the organization’s highest-paid individual
G4-55 in each country of significant operations to the median percentage increase in annual total compensation for all -
employees (excluding the highest-paid individual) in the same country
Ethics and Integrity
- Aeon Basic Principles
Describe the organization’s values, principles, standards and norms of behavior such as codes of conduct and
G4-56 - Aeon Sustainability Principle
codes of ethics
- Aeon Code of Conduct
Report the internal and external mechanisms for seeking advice on ethical and lawful behavior, and matters related - Code of Conduct Hotline
G4-57
to organizational integrity, such as helplines or advice lines - S ystem for Listening to the Opinions of Customers
Report the internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters re- - Code of Conduct Hotline
G4-58
lated to organizational integrity, such as escalation through line management, whistleblowing mechanisms or hotlines - S ystem for Listening to the Opinions of Customers
SPECIFIC STANDARD DISCLOSURES

Disclosures on Management Approach
a. Report why the Aspect is material. Report the impacts that make this Aspect material - Aeon Group CSR
G4-DMA b. Report how the organization manages the material Aspect or its impacts - Feature 2: Dialogue with Stakeholders
c. Report the evaluation of the management approach - Management Approach of Each Key Issues
Economic
Aspect: Economic Performance
G4-EC1 Direct economic value generated and distributed - Aeon Group Overview
- Developing and Selling Products that Help Re-
G4-EC2 Financial implications and other risks and opportunities for the organization’s activities due to climate change
duce CO2 Emissions
G4-EC3 Coverage of the organization’s defined benefit plan obligations -
G4-EC4 Financial assistance received from government -
Aspect: Market Presence
G4-EC5 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation -
G4-EC6 Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation -
Aspect: Indirect Economic Impacts
- Special Feature1 Promotion of CSR in the Value
Chain
G4-EC7 Development and impact of infrastructure investments and services supported
- Smart Aeon development
- Community Involvement
G4-EC8 Significant indirect economic impacts, including the extent of impacts -
Aspect: Procurement Practices
G4-EC9 Proportion of spending on local suppliers at significant locations of operation -
Environment
Aspect: Materials
G4-EN1 Materials used by weight or volume - Environmental Load in Business Activities
G4-EN2 Percentage of materials used that are recycled input materials -

Aspect: Energy
G4-EN3 Energy consumption within the organization - Environmental Load in Business Activities
G4-EN4 Energy consumption outside of the organization -
G4-EN5 Energy intensity - Enhancing Energy Efficiency
G4-EN6 Reduction of energy consumption - Enhancing Energy Efficiency
G4-EN7 Reductions in energy requirements of products and services -
Aspect: Water
G4-EN8 Total water withdrawal by source - Environmental Load in Business Activities
G4-EN9 Water sources significantly affected by withdrawal of water -
G4-EN10 Percentage and total volume of water recycled and reused -
Aspect: Biodiversity
Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value
G4-EN11 Not applicable
outside protected areas
Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas
G4-EN12 - Conservation of Biodiversity
of high biodiversity value outside protected areas
- Aeon Sustainable Procurement Policy and Sus-
tainable Procurement Goals for 2020
- Aeon Forest Circulation Program
G4-EN13 Habitats protected or restored
- Initiatives Through our Stores
- Tree Planting Activity of AEON Environmental
Foundation
Total number of IUCN Red List species and national conservation list species with habitats in areas affected by op-
erations, by level of extinction risk
Aspect: Emissions
G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) - Greenhouse Gas Emissions
G4-EN16 Indirect greenhouse gas (GHG) emissions (Scope 2) - Greenhouse Gas Emissions
G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) - Scope 3 Emissions
G4-EN18 Greenhouse gas (GHG) emissions intensity - Reducing Total CO2 Emissions
G4-EN19 Reduction of greenhouse gas (GHG) emissions -
G4-EN20 Emissions of ozone-depleting substances (ODS) -
G4-EN21 NOx, SOx, and other significant air emissions -
Aspect: Effluents and Waste
G4-EN22 Total water discharge by quality and destination -
- Environmental load in FY 2016 business activities
G4-EN23 Total weight of waste by type and disposal method
- Initiatives for Zero Waste in Stores and Products
G4-EN24 Total number and volume of significant spills Not applicable
Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Con-
G4-EN25 -
vention2 Annex I, II, III, and VIII, and percentage of transported waste shipped internationally
Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by
G4-EN26 -
the organization’s discharges of water and runoff
Aspect: Products and Services
- Smart Aeon Development
- Installation of Recharging Stations for Electric Vehicles
- Developing and Selling Products that Help Re-
G4-EN27 Extent of impact mitigation of environmental impacts of products and services duce CO2 Emissions
- Sustainable Resource Usage
- Initiatives for Zero Waste in Stores and Products
- Reducing Waste together with Customers
- Use of Returnable Containers
G4-EN28 G4-EN28 Percentage of products sold and their packaging materials that are reclaimed by category
- Reducing Waste by Collecting Resources in Stores
Aspect: Compliance
Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environ-
mental laws and regulations
Aspect: Transport
Significant environmental impacts of transporting products and other goods and materials for the organization’s
G4-EN30 - Promote Visualization in Logistics
operations, and transporting members of the workforce
Aspect: Overall
G4-EN31 Total environmental protection expenditures and investments by type - Environmental Accounting
Aspect: Supplier Environmental Assessment
G4-EN32 Percentage of new suppliers that were screened using environmental criteria -
G4-EN33 Significant actual and potential negative environmental impacts in the supply chain and actions taken - Aeon Supplier Code of Conduct
Aspect: Grievance Mechanisms
G4-EN34 Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms Not applicable

Society
Labor practices and decent work
Aspect: Employment
G4-LA1 Total number and rates of new employee hires and employee turnover by age group, gender, and region -
Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant
G4-LA2 -
locations of operation
- Creating Pleasant, Comfortable Workplaces
G4-LA3 Return to work and retention rates after parental leave, by gender
- Securing Work-Life Balance
Aspect: Labor/Management Relations
Minimum notice periods regarding operational changes, including whether these are specified in collective agree-
G4-LA4 -
ments
Aspect: Occupational Health and Safety
Percentage of total workforce represented in formal joint management–worker health and safety committees that - Health and Safety Committees
G4-LA5
help monitor and advise on occupational health and safety programs - Labor Union Status
Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of workrelat-
G4-LA6 -
ed fatalities, by region and by gender
G4-LA7 Workers with high incidence or high risk of diseases related to their occupation -
G4-LA8 Health and safety topics covered in formal agreements with trade unions - Global Framework Agreements
Aspect: Training and Education
G4-LA9 Average hours of training per year per employee by gender, and by employee category -
Programs for skills management and lifelong learning that support the continued employability of employees and - Training Programs Supporting the Growth of
G4-LA10
assist them in managing career endings Employees
Percentage of employees receiving regular performance and career development reviews, by gender and by em- - Training Programs Supporting the Growth of
G4-LA11
ployee category Employees
Aspect: Diversity and Equal Opportunity
- Promoting Diversity
Composition of governance bodies and breakdown of employees per employee category according to gender,
G4-LA12 - Employment for People with Disabilities
age group, minority group membership, and other indicators of diversity
- Workshop on LGBT
Aspect: Equal Remuneration for Women and Men
Ratio of basic salary and remuneration of women to men by employee category, by significant locations of opera-
G4-LA13 -
tion
Aspect: Supplier Assessment for Labor Practices
G4-LA14 Percentage of new suppliers that were screened using labor practices criteria -
G4-LA15 Significant actual and potential negative impacts for labor practices in the supply chain and actions taken - Aeon Supplier Code of Conduct
Aspect: Labor Practices Grievance Mechanisms
G4-LA16 Number of grievances about labor practices filed, addressed, and resolved through formal grievance mechanisms - Global Framework Agreements
Human Rights
Aspect: Investment
Total number and percentage of significant investment agreements and contracts that include human rights
G4-HR1 -
clauses or that underwent human rights screening
Total hours of employee training on human rights policies or procedures concerning aspects of human rights that
G4-HR2 - Human Rights Training
are relevant to operations, including the percentage of employees trained
Aspect: Non-discrimination
G4-HR3 Total number of incidents of discrimination and corrective actions taken -
Aspect: Freedom of Association and Collective Bargaining
Operations and suppliers identified in which the right to exercise freedom of association and collective bargaining
G4-HR4 - Aeon Supplier Code of Conduct
may be violated or at significant risk, and measures taken to support these rights
Aspect: Child Labor
Operations and suppliers identified as having significant risk for incidents of child labor, and measures taken to
contribute to the effective abolition of child labor
Aspect: Forced or Compulsory Labor
Operations and suppliers identified as having significant risk for incidents of forced or compulsory labor, and mea-
sures to contribute to the elimination of all forms of forced or compulsory labor
Aspect: Security Practices
Percentage of security personnel trained in the organization’s human rights policies or procedures that are relevant
G4-HR7 -
to operations
Aspect: Indigenous Rights
G4-HR8 Total number of incidents of violations involving rights of indigenous peoples and actions taken -

Aspect: Assessment
Total number and percentage of operations that have been subject to human rights reviews or impact assess-
G4-HR9 -
ments
Aspect: Supplier Human Rights Assessment
G4-HR10 Percentage of new suppliers that were screened using human rights criteria -
G4-HR11 Significant actual and potential negative human rights impacts in the supply chain and actions taken - Aeon Supplier Code of Conduct
Aspect: Human Rights Grievance Mechanisms
Number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mech-
G4-HR12 Not applicable
anisms
Society
Aspect: Local Communities
- Special Feature1 Promotion of CSR in the Value
Percentage of operations with implemented local community engagement, impact assessments, and develop-
G4-SO1 Chain
ment programs
- Community Involvement
G4-SO2 Operations with significant actual or potential negative impacts on local communities Not applicable
Aspect: Anti-corruption
Total number and percentage of operations assessed for risks related to corruption and the significant risks identi-
G4-SO3 -
fied
- Compliance education and training
G4-SO4 Communication and training on anti-corruption policies and procedures - Promoting Corporate Ethics at Group Compa-
nies Overseas
G4-SO5 Confirmed incidents of corruption and actions taken Not applicable
Aspect: Public Policy
G4-SO6 Total value of political contributions by country and recipient/beneficiary -
Aspect: Anti-competitive Behavior
G4-SO7 Total number of legal actions for anti-competitive behavior, anti-trust, and monopoly practices and their outcomes Not applicable
Aspect: Compliance
Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and
G4-SO8 Not applicable
regulations
Aspect: Supplier Assessment for Impacts on Society
G4-SO9 Percentage of new suppliers that were screened using criteria for impacts on society -
G4-SO10 Significant actual and potential negative impacts on society in the supply chain and actions taken - Aeon Supplier Code of Conduct
Aspect: Grievance Mechanisms for Impacts on Society
Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mecha-
G4-SO11 Not applicable
nisms
Aspect: Customer Health and Safety
Aspect: Customer Health and Safety
Percentage of significant product and service categories for which health and safety impacts are assessed for im- - Quality Management of TOPVALU Brand Prod-
G4-PR1
provement ucts
Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and
G4-PR2 -
safety impacts of products and services during their life cycle, by type of outcomes
Aspect: Product and Service Labeling
Type of product and service information required by the organization’s procedures for product and service infor-
- Labeling and Disclosing Product Information
G4-PR3 mation and labeling, and percentage of significant product and service categories subject to such information re-
- Labeling of Nutritional Contents
quirements
Total number of incidents of non-compliance with regulations and voluntary codes concerning product and ser-
G4-PR4 -
vice information and labeling, by type of outcomes
G4-PR5 Results of surveys measuring customer satisfaction - System of Dialog with Customers
Aspect: Marketing Communications
G4-PR6 Sale of banned or disputed products Not applicable
Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing com-
G4-PR7 Not applicable
munications, including advertising, promotion, and sponsorship, by type of outcomes
Aspect: Customer Privacy
G4-PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data Not applicable
Aspect: Compliance
Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use
G4-PR9 Not applicable
of products and services

Financial Section
Financial Review 167
Consolidated Balance Sheet 172
Consolidated Statement of Income 174
Consolidated Statement of
Comprehensive Income 175
Consolidated Statement of Changes in Equity 176
Consolidated Statement of Cash Flows 177
Notes to Consolidated Financial Statements 178
Note: In this section, “FY” refers to the fiscal year ended February 28 or 29, as applicable.

Financial Review
Years Ended February 28, 2013, 2014 and 2015, Thousands of

February 29, 2016 and February 28, 2017 Millions of Yen U.S. Dollars*1
’13 ’14 ’15 ’16 ’17 ’17
OPERATING RESULTS
OPERATING REVENUES
Net sales ¥5,061,929 ¥5,619,270 ¥6,202,210 ¥7,235,084 ¥7,253,529 $64,763,656
Operating revenues from financial services business 168,171 256,445 294,387 319,174 329,923 2,945,747
Rental and other revenues - net 455,201 519,426 581,978 622,473 626,691 5,595,464
Total operating revenues 5,685,303 6,395,142 7,078,577 8,176,732 8,210,145 73,304,868
OPERATING COSTS
Cost of sales 3,695,896 4,101,766 4,525,231 5,268,101 5,245,626 46,835,951
Operating costs in financial services business 14,700 24,863 27,198 30,233 28,842 257,526
Total operating costs 3,710,596 4,126,630 4,552,430 5,298,334 5,274,469 47,093,477
Operating profit 1,974,707 2,268,512 2,526,146 2,878,398 2,935,675 26,211,390
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,784,080 2,097,079 2,384,778 2,701,420 2,750,935 24,561,928
Operating income 190,626 171,432 141,368 176,977 184,739 1,649,462
OTHER INCOME (EXPENSES)-NET 1,238 (23,892) 3,492 (7,752) (35,400) (316,076)
INCOME BEFORE INCOME TAXES 191,865 147,540 144,860 169,225 149,339 1,333,385
INCOME TAXES 83,345 64,445 65,457 108,399 73,617 657,300
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS*3 34,009 37,493 37,333 54,816 64,466 575,592
NET INCOME ATTRIBUTABLE TO OWNERS OF PARENT*3 74,511 45,600 42,069 6,008 11,255 100,491
COMPREHENSIVE INCOME ¥ 151,971 ¥ 119,069 ¥ 146,389 ¥ (3,523) ¥ 70,710 $ 631,344
CASH FLOWS
Net cash provided by operating activities ¥ 142,289 ¥ 482,765 ¥ 398,453 ¥ 43,156 ¥ 294,893 $ 2,632,975
Purchases of property, buildings and equipment 328,011 375,331 435,466 518,317 519,897 4,641,942
FINANCIAL POSITION
Total assets ¥5,724,835 ¥6,815,241 ¥7,859,803 ¥8,225,874 ¥8,750,856 $78,132,647
Long-term liabilities 1,335,678 1,465,426 1,741,691 1,874,432 1,969,985 17,589,156
Equity 1,446,676 1,684,569 1,829,980 1,819,474 1,862,410 16,628,667
Yen U.S. Dollars*1

’13 ’14 ’15 ’16 ’17 ’17
PER SHARE OF COMMON STOCK DATA
Basic net income ¥95.49 ¥55.92 ¥50.22 ¥7.19 ¥13.44 $0.12
Diluted net income 87.42 50.13 49.56 7.02 13.20 0.12
Cash dividends applicable to the year*2 24.00 26.00 28.00 28.00 30.00 0.27
*1 For convenience only, U.S. dollar amounts were translated at the rate of ¥112=$1, the rate of exchange as of February 28, 2017.
Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
*2 Cash dividends per share of FY’15 include a commemorative dividend of ¥2.00.
*3 The company adopted revised Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013) and others, effective from the fiscal year
ended February 28, 2017, some changes were made to the presentation of net income and other related accounting titles.
“MINORITY INTERESTS IN NET INCOME” was changed to “NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS” and “NET INCOME” was changed to
“NET INCOME ATTRIBUTABLE TO OWNERS OF PARENT.”
These changes in presentation were applied retrospectivery to accounting titles of past fiscal years.
Performance Overview success of ongoing business portfolio diversification which has been
For the fiscal year from March 1, 2016 to February 28, 2017, Aeon Co., conducted in response to customers’ changing needs and lifestyles.
Ltd. (hereinafter “Aeon”) posted year-on-year increases in consolidated
sales and profits covering the results of Aeon and its 296 consolidated Common Group Strategy:
subsidiaries. Consolidated operating revenue totaled a record high • In June 2016, Aeon began a new Group-wide point service, WAON
of ¥8,210.1 billion (USD 73,304.8 million) (up 0.4% year on year). POINT, for cash payments. The new program is gradually merging the
Consolidated operating income totaled ¥184.7 billion (USD 1,649.4 separate point card programs operated by each Group company. As
million) (up 4.4% year on year). Consolidated ordinary income totaled of the end of August, the number of WAON POINT Card users had
¥187.3 billion (USD 1,672.7 million) (up 4.3% year on year). Net income surpassed 30 million. Besides purchases at participating stores, users
attributable to owners of the parent totaled ¥11.2 billion (USD 100.4 can accumulate points through walking and other health-promotion
million) (up 87.3% year on year). Regarding business segments, six of activities, as well as through environmental protection activities. Going
the eight segments (Supermarket and Discount Store Business, Financial forward, Aeon will further promote the use of points for donations
Services Business, Drugstore and Pharmacy Business, Services and and other social contributions activities as well as collaboration with
Specialty Store Business, Small-sized Store Business, and Shopping each region of Japan, aiming to create an exceptionally social-and
Center Development Business) posted year-on-year increases in oper- public-oriented common point service, which can serve as a platform
ating income, which bolstered consolidated results. This reflected the for local communities.

• In June 2016, Aeon established Aeon Saveur Co., Ltd. based on an of 109 additives and ingredients. Another 12 products under the sub-
agreement with Picard Surgelés SAS (head office: Paris, France), which brand “Yasashi Gohan,” which do not use seven specified ingredients,
operates small-scale frozen food supermarkets in Europe, primarily were launched for customers with food allergies. Some of the products
France, to jointly pursue the full-scale launch of the “Picard” frozen-food are available in family-size portions to enable entire families to share the
supermarkets in Japan. Three stores were opened during the period to same meal, in contrast to the one-serving portions typically offered for
establish Japan’s first specialty frozen foods supermarkets, including customers with allergies.
“Picard Aoyama Kottodori Store” as the first store on November 23,
2016. Backed by the management philosophy of “delicious meals Review by Reportable Segment
anytime, for everyone, 365 days a year,” the new chain’s delicious and GMS Business
attractive products—prepared using the most advanced frozen foods The GMS (General Merchandise Store) Business recorded operating
technologies—have elicited a positive customer response. income of ¥2.4 billion (USD 22.1 million) (down 73.6%) and operating
• In June 2016, Aeon established Bio c’Bon Japon Co., Ltd. as a joint revenue of ¥3,012.2 billion (USD 26,895.2 million) (up 6.1% year on year)
venture with Marne & Finance Europe (head office: Brussels, Belgium), for the current fiscal year. Performance was impacted by the transfer
which operates small-scale organic supermarkets “Bio c’Bon” in of stores from The Daiei, Inc. (hereinafter “Daiei”), which operates under
Europe, primarily France. The venture opened its first store, Bio c’Bon the Supermarket and Discount Store Business segment. Additionally,
Azabujuban Store, on December 9, 2016. The store features a delica- the main operating companies, including Aeon Retail Co., Ltd. (here-
tessen area with an open kitchen where customers can purchase and inafter “Aeon Retail”), Aeon Hokkaido Corporation (hereinafter “Aeon
conveniently enjoy organic foods at the store, including ready-to-eat Hokkaido”), Aeon Kyushu Co., Ltd., and Sunday Co., Ltd., recorded a
meals and sandwiches. Customers are responding positively to the steady improvement in profitability.
chain’s proposals for new organic lifestyles. Aeon Retail continued to develop sales floors meeting customers’
• As part of its strategic shift to Asian markets, Aeon established Aeon changing lifestyles and needs, also actively making new proposals to
Orange Co., Ltd. (hereinafter “Aeon Orange”) in the fast-growing market customers. To support the growing number of working women and
of Myanmar as a joint venture with a local company, Creation Myanmar dual-income households, the company introduced “Mainichi Yoruichi”
Group of Companies Limited (hereinafter “CMGC”), which manages evening food promotions between 6 p.m. and 9 p.m. Additionally, Aeon
supermarkets, specialty stores, real-estate and other businesses. In Retail became Japan’s first major general retailer to launch a “Black
August 2016, Aeon Orange acquired 14 stores from a CMGC affiliate, Friday” sale event over three days of November 25 and 27, 2016. The
Hypermart, to launch supermarket operations, and on September 30, event proved popular with consumers, with year-on-year same-store
2016, Aeon Orange opened its first store as a new company, Aeon sales surging more than 15% during the promotion period and apparel
Orange North Okkalapa Store, in Yangon City, the Myanmar’s largest sales alone jumping more than 30%. Aeon Retail’s same-store sales
city. declined by 2.3% year on year due in part to a poor weather condition,
• Aeon is striving to build local ecosystems based on a new framework including a record number of typhoons in August and September 2016
for regional development that unites a wide range of community mem- (apparel sales declined by 4.1%, food sales declined by 1.3%, and
bers, from residents to governments and corporations. As part of the housing and recreational product sales declined by 3.1% year on year).
program, Aeon launched a mobile sales van on November 17, 2016 Gross profit margin improved, however, by 0.8% year on year due to
in the Kotehashidai district of Hanamigawa Ward, Chiba City, to serve continued profitability improvement driven by product and sales floor
customers who have difficulty traveling to stores for daily shopping. The reforms promoted since the previous fiscal year. Additionally, SG&A
company also signed an agreement with the Chiba Kita police station expenses at existing stores declined by 1.5% year on year. As a result,
to help preserve a safe and secure environment for the community in Aeon Retail achieved year-on-year increases in both operating revenue
addition to shopping support. and operating income, with operating income improving by ¥3.5 billion
• In November 2016, amid rising interest in health and wellness products (USD 31.7 million) year on year.
among customers, Aeon launched a rebranding program for the Topvalu Aeon Hokkaido took measures to bolster stores transferred
Green Eye brand, which features a lineup at healthy and environmen- from Daiei. The company completed large-scale refurbishments of the
tally-friendly products. Based on customer input, a lineup of 22 new Sapporo Asabu Store, Higashi Sapporo Store, and Shin Sapporo Store
products, mostly processed foods, was launched with consideration to create new sales floors matching the needs of customers about
Operating Revenues / Ratio of Operating Income to Revenue and Income Share

Operating Income Operating Revenues by Business Segment
(¥ billion) (%) (%)
Operating
8,176 8,210 Revenues Income
7,078 General Merchandise Store 36.7 1.3

SM and DS 35.2 16.9
184 2.2 2.3 Small-sized Store 4.6 1.5
176
2.0 Drug Store and Pharmacy 7.6 11.9
141
Financial Services 4.5 33.5
SC Development 3.8 25.4
Service and Specialty Store 9.3 14.3
International 4.9 (2.9)
Other 0.2 (2.2)
FY ’15 ’16 ’17 FY ’15 ’16 ’17 Adjustments* (6.9) 0.2
Operating Revenues * Adjustments include figures of shared function companies, corpo-

Operating Income rate, and/or eliminations.

urban-style stores directly connected to subway stations. As a result Small-sized Store Business
of the refurbishments and store specialization, combined sales of the The Small-sized Store Business recorded operating income of ¥2.7 billion
transferred stores increased by 5.0% year on year, including sales from (USD 24.7 million) (up 119.4% year on year) and operating revenues of
the period prior to the transfer, making a significant contribution to Aeon ¥378.7 billion (USD 3,381.2 million) (up 0.5% year on year) for the current
Hokkaido’s performance. Regarding the transferred stores’ operating fiscal year.
income, the company accelerated by one full year its plan for making the In Japan, Ministop Co., Ltd. posted a year-on-year increase in
stores profitable, achieving profitability in the current year. operating revenue due to an expanded number of stores and an improved
lineup of chilled bento lunch boxes, stuffed bread, and other daily food
Supermarket and Discount Store Business items. Operating income declined, however, due to higher selling and
The Supermarket and Discount Store Business recorded operating administrative expenses resulting from an increase in new store openings
income of ¥31.2 billion (USD 279.3 million) (up 47.9% year on year) and and active refurbishment of existing stores. Ministop Korea Co., Ltd.
operating revenues of ¥2,890.2 billion (USD 25,805.6 million) (down posted a year-on-year decline in operating revenue, as the previous fiscal
5.3% year on year) for the current fiscal year. Excluding the impact of year’s results covered a 14-month period and foreign exchange rates
the transfer of Daiei’s GMS stores to GMS operational companies, the impacted results in yen terms.
business showed a year-on-year increase in operating revenues. My Basket Co., Ltd. (hereinafter “My Basket”) posted higher
Daiei, which is concentrating its operations in the Tokyo metropol- operating revenue and operating income. The company enhanced its
itan area and the Keihanshin area (the Kyoto-Osaka-Kobe metropolitan fresh foods and delicatessen products, improved sales floor layouts while
area) and focusing its business on food, refurbished 12 stores during the implementing training for services and customer engagement techniques.
period, which elicited positive response from urban customers. Daiei’s My Basket also strove to raise profitability by generating Group synergy
same-store gross profit margin increased by 0.8% year on year due to through the use of joint-logistics networks and other means.
reduced markdowns and other improvements resulting from enhanced
sales floor management. The company also continued to make prog- Drugstore and Pharmacy Business
ress in its structural reform program, which includes rationalization of The Drugstore and Pharmacy Business recorded operating income of
head office expenses and productivity improvements. As a result, Daiei ¥22.0 billion (USD 196.9 million) (up 18.6% year on year) and operating
achieved a significant improvement in operating profitability. revenues of ¥623.6 billion (USD 5,568.1 million) (up 5.3% year on year)
United Super Markets Holdings Inc. continued to promote joint for the current fiscal year.
procurement among its three subsidiaries aimed at lowering the cost of Welcia Holdings Co., Ltd. (hereinafter “Welcia Holdings”) and its
sales, implement cost-reduction measures to lower store materials and consolidated subsidiaries actively promoted the “Welcia Model” through
fixture expenses, and take other measures to enhance Group synergy. refurbishment of existing stores. The company raised the percentage of
The three subsidiaries also held joint sales promotions during the period, drugstores offering prescription drugs, while promoting 24-hour stores to
which contributed to higher customer traffic. In October 2016, consoli- enhance customer convenience. These and other measures raised sales
dated subsidiary, Kasumi Co., Ltd., built a meat processing center within of the prescription drugs section and led to higher same-store sales.
its Sakura distribution center in Sakura City, Chiba Prefecture. The new B.B.ON Co., Ltd., a consolidated subsidiary of Welcia Holdings,
center will raise logistics efficiency and expand capacity for processed actively promoted new initiatives, including the opening of new urban-
meats to serve the planned growth in the number of stores. style drugstores in Nihonbashi, Tokyo, and Kawaramachi, Kyoto, which
Maxvalu Tokai Co., Ltd. (hereinafter “Maxvalu Tokai”) focused support both inner and outer health and beauty by combining beauty,
initiatives on strengthening product freshness. For agricultural products, prescription drugs, and health products. Furthermore, to raise business
the company shortened delivery time from farms to stores, while for efficiency, Welcia Yakkyoku Co., Ltd. carried out a merger of CFS
marine products, it established supply routes from producers at ports. Corporation on September 1.
Maxvalu Tokai also continued to further develop its commitment to locally
rooted management by developing new products using local materials Financial Services Business
and expanding sales corners for local products. As a result, the company The Financial Services Business earned operating income of ¥61.9 billion
achieved growth in both revenue and income. (USD 552.7 million) (up 12.5% year on year) and operating revenue of ¥372.0
billion (USD 3,321.8 million) (up 4.1% year on year) for the current fiscal year.
SG&A Expenses Total Assets / Equity Cash Flows

Ratio of SG&A to Total Operating Revenues (¥ billion) (¥ billion)
(¥ billion / %)
398
2,750 1,862
2,701 1,829 1,819 313 294
8,750
8,225
2,384 7,859
33.0
33.5
95 81
33.7 36 43 27
-267
-361
-403
-446
FY ’15 ’16 ’17 FY ’15 ’16 ’17 FY ’15 ’16 ’17
SG&A Expenses Total Assets Operating Financing
Ratio of SG&A to Total Operating Revenues Equity Investing Free (Operating + Investing)

Aeon Financial Service Co., Ltd. (hereinafter “Aeon Financial Aeon Mall Co., Ltd. (hereinafter “Aeon Mall”) opened six new
Service”) continued to take initiatives to improve work efficiency through shopping centers and refurbished 20 existing shopping centers in Japan,
digitalization of operations on a global scale, enhance product and ser- including two expansions, during the period.
vice convenience, and optimize its balance sheet to improve profitability. At shopping centers in Japan, Aeon Mall promoted the use of
As a new initiative, the company held a contest, “Aeon Financial Service Aeon credit cards and WAON e-money cards in its Group-wide sales
Innovation 2016,” in which participants used Fintech to create new ser- promotions and held customer participation-style events, leading to
vices designed to raise the convenience of products and services used strong tenant sales. OPA Co., Ltd. (hereinafter “OPA”), which became a
by consumers in their daily lives. In the credit card business, the company subsidiary of Aeon Mall in March 2016, promoted a shift from its previous
offered double TOKIMEKI points to customers using Aeon credit cards at fashion orientation to a new lifestyle proposal company. In the overseas
designated Aeon Group stores. Aeon Financial Service also strengthened business, which promises to be a future growth driver, Aeon Mall opened
promotion of the “Aeon Wallet” smartphone application, which allows shopping centers in Vietnam and Hebei Province, China. Of the 17
customers to confirm and manage their credit card payment information existing shopping centers, 10 turned profitable in the period, boosting
and Aeon Bank account balances from a single application. the overall profitability of the overseas business. As a result, Aeon Mall
In the banking business, Aeon Bank, Ltd. continued to expand its posted higher operating revenue and income for the current year.
branch network by opening a new branch at Aeon Mall Nagakute (Aichi
Prefecture), raising the total number of branches to 134. In the housing Services and Specialty Store Business
loan business, the bank offered competitive special interest rate plans The Services and Specialty Store Business recorded operating income
while continuously strengthening the promotion of the Aeon Select Club of ¥26.3 billion (USD 235.6 million) (up 0.3% year on year) and operating
featuring a daily 5% discount for housing loan customers on purchases revenue of ¥765.6 billion (USD 6,836.3 million) (up 3.3% year on year) for
at Aeon Group stores. In the unsecured loan business, the bank carried the current fiscal year.
out campaigns for education and other special-purpose loans while In the facilities management business, Aeon Delight Co., Ltd.
bolstering Internet promotions. Furthermore, to accelerate the provision (hereinafter “Aeon Delight”) began offering integrated facility management
of customer services, the bank installed a self-service device at its Aeon (IFM) services, which integrate, manage and operate all facility outsourc-
Lake Town branch offering various transactions via videophone. ing services. The company also successively expanded its sanitation
In the overseas business, joint promotions was conducted with and cleaning services, which had been designed primarily for hospitals,
partner companies to increase the number of Aeon credit card holders. into other types of facilities requiring high levels of sanitation, including
It also refurbished branches through the installment of tablet devices and laboratories operated by foreign capital IT companies, clean rooms, and
digital signage designed to raise customer service and promote greater offices. As a result, Aeon Delight earned higher operating revenue and
productivity through low-cost operations. income for the year.
In the fee-based services business, measures were taken in the Aeon Fantasy Co., Ltd. (hereinafter “Aeon Fantasy”) continued to
e-money business to further develop the network of WAON participating enjoy higher sales of amusement machines in Japan, which have risen
stores, mainly members offering products and services closely related since September 2015. Same-store product sales began to rise year on
to customers’ daily needs and lifestyles. As a result of these and other year in September 2016 for the first time in 31 months and continued
activities, cumulative issuance of WAON e-money cards grew to approx- to improve thereafter, leading to a 7.3% year-on-year increase for the
imately 64 million cards as of the end of the current fiscal year, with the second half of the current fiscal year. Aeon Fantasy actively replaced
WAON e-money transaction volume in the period totaling approximately amusement machines at outlets of Fun Field Co., Ltd., which merged
¥2,082.4 billion, a 1.1% year-on-year increase. into Aeon Fantasy in June 2015, to enhance outlet appeal. Additionally,
the branding of former Fun Field outlets was changed to Mollyfantasy
Shopping Center Development Business and PALO at all stores. Owing to these initiatives, monthly same-store
The Shopping Center Development Business earned operating income sales at outlets previously managed by Fun Field began to rise year on
of ¥46.8 billion (USD 418.3 million) (up 4.0% year on year) and operating year from July 2016. In its overseas business, Aeon Fantasy recorded
revenue of ¥315.9 billion (USD 2,820.9 million) (up 16.1% year on year) operating income, continuing its profitability from the previous year. As a
for the current fiscal year. result, Aeon Fantasy recorded higher operating revenue and income for
the current year.
Capital Expenditures Return on Assets / Equity Ratio*

(¥ billion) Return on Equity* (%)
(%)
551
506
451 3.6
15.3
13.9
12.9
1.0
0.6
0.5
0.1
0.1
FY ’15 ’16 ’17 FY ’15 ’16 ’17 FY ’15 ’16 ’17
Return on Assets
Return on Equity

International Business Consolidated net assets at February 28, 2017 totaled ¥1,862.4
(Aeon’s consolidated financial statements include the operating results of billion (USD 16,628.6 million), an increase of ¥42.9 billion (USD 383.3
the International Business mainly for January through December.) million), or 2.4%, from February 29, 2016. The increase was chiefly
The International Business recorded operating revenue of ¥398.3 attributable to an increase of ¥53.5 billion (USD 477.7 million) in non-con-
billion (USD 3,557.0 million) (down 6.6% year on year) and an operating trolling interest in financial and other subsidiaries, which outweighed a
loss of ¥5.4 billion (a decline of ¥2.952 billion (USD 26.3 million) year on decline of ¥11.4 billion (USD 102.4 million) in foreign currency translation
year). adjustments.
In Malaysia, Aeon Co. (M) Bhd. opened one of the largest shopping
centers in the country, Aeon Mall Shah Alam, in Shah Alam, the capital Consolidated Cash flow and capital Expenditures
of Selangor State, in March 2016 as a flagship shopping center. In May Consolidated Cash flows
2016, the company opened Aeon Mall Kota Bharu, its first on the eastern The balance of cash and cash equivalents at February 28, 2017 was
coast of the Malay Peninsula as part of the strategy to develop new ¥802.0 billion (USD 7,161.5 million), an increase of ¥101.5 billion (USD
markets. The shopping center has enjoyed a positive response from local 907.0 million), or 14.5%, from February 29, 2016.
customers since its opening. In ASEAN, Aeon Vietnam Co., Ltd. and Net cash provided by operating activities in the current fiscal year
Aeon Cambodia Co., Ltd. both turned profitable on an operating basis ended February 28, 2017 was ¥294.8 billion (USD 2,632.9 million) (up
for the year. 583.3% year on year). The ¥251.7 billion (USD 2,247.6 million) increase
In China, Aeon Stores (Hong Kong) Co., Ltd. introduced the Aeon from the previous fiscal year resulted from the increases of ¥63.8 billion
Style brand overseas by completely refurbishing its flagship stores into (USD 570.3 million) in notes and accounts receivable-trade and ¥63.5
Aeon Style Kornhill in July 2016 and Aeon Style Whampoa in September billion (USD 567.5 million) in loans in banking business, factors reducing
2016. In the China mainland, the earnings of existing stores improved cash flows, and were outweighed by increases of ¥202.9 billion (USD
during the period as the business continued to take initiatives to 1,812.3 million) in deposits received in banking business, ¥67.4 billion
strengthen the business foundation and bolster earnings. (USD 601.8 million) in notes and accounts payable-trade, and ¥56.1
billion (USD 501.5 million) income before income taxes excluding
Cost of Sales and Selling, General and Administrative Expenses depreciation and amortization and other non-cash expenses, which were
Consolidated operating costs decreased to ¥5,274.4 billion (USD factors increasing cash flows.
47,093.4 million) (down 0.5% year on year). The ratio of operating costs Net cash used in investing activities during the current fiscal year
to operating revenues improved by 0.6 percentage points to 64.2%. ended February 28, 2017, was ¥267.7 billion (USD 2,390.2 million) (down
SG&A expenses rose to ¥2,750.9 billion (USD 24,561.9 million) (up 40.1% year on year). This ¥178.9 billion (USD 1,597.3 million) decrease
1.8 % year on year). The ratio of SG&A expenses to operating revenues from the previous fiscal year reflects an increase of ¥149.3 billion (USD
increase by 0.5 percentage points to 33.5%. 1,333.0 million) in purchase of marketable securities in banking business,
As a result, consolidated operating income for the year ended as well as increases of ¥254.4 billion (USD 2,271.6 million) in proceeds
February 28, 2017 amounted to ¥184.7 billion (USD 1,649.4 million) (up from sale and redemption of marketable securities in banking business
4.4% year on year). The ratio of operating income to operating revenues and ¥104.3 billion (USD 931.8 million) proceeds from sale of fixed assets.
increased by 0.1 percentage point to 2.3%, reflecting the increase in Net cash provided by financing activities during the fiscal year ended
operating income against the increase in revenues. February 28, 2017, was ¥81.4 billion (USD 727.2 million) (down 74.0%
year on year). This ¥231.8 billion (USD 2,070.4 million) decrease mainly
Consolidated Net Income reflects an increase of ¥36.8 billion (USD 328.9 million) in proceeds from
Income from continuing operations, before income taxes, decreased by issuance of bonds, as well as decreases of ¥199.7 billion (USD 1,783.8
¥19.8 billion (USD 177.5 million) to ¥149.3 billion (USD 1,333.3 million), million) in short-term borrowings and commercial paper and ¥90.4 billion
after deducting income taxes of ¥73.6 billion (USD 657.2 million), which (USD 807.7 million) in proceeds from long-term debt.
decreased ¥34.7 billion (USD 310.5 million) year over year. Net income
increase by ¥14.8 billion (USD 133.0 million) year over year to ¥75.7 Capital Expenditures
billion (USD 676.0 million). After deducting net income attributable to Capital expenditures during the year under review (including payments
non-controlling interests of ¥64.4 billion (USD 575.5 million), Aeon Co., for fixed leasehold deposits to lessors) amounted to ¥551.5 billion (USD
Ltd. posted Net income attributable to owners of the parent of ¥11.2 4,924.1 million), a ¥44.6 billion, or 8.8%, increase from the previous
billion (USD 100.4 million), an increase of ¥5.2 billion (USD 46.8 million) fiscal year. Capital expenditures of the Shopping Center Development
year over year. Business increased by 1.5% to ¥183.9 billion (USD 1,642.7 million),
which accounts for 33.4% of total capital expenditures.
Consolidated Financial Position
Consolidated assets at February 28, 2017 totaled ¥8,750.8 billion (USD Consolidated Financial Ratios
78,132.6 million), an increase of ¥524.9 billion (USD 4,687.3 million), or The return on assets for the year ended February 28, 2017, was 0.1%.
6.4%, from the end of the previous fiscal year (February 29, 2016). The The return on equity* increased by 0.5 percentage points to 1.0%. The
increase was chiefly attributable to the increases of ¥252.7 million (USD equity ratio* the decreased by 1.0 percentage point to 12.9% reflecting
2,256.8 million) in loans and bills discounted for banking business, ¥106.6 the increase in total liabilities.
billion (USD 952.2 million) in cash and time deposits, and ¥92.5 billion
(USD 826.6 million) in notes and accounts receivable-trade, consisting * The equity figures used in calculation of the return on equity and the equity ratio do not
include stock acquisition rights and minority interests.
mostly of installment plan accounts receivable at financial subsidiaries.
Consolidated liabilities at February 28, 2017 totaled ¥6,888.4
billion (USD 61,503.9 million), an increase of ¥482.0 billion (USD 4,303.9
million), or 7.5%, from February 29, 2016. The increase was chiefly attrib-
utable to the increases of ¥382.5 billion (USD 3,415.6 million) in deposits
for banking business and ¥73.9 billion (USD 660.3 million) in corporate
bonds (including bonds redeemable within one year).

Aeon Co., Ltd., and its consolidated subsidiaries
Consolidated Balance Sheet

As of February 28, 2017
Thousands of
U.S. Dollars
Millions of Yen (Note 1)
’16 ’17 ’17

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 9, 16.a, and 18) ¥ 702,400 ¥ 805,646 $ 7,193,275
Time deposits (Note 18) 18,750 15,078 134,627
Call loans (Note 18) 25,000 223,214
Marketable securities (Notes 5, 9, and 18) 237,767 185,098 1,652,662
Receivables:
Notes and accounts—trade (Note 18) 69,651 65,529 585,080
Installment (Notes 4, 9, and 18) 1,025,255 1,121,959 10,017,492
Financial loans (Notes 4, 9, and 18) 300,854 299,271 2,672,067
Loans and bills discounted in banking business (Notes 4, 18, and 23) 1,217,376 1,470,142 13,126,270
Other (Note 18) 183,888 232,068 2,072,039
Inventories (Note 6) 575,620 586,202 5,233,947
Deferred tax assets (Note 15) 43,249 53,257 475,513
Prepaid expenses and other current assets (Notes 9 and 23) 112,534 113,583 1,014,134
Allowance for doubtful accounts (Note 18) (51,409) (53,061) (473,767)
Total current assets 4,435,940 4,919,774 43,926,560
PROPERTY, BUILDINGS, AND EQUIPMENT (Notes 2.h, 7, 8, and 9):

Land 811,128 804,884 7,186,467
Buildings and structures 1,472,547 1,487,044 13,277,186
Furniture and fixtures 209,414 224,190 2,001,698
Vehicles 5,596 4,592 41,000
Lease assets 49,612 68,483 611,459
Construction in progress 67,142 70,584 630,217
Total property, buildings, and equipment 2,615,442 2,659,779 23,748,030
INVESTMENTS AND OTHER ASSETS:

Investment securities (Notes 5, 9, and 18) 133,424 137,135 1,224,424
Investments in, and advances to, unconsolidated subsidiaries and
associated companies (Note 18) 67,463 74,026 660,949
Asset for retirement benefits (Note 10) 7,976 10,693 95,477
Goodwill (Notes 2.a and 7) 181,806 161,694 1,443,704
Intangible assets (Notes 7 and 9) 120,024 133,142 1,188,768
Fixed leasehold deposits to lessors (Notes 18 and 23) 413,330 404,255 3,609,424
Deferred tax assets (Note 15) 87,687 87,341 779,835
Other (Notes 7 and 9) 187,084 181,966 1,624,702
Allowance for doubtful accounts (Note 18) (24,304) (18,953) (169,230)
Total investments and other assets 1,174,491 1,171,302 10,458,056
TOTAL ¥8,225,874 ¥8,750,856 $78,132,647
See notes to consolidated financial statements.

Thousands of
U.S. Dollars
’16 ’17 ’17

LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term borrowings (Notes 9 and 18) ¥ 444,070 ¥ 397,973 $ 3,553,338
Current portion of long-term debt (Notes 2.x, 9, and 18) 300,257 347,326 3,101,129
Deposits received in banking business (Note 18) 2,116,171 2,498,725 22,310,051
Payables:
Notes and accounts—trade (Note 18) 892,629 888,422 7,932,344
Construction 121,762 103,093 920,475
Other 111,874 109,350 976,345
Income taxes payable 58,715 49,277 439,978
Accrued expenses 118,145 121,846 1,087,914
Provision for store closing expenses 7,468 5,505 49,154
Provision for point program 24,649 21,358 190,701
Other (Notes 9, 11, and 17.a) 336,223 375,579 3,353,388
Total current liabilities 4,531,966 4,918,460 43,914,823
LONG-TERM LIABILITIES:
Long-term debt (Notes 2.x, 9, and 18) 1,426,473 1,507,206 13,457,205
Lease deposits from lessees (Notes 9 and 18) 264,976 262,850 2,346,876
Liability for retirement benefits (Note 10) 27,432 25,735 229,780
Retirement allowances for directors and Audit & Supervisory Board members 1,428 1,345 12,015
Provision for loss on refund of interest received 4,474 3,808 34,002
Asset retirement obligations (Note 11) 75,119 80,734 720,843
Deferred tax liabilities (Note 15) 36,410 48,350 431,705
Other (Notes 9 and 17.a) 33,800 35,715 318,890
Total long-term liabilities 1,874,432 1,969,985 17,589,156
COMMITMENTS AND CONTINGENT LIABILITIES (Note 20)
EQUITY (Notes 2.x and 13):

Common stock—authorized, 2,400,000,000 shares;
issued 871,924,572 shares in 2016 and 2017 220,007 220,007 1,964,357
Capital surplus 316,894 315,813 2,819,759
Stock acquisition rights 1,979 1,820 16,253
Retained earnings 588,306 575,147 5,135,246
Treasury stock—at cost, 35,181,560 shares in 2016 and
33,734,908 shares in 2017 (Note 2.y) (42,538) (40,709) (363,478)
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities 42,815 52,440 468,214
Deferred loss on derivatives under hedge accounting (5,237) (2,588) (23,108)
Foreign currency translation adjustments 21,651 10,178 90,877
Defined retirement benefit plans (104) 1,091 9,748
Total 1,143,774 1,133,201 10,117,869
Non-controlling interests 675,700 729,209 6,510,798
Total equity 1,819,474 1,862,410 16,628,667
TOTAL ¥8,225,874 ¥8,750,856 $78,132,647

Consolidated Statement of Income

For the Year Ended February 28, 2017
Thousands of
U.S. Dollars
’15 ’16 ’17 ’17

OPERATING REVENUES
Net sales ¥6,202,210 ¥7,235,084 ¥7,253,529 $64,763,656
Operating revenues from financial services business 294,387 319,174 329,923 2,945,747
Rental and other revenues–net (Note 17.b) 581,978 622,473 626,691 5,595,464
Total operating revenues 7,078,577 8,176,732 8,210,145 73,304,868
OPERATING COSTS
Cost of sales 4,525,231 5,268,101 5,245,626 46,835,951
Operating costs in financial services business 27,198 30,233 28,842 257,526
Total operating costs 4,552,430 5,298,334 5,274,469 47,093,477
Operating profit 2,526,146 2,878,398 2,935,675 26,211,390
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (Note 2.s) 2,384,778 2,701,420 2,750,935 24,561,928
Operating income 141,368 176,977 184,739 1,649,462
OTHER INCOME (EXPENSES):

Interest and dividend income 5,770 5,538 5,241 46,802
Interest expense (13,156) (13,760) (14,945) (133,440)
Impairment loss (Notes 7, 17.a, and 24) (46,163) (46,518) (45,253) (404,047)
Amortization of goodwill (Note 2.a) (9,780) (6,181) (3,443) (30,742)
Net gain on sales of securities (Note 5) 1,078 18,503 3,673 32,802
Gain on negative goodwill 10,593 1,475
Gain on sales of investments in consolidated subsidiaries 172 7,570
Dilution gain from changes in equity interest of consolidated subsidiaries 3,787 510
Gain resulting from step acquisitions (Note 3) 33,686 7,698
Equity in (losses) earnings of associated companies 6,689 2,012 (40) (365)
Gain on return of assets from retirement benefits trust (Note 23) 13,603
Gain on sales of fixed assets 4,341 9,207 26,342 235,198
Other—net (Note 14) 6,470 (7,412) (6,975) (62,284)
Other income (expenses)—net 3,492 (7,752) (35,400) (316,076)
INCOME BEFORE INCOME TAXES 144,860 169,225 149,339 1,333,385
INCOME TAXES (Note 15):

Current 73,069 98,621 75,475 673,888
Deferred (7,612) 9,778 (1,857) (16,587)
Total income taxes 65,457 108,399 73,617 657,300
NET INCOME 79,403 60,825 75,721 676,084
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS 37,333 54,816 64,466 575,592
NET INCOME ATTRIBUTABLE TO OWNERS OF PARENT ¥ 42,069 ¥ 6,008 ¥ 11,255 $ 100,491
U.S. Dollars
Yen (Note 1)
’15 ’16 ’17 ’17

PER SHARE OF COMMON STOCK (Note 22):
Basic net income ¥50.22 ¥ 7.19 ¥13.44 $0.12
Diluted net income 49.56 7.02 13.20 0.12
Cash dividends applicable to the year 28.00 28.00 30.00 0.27

Consolidated Statement of Comprehensive Income

Thousands of
U.S. Dollars
’15 ’16 ’17 ’17

NET INCOME ¥ 79,403 ¥ 60,825 ¥75,721 $676,084
OTHER COMPREHENSIVE (LOSS) INCOME (Note 21):
Unrealized gain (loss) on available-for-sale securities 26,228 (6,074) 9,743 86,997
Deferred gain (loss) on derivatives under hedge accounting (2,355) (2,323) 4,398 39,270
Foreign currency translation adjustments 42,847 (34,269) (20,544) (183,429)
Defined retirement benefit plans (21,664) 1,466 13,092
Share of other comprehensive (loss) income in associated companies 266 (18) (75) (670)
Total other comprehensive (loss) income 66,986 (64,349) (5,010) (44,739)
COMPREHENSIVE INCOME (LOSS) ¥146,389 ¥ (3,523) ¥70,710 $631,344
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:
Owners of the parent ¥ 90,925 ¥(39,381) ¥13,253 $118,331
Non-controlling interests 55,464 35,857 57,457 513,013

Consolidated Statement of Changes in Equity

Thousands Millions of Yen

Accumulated Other Comprehensive Income
Outstanding Unrealized Deferred Gain
Number of Gain (Loss) (Loss) on Foreign
Shares of Stock on Available- Derivatives Currency Defined Non-
Common Common Capital Acquisition Retained Treasury for-sale under Hedge Translation Retirement controlling
Stock Stock Surplus Rights Earnings Stock Securities Accounting Adjustments Benefit Plans Total Interests Total Equity
BALANCE, MARCH 1, 2014 837,874 ¥220,007 ¥285,917 ¥1,670 ¥589,943 ¥(10,933) ¥23,318 ¥(2,122) ¥13,964 ¥1,121,766 ¥562,802 ¥1,684,569
Net income 42,069 42,069 42,069
Cash dividends, ¥27 per share (22,843) (22,843) (22,843)
Issuance of common stock 25,527 30,977 30,977 30,977
Purchase of treasury stock (30,050) (35,948) (35,948) (35,948)
Disposal of treasury stock 2,058 (44) 2,646 2,602 2,602
Net change in the year 240 26,254 (1,021) 23,622 20,497 69,593 58,960 128,553
BALANCE, FEBRUARY 28, 2015 835,409 220,007 316,894 1,910 609,125 (44,235) 49,573 (3,144) 37,587 20,497 1,208,217 621,763 1,829,980
Cumulative effects of changes in accounting policy (3,244) (3,244) (3,244)
BALANCE, MARCH 1, 2015 (as restated) 835,409 220,007 316,894 1,910 605,881 (44,235) 49,573 (3,144) 37,587 20,497 1,204,973 621,763 1,826,736
Net income 6,008 6,008 6,008
Purchase of treasury stock (53) (86) (86) (86)
Net change in the year 68 (6,758) (2,093) (15,936) (20,601) (45,320) 53,937 8,616
BALANCE, FEBRUARY 29, 2016 836,743 220,007 316,894 1,979 588,306 (42,538) 42,815 (5,237) 21,651 (104) 1,143,774 675,700 1,819,474
Net income attributable to owners of the parent 11,255 11,255 11,255
Purchase of treasury stock (12) (19) (19) (19)
Change in treasury shares of parent arising from
transactions with non-controlling shareholders (1,081) (1,081) (1,081)
Net change in the year (159) 9,624 2,649 (11,472) 1,196 1,838 53,508 55,347
BALANCE, FEBRUARY 28, 2017 838,189 ¥220,007 ¥315,813 ¥1,820 ¥575,147 ¥(40,709) ¥52,440 ¥(2,588) ¥10,178 ¥ 1,091 ¥1,133,201 ¥729,209 ¥1,862,410
Thousands of U.S. Dollars (Note 1)

Accumulated Other Comprehensive Income
Unrealized Deferred Gain
Gain (Loss) (Loss) on Foreign
Stock on Available- Derivatives Currency Defined Non-
Common Capital Acquisition Retained Treasury for-sale under Hedge Translation Retirement controlling
Stock Surplus Rights Earnings Stock Securities Accounting Adjustments Benefit Plans Total Interests Total Equity
BALANCE, MARCH 1, 2016 $1,964,357 $2,829,419 $17,676 $5,252,732 $(379,806) $382,279 $(46,765) $193,314 $(937) $10,212,269 $6,033,040 $16,245,310
Net income attributable to owners of the parent 100,491 100,491 100,491
Cash dividends, $0.26 per share (217,922) (217,922) (217,922)
Purchase of treasury stock (178) (178) (178)
Disposal of treasury stock (55) 16,506 16,451 16,451
Change in treasury shares of the parent arising from
transactions with non-controlling shareholders (9,660) (9,660) (9,660)
Net change in the year (1,422) 85,934 23,656 (102,437) 10,685 16,417 477,757 494,174
BALANCE, FEBRUARY 28, 2017 $1,964,357 $2,819,759 $16,253 $5,135,246 $(363,478) $468,214 $(23,108) $ 90,877 $9,748 $10,117,869 $6,510,798 $16,628,667

Consolidated Statement of Cash Flows

Thousands of
U.S. Dollars
’15 ’16 ’17 ’17
OPERATING ACTIVITIES:
Income before income taxes ¥144,860 ¥169,225 ¥149,339 $1,333,385
Adjustments for:
Income taxes—paid (86,241) (84,486) (84,877) (757,837)
Depreciation and amortization 188,344 215,033 231,904 2,070,571
Amortization of goodwill 22,963 22,700 19,058 170,165
Gain on negative goodwill (10,593) (1,475)
Gain on return of assets from retirement benefits trust (13,603)
Foreign exchange (gain) loss—net 3,470 (1,357) (172) (1,542)
Equity in (losses) earnings of associated companies (6,689) (2,012) 40 365
Gain on sales of property, buildings, and equipment (4,341) (9,207) (26,342) (235,198)
Loss on disposals and sales of property, buildings, and equipment 4,073 5,907 12,421 110,902
Loss on impairment of long-lived assets 46,163 46,518 45,253 404,047
Gain on sales of investments in consolidated subsidiaries (172) (7,570)
Gain resulting from step acquisitions (33,686) (7,629)
Dilution gain from changes in equity interest of consolidated subsidiaries, net (3,753) 1,004
Gain on sales of short-term and long term investment securities (1,078) (18,503) (3,673) (32,802)
Changes in assets and liabilities:
Increase in notes and accounts receivable (142,426) (60,196) (124,076) (1,107,822)
Decrease (increase) in financial loans receivable 16,267 (17,110) 2,540 22,687
Increase in cash loans and bills discounted in banking business (137,297) (197,306) (260,874) (2,329,235)
Increase in inventories (27,789) (18,477) (13,825) (123,445)
Increase (decrease) in notes and accounts payable—trade 106,026 (66,732) 675 6,032
Increase in deposits received in banking business 235,278 179,565 382,554 3,415,662
Increase (decrease) in allowance for doubtful accounts (3,809) 1,914 906 8,096
Increase (decrease) in liability for retirement benefits (12,799) (33,608) 175 1,570
(Decrease) increase in provision for loss on refund of interest received 1,759 (370) (666) (5,946)
Other assets and liabilities 109,573 (60,322) (29,045) (259,336)
Other—net (9,647) 1,260 (6,422) (57,344)
Total adjustments 253,592 (126,068) 145,554 1,299,589
Net cash provided by operating activities 398,453 43,156 294,893 2,632,975
INVESTING ACTIVITIES:
Purchases of marketable securities (42) (167) (1,496)
Proceeds from sales of marketable securities 165 50 100 892
Purchases of securities in banking business (202,858) (190,184) (339,487) (3,031,136)
Proceeds from sales and redemption of securities in banking business 228,012 135,973 390,398 3,485,698
Purchases of property, buildings, and equipment (435,466) (518,317) (519,897) (4,641,942)
Proceeds from sales of property, buildings, and equipment 47,616 80,361 184,730 1,649,376
Purchases of investment securities (17,467) (5,534) (9,630) (85,985)
Proceeds from sales of investment securities 2,395 50,700 12,823 114,495
Proceeds from sales of investments in subsidiaries 871 5,462
Cash paid in conjunction with purchases of consolidated subsidiaries (Note 16.b) (11,274) (5,304)
Cash received in conjunction with purchases of consolidated subsidiaries 509
Collection of loans receivable 794 1,033 406 3,630
Payments for fixed leasehold deposits to lessors (15,626) (21,651) (31,609) (282,226)
Collection of fixed leasehold deposits to lessors 34,129 31,845 40,753 363,868
Proceeds from lease deposits from lessees 33,168 27,826 25,521 227,871
Repayments of lease deposits from lessees (26,247) (24,646) (26,596) (237,470)
Other—net (10) (14,739) 4,944 44,150
Net cash used in investing activities (361,838) (446,612) (267,710) (2,390,273)
FINANCING ACTIVITIES:
Net (decrease) increase in short-term borrowings 15,188 155,450 (44,336) (395,860)
Proceeds from long-term debt 408,340 510,635 457,013 4,080,478
Repayments of long-term debt (270,591) (315,950) (327,731) (2,926,177)
Purchase of treasury stock (35,948) (86) (19) (178)
Proceeds from share issuance to non-controlling shareholders 29,561 4,094 17,292 154,399
Repayments to non-controlling shareholders (25,009) (8,260) (731) (6,533)
Dividends paid to shareholders (22,843) (23,564) (24,407) (217,922)
Dividends paid to non-controlling interests (16,183) (18,863) (19,350) (172,773)
Proceeds of ownership interests in a subsidiary without a change in consolidation scope 10,560 94,285
Other—net 13,012 9,890 13,162 117,517
Net cash provided by financing activities 95,527 313,344 81,450 727,235
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS 12,884 (2,147) (7,044) (62,896)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 145,027 (92,258) 101,588 907,040
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 633,123 778,151 700,511 6,254,566
INCREASE IN CASH AND CASH EQUIVALENTS RESULTING FROM SHARE TRANSFER (Note 16.c) 13,745
INCREASE IN CASH AND CASH EQUIVALENTS RESULTING FROM MERGER 873
CASH AND CASH EQUIVALENTS, END OF YEAR (Note 16.a) ¥778,151 ¥700,511 ¥802,099 $7,161,606
NON-CASH INVESTING AND FINANCING ACTIVITIES (Note 16.c)

Notes to Consolidated Financial Statements

As of and for the Year Ended February 28, 2017
effective period) for the Company and domestic consolidated subsidiaries.

1 Basis of presenting consolidated finan-
Goodwill recorded upon the acquisition of Origin Toshu Co., Ltd., of
¥41,903 million, Diamond City Co., Ltd. (current Aeon Mall Co., Ltd.), of
cial statements
¥55,625 million, Aeon Bank, Ltd. (“Aeon Bank”), of ¥21,810 million, and
Welcia Holdings Co., Ltd. of ¥54,024 million is amortized over a period
The accompanying consolidated financial statements have been
of 20 years.
prepared in accordance with the provisions set forth in the Japanese
The Company recognized a writedown of its investment in a consoli-
Financial Instruments and Exchange Act and its related accounting
dated subsidiary on the nonconsolidated financial statement for the fiscal
regulations, and in accordance with accounting principles generally
years ended February 28, 2015, February 29, 2016 and February 28,
accepted in Japan (“Japanese GAAP’’), which are different in certain
2017. Accordingly, the Company expensed goodwill of ¥9,780 million,
respects as to application and disclosure requirements of International
¥6,181 million and ¥3,443 million ($30,742thousand), which is included
Financial Reporting Standards (“IFRS’’) and accounting principles gener-
in other expenses in the consolidated statements of income for the years
ally accepted in the United States of America (“U.S. GAAP’’).
ended February 28, 2015, February 29, 2016, and February 28, 2017,
In preparing these consolidated financial statements, certain reclas-
respectively, in accordance with Paragraph 32 of “Practical Guidelines on
sifications and rearrangements have been made to the consolidated
Accounting Standards for Capital Consolidation Procedures in Preparing
financial statements issued domestically in order to present them in a
Consolidated Financial Statements” (the Accounting Practice Committee
form that is more familiar to readers outside Japan. In addition, certain
Report No. 7, issued by the Japanese Institute of Certified Public
reclassifications have been made in the 2015 and 2016 consolidated
Accountants (“JICPA”), the latest revision on November 28, 2014).
financial statements to conform to the classifications used in 2017.
All significant intercompany balances and transactions have been
The consolidated financial statements are stated in Japanese yen,
eliminated in consolidation. All material unrealized profit included in
the currency of the country in which Aeon Co., Ltd. (the “Company’’) is
assets resulting from transactions within the Group is eliminated.
incorporated and operates. The translation of Japanese yen amounts
into U.S. dollar amounts is included solely for the convenience of readers
outside Japan and has been made at the rate of ¥112 to $1, the approx- b. Business combination—In October 2003, the Business Accounting
imate rate of exchange as of February 28, 2017. Such translation should Council issued a Statement of Opinion, “Accounting for Business
not be interpreted as representation that the Japanese yen amounts Combinations,” and in December 2005, the ASBJ issued ASBJ
could be converted into U.S. dollars at that or any other rate. Statement No. 7, “Accounting Standard for Business Divestitures” and
ASBJ Guidance No. 10, “Guidance for Accounting Standard for Business
Japanese yen figures less than a million yen are rounded down to the
Combinations and Business Divestitures.”
nearest million, except for per share data.
In December 2008, the ASBJ issued a revised accounting standard
U.S. dollar figures less than a thousand dollars are rounded down to
for business combinations, ASBJ Statement No. 21, “Accounting
the nearest thousand, except for per share data.
Standard for Business Combinations.” Major accounting changes under
the revised accounting standard are as follows: (1) The revised standard
requires accounting for business combinations only by the purchase
method. As a result, the pooling-of-interests method of accounting is no
2 Summary of significant accounting
longer allowed. (2) The previous accounting standard required research
policies and development costs to be charged to income as incurred. Under the
revised standard, in-process research and development costs (IPR&D)
acquired in the business combination are capitalized as an intangible
a. Consolidation—The consolidated financial statements as of February
asset. (3) The previous accounting standard provided for a bargain
28, 2017, include the accounts of the Company and its 296 (284 in 2015
purchase gain (negative goodwill) to be systematically amortized over a
and 295 in 2016) significant subsidiaries (together, the “Group’’).
period not exceeding 20 years. Under the revised standard, the acquirer
Under the control and influence concepts, those companies in which recognizes the bargain purchase gain in profit or loss immediately on the
the Company, directly or indirectly, is able to exercise control over opera- acquisition date after reassessing and confirming that all of the assets
tions are fully consolidated, and those companies over which the Group acquired and all of the liabilities assumed have been identified after a
has the ability to exercise significant influence are accounted for by the review of the procedures used in the purchase price allocation.
equity method.
In September 2013, the ASBJ issued revised ASBJ Statement No.
Investments in 32 (31 in 2015 and 33 in 2016) associated companies 21, “Accounting Standard for Business Combinations,” revised ASBJ
are accounted for by the equity method. Guidance No. 10, “Guidance on Accounting Standards for Business
Investments in four (five in 2015 and 2016) unconsolidated subsidiar- Combinations and Business Divestitures,” and revised ASBJ Statement
ies and four (two in 2015 and 2016) associated companies are stated at No. 22, “Accounting Standard for Consolidated Financial Statements.”
cost. If the equity method of accounting had been applied to the invest- Major accounting changes are as follows:
ments in these companies, the effect on the accompanying consolidated (a) Transactions with noncontrolling interest—A parent’s ownership inter-
financial statements would not be material. est in a subsidiary might change if the parent purchases or sells ownership
The differences between the cost of an acquisition and the fair value interests in its subsidiary. The carrying amount of noncontrolling interest
of the net assets of the acquired subsidiary at the date of acquisition is adjusted to reflect the change in the parent’s ownership interest in its
are recorded as goodwill and are amortized within 20 years (estimated subsidiary while the parent retains its controlling interest in its subsidiary.

Under the previous accounting standard, any difference between the fair of the consolidated balance sheet and (c) presentation of the consoli-
value of the consideration received or paid and the amount by which dated statement of income shall be applied to all periods presented in
the noncontrolling interest is adjusted is accounted for as an adjustment financial statements containing the first-time application of the revised
of goodwill or as profit or loss in the consolidated statement of income. standards and guidance.
Under the revised accounting standard, such difference is accounted for The revised standards and guidance for (d) provisional accounting
as capital surplus as long as the parent retains control over its subsidiary. treatments for a business combination are effective for a business combi-
(b) Presentation of the consolidated balance sheet—In the consolidated nation which occurs on or after the beginning of annual periods beginning
balance sheet, “minority interest” under the previous accounting stan- on or after March 1, 2016. Earlier application is permitted for a business
dard is changed to “noncontrolling interest” under the revised accounting combination which occurs on or after the beginning of annual periods
standard. beginning on or after March 1, 2015.
(c) Presentation of the consolidated statement of income—In the consol- The Company applied the revised accounting standards and guid-
idated statement of income, “net income before minority interest” under ance for (a) transactions with noncontrolling interest, (b) presentation
the previous accounting standard is changed to “net income” under of the consolidated balance sheet, (c) presentation of the consolidated
the revised accounting standard, and “net income” under the previous statement of income, and (e) acquisition-related costs above, effective
accounting standard is changed to “net income attributable to owners of March 1, 2016, and (d) provisional accounting treatments for a business
the parent” under the revised accounting standard. combination above for a business combination which occurred on or
(d) Provisional accounting treatments for a business combination—If the after March 1, 2016. The revised accounting standards and guidance
initial accounting for a business combination is incomplete by the end for (a) transactions with noncontrolling interest and (e) acquisition-related
of the reporting period in which the business combination occurs, an costs were applied prospectively.
acquirer shall report in its financial statements provisional amounts for With respect to (b) presentation of the 2016 consolidated balance
the items for which the accounting is incomplete. Under the previous sheet and (c) presentation of the consolidated statement of income, the
accounting standard guidance, the impact of adjustments to provisional applicable line items in the 2015 and 2016 consolidated financial state-
amounts recorded in a business combination on profit or loss is recog- ments have been accordingly reclassified and presented in line with those
nized as profit or loss in the year in which the measurement is completed. in 2017.
Under the revised accounting standard guidance, during the measure- In the consolidated statement of cash flows for the year ended
ment period, which shall not exceed one year from the acquisition, the February 28, 2017, cash flows regarding purchases or sales of ownership
acquirer shall retrospectively adjust the provisional amounts recognized interests in a subsidiary without a change in consolidation scope are pre-
at the acquisition date to reflect new information obtained about facts sented under financing activities, and cash flows for acquisition-related
and circumstances that existed as of the acquisition date and that would costs are presented under operating activities.
have affected the measurement of the amounts recognized as of that
The effect of these changes on consolidated financial statements
date. Such adjustments shall be recognized as if the accounting for the
was not material.
business combination had been completed at the acquisition date.
(e) Acquisition-related costs—Acquisition-related costs are costs, such
as advisory fees or professional fees, which an acquirer incurs to effect c. Unification of accounting policies applied to foreign subsidiaries for
a business combination. Under the previous accounting standard, the the consolidated financial statements—Under ASBJ Practical Issues
acquirer accounts for acquisition-related costs by including them in Task Force (“PITF”) No. 18, ‘Practical Solution on Unification of Accounting
the acquisition costs of the investment. Under the revised accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
standard, acquisition-related costs shall be accounted for as expenses in Statements’, the accounting policies and procedures applied to a parent
the periods in which the costs are incurred. company and its subsidiaries for similar transactions and events under
similar circumstances should in principle be unified for the preparation
The above accounting standards and guidance for (a) transactions
of the consolidated financial statements. However, financial statements
with noncontrolling interest, (b) presentation of the consolidated balance
prepared by foreign subsidiaries in accordance with either International
sheet, (c) presentation of the consolidated statement of income, and (e)
Financial Reporting Standards or generally accepted accounting prin-
acquisition-related costs are effective for the beginning of annual periods
ciples in the United States of America (Financial Accounting Standards
beginning on or after March 1, 2016. Earlier application is permitted from
Board Accounting Standards Codification—”FASB ASC”) tentatively may
the beginning of annual periods beginning on or after March 1, 2015,
be used for the consolidation process, except for the following items that
except for (b) presentation of the consolidated balance sheet and (c) pre-
should be adjusted in the consolidation process so that net income is
sentation of the consolidated statement of income. In the case of earlier
accounted for in accordance with Japanese GAAP, unless they are not
application, all accounting standards and guidance above, except for (b)
material: (1) amortization of goodwill; (2) scheduled amortization of actu-
presentation of the consolidated balance sheet and (c) presentation of
arial gain or loss of pensions that has been recorded in equity through
the consolidated statement of income, should be applied simultaneously.
other comprehensive income; (3) expensing capitalized development
Either retrospective or prospective application of the revised account- costs of R&D; and (4) cancellation of the fair value model of accounting
ing standards and guidance for (a) transactions with noncontrolling for property, plant and equipment and investment properties and incor-
interest and (e) acquisition-related costs is permitted. In retrospective poration of the cost model of accounting.
application of the revised standards and guidance, the accumulated
effects of retrospective adjustments for all (a) transactions with noncon-
trolling interest and (e) acquisition-related costs which occurred in the d. Cash equivalents—Cash equivalents in the consolidated balance
past shall be reflected as adjustments to the beginning balance of capital sheets are short-term investments that are readily convertible into cash
surplus and retained earnings for the year of the first-time application. In and exposed to insignificant risk of changes in value. Cash equivalents
prospective application, the new standards and guidance shall be applied include time deposits; certificates of deposit; marketable securities, such
prospectively from the beginning of the year of the first-time application. as Money Management Fund; and others, all of which mature or become
due within three months of the date of acquisition. Deposit with the Bank
The revised accounting standards and guidance for (b) presentation

of Japan in the banking subsidiary is also included in cash equivalents. In of useful lives is principally from 20 to 39 years for store buildings, from
the consolidated statements of cash flows, the ending balance of bank 38 to 50 years for office buildings, from three to 20 years for structures,
overdraft is excluded from cash equivalents (see Note 16). from two to 20 years for furniture and fixtures, and from four to six
years for vehicles. Accumulated depreciation of property, buildings, and
equipment, including lease assets, as of February 29, 2016 and February
e. Inventories—Substantially all merchandise of consolidated subsidiar-
28, 2017, was ¥2,120,510 million and ¥2,180,827 million ($19,471,678
ies are stated at the lower of cost, determined by the retail method or net
thousand), respectively.
selling value. Other merchandise of certain consolidated subsidiaries are
stated at the lower of cost determined by the moving-average method or
net selling value. Raw materials and supplies are principally stated at the i. Intangible assets (excluding goodwill and lease assets)—Intangible
lower of cost determined by the most recent purchase price. assets are carried at cost, less accumulated amortization. Amortization
of intangible assets of the Group is calculated using the straight-line
method. Software is amortized mainly over five years.
f. Marketable and investment securities—Marketable and investment
securities are classified and accounted for, depending on management’s
intent, as follows: (1) held-to-maturity debt securities, for which there is j. Long-lived assets—The Company and its domestic consolidated
the positive intent and ability to hold to maturity are reported at amortized subsidiaries review their long-lived assets, including goodwill, for
cost, and (2) available-for-sale securities are reported at fair value, with impairment whenever events or changes in circumstance indicate the
unrealized gains and losses, net of applicable taxes, reported in a sepa- carrying amount of an asset or asset group may not be recoverable.
rate component of equity. An impairment loss would be recognized if the carrying amount of an
Non-marketable available-for-sale securities are stated at cost, asset or asset group exceeds the sum of the undiscounted future cash
determined by the moving-average method. For other-than-temporary flows expected to result from the continued use and eventual disposition
declines in fair value, investment securities are reduced to net realizable of the asset or asset group. The impairment loss would be measured
value by a charge to income. as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows
from the continued use and eventual disposition of the asset or the net
g. Allowance for doubtful accounts selling price at disposition. Foreign consolidated subsidiaries review their
(Allowance for doubtful accounts) long-lived assets for impairment based on IFRS principally.
The allowance for doubtful accounts is stated in amounts considered to
be appropriate based on the past credit loss experience and an evalu- k. Provision for store closing expenses—The provision for store closing
ation of potential losses in receivables and other assets, such as fixed expenses, including rental agreement cancellation penalties, is recognized
leasehold deposits to lessors. at the time when a decision to close a store is made by management and
such expenses may be reasonably estimated.
(Allowance for doubtful accounts in the financial services business)
The allowance for doubtful accounts in the financial services business is l. Retirement and pension plans—The Company and certain domestic
stated in accordance with its internally developed standards for write-offs consolidated subsidiaries have a defined benefit pension plan, advance
and provisions mainly described as follows: payment plan, and defined contribution pension plan covering substan-
The financial services subsidiaries classify their obligors into five tially all employees.
categories for self-assessment purposes, namely, “normal,’’ “in need The Company accounts for the liability for retirement benefits based
of caution,’’ “possible bankruptcy,’’ “virtual bankruptcy,’’ and “legal on the projected benefit obligations and plan assets at the balance sheet
bankruptcy.’’ date. The projected benefit obligations are attributed to periods on a ben-
For credits to obligors classified as normal or in need of caution, the efit formula basis. Actuarial gains and losses that are yet to be recognized
allowance for doubtful accounts is provided based on the bad debt ratio in profit or loss are recognized within equity (accumulated other compre-
derived from past credit loss experience over a certain period. hensive income) after adjusting for tax effects and are mainly recognized
in profit or loss on a straight-line basis over 10 years, no longer than the
For credits classified as possible bankruptcy, the allowance for
expected average remaining service period of the employees.
doubtful accounts is provided only for the required amount of the follow-
ing: credit amount, less the expected amount recoverable through the Retirement allowances for directors and Audit & Supervisory Board
disposal of collateral or execution of guarantee. members are recorded by certain domestic subsidiaries as a liability at
the amount that would be required if all directors and Audit & Supervisory
For credits classified as virtual bankruptcy or legal bankruptcy, the
Board members retired at each balance sheet date.
allowance for doubtful accounts is provided for the full amounts of such
credits, deducting the expected amount recoverable through the disposal
of collateral or execution of guarantee. m. Provision for loss on refund of interest received—The provision for
All claims are assessed initially by the relevant departments based on loss on refund of interest received (the amount of interest that exceeds
the financial services subsidiaries’ internal standards for self-assessment the ceiling rate imposed by the Interest Rate Restriction Law) is provided
of asset quality. The Internal Audit Department, which is independent from by the consolidated credit services subsidiaries and is stated in amounts
the relevant departments, reviews the results of the self-assessments. considered to be appropriate based on the subsidiary’s past refund
experiences.
h. Property, buildings and equipment (excluding lease assets)—

Property, buildings, and equipment are stated at cost. Depreciation of n. Provision for point program—The provision for the point program is
property, buildings, and equipment is computed using the straight-line stated in amounts considered to be appropriate based on the compa-
method based on the estimated useful lives of the assets. The range nies’ past redemption experience.

o. Asset retirement obligations—An asset retirement obligation is translation are recognized in the consolidated statements of income to
recorded for a legal obligation imposed either by law or contract that the extent that they are not hedged by forward exchange contracts.
results from the acquisition, construction, development, and the normal
operation of a tangible fixed asset and is associated with the retirement
u. Foreign currency financial statements—The balance sheet accounts
of such tangible fixed asset.
of the foreign consolidated subsidiaries are translated into Japanese yen
The asset retirement obligation is recognized as the sum of the at the current exchange rate as of each balance sheet date, except for
discounted cash flows required for the future asset retirement and is equity, which is translated at the historical rate. Differences arising from
recorded in the period in which the obligation is incurred if a reasonable such translation were shown as “Foreign currency translation adjust-
estimate can be made. If a reasonable estimate of the asset retirement ments” under accumulated other comprehensive income in a separate
obligation cannot be made in the period the asset retirement obligation component of equity. Revenue and expense accounts of foreign consol-
is incurred, the liability should be recognized when a reasonable estimate idated subsidiaries are translated into yen at the average exchange rate.
of asset retirement obligation can be made. Upon initial recognition of
a liability for an asset retirement obligation, an asset retirement cost is
capitalized by increasing the carrying amount of the related fixed asset v. Derivatives and hedging activities—The Group uses derivative
by the amount of the liability. The asset retirement cost is subsequently financial instruments to manage its exposures to fluctuations in foreign
allocated to expense through depreciation over the remaining useful life currency exchange and interest rates. Derivative financial instruments are
of the asset. Over time, the liability is accreted to its present value each composed principally of foreign exchange forward contracts, currency
period. Any subsequent revisions to the timing or the amount of the orig- swaps, and interest rate swaps utilized by the Group to reduce foreign
inal estimate of undiscounted cash flows are reflected as an adjustment currency exchange and interest rate risks.
to the carrying amount of the liability and the capitalized amount of the The Group does not enter into derivatives for trading or speculative
related asset retirement cost. purposes.
Derivative financial instruments and foreign currency transactions are
p. Employee stock ownership plan—In accordance with PITF No. 30, classified and accounted for as follows: (a) all derivatives are recognized
Practical Solution on Transactions of Delivering the Company’s Own as either assets or liabilities and measured at fair value, and gains or
Stock to Employees etc. through Trusts,’ upon transfer of treasury stock losses on derivative transactions are recognized in the consolidated
to the employee stockownership trust (the “Trust”) by the entity, any statement of income, and (b) for derivatives used for hedging purposes, if
difference between the book value and fair value of the treasury stock derivatives qualify for hedge accounting because of high correlation and
is recorded in capital surplus. At year-end, the Company records (1) the effectiveness between the hedging instruments and the hedged items,
Company stock held by the Trust as treasury stock in equity, (2) all other gains or losses on derivatives are deferred until maturity of the hedged
assets and liabilities of the Trust on a line-by-line basis, and (3) a liability/ transactions.
asset for the net of (i) any gain or loss on delivery of the stock by the Trust Receivables and payables denominated in foreign currencies are
to the employee shareholding association, (ii) dividends received from translated at the contracted rates if the forward contracts qualify for
the entity for the stock held by the Trust, and (iii) any expenses relating hedge accounting. Gains or losses related to qualifying hedges of firm
to the Trust. commitments or anticipated transactions are deferred and recognized in
income or loss when the hedged transactions occur.
q. Leases—Finance lease transactions are capitalized lease assets and Long-term debt denominated in foreign currencies for which cur-
lease obligations in the balance sheet. Finance lease assets that deem to rency swaps are used to hedge the foreign currency fluctuations are
transfer ownership of the leased property to the lessee are depreciated translated at the contracted rate if the forward contracts qualify for hedge
using the same method for property, buildings, and equipment. Finance accounting.
lease assets that do not deem to transfer ownership of the leased prop- Interest rate swaps are utilized to hedge interest rate exposures
erty to the lessee are depreciated using the straight-line method over the of long-term debt. In principle, these swaps, which qualify for hedge
period of the lease, with zero residual value. accounting, are measured at market value at the balance sheet date and
the unrealized gain or loss, net of applicable taxes, is deferred until matu-
rity as “Deferred Gain (Loss) on Derivatives under Hedge Accounting” in
r. Income taxes—The provision for income taxes is computed based on
a separate component of equity.
the pretax income included in the consolidated statements of income.
The asset and liability approach is used to recognize deferred tax assets Interest rate swaps which qualify for hedge accounting and meet
and liabilities for the expected future tax consequences of temporary specific matching criteria are not remeasured at market value, but the
differences between the carrying amounts and the tax bases of assets differential paid or received under the swap agreements is recognized
and liabilities. Deferred taxes are measured by applying currently enacted and included in interest expense or income.
tax rates to the temporary differences.
w. Per share information—Basic net income per share is computed by
s. Advertising costs—Advertising costs that are expensed as incurred dividing net income available to common shareholders by the weight-
and included in selling, general and administrative expenses were ed-average number of common shares outstanding for the period,
¥172,196 million, ¥194,798 million, and ¥193,753 million ($1,729,945 retroactively adjusted for stock splits.
thousand) for the years ended 2015, 2016, and 2017, respectively. Diluted net income per share reflects the potential dilution that could
occur if securities were exercised or converted into common stock.
Diluted net income per share of common stock assumes full conversion
t. Foreign currency transactions—All short-term and long-term mon-
of the outstanding convertible bonds at the beginning of the year (or at
etary receivables and payables denominated in foreign currencies are
the time of issuance) with an applicable adjustment for related interest
translated into Japanese yen at the exchange rates at each consolidated
expense, net of tax, and full exercise of outstanding stock acquisition
balance sheet date. The foreign exchange gains and losses from
rights.

Cash dividends per share presented in the accompanying consoli- Foreign consolidated subsidiaries
dated statements of income are dividends applicable to the respective New standards and interpretations which are newly established or
years, including dividends to be paid after the end of the year, retroactively amended before the approval date of the consolidated financial state-
adjusted for stock splits. ments, not yet adopted by the foreign consolidated subsidiaries and
which may have potential impacts are as follows:
x. Additional information
Accounting Treatment for the Employee Stock Ownership Plan Trust The Company is currently evaluating the potential impacts of applying the
The Company has introduced an Employee Stock Ownership Plan Trust following in the future period to be adopted.
(the “ESOP Trust”), which is a trust-type incentive scheme that provides Standard/ To be adopted by
Outline of the new/revised standards
interpretation the Group
the Company’s workforce with ownership interests in the Company, IFRS 9 replaces a part of the previous
aiming to enhance the corporate value over the medium to long term. IAS 39.
Main revisions are:
The Company’s stock held by the ESOP Trust is accounted for as
to revise classification into
treasury stock within Equity by using the look-through approach for the measurement categories of financial
trust account. As of February 29, 2016 and February 28, 2017, the book instruments (amortized costs and fair
values) and measurement; to revise
value and the number of treasury stock recorded under the look-through
the treatment of changes in fair values From the
approach were ¥6,084 million and 4,794,600 shares, and ¥4,290 million Financial
IFRS 9 of financial liabilities measured at fair fiscal year ending
Instruments
($38,303 thousand) and 3,380,600 shares respectively. The book values value; to revise the eligibility require- February 28, 2019
ment of hedged items and hedging
of long-term loans, including the current portion, recorded under the
instruments, and requirements related
look-through approach, as of February 29, 2016 and February 28, 2017, to the effectiveness of the hedge; and
were ¥6,000 million and ¥3,600 million ($32,142 thousand), respectively. to revise the measurement approach
for impairment by introducing an
impairment model based on the
expected credit loss.
y. New accounting pronouncements IFRS 15 replaces the previous IAS 11
Tax Effect Accounting and IAS 18.
Main revisions are:
On March 28, 2016, the ASBJ issued ASBJ Guidance No. 26, “Guidance to require revenue recognition by the
on Recoverability of Deferred Tax Assets,” which included certain following five steps:
a. identify the contract with the
revisions of the previous accounting and auditing guidance issued by
customer
JICPA. While the new guidance continues to follow the basic framework Revenue
b. identify the performance obligations From the
from con-
of the previous guidance, it provides new guidance for the application of IFRS 15 in the contract fiscal year ending
tracts with
c. determine the transaction price February 28, 2019
judgment in assessing the recoverability of deferred tax assets. customers
d. allocate the transaction price to
The previous guidance provided a basic framework which included each performance obligation in the
contract
certain specific restrictions on recognizing deferred tax assets depending
e. recognise revenue when (or as) a
on the company’s classification in respect of its profitability, taxable profit performance obligation is satisfied to
and temporary difference, etc. revise the treatment for contract costs,
license and guarantee of products
The new guidance does not change such basic framework but, in IFRS 16 replaces the previous IAS 17
limited cases, allows companies to recognize deferred tax assets even and IFRIC 4.
Main revisions are:
for deductible temporary differences for which it was specifically prohib-
Revision to apply a control model to
ited to recognize deferred tax assets under the previous guidance, if the From the
the identification of leases and distin-
IFRS 16 Leases fiscal year ending
company can justify, with reasonable grounds, that it is probable that guishing between leases and service
February 29, 2020
contracts; and Revision to eliminate
the deductible temporary difference will be utilized against future taxable
lease classification and recognition of
profit in some future period. assets and liabilities for all leases by
the lessee.
The new guidance is effective for the beginning of annual periods
beginning on or after April 1, 2016. Earlier application is permitted for
annual periods ending on or after March 31, 2016. The new guidance shall
not be applied retrospectively and any adjustments from the application
of the new guidance at the beginning of the reporting period shall be 3 Acquisitions
reflected within retained earnings or accumulated other comprehensive
income at the beginning of the reporting period.
Establishment of a new joint-holding company through management
The Company expects to apply the new guidance on recoverability of integration of The Maruetsu, Inc., KASUMI CO., LTD., and Maxvalu
deferred tax assets effective March 1, 2017, and is in process of measur- Kanto Co., Ltd., and the acquisition of Kasumi (FY’16)
ing the effects of applying the new guidance in future applicable periods.
KASUMI Co., Ltd. (“Kasumi”), an associated company of the Company
accounted for using the equity method, and The Maruetsu, Inc.
(“Maruetsu”) and Maxvalu Kanto Co., Ltd. (“MV Kanto”), consolidated
subsidiaries of the Company, completed a joint share transfer and
established a joint-holding company, United Super Markets Holdings
Inc. (“U.S.M. Holdings”). As a result, Kasumi became a consolidated
subsidiary of the Company. The overview of this business combination
is described below.

Objectives of business combination v) Percentage of voting rights acquired
The Tokyo metropolitan area is a rapidly evolving market, where new Voting rights held immediately before the acquisition: 32.40%
customer needs are generated on a daily basis. It is one of the richest Additionally acquired voting rights on the business combination date:
and most promising areas in Japan and is expected to continue its 67.60%
sustainable growth, while competition in the supermarket (“SM”) industry Voting rights held after the acquisition: 100.00%
intensifies and spreads beyond the SM industry. Maruetsu, Kasumi, and vi) Primary basis for determining an acquired company
MV Kanto (the “Three Operating Companies”) intend to contribute to cus-
U.S.M. Holdings and Kasumi became the Company’s consolidated
tomers by offering products that enrich their diet and lead them to healthy
subsidiaries through a joint share transfer. As such, it was determined
lifestyles, and becoming a community-based company that will support
that Maruetsu and MV Kanto, which had been consolidated subsidiar-
local communities’ development and prosperity by enhancing their man-
ies of the Company from before the share transfer, were identified as
agement know-how cultivated over the years as SM companies based
acquirers, and Kasumi as an acquiree.
in the metropolitan area. Further, the Three Operating Companies seek
to remain as companies of continuous renovation and confronting new
challenges by flexibly adapting their business directions to the changing Period of the acquired company’s financial results included in the
trends. Under these basic principles, the Three Operating Companies consolidated financial statements
established a joint-holding company, U.S.M. Holdings through manage- From March 1, 2015 to February 29, 2016
ment integration, and Kasumi became a consolidated subsidiary as a
result of the joint share transfer.
Acquisition cost of the acquired company and its breakdown
The total acquisition cost was ¥64,257 million, consisting of the following:
Overview of the share transfer
Millions of Yen
i) Share transfer date Consideration for the acquisition - fair value of shares of U.S.M.
March 2, 2015 Holdings issued to the shareholders of Kasumi on the date of ¥64,137
the business combination
ii) Share transfer method
Direct costs of the acquisition (advisory fee and others) 119
The new joint-holding company, U.S.M. Holdings, was established Acquisition cost ¥64,257
through a joint share transfer and became the wholly owning parent, with
the Three Operating Companies being its wholly-owned subsidiaries Gain resulting from the step acquisition of Kasumi of ¥7,473 million is
iii) Details of the allocation pertaining to the share transfer (share recorded in the Consolidated Statement of Income for the year ended
transfer ratio) February 29, 2016.
The share transfer ratio is as follows:

Company name Maruetsu Kasumi MV Kanto Goodwill generated, underlying factors for the goodwill, and amor-
Share transfer ratio 0.51 1 300 tization method and period
i) Goodwill generated
iv) Outline of the joint-holding company established through the
¥8,977 million
share transfer
Goodwill is measured based on the proportionate number of shares
1) Company name: United Super Markets Holdings Inc.
held by the consolidated subsidiary of the Company (the JV company).
2) Business description: Management of the supermarket business
ii) Underlying factors for the goodwill
3) Shareholding ratio by the Company’s consolidated subsidiary (the JV
Goodwill was generated due to an excess in earning power, which is
company): 51.0%
expected from future business operations of Kasumi.
iii) Amortization method and period
Company name and business description of the acquired company,
Amortized over 20 years on a straight-line basis
the date and legal form of the business combination, the company
name after the business combination, the percentage of voting rights
of Kasumi acquired by the Company’s consolidated subsidiaries, The estimated fair values of the assets acquired and the liabilities
and the primary reasons for determining an acquired company assumed at the acquisition date are as follows:
i) Company name and business description of the acquired Millions of Yen
company Company name: KASUMI Co., Ltd. Current assets ¥28,858
Fixed assets 64,430
Business description: Supermarket business involved in retail of food
Total assets ¥93,289
products, household goods, and clothes
Current liabilities 35,246
ii) Date of the business combination Long-term liabilities 10,096
March 2, 2015 Total liabilities ¥45,342
iii) Legal form of the business combination

Establishment of a joint-holding company through a joint share transfer
iv) Company name after the business combination
No change – remains the same

4 Receivables
Installment and financial loans are operating receivables of the consolidated credit services subsidiaries.
Loans and bills discounted in the banking business are housing, personal, and other loans of the consolidated banking subsidiary.
5 Marketable and investment securities
Marketable securities as of February 29, 2016 and February 28, 2017, consisted of the following:
Thousands of
Millions of Yen U.S. Dollars
’16 '17 '17
Securities in banking business ¥233,513 ¥180,731 $1,613,675
Monetary claims bought in banking business 4,097 4,031 35,994
Others 156 335 2,992
Total ¥237,767 ¥185,098 $1,652,662
The cost and aggregate fair values of marketable and investment securities as of February 29, 2016 and February 28, 2017, were as follows:
Millions of Yen
February 29, 2016 Cost Unrealized Gains Unrealized Losses Fair Value
Securities classified as:
Available-for-sale: Equity securities ¥ 52,492 ¥62,968 ¥(1,465) ¥113,995
Debt securities 227,148 3,105 (11) 230,243
Other 7,196 729 (162) 7,763
Millions of Yen
Available-for-sale: Equity securities ¥ 44,752 ¥74,368 ¥(107) ¥119,014
Debt securities 173,596 2,482 (4) 176,073
Other 8,243 540 (230) 8,554
Thousands of U.S. Dollars

Available-for-sale: Equity securities $ 399,579 $664,008 $ (958) $1,062,629
Debt securities 1,549,966 22,162 (42) 1,572,086
Other 73,606 4,827 (2,054) 76,378
Proceeds and realized gains and losses on sales of available-for-sale securities for the years ended February 29, 2016 and February 28, 2017, were
as follows:
Millions of Yen
February 29, 2016 Proceeds Realized Gains Realized Losses
Equity securities ¥50,700 ¥19,398 ¥(895)
Millions of Yen Thousands of U.S. Dollars

February 28, 2017 Proceeds Realized Gains Realized Losses Proceeds Realized Gains Realized Losses
Equity securities ¥12,144 ¥3,672 $108,432 $32,789
Debt securities 100 892
Other 579 1 5,170 12
Total ¥12,823 ¥3,673 $114,495 $32,802

The impairment loss on valuation of investment securities and investments in associated companies for the years ended February 29, 2016 and
February 28, 2017, was ¥192 million and ¥1 million ($11 thousand), respectively, which included available-for-sale securities whose fair value could not
be reliably measured of ¥100 million and ¥1 million ($11 thousand), respectively.
The consolidated banking subsidiary pledged securities of ¥37,503 million and ¥37,288 million ($332,935 thousand) as collateral for transactions,
such as for exchange settlement transactions, as of February 29, 2016 and February 28, 2017, respectively.
6 Inventories
Inventories as of February 29, 2016 and February 28, 2017, consisted of the following:
Thousands of
’16 '17 '17
Merchandise ¥566,794 ¥575,259 $5,136,243
Raw materials and supplies 8,826 10,942 97,703
Total ¥575,620 ¥586,202 $5,233,947
7 Long-lived assets
The Group reviewed its long-lived assets for impairment for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, and, as
a result, recorded impairment losses of ¥46,163 million, ¥46,518 million and ¥45,253 million ($404,047 thousand) respectively on the following group
of long-lived assets:
For the years ended February 28, 2015, February 29, 2016 and February 28, 2017
a. GMS Business
Number of Number of Number of Thousands of
Asset Groups Millions of Yen Asset Groups Millions of Yen Asset Groups Millions of Yen U.S. Dollars
Use Type of Assets Location ’15 ’16 ’17 ’17
Northern Japan 17 ¥ 586 49 ¥ 2,594 27 ¥ 1,989 $ 17,762
Land, buildings and Kanto 49 2,798 63 4,508 74 8,397 74,975
Stores
structures and others Chubu 26 2,635 21 2,815 25 2,233 19,941
Western Japan 63 6,616 58 5,279 52 3,930 35,096
Idle Western Japan
Land 2 55 1 5
assets and others
Total 157 ¥12,692 192 ¥15,203 178 ¥16,550 $147,776
b. Supermarket (“SM”) and Discount Store (“DS”) Business

Japan
Northern Japan 37 ¥ 1,514 59 ¥ 1,225 59 ¥ 3,783 $ 33,777
Land, buildings and Kanto 306 8,461 335 9,251 256 5,790 51,697
Stores
structures and others Chubu 31 1,318 40 1,096 23 415 3,712
Western Japan 183 9,012 187 7,647 231 6,110 54,559
China 1 112 3 350 5 389 3,481
Idle Land, buildings and Western Japan
21 174 25 2,037 16 188 1,684
assets structures and others and others
Total 579 ¥20,593 649 ¥21,609 590 ¥16,678 $148,912

c. Small-sized Store Business
Japan
Northern Japan 31 ¥ 175 27 ¥ 125 29 ¥ 129 $ 1,156
Kanto 364 1,341 210 1,398 244 1,182 10,560
Land, buildings and
Stores Chubu 106 428 74 273 86 398 3,559
structures and others
Western Japan 134 380 47 204 63 404 3,608
China 44 127 1,136
Korea 369 567 264 288 401 359 3,213
Idle
Land Chubu 1 1 1
assets
Total 1,005 ¥2,893 622 ¥2,291 868 ¥2,602 $23,236
d. Drug Store and Pharmacy Business

Japan
Kanto 31 ¥ 628 40 ¥ 635 58 ¥ 908 $ 8,108
Land, buildings and
Stores Chubu 20 759 41 810 61 507 4,534
structures and others
Western Japan 35 416 58 883 38 376 3,365
China 2 2 2 5
Idle Land, buildings and Western Japan
1 192 1 16 144
assets structures and others and Kanto
Total 88 ¥1,807 142 ¥2,527 158 ¥1,809 $16,152
e. Financial Services Business

Northern Japan 1 ¥ 4 2 ¥ 3 $ 27
Buildings and structures Kanto 4 ¥17 5 20 12 38 340
Stores
and others Chubu 5 16 2 10 3 1 16
Western Japan 4 1 2 2 6 18 166
Idle Land, buildings and
Kanto 5 48 436
assets structures and others
Total 13 ¥36 10 ¥37 28 ¥110 $987
f. Shopping Center (“SC”) Development Business

Japan
Northern Japan 2 ¥ 285 2 ¥ 8 2 ¥ 21 $ 191
Buildings and structures Kanto 4 259 3 498 4 1,315 11,746
Stores
and others Chubu 2 328 1 1 29 261
Western Japan 2 995 1 686 5 1,262 11,270
China 1 386 3,449
Total 10 ¥1,868 7 ¥1,193 13 ¥3,014 $26,918

g. Service and Specialty Store Business
Japan
Northern Japan 48 ¥ 269 57 ¥ 231 40 ¥ 113 $ 1,014
Kanto 203 1,864 187 993 165 861 7,692
Buildings and structures Chubu 60 327 58 309 64 277 2,481
Stores
and others Western Japan 144 1,067 127 564 105 636 5,683
China 15 37 2 9 5 36 326
Malaysia 1 2 6 19 174
Thailand 17 131 1,169
Idle Buildings and structures
Malaysia 1 3 32
assets and others
Total 470 ¥3,567 432 ¥2,110 403 ¥2,080 $18,574
h. International Business
Malaysia 7 ¥1,278 9 ¥ 138 11 ¥ 229 $ 2,050
Buildings and structures
Stores Thailand 1 260 7 93 3 41 371
and others
China 5 1,075 7 1,143 4 172 1,535
- Goodwill* Malaysia 1,819 16,242
Total 13 ¥2,614 23 ¥1,375 18 ¥2,262 $20,200
* The book value of goodwill was written down to zero since the Company has determined that reaching the income target expected in line with the business plan in effect when the
subsidiary was acquired is no longer probable.
i. Other Businesses
Northern Japan 1
Buildings and structures
Stores Kanto 2 ¥89 3 ¥167 2 ¥144 $1,288
and others
Western Japan 3 1
Total 2 ¥89 7 ¥169 2 ¥144 $1,288
The Group mainly categorizes stores as minimum cash-generating units and idle assets as individual independent units.
The book values of the stores, which incurred or are expected to incur continuous operating losses, and idle assets, which are not scheduled to
be used, were reduced to their recoverable amounts, and such reductions in carrying value were recorded as impairment loss in other expenses.
The recoverable amounts of the asset groups are measured at net selling price or value in use. The net selling price for land is measured based
on the real estate appraisal value or assessed value of fixed assets. The net selling price for other assets is estimated based on past transactions. The
value in use is estimated using the discounted future cash flow method. The discount rates for fiscal years ended February 28, 2015, February 29,
2016 and February 28, 2017, were 1.5% to 10.0%, 1.7% to 6.4%, and 1.7% to 8.1%, respectively.
The breakdown of impairment loss for the years ended February 28, 2015, February 29, 2016 and February 28, 2017 is as follows:
Thousands of
’15 ’16 '17 '17
Buildings and structures ¥29,059 ¥31,244 ¥28,863 $257,713
Land 3,913 2,902 2,236 19,968
Furniture and fixtures 7,786 7,473 8,075 72,100
Goodwill 1,819 16,242
Leased property held under finance leases 2,965 1,630 1,093 9,762
Other intangible assets and others 2,437 3,267 3,165 28,259
Total ¥46,163 ¥46,518 ¥45,253 $404,047

8 Investment properties
Certain consolidated subsidiaries hold some rental properties, such as commercial facilities, in major cities throughout Japan.
The net of rental revenues and operating expenses for those rental properties for the years ended February 29, 2016 and February 28, 2017, were
¥65,383 million and ¥74,417 million ($664,439 thousand), respectively.
The carrying amounts, increases in balances, and fair values of the properties as of February 29, 2016 and February 28, 2017, were as follows:
Millions of Yen
’16 ’17
Carrying amount Fair value Carrying amount Fair value
Beginning Beginning
of the year Increase End of the year of the year Increase End of the year
¥919,575 ¥45,024 ¥964,600 ¥1,433,470 ¥964,600 ¥4,599 ¥969,199 ¥1,379,777

’17
Carrying amount Fair value
Beginning
of the year Increase End of the year
$8,612,500 $41,067 $8,653,567 $12,319,439
*1 Carrying amounts recognized in the consolidated balance sheets were net of accumulated depreciation.
*2 Increase during the year ended February 29, 2016, was primarily attributable to newly acquired properties of ¥144,647 million, which was partially offset by disposal and sales of fixed
assets of ¥39,494 million, depreciation expense of ¥37,040 million and impairment loss of ¥6,973 million.
Increase during the year ended February 28, 2017, was primarily attributable to newly acquired properties of ¥102,223 million ($912,706 thousand), which was partially offset by
disposal and sales of fixed assets of ¥63,826 million ($569,878 thousand), and depreciation expense of ¥39,163 million ($349,675 thousand) and impairment loss of ¥2,904 million
($25,934 thousand).
*3 Fair values of the properties as of February 29, 2016 and February 28, 2017, are mainly determined by the Company based on the “Real Estate Appraisal Standards” or appraisal
reports issued by real estate appraisers.
9 Short-term borrowings and long-term debt
Short-term borrowings as of February 29, 2016 and February 28, 2017, consisted of the following:
Thousands of
’16 ’17 ’17
Short-term loans principally from banks, 0.10% to10.50% (2016) and 0.00% to12.50% (2017) ¥326,624 ¥350,760 $3,131,790
Bank overdraft, 1.48% to 3.14% (2016) and 0.65% to 3.20% (2017) 1,945 3,714 33,165
Commercial papers, 0.01% to 0.20% (2016) and 0.03% to 3.83% (2017) 115,500 43,498 388,383
Total ¥444,070 ¥397,973 $3,553,338

Long-term debt as of February 29, 2016 and February 28, 2017, consisted of the following:
Thousands of
’16 ’17 ’17
Issued by Aeon Co., Ltd.:
Unsecured 2.59% Japanese yen notes due in 2026 ¥ 15,000 ¥ 15,000 $ 133,928
Subordinated Japanese yen bond with deferral of interest and early redemption provisions due in 2057 *1 26,500
Unsecured 1.01% Japanese yen notes due in 2019 20,000 20,000 178,571
Subordinated Japanese yen bond with deferral of interest and early redemption provisions due in 2047 *2 24,800 221,428
Subordinated Japanese yen bond with deferral of interest and early redemption provisions due in 2047 *3 21,700 193,750
Issued by Aeon Financial Service Co., Ltd.:
Zero-Coupon Convertible Bonds due in 2018 50
Unsecured 0.83% callable subordinated Japanese yen notes due in 2025 30,000 30,000 267,857
Unsecured 0.83% callable subordinated Japanese yen notes due in 2025 10,000 10,000 89,285
Unsecured Zero-Coupon Japanese yen Convertible Bonds due in 2020 30,000 267,857
Issued by Aeon Thana Sinsap (Thailand) Plc.:
Unsecured 1.15% Thai baht debenture due in 2017 1,706
Unsecured 1.73% Thai baht debenture due in 2017 2,268
Unsecured 1.05% Thai baht debenture due in 2018 3,385 3,385 30,229
Unsecured 2.87% Thai baht debenture due in 2019 634 645 5,761
Unsecured 1.74% Thai baht debenture due in 2021 1,684 15,038
Issued by Aeon Credit Service (M) Berhad: *4
Medium-term note 3.95% due in 2018 1,347 1,267 11,316
Issued by Aeon Co. (M) Bhd.:
Medium-term note 4.18% due in 2018 1,300 11,607
Issued by Aeon Mall Co., Ltd.:
Unsecured 0.48% Japanese yen notes due in 2024 25,000 223,214
Unsecured 1.10% Japanese yen notes due in 2037 10,000 89,285
Issued by other consolidated subsidiary :*5
Unsecured notes, due through 2020, with interest rates ranging from 0.40% to 0.61% 1,004 620 5,535
Loans from banks and insurance companies, due through 2074, with interest rates
ranging from 0.00% to 12.95% (2016) and from 0.00% to 12.95% (2017):
Collateralized 120,943 119,795 1,069,603
Unsecured 1,134,774 1,154,965 10,312,195
Lease obligations 66,433 73,176 653,358
Accounts payable for capital expenditures-installment 14,950 13,055 116,563
Total 1,726,730 1,854,533 16,558,334
Less current portion (300,257) (347,326) (3,101,129)
Long-term debt, less current portion ¥1,426,473 ¥1,507,206 $13,457,205
*1 Interest rate: Six-month euroyen LIBOR, plus 1.40% until September 29, 2016, and Six-month euroyen LIBOR, plus 2.40% after September 29, 2016
*2 Interest rate: 2.17% until September 21, 2026, and Six-month euroyen LIBOR, plus 3.05% after September 21, 2026
*3 Interest rate: Six-month euroyen LIBOR, plus 2.05% until September 21, 2026, and Six-month euroyen LIBOR, plus 3.05% after September 21, 2026
*4 Percentage figures show profit return rates.
*5 Consolidated subsidiary: Red Cabbage Co., Ltd.

The following is a summary of the terms for conversion and redemption of the convertible bonds with stock acquisition rights:
Number of Shares of Common Stock
Conversion Price*1 (thousands)*2 Exercise Period
From November 1, 2016 to
Unsecured Zero-Coupon Japanese yen Convertible Bonds due in 2020 ¥2,558 11,727
September 11, 2019
*1 The conversion price is subject to adjustment for certain subsequent events such as the issue of common stock at less than market value and stock splits.
*2 Numbers of shares of common stock are calculated on the assumption that all convertible bonds with stock acquisition rights are converted as of February 28, 2017.
Annual maturities of long-term debt as of February 28, 2017, were as follows:

Thousands of
Fiscal Year Ending February, Millions of Yen U.S. Dollars
2018 ¥ 347,326 $ 3,101,129
2019 302,579 2,701,598
2020 289,939 2,588,742
2021 243,035 2,169,956
2022 206,723 1,845,744
2023 and thereafter 464,930 4,151,164
Total ¥1,854,533 $16,558,334
Collateralized short-term borrowings, long-term debt, and others as of February 28, 2017, were as follows:
Thousands of
Short-term borrowings ¥ 32,665 $ 291,658
Other current liabilities 29,963 267,532
Long-term debt 119,795 1,069,603
Lease deposits from lessees 3,884 34,680
Other long-term liabilities 146 1,305
Total ¥186,455 $1,664,778
A certain subsidiary securitized real estate by means of a certain special purpose company and the Group treated the transaction as a finance
transaction according to the “Practical Guidelines on Accounting by Transferors for Derecognition of Real Estate Securitized by Means of Special
Purpose Companies” (the Accounting Practice Committee Report No. 15, issued by the JICPA, the latest revision on November 4, 2014). Accordingly,
the figures above include the amounts of such finance transactions as follows:
Thousands of
Buildings and structures-net of accumulated depreciation ¥21,405 $191,124
Land 4,573 40,835
Others 709 6,337
Thousands of
Other current liabilities ¥29,963 $267,532
The carrying amounts of assets pledged as collateral for short-term borrowings, long-term debt, and others as of February 28, 2017, were as
follows:
Thousands of
Buildings and structures-net of accumulated depreciation ¥102,381 $ 914,119
Land 72,846 650,418
Marketable securities 27,156 242,467
Installment and financial loans receivable 24,113 215,298
Cash and cash equivalents 2,695 24,069
Investment securities 44 400
Others 1,063 9,499
Total ¥230,302 $2,056,273

10 Retirement and pension plans
The Company and certain domestic consolidated subsidiaries have a defined benefit pension plan, advance payment plan, and defined contribution
pension plan covering substantially all employees.
Defined benefit plan

(1) The changes in defined benefit obligation for the years ended February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’16 ’17 ’17
Balance at beginning of year (as previously reported) ¥179,052 ¥188,403 $1,682,173
Cumulative effects of changes in accounting policy 4,073
Balance at beginning of year (as restated) ¥183,125 ¥188,403 $1,682,173
Current service cost 10,191 9,194 82,090
Interest cost 1,720 1,276 11,396
Actuarial (gains) losses 9,209 (5,544) (49,505)
Benefits paid (17,263) (7,945) (70,944)
Prior service cost (896) (8,004)
Increase of newly consolidated subsidiaries 7,610
Decrease due to the termination of a defined benefit plan (5,341) (644) (5,757)
Others (849) 135 1,213
Balance at end of year ¥188,403 ¥183,978 $1,642,661
(2) The changes in plan assets for the years ended February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’16 ’17 ’17
Balance at beginning of year ¥171,154 ¥168,946 $1,508,454
Expected return on plan assets 2,866 3,396 30,322
Actuarial losses (1,988) (5,148) (45,964)
Contributions from the employer 8,055 8,403 75,034
Benefits paid (8,591) (6,722) (60,019)
Setting of assets from retirement benefits trust 24,000
Increase of newly consolidated subsidiaries 5,360
Decrease due to the termination of a defined benefit plan (1,459)
Return of assets from retirement benefits trust (29,851)
Others (598) 59 530
Balance at end of year ¥168,946 ¥168,936 $1,508,357
(3) Reconciliation between the liability recorded in the consolidated balance sheet and the balances of defined benefit obligation and plan assets as of
February 29, 2016 and February 28, 2017, was as follows:
Thousands of
’16 ’17 ’17
Funded defined benefit obligation ¥173,210 ¥169,031 $1,509,206
Plan assets (168,946) (168,936) (1,508,357)
4,263 94 848
Unfunded defined benefit obligation 15,192 14,946 133,455
Net liability for defined benefit obligation ¥ 19,456 ¥ 15,041 $ 134,303
Liability for retirement benefits 27,432 25,735 229,780

Asset for retirement benefits (7,976) (10,693) (95,477)
Net liability for defined benefit obligation ¥ 19,456 ¥ 15,041 $ 134,303

(4) The components of net periodic benefit costs for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’15 ’16 ’17 ’17
Service cost ¥7,583 ¥10,191 ¥9,194 $82,090
Interest cost 2,586 1,720 1,276 11,396
Expected return on plan assets (1,328) (2,866) (3,396) (30,322)
Recognized actuarial gains (losses) (464) (1,783) 599 5,349
Others 107 80 157 1,407
Subtotal (net periodic benefit costs) 8,485 7,343 7,831 69,920
Gain on return of assets from retirement benefits trust (13,603)
Gain on abolishment of retirement benefit plan (773) (35) (318)
Total ¥8,485 ¥ (7,033) ¥7,795 $69,602
(5) The components of defined retirement benefit plans recognized in the Consolidated Statement of Comprehensive Income for the years ended
February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’15 ’16 ’17 ’17
Actuarial gains (losses) ¥(31,159) ¥1,005 $ 8,974
Prior service cost (281) 958 8,561
Other 319
Total ¥(31,121) ¥1,964 $17,535
(6) The components of accumulated other comprehensive income (before income tax effect) in respect of defined retirement benefit plans as of
February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’16 ’17 ’17
Unrecognized actuarial losses ¥(1,958) ¥(953) $(8,511)
Unrecognized prior service cost (144) 814 7,270
Total ¥(2,103) ¥(139) $(1,241)
(7) Plan assets as of February 29, 2016 and February 28, 2017 (8) Assumptions used for the years ended February 28, 2015, February
a. Components of plan assets 29, 2016 and February 28, 2017, were set forth as follows:
’15 ’16 ’17
Plan assets consisted of the following: Discount rate Mainly 1.3% Mainly 0.9% Mainly 0.8%
’16 ’17 Expected rate of Mainly Mainly Mainly
Debt investments 35% 40% return on plan assets 0%~1.58% 0%~2.37% 0.72%~2.51%
Equity investments 25% 31% * Expected rates of salary increase are based on an index of salary increase by age,
Cash and cash equivalents 24% 10% calculated using the base date of March31, 2016.
General account of life insurance 8% 8%

Others*1 8% 11%
Defined contribution plan
Total*2 100% 100%
Contribution for defined contribution plan for the years ended February
*1 Mainly includes Alternative investments. 28, 2015, February 29, 2016 and February 28, 2017, was ¥6,556 million,
*2 The retirement benefits trust which is contributed to the defined benefit pension plan
and retirement lump sum grants plan included in the plan assets total for the years ¥7,472 million and ¥8,221 million ($73,408 thousand), respectively.
ended February 29, 2016 and February 28, 2017 was 39% and 37%.
Advance payment plan

b. Method of determining the expected rate of return on plan assets
Payment for advance payment plan for the years ended February 28,
The expected rate of return on plan assets is determined considering the
2015, February 29, 2016 and February 28, 2017, was ¥857 million, ¥750
long-term rates of return which are expected currently and in the future
million and ¥730 million ($6,526 thousand), respectively.
from the various components of the plan assets.

11 Asset retirement obligations
The changes in asset retirement obligations for the years ended February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’16 ’17 ’17
Balance at beginning of year ¥71,451 ¥76,280 $681,073
Additional provisions associated with the acquisition of property, buildings, and equipment 3,537 4,414 39,412
Reconciliation associated with passage of time 1,198 1,141 10,192
Reduction associated with settlement of asset retirement obligations (1,470) (2,221) (19,831)
Increase associated with the change of scope of consolidation 2,282
Others (717) 1,887* 16,856*
Balance at end of year ¥76,280 ¥81,502 $727,703
* “Others” mainly represents an increase of ¥2,616 million ($23,357 thousand) due to changes in accounting estimates of asset retirement obligations (AROs). This is associated with
certain consolidated subsidiaries’ revised accounting estimates for AROs related to restoration obligations under real estate leasehold contracts.
The AROs were estimated based on restoration cost incurred on store closures. The effects of this change on profit or loss are immaterial.
(b) Increases/decreases and transfer of common stock, reserve, and

12 Equity surplus
The Companies Act requires that an amount equal to 10% of dividends
must be appropriated as a legal reserve (a component of retained
Japanese companies are subject to the Companies Act of Japan (the
earnings) or as additional paid-in capital (a component of capital surplus)
“Companies Act”). The significant provisions in the Companies Act that
depending on the equity account charged upon the payment of such div-
affect financial and accounting matters are summarized below:
idends, until the total of aggregate amount of legal reserve and additional
paid-in capital equals 25% of the common stock. Under the Companies
(a) Dividends Act, the total amount of additional paid-in capital and legal reserve may
Under the Companies Act, companies can pay dividends at any time be reversed without limitation.
during the fiscal year in addition to the year-end dividend upon resolution The Companies Act also provides that common stock, legal reserve,
at the shareholders’ meeting. For companies that meet certain criteria, additional paid-in capital, other capital surplus, and retained earnings can
such as (1) having a Board of Directors, (2) having independent auditors, be transferred among the accounts within equity under certain conditions
(3) having an Audit & Supervisory Board, and (4) the term of service of upon resolution of the shareholders.
the directors being prescribed as one year rather than two-year term by
its articles of incorporation, the Board of Directors may declare dividends
(c) Treasury stock and treasury stock acquisition rights
(except for dividends-in-kind) at any time during the fiscal year if the
company has prescribed so in its articles of incorporation. The Board of The Companies Act also provides for companies to purchase treasury
Directors of companies with board committees (including appointment stock and dispose of such treasury stock by resolution of the Board of
committee, compensation committee, and audit committee) can also do Directors. The amount of treasury stock purchased cannot exceed the
so because such companies with board committees already, by nature, amount available for distribution to the shareholders, which is determined
meet the above criteria under the Companies Act, even though such by a specific formula.
companies have an audit committee instead of an Audit & Supervisory Under the Companies Act, stock acquisition rights are presented as
Board. a separate component of equity.
The Board of Directors of the Company can declare dividends with- The Companies Act also provides that companies can purchase
out resolution at the shareholders’ meeting as the Company is organized both treasury stock acquisition rights and treasury stock. Such treasury
as a company with board committees and meets the above criteria. stock acquisition rights are presented as a separate component of equity
The Companies Act permits companies to distribute dividends-in-kind or deducted directly from stock acquisition rights.
(non-cash assets) to shareholders subject to a certain limitation and
additional requirements.
Semiannual interim dividends may also be paid once a year upon
resolution by the Board of Directors if the articles of incorporation of the
company so stipulate. The Companies Act provides certain limitations on
the amounts available for dividends or the purchase of treasury stock.
The limitation is defined as the amount available for distribution to the
shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.

13 Stock-based compensation
For the years ended February 28, 2015, February 29, 2016 and February 28, 2017, the Company and domestic consolidated subsidiaries recognized
expenses related to stock options of ¥399 million, ¥370 million and ¥457 million ($4,081 thousand), respectively, which are included in selling, general
and administrative expenses. The Company also recorded ¥17 million, ¥17 million and ¥5 million ($50 thousand) of extraordinary income on the
expiration of stock options for the years ended February 28, 2015, February 29, 2016 and February 28, 2017.
The stock options outstanding as of February 28, 2017, are as follows:

Number of Exercise
Options Granted Price
Company Name Stock Option Persons Granted (Shares) Date of Grant Yen (¥) Exercise Period
2008 From May 21, 2007
Aeon Co., Ltd. 30 executive officers 66,500 April 21, 2007 1
Stock Option to May 20, 2022
2009 30 executive officers and From May 21, 2008
Aeon Co., Ltd. 84,000 April 22, 2008 1
Stock Option 7 executives of the group companies to May 20, 2023
2009 26 executive officers and November 20, From November 21, 2008
Aeon Co., Ltd. 21,600 1
Stock Option 7 executives of the subsidiaries 2008 to November 20, 2023
2010 From May 21, 2009
Aeon Co., Ltd. 8 executives of the subsidiaries 5,300 May 20, 2009 1
2011 20 executive officers and From July 21, 2010
Aeon Co., Ltd. 99,800 June 21, 2010 1
Stock Option 20 directors of the group companies to July 20, 2025
Aeon Co., Ltd. 78,200 June 21, 2011 1
Aeon Co., Ltd. 86,500 June 21, 2012 1
Aeon Co., Ltd. 92,200 June 21, 2013 1
Aeon Co., Ltd. 37,000 June 21, 2014 1
Aeon Co., Ltd. 37,900 June 21, 2015 1
2009 From May 31, 2008
Aeon Hokkaido Corporation 5 directors 20,000 April 30, 2008 1
2010 From May 31, 2009
2011 From May 31, 2010
2012 From May 31, 2011
2013 From May 31, 2012
2014 From May 31, 2013
2015 From May 31, 2014
2016 From May 31, 2015
2017 From May 31, 2016
2009 From May 21, 2008
Aeon Kyushu Co., Ltd. 9 directors 6,300 April 21, 2008 1
2010 From May 21, 2009
2011 From May 21, 2010
2012 From May 21, 2011
2013 From May 21, 2012
2014 From June 10, 2013
Aeon Kyushu Co., Ltd. 7 directors 6,600 May 10, 2013 1
Stock Option to June 9, 2028
2015 From June 10, 2014
Aeon Kyushu Co., Ltd. 7 directors 6,600 May 10, 2014 1
2014 From June 10, 2013
Sunday Co., Ltd. 5 directors 12,500 May 10, 2013 1
2015 From June 10, 2014
2016 From June 10, 2015

Number of Exercise
2017 From June 10, 2016
2012 From May 1, 2011
Maxvalu Hokkaido Co., Ltd. 6 directors 7,600 April 1, 2011 1
Stock Option to April 30, 2026
2013 From May 1, 2012
Maxvalu Hokkaido Co., Ltd. 6 directors 7,600 April 1, 2012 1
2014 From June 10, 2013
Maxvalu Hokkaido Co., Ltd. 5 directors 4,900 May 10, 2013 1
2015 From June 9, 2014
2016 From June 10, 2015
2017 From June 10, 2016
2011 From May 21, 2010
Maxvalu Tohoku Co., Ltd. 6 directors 6,500 April 21, 2010 1
2012 From May 21, 2011
2013 From May 21, 2012
2014 From June 10, 2013
Maxvalu Tohoku Co., Ltd. 6 directors 12,100 May 10, 2013 1
2017 From June 10, 2016
Maxvalu Tohoku Co., Ltd. 5 directors 9,600 May 10, 2016 1
2011 From June 7, 2010
Maxvalu Tokai Co., Ltd. 9 directors 10,400 May 6, 2010 1
2012 From June 2, 2011
2013 From June 1, 2012
2014 From June 1, 2013
2015 From June 1, 2014
2016 From June 1, 2015
2017 From June 2, 2016
2009 From May 1, 2008
Maxvalu Chubu Co., Ltd. 7 directors 11,100 April 1, 2008 1
2010 From May 1, 2009
2011 From May 1, 2010
2012 From May 1, 2011
2013 From May 1, 2012
2014 From June 10, 2013
Maxvalu Chubu Co., Ltd. 7 directors 12,100 May 10, 2013 1
2015 From June 10, 2014
2016 From June 10, 2015
2017 From June 10, 2016
2009 From May 21, 2008
Maxvalu Nishinihon Co., Ltd. 11 directors 24,900 April 21, 2008 1
2010 From May 21, 2009
2011 From May 21, 2010
2012 From May 21, 2011
2013 From May 21, 2012
2014 From June 10, 2013
Maxvalu Nishinihon Co., Ltd. 9 directors 9,100 May 10, 2013 1
2015 From June 10, 2014

Number of Exercise
2016 From June 10, 2015
2017 From June 10, 2016
2014 From June 10, 2013
Maxvalu Kyushu Co., Ltd. 10 directors 21,700 May 10, 2013 1
2015 From June 10, 2014
2015 From June 10, 2015
2017 From June 10, 2016
2009 From June 1, 2008
Ministop Co., Ltd. 8 directors 12,700 April 30, 2008 1
2010 From June 1, 2009
2011 From June 1, 2010
2012 From June 3, 2011
Ministop Co., Ltd. 7 directors 16,500 May 2, 2011 1
2013 From June 2, 2012
2014 From June 1, 2013
2015 From June 1, 2014
2016 From June 1, 2015
2017 From June 3, 2016
2012 From May 21, 2011
Aeon Financial Service Co., Ltd. 12 directors 15,500 April 21, 2011 1
2013 From May 21, 2012
Aeon Financial Service Co., Ltd. 6 directors 12,100 April 21, 2012 1
2014 From August 21, 2013
Aeon Financial Service Co., Ltd. 6 directors 12,000 July 21, 2013 1
Stock Option to August 20, 2028
2009 From May 21, 2008
Aeon Mall Co., Ltd.*1 17 directors 22,220 April 21, 2008 1
2010 From May 21, 2009
2011 From May 21, 2010
2012 From May 21, 2011
2013 From May 21, 2012
2014 From May 21, 2013
2015 From May 21, 2014
Aeon Mall Co., Ltd. 10 directors 18,400 April 21, 2014 1
2016 From June 10, 2015
Aeon Mall Co., Ltd. 10 directors 20,400 May 10, 2015 1
2017 From June 10, 2016
Aeon Mall Co., Ltd. 8 directors 16,600 May 10, 2016 1
2009 From May 21, 2008
Zwei Co., Ltd. 5 directors 8,500 April 21, 2008 1
2010 From May 21, 2009
2011 From May 21, 2010
2012 From May 21, 2011
2013 From May 21, 2012

Number of Exercise
2014 From June 1, 2013
Zwei Co., Ltd. 6 directors 9,500 May 1, 2013 1
2015 From June 10, 2014
2016 From June 1, 2015
2017 From June 1, 2016
2010 From May 21, 2009
Aeon Fantasy Co., Ltd. 9 directors 9,800 April 21, 2009 1
2011 From May 21, 2010
2012 From May 21, 2011
2013 From May 21, 2012
2014 From June 10, 2013
Aeon Fantasy Co., Ltd. 7 directors 15,800 May 10, 2013 1
2015 From June 10, 2014
2016 From June 10, 2015
2017 From June 10, 2016
2009 From June 10, 2008
Aeon Delight Co., Ltd. 15 directors 35,000 May 12, 2008 0.5
2010 From June 10, 2009
2011 From June 10, 2010
2012 From June 10, 2011
2013 From June 10, 2012
2014 From June 10, 2013
2015 From June 10, 2014
2016 From June 10, 2015
2017 From June 10, 2016
2009 From May 21, 2008
Cox Co., Ltd. 7 directors 16,000 April 21, 2008 1
Cox Co., Ltd.*2 1 director and 5 employees and other 8,232 August 21, 2010 1
2012 From June 10, 2011
Cox Co., Ltd. 6 directors 14,000 May 10, 2011 1
2016 From June 1, 2015
Cox Co., Ltd. 4 directors 21,000 April 30, 2015 1
9 directors, 1 executive officer, and
2014 From July 17, 2014
Welcia Holdings Co., Ltd.*3 27 directors and 11 executive officers 31,600 July 16, 2014 1
Stock Option to July 16, 2044
of the subsidiaries
2015 7 directors, and 17 directors and From February 17, 2015
Welcia Holdings Co., Ltd. 29,600 February 16, 2015 1
Stock Option 25 executive officers of the subsidiaries to February 16, 2045
2017 6 directors, and 14 directors of the From March 17, 2016
Welcia Holdings Co., Ltd. 10,000 March 16, 2016 1
Stock Option subsidiaries to March 16, 2046
2017 6 directors, and 15 directors of the From February 17, 2017
Welcia Holdings Co., Ltd. 14,000 February 16, 2017 1
Stock Option subsidiaries to February 16, 2047
2017 From June 1, 2016
GFoot Co., Ltd. 8 directors 33,200 May 1, 2016 1
*1 Aeon Mall Co., Ltd., split one share of common stock into 1.1 shares effective August 1, 2013. The number of shares and figures regarding the options granted on or before the fiscal
year ended February 2014, are presented at the converted number.
*2 Effective August 21, 2010, Cox Co., Ltd., and Blue Grass Co., Ltd., merged, and Cox Co., Ltd. assumed the stock options of Blue Grass Co., Ltd. (the non-surviving company), at
the merger ratio of 1:1.68. Persons granted and number of options granted represent the figures at the merger date.
*3 Welcia Holdings Co., Ltd. split one share of common stock into two shares effective September 1, 2014. The number of shares and figures of 2014 Stock Option are presented at
the converted number.

The summary of stock option activity during the fiscal year ended 2017 is as follows:
Aeon Hokkaido Aeon Kyushu Maxvalu Hokkaido Maxvalu Tohoku
Aeon Co., Ltd. Corporation Co., Ltd. Sunday Co., Ltd. Co., Ltd. Co., Ltd.
’08-’16 Stock Option ’09-’17 Stock Option ’09-’15 Stock Option ’14-’17 Stock Option ’12-’17 Stock Option ’11-’17 Stock Option
Non-vested (Shares)
Outstanding at beginning of year
Granted 52,700 4,900 6,800 9,600
Expired
Vested 52,700 4,900 6,800 9,600
Outstanding at end of year
Vested (Shares)
Outstanding at beginning of year 383,600 237,900 26,000 30,600 22,100 21,500
Vested 52,700 4,900 6,800 9,600
Exercised 41,900 20,200 16,700 1,300 2,200
Expired
Outstanding at end of year 341,700 270,400 9,300 35,500 27,600 28,900
Exercise price ¥1 ¥1 ¥1 ¥1 ¥1 ¥1
Average stock price at exercise ¥1,625 - ¥1,688 ¥503 - ¥505 ¥1,651 - ¥1,730 ¥3,045 ¥1,095
Fair value price at grant date ¥710 - ¥2,085 ¥283 - ¥590 ¥928 - ¥1,522 ¥620 - ¥1,664 ¥1,323 - ¥2,891 ¥581 - ¥1,111
Maxvalu Tokai Maxvalu Chubu Maxvalu Nishinihon Maxvalu Kyushu Ministop Aeon Financial Service
Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd.
Non-vested (Shares)
Granted 13,800 17,000 11,100 18,300 8,300 15,300
Expired
Vested 13,800 17,000 11,100 18,300 8,300 15,300
Vested (Shares)
Vested 13,800 17,000 11,100 18,300 8,300 15,300
Exercised 18,200 18,500 21,400 2,300 15,500 16,100
Expired
Exercise price ¥1 ¥1 ¥1 ¥1 ¥1 ¥1
Average stock price at exercise ¥1,707 - ¥1,900 ¥1,044 - ¥1,172 ¥1,558 - ¥1,577 ¥1,760 ¥1,650 - ¥1,747 ¥1,755 - ¥1,814
Fair value price at grant date ¥771 - ¥1,615 ¥699 - ¥1,097 ¥893 - ¥1,327 ¥1,052 - ¥1,546 ¥1,023 - ¥1,870 ¥809 - ¥3,072
Welcia Holdings
Aeon Mall Co., Ltd.*1 Zwei Co., Ltd. Aeon Fantasy Co., Ltd. Aeon Delight Co., Ltd. Cox Co., Ltd. Co., Ltd.*3
Non-vested (Shares)
Granted 16,600 3,500 6,500 26,400 24,000
Expired
Vested 16,600 3,500 6,500 26,400 24,000
Vested (Shares)
Vested 16,600 3,500 6,500 26,400 24,000
Exercised 46,730 3,000 10,400 19,400 2,800
Expired
Exercise price ¥1 ¥1 ¥1 ¥0.5 ¥1 ¥1

Average stock price at exercise ¥1,344 - ¥1,506 ¥848 ¥2,469 - ¥3,335 ¥2,995 - ¥3,455 ¥6,005 - ¥6,065
Fair value price at grant date ¥1,089 - ¥2,763 ¥422 - ¥656 ¥570 - ¥2,359 ¥1,136 - ¥2,841 ¥195 - ¥438 ¥3,030 - ¥5,992

GFoot Co., Ltd.
’17 Stock Option
Non-vested (Shares)
Granted 33,200
Expired
Vested 33,200
Vested (Shares)
Vested 33,200
Exercised
Expired
Outstanding at end of year 33,200
Exercise price ¥1
Average stock price at exercise
Fair value price at grant date ¥636
The assumptions used to measure fair value of stock options vested during fiscal year 2017 were as follows:
Aeon Hokkaido Maxvalu Hokkaido Maxvalu Tohoku Maxvalu Tokai Maxvalu Chubu
Corporation Sunday Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd.
’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option
Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes
Measurement method
option-pricing model option-pricing model option-pricing model option-pricing model option-pricing model option-pricing model
Risk-free interest rate -0.23% -0.15% -0.21% 0.01% -0.24% -0.20%
Expected life of option grants 7.5 years 7.5 years 7.5 years 7.6 years 2.7 years 7.5 years
Expected volatility of underlying stock 20.02% 32.05% 19.90% 23.98% 14.89% 14.52%
Expected dividend payment rate as a
percentage of the stock price on the 1.94% 0.85% 0.50% 0.00% 2.23% 1.11%
date of grant
Maxvalu Nishinihon Maxvalu Kyushu Aeon Financial Service

Co., Ltd. Co., Ltd. Ministop Co., Ltd. Co., Ltd. Aeon Mall Co., Ltd. Zwei Co., Ltd.
’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option
Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes Black-Scholes
Measurement method
option-pricing model option-pricing model option-pricing model option-pricing model option-pricing model option-pricing model
Risk-free interest rate -0.21% 0.00% -0.17% -0.32% -0.20% -0.17%
Expected life of option grants 7.5 years 7.5 years 7.5 years 7.5 years 7.5 years 7.5 years
Expected volatility of underlying stock 14.73% 20.20% 22.40% 37.94% 38.09% 17.24%
percentage of the stock price on the 2.27% 1.74% 2.57% 2.83% 1.50% 3.81%
date of grant
Aeon Fantasy Aeon Delight Welcia Holdings

Co., Ltd. Co., Ltd. Co., Ltd. GFoot Co., Ltd.
’17 Stock Option ’17 Stock Option ’17 Stock Option ’17 Stock Option
Black-Scholes Black-Scholes Black-Scholes Black-Scholes
Measurement method
option-pricing model option-pricing model option-pricing model option-pricing model
Risk-free interest rate -0.23% -0.20% -0.10% - 0.03% 0.00%
Expected life of option grants 7.5 years 7.5 years 7.8 years - 8 years 7.5 years
Expected volatility of underlying stock 38.70% 35.81% 31.46% - 32.81% 26.16%
percentage of the stock price on the 1.17% 1.70% 0.62% - 0.76% 2.59%
date of grant

14 Other income (expenses)
Other income (expenses)—net for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, consisted of the following:
Thousands of
’15 ’16 ’17 ’17
Loss on disposals of fixed assets ¥(1,989) ¥(3,748) ¥(4,086) $(36,490)
Loss on sales of fixed assets (645) (1,037) (7,432) (66,358)
Provision for store closing expenses (2,105) (5,380) (3,955) (35,313)
Penalty income from leaving tenants 2,328 2,477 3,153 28,159
Reversal of allowance for doubtful accounts-net 1,811 1,692 1,113 9,943
Gain on collection of fixed leasehold deposits to lessors 1,126 1,433 2,946 26,308
Income from unredeemed gift coupons 2,912 2,934 3,082 27,524
Loss on store closings (1,213) (1,199) (1,695) (15,142)
Other 4,245 (4,583) (102) (915)
Total ¥ 6,470 ¥(7,412) ¥(6,975) $(62,284)
15 Income taxes
The tax effects of significant temporary differences and tax loss carryforwards, which resulted in deferred tax assets and liabilities, as of February 29,
2016 and February 28, 2017, are as follows:
Thousands of
’16 ’17 ’17
Deferred tax assets:
Enterprise tax ¥ 6,447 ¥ 5,557 $ 49,619
Inventories 1,862 1,887 16,854
Allowance for doubtful accounts 26,222 18,016 160,859
Receivables 474 203 1,819
Payables and accrued expenses 13,443 12,900 115,180
Provision for point program 7,973 6,460 57,685
Property, buildings, and equipment 134,844 122,540 1,094,107
Liability for retirement benefits 23,905 27,630 246,700
Tax loss carryforwards 134,175 152,382 1,360,553
Write-down of assets under the reorganization proceedings 16,783 12,697 113,370
Asset retirement obligation 24,317 25,461 227,339
Other 46,986 61,118 545,698
Less valuation allowance (295,493) (294,104) (2,625,936)
Total 145,491 154,950 1,383,490
Deferred tax liabilities:
Property, buildings, and equipment (3,543) (3,712) (33,151)
Reserve for special depreciation (1,459) (868) (7,750)
Undistributed earnings of foreign consolidated subsidiaries (723) (697) (6,223)
Unrealized gain on available-for-sale securities (19,869) (25,648) (229,008)
Asset for retirement benefits (3,170) (3,740) (33,396)
Asset retirement cost related to the asset retirement obligation (8,464) (9,301) (83,050)
Unrealized loss on acquisition of subsidiaries (6,431) (4,888) (43,644)
Gain on sales of investment securities under the Group Taxation System (6,009) (5,736) (51,217)
Other (1,294) (8,109) (72,402)
Total (50,965) (62,702) (559,846)
Net deferred tax assets ¥ 94,526 ¥ 92,248 $823,644

Reconciliations between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated state-
ments of income for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, are as follows:
’15 ’16 ’17
Normal effective statutory tax rate 37.6% 35.2% 32.7%
Lower income tax rates applicable to income in certain foreign countries (4.3) (2.7) (2.1)
Per capita portion of inhabitants tax 3.8 3.5 4.1
Goodwill and negative goodwill-net 6.0 4.7 4.7
Change in valuation allowance 3.4 19.3 9.2
Expenses not deductible for tax purposes 2.1 3.6 3.7
Tax rate change 3.6 4.5 3.1
Gain resulting from step acquisitions (8.7) (1.6) —
Deduction of loss on impairment of securities of affiliates — — (2.6)
Other-net 1.7 (2.4) (3.5)
Actual effective tax rate 45.2% 64.1% 49.3%
Adjustments to deferred tax assets and liabilities due to changes in increase income taxes-deferred (debit) by ¥4,311 million ($38,491thou-
income tax rates sand), deferred loss on derivatives under hedge accounting by ¥24
The Diet passed the “Act for Partial Amendment of the Income Tax Act, million ($214 thousand), unrealized gain on available-for-sale securities
etc.” (Act No. 15 of 2016) and the “Act for Partial Amendment of the by ¥1,042 million ($9,303 thousand), and defined retirement benefit plans
Local Tax Act, etc.” (Act No. 13 of 2016) on March 29, 2016. It also (credit) by ¥2 million ($17 thousand).
passed the “Act for Partial Amendment of the Consumption Tax Act, etc. As of February 28, 2017, certain consolidated subsidiaries have
for the Drastic Reform of the Taxation System of Ensuring Stable Financial tax loss carryforwards aggregating approximately ¥503,483 million
Resources for Social Security” (Act No. 85 of 2016) and the “Act for ($4,495,390 thousand), which are available to be offset against taxable
Partial Amendment of the Local Tax Act and Local Allocation Tax act for income of such subsidiaries in future years. These tax loss carryforwards,
the Drastic Reform of the Taxation System for Ensuring Stable Financial if not utilized, will expire as follows:
Resources for Social Security” (Act No. 86 of 2016) on November 18,
2016. As a result, the effective statutory tax rate used to calculate the
Thousands of
Company’s deferred tax assets and liabilities was changed from 31.9% Years Ending February Millions of Yen U.S. Dollars
to 30.7% for the temporary differences expected to be realized or settled 2018 ¥ 27,498 $ 245,524
in the fiscal years beginning on March 1, 2017 and 2018, and to 30.5% 2019 41,828 373,467
for those expected to be realized or settled in the fiscal years beginning 2020 41,542 370,917
on March 1, 2019, and thereafter. 2021 50,758 453,198
The effects of these changes were to decrease deferred tax assets, 2022 and thereafter 341,855 3,052,282
net of deferred tax liabilities, by ¥3,290 million ($29,374 thousand), and to Total ¥503,483 $4,495,390
16 Supplemental cash flow information
a. Reconciliation of cash and cash equivalents

A reconciliation of cash and cash equivalents between the consolidated balance sheets and the consolidated statements of cash flows as of February
28, 2015, February 29, 2016 and February 28, 2017, is as follows:
Thousands of
’15 ’16 ’17 ’17
Cash and cash equivalents in the consolidated balance sheets ¥780,088 ¥702,400 ¥805,646 $7,193,275
Bank overdraft (1,955) (1,945) (3,714) (33,165)
Marketable securities (Money Management Fund and others) 18 56 167 1,496
Cash and cash equivalents in the consolidated statement of cash flows ¥778,151 ¥700,511 ¥802,099 $7,161,606

b. Acquisitions of newly consolidated subsidiaries c. Non-cash investing and financing activities
During the year ended February 28, 2015, Welcia Holdings Co., Ltd. During the year ended February 29, 2016, Kasumi and 4 other compa-
and 19 other companies were acquired. Assets and liabilities of these nies became the Company’s consolidated subsidiaries by a joint share
companies at the acquisition date, cash paid for the capital, and cash transfer. Assets and liabilities of these companies at the acquisition date
received in conjunction with the purchases of consolidated subsidiaries were as follows:
were as follows: Millions of Yen
Millions of Yen Current assets ¥ 28,858
Assets ¥225,100 Fixed assets 64,430
Goodwill 65,598 Total 93,289
Liabilities (187,556)
Current liabilities (35,246)
Non-controlling interests (53,305)
Long-term liabilities (10,096)
Cash paid for the capital 49,836
Total ¥(45,342)
Cash and cash equivalents of consolidated subsidiaries 38,562
Cash paid in conjunction with the purchases of
¥ (11,274)
consolidated subsidiaries-net
Current assets include cash and cash equivalents at the acquisition date
of ¥13,745 million, which are presented as “Increase in cash and cash
During the year ended February 29, 2016, Hakuseisha Co., Ltd. and 4 equivalents resulting from share transfer” in the consolidated statement
other companies were acquired. Assets and liabilities of these companies of cash flows.
at the acquisition date, cash paid for the capital, and cash received in
conjunction with the purchases of consolidated subsidiaries were as
follows:
Millions of Yen
Assets ¥ 9,482
Liabilities (2,339)
Non-controlling interests (8)
Other (307)
Cash paid for the capital 6,828
Cash and cash equivalents of consolidated subsidiaries 1,523
Cash paid in conjunction with the purchases of
¥(5,304)
consolidated subsidiaries-net
17 Leases
a. Lessee
(1) Finance leases
The Group leases certain store buildings, store equipment, and other assets.
Total rental expenses for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, were ¥385,531 million, ¥431,117 million,
and ¥435,662 million ($3,889,839 thousand), respectively, including ¥9,180 million, ¥9,017 million, and ¥5,295 million ($47,282 thousand) of lease
payments under finance leases discussed below.
For the years ended February 28, 2015, February 29, 2016 and February 28, 2017, the Group recorded impairment losses of ¥535 million, ¥108
million, and ¥0 million ($3 thousand), respectively, on certain leased property held under finance leases that do not transfer ownership and an allowance
for impairment loss on leased property, which is included in other current liabilities and long-term liabilities–other.
As discussed in Note 2.q, the Group accounts for leases that existed at the transition date and do not transfer ownership of the leased property
to the lessee as operating lease transactions.
Pro forma information of leased property under finance leases that do not transfer ownership of the leased property to the lessee on an ‘’as if
capitalized’’ basis for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, for the Company and domestic consolidated
subsidiaries was as follows:
Millions of Yen
’16
Buildings and
Structures Furniture and Fixtures Vehicles Total
Acquisition cost ¥99,366 ¥405 ¥33 ¥99,805
Accumulated depreciation (69,704) (336) (22) (70,062)
Accumulated impairment loss (6,738) (1) (6,740)
Net leased property ¥22,923 ¥ 66 ¥10 ¥23,001

Millions of Yen
’17
Buildings and
Acquisition cost ¥69,953 ¥176 ¥21 ¥70,151
Accumulated depreciation (46,287) (147) (11) (46,447)
Net leased property ¥18,518 ¥ 27 ¥ 9 ¥18,554

’17
Buildings and
Acquisition cost $624,585 $1,577 $192 $626,355
Accumulated depreciation (413,284) (1,320) (105) (414,710)
Net leased property $165,341 $ 241 $ 86 $165,669
Obligations under finance leases:

Thousands of
’16 ’17 ’17
Due within one year ¥ 5,247 ¥ 3,855 $ 34,422
Due after one year 28,655 23,453 209,409
Total ¥33,902 ¥27,309 $243,831
Allowance for impairment loss on leased property as of February 29, 2016 and February 28, 2017, was ¥4,611 million and ¥3,948 million ($35,254
thousand), respectively, which is not included in obligations under finance leases.
Depreciation expense, interest expense, and other information under finance leases:
Thousands of
’15 ’16 ’17 ’17
Depreciation expense ¥5,131 ¥4,563 ¥2,975 $26,563
Interest expense 1,932 1,582 1,262 11,274
Total ¥7,064 ¥6,145 ¥4,237 $37,837
Reversal of allowance for impairment loss on leased property ¥ 845 ¥ 670 ¥ 296 $ 2,646
Impairment loss 535 108 3
Depreciation expense and interest expense, which are not reflected in the accompanying consolidated statement of income, are computed by the
straight-line method and the interest method, respectively.
(2) Operating leases

The minimum rental commitments under noncancelable operating leases as of February 28, 2017, were as follows:
Thousands of
Due within one year ¥ 189,498 $ 1,691,952
Due after one year 1,093,774 9,765,847
Total ¥1,283,273 $11,457,799
b. Lessor
The Group leases certain store space to tenants and other assets. Total rental revenues for the years ended February 28, 2015, February 29, 2016
and February 28, 2017, were ¥352,714 million, ¥376,888 million, and ¥380,289 million ($3,395,445 thousand), respectively. The minimum rental
commitments under noncancelable operating leases as of February 28, 2017 were as follows:
Thousands of
Due within one year ¥ 6,750 $ 60,275
Due after one year 30,801 275,016
Total ¥37,552 $335,291

Short-term borrowings, commercial paper, long-term debt, and
18 Financial instruments and related disclosures bonds are financing means, mainly for operating transactions, capital
expenditures, and equity transactions. Though such contractual obliga-
1. Conditions of financial instruments tions comprise the risk that they may fail to be met in full on maturity
dates, such liquidity risks are avoided by spreading out due dates or
(1) Policy for Financial Instruments
maturity dates.
The Group mainly conducts retail store operations, centering around
The Group mainly enters into foreign exchange forward contracts
the GMS Business as its core, and expands businesses, such as the
and currency swap contracts to hedge exchange rate risk associated
Financial Services Business, the SC Development Business, and the
with certain assets and liabilities denominated in foreign currencies.
Service Business. In order to finance these businesses, the Group limits
The Group also enters into interest rate swap contracts and interest
its fund management primarily to safe and secure monetary assets such
rate option contracts to manage its interest rate exposures on certain
as time deposits, while the Group utilizes both indirect financing, such as
liabilities. Derivative financial instruments contain credit risk of counter-
bank loans and direct financing, such as issuance of bonds, commercial
parties defaulting on contracts.
paper, and equity securities, and securitization of receivables.
Please see Note 19 for more details about derivatives.
The consolidated subsidiaries operating financial services business
operate a variety of financial services business, such as credit card
business, housing loan business, and installment payment business. The (3) Risk Management for Financial Instruments
consolidated banking subsidiary invests in securities as well. a. Credit risk management
The consolidated subsidiaries operating financial services business The Group manages its credit risk from notes and accounts receiv-
raise capital mainly through customer deposits, borrowings from financial able–trade based on its internal policies, which include monitoring of
institutions, issuance of bonds and commercial paper, and securitization payment terms and balances of major customers by operating division
of receivables in the view of the market conditions and short-term/long- and accounting division to identify the default risk of customers at an
term balance. In addition, the Group funds management and financing in early stage.
the short-term market in order to respond to the excess and deficiency
As to marketable and investment securities, the Group monitors
of temporary funding. It should be noted, certain consolidated subsid-
regularly the issuers’ financial position for equity securities without market
iaries are located overseas and they conduct their business in foreign
values.
currencies.
The consolidated subsidiaries operating financial services business
The Financial Services Business holds financial assets and liabilities,
manage their credit risk in accordance with respective management
which are exposed to interest rate risk and foreign exchange risk. It
policies to assess/manage the credibility properly. Credit management
manages the risk through Asset Liability Management.
is conducted by the following divisions: the credit assessment division
The Group mainly utilizes derivative financial instruments to hedge keeps track of credit status at the time of credit extension and through
interest rate risk, foreign exchange rate risk, and market risk arising from continuous monitoring after lending and the credit risk management divi-
financing activities, but does not enter into derivatives for trading or sion conducts analysis and research to share information with the credit
speculative purposes. assessment division.
In addition, the Risk Management Department measures mainly
(2) Nature and Extent of Risks Arising from Financial Instruments Value at Risk (a method that estimates potential losses under a certain
Notes and accounts receivable–trade are exposed to credit risk of confidence level for currently held financial instruments that will be held
customers. for a period based on historical data, hereafter, ‘’VaR’’) to quantify risks
and regularly reports to the Internal Control Promotion Committee and
Marketable and investment securities are mainly composed of equity
Board of Directors.
securities held for maintaining business relationships with other compa-
nies and are exposed to market price fluctuation risk and credit risk. A portion of fixed leasehold deposits to lessors is covered by mort-
gages and right of pledges.
Securities in banking business, including foreign securities, debt,
equity, are exposed to issuers’ credit risk, and market risk. Because the counterparties to the derivatives are major international
financial institutions, the Group does not anticipate any losses arising
Loans and bills discounted in banking business and financial loans
from credit risk.
receivable mainly consist of loans to individual and business customers
and are exposed to interest rate risk and customer credit risk due to
breach of contract. b. Market risk management (foreign exchange risk and interest rate
Fixed leasehold deposits to lessors are related primarily to store rent risk)
and are exposed to lessors’ credit risk. Notes and accounts payable– The Group utilizes interest rate swap and currency swap transactions in
trade are mostly due within one year. Operating receivables and payables order to hedge interest rate risk and foreign exchange risk associated
denominated in foreign currencies are exposed to exchange rate risk. with long-term debt and bonds. Also, foreign exchange risk associated
Deposits received in banking business consist of customer deposits with assets and liabilities denominated in foreign currencies is hedged by
held by the consolidated banking subsidiary and are exposed to liquidity forward exchange contracts.
risk, interest rate risk, foreign currency risk, in that the consolidated bank- Marketable and investment securities are managed by monitoring
ing subsidiary cannot make necessary payments upon due dates under market values and financial position of issuers on a regular basis.
certain circumstances, such as when it cannot access the market due Derivative transactions entered into by the Group are implemented
to changes in financial situation or other situations or when its financial and controlled in accordance with internal policies that regulate the
results deteriorate. authorization and credit limit amount.

The consolidated subsidiaries operating financial services business (4) Quantitative Analysis on Market Risks for Financial Services
manage their market risk properly by determining the existence and scale Business
of such risk in accordance with respective management policies. Further, The consolidated subsidiaries operating the financial services business
the management status is reported to the Internal Control Promotion apply the delta method (at a 99% ile confidence level assuming a 240
Committee regularly. day holding period over one year) to calculate VaR for the interest rate
They have established a reciprocal control mechanism as a system risk with an estimated amount of ¥5,043 million ($45,027 thousand) as
to manage the market risk by setting up an organization independent of February 28, 2017 (amount of ¥3,484 million as of February 29, 2016).
from the revenue-generating division. In the measurement of VaR is calculated by using the concept of core
In addition, they generally perform quantitative market risk analysis deposits and methods of measuring for the interest volatilities is changed
for all financial instruments held and manage the level of market risk from variation width to rate of change.
mainly through VaR. Specifically, they control the market risk so that VaR Overseas subsidiaries and certain domestic subsidiaries do not
does not exceed risk limits (allocated capital amount) decided by the measure interest rate risk because the impact is considered to be limited.
Board of Directors.
They apply Monte Carlo simulations (at a 99% ile confidence level
assuming a three-month holding period over five years) to calculate VaR
c. Liquidity risk management for price risks (other than interest rate risk) in investment securities. Under
The Company manages its liquidity risk by holding an adequate volume this methodology, the impact as of February 28, 2017, is estimated to be
of liquid assets, along with adequate financial planning by the corporate ¥38,008 million ($339,366 thousand) (amount of ¥34,702 million as of
finance division. February 29, 2016).
The consolidated subsidiaries operating financial services business The amounts represent the market volatility statically calculated
manage liquidity risk through continuous monitoring of cash flows and based on a probability-based approach that takes into account historical
through other means, including diversifying financing instruments, acquir- credit spread and fluctuation in correlations. Accordingly, the market
ing commitment lines from multiple financial institutions, and adjusting risk may not be captured properly in the event of an extreme market
short-term/long-term balances taking into account the market conditions. movement.
The consolidated banking subsidiary controls liquidity risk by

establishing a payment reserve asset holding ratio and limits on cash (5) Supplementary information on fair value of financial instruments
gaps, which are monitored by the Risk Compliance Division on a daily Fair value of financial instruments is measured based on the quoted mar-
basis. The monitoring results are reported to management regularly in the ket price, if available, or a reasonably assessed value if a quoted market
Internal Control Promotion Committee and board meetings. Although the price is not available. Fair value of financial instruments for which quoted
consolidated banking subsidiary places value on efficient cash manage- market price is not available is calculated based on certain assumptions,
ment, it gives more weight to securing liquidity for management purpose. and the fair value might differ if different assumptions are used.

2. Fair value of financial instruments
The carrying amounts in the consolidated balance sheet, fair values, and the differences between the two as of February 29, 2016 and February 28,
2017, are as follows:
Financial instruments for which fair value cannot be reliably determined are not included.
Millions of Yen
February 29, 2016 Carrying Amount Fair Value Unrealized Gain (Loss)
Cash and cash equivalents ¥ 702,400 ¥ 702,400
Time deposits 18,750 18,750
Receivables:
Notes and accounts-trade 69,651
Installment 1,025,255
Other 15,025
Allowance for doubtful accounts*1 (35,352)
Notes and accounts-trade, Installment, and Other, net 1,074,579 1,086,365 ¥ 11,785
Financial loans 300,854
Financial loans, net 278,026 287,320 9,293
Loans and bills discounted in banking business 1,217,376
Loans and bills discounted in banking business, net 1,213,973 1,307,921 93,948
Marketable securities
Available-for-sale securities
Securities in banking business 233,513 233,513
Monetary claims bought in banking business 4,097 4,097
Other 156 156
Marketable securities, total 237,767 237,767
Investment securities and investments in associated companies
Investments in associated companies 56,086 65,075 8,989
Available-for-sale securities 114,234 114,234
Investment securities and investments in associated companies, total 170,320 179,309 8,989
Fixed leasehold deposits to lessors, including current portion 427,004
Fixed leasehold deposits to lessors, including current portion, net 422,847 422,887 40
Total ¥4,118,665 ¥4,242,722 ¥124,057
Notes and accounts payable-trade 892,629 892,629
Short-term borrowings 444,070 444,070
Deposits received in banking business 2,116,171 2,117,185 1,014
Long-term debt, including current portion
Bonds 389,579 397,566 7,987
Convertible bonds with stock acquisition rights 50 91 41
Long-term loans from banks 1,255,717 1,266,642 10,925
Long-term debt, including current portion, total 1,645,346 1,664,300 18,953
Lease deposits from lessees, including current portion 271,652 272,740 1,088
Total ¥5,369,870 ¥5,390,926 ¥ 21,055
Derivatives*3 ¥ 7,693 ¥ 7,693

Millions of Yen
Cash and cash equivalents ¥ 805,646 ¥ 805,646
Call loans 25,000 25,000
Receivables:
Other 22,104
Notes and accounts-trade, Installment, and Other, net 1,166,315 1,185,869 ¥ 19,554
Financial loans 299,271
Financial loans, net 277,017 290,723 13,705
Securities in banking business 180,231 180,231
Other 335 335
Marketable securities, total 184,598 184,598
Investments in associated companies*2 61,727 69,986 8,258
Available-for-sale securities 119,044 119,044
Investment securities and investments in associated companies, total 180,772 189,031 8,258
Fixed leasehold deposits to lessors, including current portion 415,989
Fixed leasehold deposits to lessors, including current portion, net 412,093 410,564 (1,528)
Total ¥4,531,946 ¥4,639,752 ¥107,806
Notes and accounts payable-trade 888,422 888,422
Short-term borrowings 397,973 397,973
Bonds 463,540 467,361 3,821
Convertible bonds with stock acquisition rights 30,000 32,790 2,790
Lease deposits from lessees, including current portion 269,342 269,528 186
Total ¥5,822,766 ¥5,843,213 ¥20,446
Derivatives*3 ¥ 10,949 ¥ 10,949

Cash and cash equivalents $ 7,193,275 $ 7,193,275
Call loans 223,214 223,214
Receivables:
Other 197,363
Notes and accounts-trade, Installment, and Other, net 10,413,533 10,588,123 $174,589
Financial loans 2,672,067
Financial loans, net 2,473,366 2,595,741 122,374
Securities in banking business 1,609,209 1,609,209
Other 2,992 2,992
Marketable securities, total 1,648,197 1,648,197
Investments in associated companies*2 551,140 624,880 73,739
Available-for-sale securities 1,062,896 1,062,896
Investment securities and investments in associated companies, total 1,614,037 1,687,777 73,739
Fixed leasehold deposits to lessors, including current portion 3,714,191
Fixed leasehold deposits to lessors, including current portion, net 3,679,405 3,665,756 (13,649)
Total $40,463,807 $41,426,364 $962,557
Notes and accounts payable-trade 7,932,344 7,932,344
Short-term borrowings 3,553,338 3,553,338
Bonds 4,138,756 4,172,873 34,116
Convertible bonds with stock acquisition rights 267,857 292,767 24,910
Lease deposits from lessees, including current portion 2,404,841 2,406,507 1,666
Total $51,988,989 $52,171,549 $182,560
Derivatives*3 $ 97,767 $ 97,767
*1 Allowance for doubtful accounts associated with receivables, financial loans, loans and bills discounted in banking business, and fixed leasehold deposits to lessors are deducted,
respectively.
*2 The above figures include investment securities temporarily lent to financial institution based on security lending agreement in the amount of ¥1,552 milion ($13,863 thousand) as of
February 28, 2017.
*3 Derivatives are stated net of assets and liabilities. The figures in parentheses indicate net assets.
The methodologies and assumptions used to estimate the fair values of interest rate that is based on the risk-free rate plus internal expense rate
financial instruments are summarized below: for collection.
Cash and cash equivalents, Time deposits, Call loans, Notes and Loans and bills discounted in banking business
accounts receivable–trade, Installment and other receivables The carrying amounts of loans with floating interest rates approximate
The carrying values of cash and cash equivalents, time deposits, call their fair values as long as customers’ credit risks have not changed
loans, notes and accounts receivable–trade, installment and other significantly after lending because the market rates are promptly reflected
receivables approximate fair value because of their short-term maturities. in the floating interest rates.
The fair values of installment receivables for certain consolidated credit The fair values of loans with fixed interest rates are determined for
services subsidiaries are measured by discounting the total amount to be each group classified by product type, internal rating, and remaining
received based on a collection schedule at the interest rate that is based duration, by discounting the future cash flows at applicable rates under
on the risk-free rate plus internal expense rate for collection. which loans similar to the aggregate amount of principal and interest
would be made.
Financial loans receivable The carrying amounts of loans with maturities of less than one year
The fair values of financial loans receivable are measured by discounting approximate fair value because of their short-term maturities.
the total amount to be received based on a collection schedule at the For loans to obligors in “legal bankruptcy,’’ “virtual bankruptcy,’’ and

“possible bankruptcy,’’ a reserve is provided based on the discounted Deposits received in banking business
cash flow method or estimated recoverable amounts through the disposal The fair values of demand deposits are deemed equal to the amounts
of collateral or execution of guarantees. The carrying values net of reserve that would be paid (carrying values) if the payments were demanded at
as of the consolidated balance sheet date are reasonable estimates of the balance sheet date. The fair values of time deposits are determined
fair values of those loans. by grouping the deposits based on their contract term and discounting
The fair values of loans for which repayment terms are not set future cash flows at rates that would be applied for similar new contracts.
because of their attributes (e.g., loans are limited to the amounts of The carrying amounts of the deposits with maturities of less than one
pledged assets) are assumed to approximate carrying values, consider- year approximate fair value because of their short-term maturities.
ing the expected repayment periods and interest rate conditions, and are
deemed equal to the carrying values.
Bonds and Convertible bonds with stock acquisition rights
The fair values of bonds and convertible bonds with stock acquisition
Marketable securities, Investment securities, rights issued by the Company and certain consolidated subsidiaries are
and Investments in associated companies based on the market price.
The fair values of equity securities are measured at the quoted market
price on the stock exchange. The fair values of debt securities and mon-
Long-term loans from banks
etary claims bought in the banking business are measured at the quoted
price obtained from the stock exchange or financial institutions, or at the The fair values of long-term loans from banks are determined by dis-
reasonably calculated values. counting the cash flows related to the loans at the risk-free rate plus
credit risk.
Fixed leasehold deposits to lessors

Lease deposits from lessees
The fair values of fixed leasehold deposits to lessors are measured by
discounting the total amount to be received based on the contract period The fair values of lease deposits from lessees are measured by dis-
at the risk-free rate and deducting the allowance for doubtful accounts. counting the total amount to be paid based on the contract period at the
interest rate that is based on the risk-free rate.
Notes and accounts payable–trade, and Short-term borrowings

Derivatives
The carrying values of notes and accounts payable–trade and short-term
borrowings approximate fair value because of their short-term maturities. Fair values information for derivatives is included in Note 19.
Carrying amount of financial instruments for which fair value is extremely difficult to measure:
Thousands of
’16 ’17 ’17
Unlisted equity securities ¥10,582 ¥10,959 $ 97,853
Trust beneficiary rights 14,755 13,837 123,547
Total ¥25,337 ¥24,797 $221,401
Maturity analysis for financial assets and securities with contractual maturities:
Millions of Yen
Due in one year or Due after one year Due after five years
February 28, 2017 less through five years through 10 years Due after 10 years
Cash and cash equivalents ¥ 805,646
Time deposits 15,078
Call loans 25,000
Receivables*1:
Installment 734,482 ¥258,433 ¥ 74,480 ¥ 23,123
Other 22,104
Financial loans 193,038 67,872 5,855 4,919
Loans and bills discounted in banking business*2 184,937 447,793 134,355 650,321
Available-for-sale securities with contractual maturities
Securities in banking business 57,500 69,700 8,000 38,474
Monetary claims bought in banking business 77 618 3,230
Other 335
Investment securities
Government bonds 28
Fixed leasehold deposits to lessors*3 12,428 35,201 20,314 8,575
Total ¥2,116,109 ¥879,079 ¥243,623 ¥728,645

Due in one year or Due after one year Due after five years
February 28, 2017 less through five years through 10 years Due after 10 years
Cash and cash equivalents $ 7,193,275
Time deposits 134,627
Call loans 223,214
Receivables*1:
Installment 6,557,880 $2,307,443 $ 665,002 $ 206,460
Other 197,363
Financial loans 1,723,555 606,005 52,281 43,928
Loans and bills discounted in banking business*2 1,651,229 3,998,153 1,199,598 5,806,440
Securities in banking business 513,392 622,321 71,428 343,524
Monetary claims bought in banking business 695 5,518 28,846
Other 2,992
Investment securities
Government bonds 254
Fixed leasehold deposits to lessors*3 110,969 314,300 181,383 76,566
Total $18,893,837 $7,848,919 $2,175,212 $6,505,767
*1 Long-term receivables whose future cash flows are unpredictable, such as doubtful receivables, of ¥59,024 million ($527,002 thousand) are not included in the above table.
*2 Loans such as to bankrupt, substantially bankrupt, and deemed bankrupt borrowers are the loans that are not expected to be collected of ¥3,077 million ($27,479 thousand) and the
loans with no redemption schedule of ¥51,032 million ($455,647 thousand), and they are not included in the above table.
*3 Fixed leasehold deposits to lessors with no definite redemption schedule of ¥341,958 million ($3,053,199 thousand) are not included in the above table.
Redemption schedule for deposits received in banking business with maturities:

Thousands of
Fiscal Year Ending February Millions of Yen U.S. Dollars
2018 ¥1,867,133 $16,670,836
2019 432,080 3,857,861
2020 93,084 831,110
2021 88,926 793,987
2022 16,606 148,269
2023 and thereafter
Total ¥2,497,831 $22,302,065
* Demand deposits are included and presented in “2018.”
Please see Note 9 for annual maturities of long-term debt.
foreign currency exposures incorporated within the Group’s business.

19 Derivatives Accordingly, market risk in these derivatives is basically offset by opposite
movements in the value of hedged assets or liabilities.
The Group enters into foreign exchange forward contracts and currency Because the counterparties to these derivatives are major interna-
swap contracts to hedge exchange rate risk associated with certain tional financial institutions, the Group does not anticipate any losses
assets and liabilities denominated in foreign currencies. The Group also arising from credit risk.
enters into interest rate swap contracts to manage its interest rate expo- Derivative transactions entered into by the Group have been made
sures on certain liabilities. in accordance with internal policies which regulate the authorization and
All derivative transactions are entered into to hedge interest and credit limit amount.

Derivative transactions to which hedge accounting is not applied as of February 29, 2016 and February 28, 2017:
Millions of Yen
’16
Contract Amount Due
Contract Amount after One Year Fair Value Unrealized Gain (Loss)
Long call (U.S. dollar) ¥ 579 ¥ 74 ¥ 83 ¥ 98
Currency option contracts
Short put (U.S. dollar) 579 74 (4) 32
Rupee payment, Yen receipt 1,670 44 44
Currency swap contracts
Yen payment, U.S. dollar receipt 13,206 10,805 (874) (874)
Forward exchange contracts Long call (U.S. dollar) 29 4 4
Credit default swap Sell 3,000 (8) 288
Interest rate cap contracts 18,275 18,275 17 17
Stock forward contract Long call 36,602 25,900 (763) (763)
Millions of Yen
’17
Contract Amount Due
Long call (U.S. dollar) ¥ 74 ¥ 9 ¥ 8
Short put (U.S. dollar) 74 10
Rupee payment, Yen receipt 5,425 (237) (237)
Currency swap contracts Yen payment, U.S. dollar receipt 10,805 ¥ 7,202 (751) (751)
Malaysia ringgit payment, U.S. dollar receipt 244 (3) (3)
Stock forward contract Long call 25,900 208 208

’17
Contract Amount Due
Long call (U.S. dollar) $ 663 $ 87 $ 76
Short put (U.S. dollar) 663 (1) 89
Rupee payment, Yen receipt 48,445 (2,121) (2,121)
Currency swap contracts Yen payment, U.S. dollar receipt 96,475 $ 64,310 (6,707) (6,707)
Malaysia ringgit payment, U.S. dollar receipt 2,182 (29) (29)
Stock forward contract Long call 231,253 1,859 1,859
Derivative transactions to which hedge accounting is applied as of February 29, 2016 and February 28, 2017:
Millions of Yen
’16
Contract Amount Due
Hedged Item Contract Amount after One Year Fair Value
Forward exchange contracts
Buy (U.S. dollar) Accounts payable-trade ¥ 19,719 ¥ (1,014)
Buy (Australian dollar) Accounts payable-trade 4,110 (92)
Buy (Euro) Accounts payable-trade 1,050 (53)
Buy (British pound) Accounts payable-trade 1,157 (135)
Buy (Yen) Accounts payable-trade 12
Malaysia ringgit payment, U.S. dollar receipt Short-term borrowings 1,365 (12)
Hong Kong dollar payment, U.S. dollar receipt Long-term debt 5,683 3
Thai baht payment, yen receipt Long-term debt 53,452 ¥50,061 (3,096)
Thai baht payment, U.S. dollar receipt Long-term debt 67,990 49,025 6,188
Malaysia ringgit payment, U.S. dollar receipt Long-term debt 62,667 57,817 12,896
India rupee payment, U.S. dollar receipt Long-term debt 509 (60)
Forward exchange contracts *1
Buy (U.S. dollar) Accounts payable-trade 6 *1
Buy (British pound) Accounts payable-trade 62 *1
Interest rate swap contracts
Receive floating, pay fixed Long-term debt 137,569 95,298 (5,446)
Interest rate swap contracts*2
Receive floating, pay fixed Long-term debt 55,355 44,057 *2

Millions of Yen
’17
Contract Amount Due
Buy (U.S. dollar) Accounts payable-trade ¥ 16,373 ¥ 67
Buy (Australian dollar) Accounts payable-trade 2,474 319
Buy (Euro) Accounts payable-trade 267 (4)
Hong Kong dollar payment, U.S. dollar receipt Long-term debt 5,619 ¥ 5,619 137
Thai baht payment, yen receipt Long-term debt 50,847 46,868 (3,108)
India rupee payment, U.S. dollar receipt Long-term debt 503 (67)
Receive floating, pay fixed Long-term debt 114,954 113,070 (3,075)

’17
Contract Amount Due
Buy (U.S. dollar) Accounts payable-trade $ 146,194 $ 602
Buy (Australian dollar) Accounts payable-trade 22,097 2,856
Buy (Euro) Accounts payable-trade 2,387 (42)
Hong Kong dollar payment, U.S. dollar receipt Long-term debt 50,170 $ 50,170 1,226
Thai baht payment, yen receipt Long-term debt 453,997 418,467 (27,756)
India rupee payment, U.S. dollar receipt Long-term debt 4,494 (606)
Receive floating, pay fixed Long-term debt 1,026,379 1,009,561 (27,459)
*1 Foreign currency forward contracts were not measured at fair value and the accounts payable-trade denominated in a foreign currency were translated at the contracted rates, as
described in Note 2 (v). The fair values of such foreign currency forward contracts were included in those of the hedged items in Note 18.
*2 The interest rate swaps that qualify for hedge accounting and meet specific matching criteria are not remeasured at market value, but the differential paid or received under the swap
agreements is recognized and included in interest expense or income. In addition, the fair value of such interest rate swaps is included in hedged items such as long-term debt, in
Note 18.
The fair value of derivative transactions other than the acquisition option derivatives is measured at the quoted price obtained from the financial
institution or discounted value of future cash flows.
The contract or notional amounts of derivatives, which are shown in the above table, do not represent the amounts exchanged by the parties and
do not measure the Group’s exposure to credit or market risk.

Since many of these commitments are expected to expire without
20 Commitments and contingent liabilities being drawn upon, the total amounts of unused commitments does not
necessarily represent the consolidated banking subsidiary’s future cash
a. Commitments flow requirement.
The consolidated credit services subsidiaries and the consolidated bank- Many of these commitments have clauses that allow the consolidated
ing subsidiary have agreements under which they are committed to card banking subsidiary to withdraw the commitment line offer or reduce
members to execute loans as long as the agreed-upon terms are met. the contract amount under certain conditions, for example, when the
financial condition changes or when the consolidated banking subsidiary
As of February 28, 2017, the total unused credit available to card
needs to secure claims. Additionally, the consolidated banking subsidiary
members is ¥7,773,385 million ($69,405,228 thousand).
periodically reviews the customers’ business condition based on internal
The consolidated banking subsidiary has commitment line contracts rules and takes necessary measures, such as revising contract terms and
on overdrafts and loans under which it is committed to lend to customers requiring customers to provide additional collateral and/or guarantee.
when they apply for borrowing, up to a prescribed amount, as long as
there is no violation of any conditions described in the contract. As of
February 28, 2017, the amount of unused commitments was ¥32,825 b. Contingent liabilities
million ($293,087 thousand) including ¥9,974 million ($89,061 thousand) Contingent liabilities as of February 28, 2017, for guarantees were
of unused commitments whose original contract term is within one year ¥141,268 million ($1,261,326 thousand).
(or is unconditionally cancelable at any time).
21 Comprehensive income
The components of other comprehensive income for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, were as follows:
Thousands of
’15 ’16 ’17 ’17
Unrealized gain on available-for-sale securities:
Gains arising during the year ¥43,661 ¥ 7,269 ¥ 16,512 $ 147,429
Reclassification adjustments to profit or loss (2,966) (19,282) (4,393) (39,225)
Amount before income tax effect 40,695 (12,012) 12,118 108,203
Income tax effect (14,467) 5,937 (2,375) (21,205)
Total ¥26,228 ¥ (6,074) ¥ 9,743 $ 86,997
Deferred gain (loss) on derivatives on hedge accounting:
Gains (losses) arising during the year ¥ (2,141) ¥ (1,576) ¥ 7,914 $ 70,667
Reclassification adjustments to profit or loss (849) (1,716) (1,888) (16,861)
Amount before income tax effect (2,990) (3,292) 6,026 53,805
Income tax effect 635 969 (1,627) (14,535)
Total ¥ (2,355) ¥ (2,323) ¥ 4,398 $ 39,270
Foreign currency translation adjustments:
Adjustments arising during the year ¥42,847 ¥(33,011) ¥(20,550) $(183,484)
Reclassification adjustments to profit or loss (1,257) 6 54
Amount before income tax effect 42,847 (34,269) (20,544) (183,429)
Income tax effect
Total ¥42,847 ¥(34,269) ¥(20,544) $(183,429)
Defined retirement benefit plans:
Adjustments arising during the year ¥(10,722) ¥ 1,293 $ 11,545
Reclassification adjustments to profit or loss (20,398) 670 5,990
Amount before income tax effect (31,121) 1,964 17,535
Income tax effect 9,457 (497) (4,443)
Total ¥(21,664) ¥ 1,466 $ 13,092
Share of other comprehensive income in associates:
(Losses) gains arising during the year ¥ 311 ¥ 165 ¥ (75) $ (670)
Reclassification adjustments to profit or loss (45) (183)
Total ¥ 266 ¥ (18) ¥ (75) $ (670)
Total other comprehensive income ¥66,986 ¥(64,349) ¥ (5,010) $ (44,739)

22 Net income per share
Basic and diluted net income per share (“EPS”) for the years ended February 28, 2015, February 29, 2016 and February 28, 2017, were as follows:
Millions of Yen Thousands of Shares Yen

Net Income
attributable to Owners Weighted-average
Year Ended February 28, 2015 of the Parent Shares EPS
Basic EPS:
Net income ¥42,069
Net income available to common shareholders ¥42,069 837,723 ¥50.22
Effect of dilutive securities—mainly convertible bonds with stock
¥ (533) 416
acquisition rights of the Company
Diluted EPS—Net income for computation ¥41,536 838,140 ¥49.56
Millions of Yen Thousands of Shares Yen

Net Income
Basic EPS:
Net income ¥6,008
Net income available to common shareholders ¥6,008 836,049 ¥7.19
¥ (130) 1,774
acquisition rights of the Company
Diluted EPS—Net income for computation ¥5,877 837,824 ¥7.02
Millions of Yen Thousands of Shares Yen U.S. Dollars

Net Income
Basic EPS:
Net income ¥11,255
Net income available to common shareholders ¥11,255 837,428 ¥13.44 $0.12
acquisition rights of the Company ¥ (199) 362
Diluted EPS—Net income for computation ¥11,055 837,791 ¥13.20 $0.12
* The average number of shares of common stock held by the ESOP Trust for fiscal years ended February 28, 2015, February 29, 2016 and February 28, 2017 was 7,161 thousand,
5,469 thousand and 4,127 thousand, respectively.
23 Related party transactions
Transactions of the Company with related parties

Transaction Amount
Year ended February 29, 2016 Millions of Yen
Relatives of directors of the Company
Purchase of subsidiaries’ shares ¥1,073
* The purchase price of two listed subsidiaries’ shares was determined based on the closing price of the transaction execution date, it was conducted in after-hours trading of the stock
exchange.
Transaction Amount
Thousands of
Year ended February 28, 2017 Millions of Yen U.S. Dollars
Relatives of directors of the Company
Purchase of subsidiaries’ shares ¥16 $143
* The purchase price of one unlisted subsidiary’s shares was determined based on the stock price valuation report by an independent third party.

Transactions with the corporate pension for employees
Transaction Amount
Year ended February 29, 2016 Millions of Yen
Retirement benefits trust*1
Transfer of investment securities Sale value ¥23,998
Gain on sales of investment securities ¥18,806
*1 This is a retirement benefit trust for the employees of the Daiei, Inc., a consolidated subsidiary.
*2 The transfer price of three investment securities was determined based on the closing price of the transaction execution date.
Transactions of the Group with related parties

Millions of Yen
Year ended February 28, 2015 Transaction Amount Balance at end
Relatives of executive officers of the Company
Housing loan (Loans and bills discounted in banking business) ¥33 ¥32
Millions of Yen
Year ended February 29, 2016 Transaction Amount Balance at end
Significant directors of the subsidiaries and their
relatives
Housing loan *1 (Loans and bills discounted in banking business) ¥54
Companies where directors and their close relatives
owned a majority of the votiong rights
Payments of leases *2 (Prepaid expenses & Other current assets) ¥30 ¥ 2
Return of lease deposits *2 (Prepaid expenses & Other current assets) ¥ 3 ¥ 3
(Fixed leasehold deposits to lessors) ¥33
*1 Housing loans are package loans from Aeon Bank. Interest rate and conditions of repayment are similar to general loans. Repayment of housing loans is not included in the transaction
amount.
*2 Lease of land and parking is for store of Marunaka CO., LTD. The terms of rents are determined by negotiation based on market-price.
Millions of Yen Thousands of U.S. dollars

Transaction Transaction
Year ended February 28, 2017 Amount Balance at end Amount Balance at end
Officers of the Company and their relatives
Housing loan *1 (Loans and bills discounted in banking business) ¥51 $461
Companies where directors and their close
relatives owned a majority of the votiong rights
Payments of leases *2 (Prepaid expenses & other current assets) ¥28 ¥ 2 $258 $ 20
Return of lease deposits *2 (Prepaid expenses & other current assets) ¥ 3 ¥ 3 $ 33 $ 33
(Fixed leasehold deposits to lessors) ¥29 $264
*1 Housing loans are package loans from Aeon Bank. Interest rates and conditions of repayment are similar to those of general loans. Repayment of housing loans is not included in the
transaction amount.
*2 Lease of land and parking is for a store of Marunaka CO., LTD. The terms of rent payments are determined by negotiation based on market-price.
1. Description of reportable segments

24 Segment information
The Group’s reportable segments are those for which separate finan-
cial information is available and regular evaluation by the Company’s
Under ASBJ Statement No. 17, “Accounting Standard for Segment management is being performed in order to decide how resources are
Information Disclosures” and ASBJ Guidance No. 20, “Guidance on allocated within the Group.
Accounting Standard for Segment Information Disclosures,” an entity is The Group’s reportable segments and main operations in each
required to report financial and descriptive information about its report- segment are as follows:
able segments. Reportable segments are operating segments or aggre-
The GMS Business includes general merchandise stores (GMS).
gations of operating segments that meet specified criteria. Operating
segments are components of an entity about which separate financial The Supermarket and Discount Store Business includes supermar-
information is available and such information is evaluated regularly by the kets and discount stores.
chief operating decision maker in deciding how to allocate resources and The Small-sized Store Business includes convenience stores, small-
in assessing performance. Generally, segment information is required to scale supermarkets, and specialty stores that sell packaged lunches and
be reported on the same basis as is used internally for evaluating oper- ready-to-eat meals.
ating segment performance and deciding how to allocate resources to The Drugstore and Pharmacy Business includes drugstores and
operating segments. pharmacies.
The Financial Services Business includes credit card, fee, and bank-
ing business.

The SC Development Business includes development and leasing of 2. Methods of measurement for the amounts of sales, income (loss),
shopping centers. assets, liabilities and other items for each reportable segment
The Services and Specialty Store Business includes facilities man- The accounting policies of each reportable segment are consistent with
agement services, amusement services, food services, and specialty those disclosed in Note 2, “Summary of significant accounting policies.”
stores that sell family casual apparel, women’s apparel, footwear, and
others.
The international Business includes retail stores in the ASEAN region
and China.
Other Businesses include digital business, etc.
3. Information about sales, income (loss), assets, liabilities, and other items is as follows.
Millions of Yen
’15
Reportable segment
Small-sized Drug Store Financial SC Service and
GMS SM and DS Store and Pharmacy Services Development Specialty Store
Sales to external customers ¥2,614,620 ¥2,510,362 ¥304,506 ¥255,290 ¥ 294,387 ¥ 183,130 ¥537,692
Intersegment sales 65,433 15,424 5,587 385 35,388 61,586 167,228
Total revenues 2,680,054 2,525,786 310,094 255,676 329,776 244,717 704,921
Segment income (loss) 11,608 (5,575) 1,792 7,023 53,058 42,305 24,597
Segment assets 1,385,474 1,091,455 187,955 277,127 3,307,815 1,094,179 370,259
Segment interest-bearing debt 292,962 242,246 7,753 26,527 719,314 348,644 43,972
Other :
Depreciation and amortization 47,001 37,033 9,675 3,875 17,512 37,835 14,341
Equity in earnings (losses) of associated companies 97 2,511 (42) 2,707 877 (4) (10)
Impairment loss 12,692 20,593 2,893 1,807 36 1,868 3,567
Investments in associated companies 1,421 29,257 568 2,424 22,418 195 2,657
Increase in property, buildings and equipment, and
48,704 44,658 12,288 6,858 37,315 214,178 22,566
intangible assets
Millions of Yen
’15
Reportable segment
International Subtotal Other Total Reconciliations Consolidated
Sales to external customers ¥376,890 ¥7,076,881 ¥ 8,627 ¥7,085,508 ¥ (6,931) ¥7,078,577
Intersegment sales 821 351,858 5,866 357,725 (357,725)
Total revenues 377,712 7,428,739 14,494 7,443,234 (364,656) 7,078,577
Segment income (loss) 5,354 140,166 (2,453) 137,713 3,654 141,368
Segment assets 336,471 8,050,738 7,099 8,057,837 (198,034) 7,859,803
Segment interest-bearing debt 31,720 1,713,141 1,202 1,714,344 130,688 1,845,032
Other :
Depreciation and amortization 14,302 181,578 349 181,927 6,416 188,344
Equity in earnings (losses) of associated companies 6,137 (4) 6,133 556 6,689
Impairment loss 2,614 46,074 89 46,163 46,163
Investments in associated companies 1,822 60,765 14 60,780 4,125 64,906
Increase in property, buildings and equipment, and intangible assets 47,238 433,808 1,454 435,263 8,180 443,443
*1 Reconciliations of sales to external customers include ¥-70,584 million of adjustment from a gross to net basis and ¥63,488 million of sales by the shared function companies, which
are not included in any business segment.
*2 Reconciliations of segment income include ¥5,707 million of income of the Corporate, which is not allocated to any business segment, ¥-46 million of income of the shared function
companies, which is not included in any business segment, and ¥-3,123 million of elimination of the intersegment transactions.
*3 Reconciliations of segment assets include ¥570,836 million of assets of the Corporate, which are not allocated to any business segment, ¥210,030 million of assets of the shared
function companies, which are not included in any business segment, and ¥-978,901 million of elimination of the intersegment transactions.
*4 Reconciliations of segment interest-bearing debt include ¥471,590 million of interest-bearing debt of Corporate, which is not allocated to any business segment, ¥40,117 million of
interest-bearing debt of the shared function companies, which is not included in any business segment, and ¥-381,019 million of elimination of the intersegment transactions.
*5 Reconciliations of depreciation and amortization include ¥655 million of depreciation of Corporate, which is not allocated to any business segment, and ¥5,760 million of depreciation
of the shared function companies, which is not included in any business segment.
*6 Reconciliations of increase in property, buildings, and equipment, and intangible assets include ¥652 million of acquisitions of those assets of Corporate, which are not allocated to
any business segment, and ¥7,527 million of acquisitions of the shared function companies, which are not included in any business segment.
*7 Segment income is based on operating income.

Millions of Yen
’16
Reportable segment
Total revenues 2,838,239 3,053,298 376,913 592,364 357,252 272,124 741,265
Segment income (loss) 9,390 21,157 1,265 18,589 55,027 45,068 26,320
Segment assets 1,443,598 1,108,680 167,118 276,998 3,555,733 1,164,851 385,908
Other :
Equity in earnings (losses) of associated companies 107 610 (43) 317 927 (46) 73
Impairment loss 15,203 21,609 2,291 2,527 37 1,193 2,110
Investments in associated companies 1,662 21,280 509 2,764 27,372 148 2,652
70,405 88,792 17,536 17,529 39,005 179,470 26,123
intangible assets
Millions of Yen
’16
Reportable segment
Intersegment sales 1,523 466,288 5,395 471,684 (471,684)
Total revenues 426,482 8,657,940 13,192 8,671,132 (494,399) 8,176,732
Segment income (loss) (2,449) 174,370 (3,518) 170,852 6,125 176,977
Segment assets 326,887 8,429,777 6,455 8,436,233 (210,358) 8,225,874
Other :
Equity in earnings (losses) of associated companies (257) 1,689 (2) 1,686 325 2,012
Impairment loss 1,375 46,348 46,348 169 46,518
Investments in associated companies 1,563 57,954 21 57,975 4,001 61,977
Increase in property, buildings and equipment, and intangible assets 40,193 479,055 667 479,722 10,952 490,675
*1 Reconciliations of sales to external customers include ¥-70,831 million of adjustment from a gross to net basis and ¥48,130 million of sales by the shared function companies, which
are not included in any business segment.
*2 Reconciliations of segment income include ¥4,815 million of income of the Corporate, which is not allocated to any business segment, ¥1,401 million of income of the shared function
companies, which is not included in any business segment, and ¥-2,340 million of elimination of the intersegment transactions.
*3 Reconciliations of segment assets include ¥669,927 million of assets of the Corporate, which are not allocated to any business segment, ¥162,365 million of assets of the shared
function companies, which are not included in any business segment, and ¥-1,042,652 million of elimination of the intersegment transactions.
*4 Reconciliations of segment interest-bearing debt include ¥590,011 million of interest-bearing debt of Corporate, which is not allocated to any business segment, ¥44,158 million of
interest-bearing debt of the shared function companies, which is not included in any business segment, and ¥-509,260 million of elimination of the intersegment transactions.
*5 Reconciliations of depreciation and amortization include ¥673 million of depreciation of Corporate, which is not allocated to any business segment and ¥7,169 million of depreciation
of the shared function companies, which is not included in any business segment.
*6 Reconciliations of increase in property, buildings, and equipment, and intangible assets include ¥358 million of acquisitions of those assets of Corporate, which are not allocated to
any business segment and ¥10,593 million of acquisitions of the shared function companies, which are not included in any business segment.
Millions of Yen
’17
Reportable segment
Total revenues 3,012,263 2,890,232 378,703 623,631 372,046 315,940 765,669
Segment assets 1,462,549 1,010,714 170,704 295,293 4,050,134 1,242,310 404,474
Other :
Equity in earnings (losses) of associated companies (56) 616 (37) 465 385 (148) 100
Impairment loss 16,550 16,678 2,602 1,809 110 3,014 2,080
Investments in associated companies 1,717 21,609 1,596 3,151 32,399 2,691
122,796 59,280 14,979 24,596 45,019 159,144 24,278
intangible assets

Millions of Yen
’17
Reportable segment
Intersegment sales 1,778 514,032 11,429 525,462 (525,462)
Total revenues 398,395 8,756,883 18,125 8,775,009 (564,863) 8,210,145
Segment income (loss) (5,401) 188,347 (4,036) 184,311 428 184,739
Segment assets 314,318 8,950,499 21,277 8,971,776 (220,920) 8,750,856
Other :
Equity in earnings (losses) of associated companies (1,665) (341) (341) 300 (40)
Impairment loss 2,262 45,109 112 45,221 32 45,253
Investments in associated companies 12 63,177 63,177 4,251 67,429
Increase in property, buildings and equipment, and intangible assets 33,200 483,296 1,362 484,659 13,223 497,883

’17
Reportable segment
Sales to external customers $25,226,661 $25,608,912 $3,328,178 $5,567,072 $2,945,747 $2,165,334 $5,213,753
Intersegment sales 1,668,548 196,738 53,100 1,065 376,095 655,566 1,622,578
Total revenues 26,895,209 25,805,651 3,381,278 5,568,138 3,321,843 2,820,900 6,836,332
Segment assets 13,058,474 9,024,232 1,524,146 2,636,547 36,161,917 11,092,055 3,611,382
Segment interest-bearing debt 3,734,104 2,160,748 67,625 216,579 7,355,361 4,101,740 711,538
Other :
Equity in earnings (losses) of associated companies (507) 5,502 (337) 4,155 3,445 (1,324) 896
Impairment loss 147,776 148,912 23,236 16,152 986 26,918 18,574
Investments in associated companies 15,331 192,938 14,254 28,134 289,280 24,033
1,096,396 529,294 133,747 219,615 401,963 1,420,929 216,772
intangible assets

’17
Reportable segment
Sales to external customers $3,541,224 $73,596,885 $59,785 $73,656,671 $ (351,802) $73,304,868
Intersegment sales 15,880 4,589,574 102,051 4,691,626 (4,691,626)
Total revenues 3,557,104 78,186,459 161,837 78,348,297 (5,043,428) 73,304,868
Segment income (loss) (48,231) 1,681,673 (36,037) 1,645,635 3,826 1,649,462
Segment assets 2,806,413 79,915,170 189,977 80,105,147 (1,972,500) 78,132,647
Segment interest-bearing debt 539,351 18,887,049 63,534 18,950,583 1,202,045 20,152,629
Other :
Depreciation and amortization 153,332 1,979,577 6,100 1,985,677 84,893 2,070,571
Equity in earnings (losses) of associated companies (14,874) (3,045) (3,045) 2,680 (365)
Impairment loss 20,200 402,759 1,000 403,759 287 404,047
Investments in associated companies 115 564,088 564,088 37,963 602,052
Increase in property, buildings and equipment, and intangible assets 296,430 4,315,150 12,167 4,327,317 118,067 4,445,385
*1 Reconciliations of sales to external customers include ¥-76,397 million ($-682,116 thousand) of adjustment to present sales from a gross basis to a net basis. Certain service
transactions in the business segment, whose operating results are presented on a gross basis, are adjusted to be presented on a net basis since such revenue is incidental in the
Consolidated Statement of Income as a whole. Reconciliations of sales to external customers also include an upward adjustment of ¥36,948 million ($329,900 thousand) related
to sales to associated companies accounted for by the equity method by the shared function companies, serve as part of the head office functions, which are not included in any
business segment.
*2 Reconciliations of segment income include ¥2,727 million ($24,349 thousand) of income of the Corporate, which is not allocated to any business segment, ¥-846 million ($-7,561
thousand) of income of the shared function companies, which is not included in any business segment, and ¥-1,894 million ($-16,913 thousand) of elimination of the intersegment
transactions.
*3 Reconciliations of segment assets include ¥668,293 million ($5,966,902 thousand) of assets of the Corporate, which are not allocated to any business segment, ¥156,166 million
($1,394,340 thousand) of assets of the shared function companies, which are not included in any business segment, and ¥-1,045,379 million ($-9,333,743 thousand) of elimination
of the intersegment transactions.
*4 Reconciliations of segment interest-bearing debt include ¥585,256 million ($5,225,506 thousand) of interest-bearing debt of Corporate, which is not allocated to any business
segment, ¥47,597 million ($424,980 thousand) of interest-bearing debt of the shared function companies, which is not included in any business segment, and ¥-498,225 million
($-4,448,441 thousand) of elimination of the intersegment transactions.
*5 Reconciliations of depreciation and amortization include ¥699 million ($6,245 thousand) of depreciation of Corporate, which is not allocated to any business segment and ¥8,808
million ($78,647 thousand) of depreciation of the shared function companies, which is not included in any business segment.
*6 Reconciliations of increase in property, buildings, and equipment, and intangible assets include ¥333 million ($2,973 thousand) of acquisitions of those assets of Corporate, which are
not allocated to any business segment and ¥12,890 million ($115,093 thousand) of acquisitions of the shared function companies, which are not included in any business segment.

4. Information about geographical areas
(1) Total operating revenues
Millions of Yen
’15
Japan ASEAN China Other Total
¥6,486,616 ¥304,360 ¥203,177 ¥84,422 ¥7,078,577
Millions of Yen
’16
¥7,464,583 ¥333,196 ¥248,540 ¥130,411 ¥8,176,732

’17 ’17
Japan ASEAN China Other Total Japan ASEAN China Other Total
¥7,543,969 ¥312,717 ¥242,068 ¥111,390 ¥8,210,145 $67,356,866 $2,792,116 $2,161,324 $994,561 $73,304,868
* Total revenues are classified by country and region based on the location of customers.
(2) Property, buildings and equipment

Millions of Yen
’16
¥2,302,332 ¥222,402 ¥83,391 ¥7,316 ¥2,615,442

’17 ’17
Japan ASEAN China Other Total Japan ASEAN China Other Total
¥2,337,090 ¥232,362 ¥82,188 ¥8,137 ¥2,659,779 $20,866,882 $2,074,667 $733,828 $72,652 $23,748,030
5. Information about goodwill by segment

Millions of Yen
’16
Reportable segment
Amortization of goodwill ¥ 156 ¥ 8,658 ¥ 2,158 ¥ 3,065 ¥ 3,071 ¥ 2,462 ¥1,418
Book value 1,733 39,815 21,551 51,844 25,971 28,289 9,779
Millions of Yen
’16
Reportable segment
International Total Other Reconciliations Consolidated
Amortization of goodwill ¥1,684 ¥ 22,675 ¥ 25 ¥ 22,700
Book value 2,713 181,698 107 181,806
Millions of Yen
’17
Reportable segment
Amortization of goodwill ¥ 210 ¥ 5,680 ¥ 2,150 ¥ 3,993 ¥ 3,083 ¥ 2,617 ¥1,009
Book value 1,521 33,941 19,380 47,851 22,910 26,165 8,649
Millions of Yen
’17
Reportable segment
Amortization of goodwill ¥ 289 ¥ 19,034 ¥23 ¥ 19,058
Book value 1,191 161,611 83 161,694

’17
Reportable segment
Amortization of goodwill $ 1,882 $ 50,717 $ 19,199 $ 35,655 $ 27,529 $ 23,371 $ 9,014
Book value 13,583 303,045 173,037 427,244 204,558 233,623 77,226

’17
Reportable segment
Amortization of goodwill $ 2,581 $ 169,952 $213 $ 170,165
Book value 10,638 1,442,957 747 1,443,704
1 For the year ended February 29, 2016, the amount of “SM and DS” and “International” includes ¥6,181 million of other expenses in the consolidated statement of income.
2 For the year ended February 28, 2017, the amount of “SM and DS” and “Drug Store and Pharmacy” includes ¥3,443 million ($30,742 thousand) of other expenses in the consolidated
statement of income. And the amount of “International” does not include ”impairment loss” of ¥1,819 million ($16,242 thousand) in the consolidated statement of income.
(5) Name of the company after the business combination

25 Subsequent events
Marudai Sakurai Yakkyoku Co., Ltd.
Business combination through acquisition of shares by a consolidated

(6) Ratio of voting rights to be acquired
subsidiary (FY’17)
100%
Effective April 18, 2017, the Company’s consolidated subsidiary, Welcia
Holdings Co., Ltd. (“Welcia HD”), entered into a share transfer agreement
with Marudai Sakurai Yakkyoku Co., Ltd. (“Marudai Sakurai Yakkyoku”) (7) Basis for determining the acquirer
to acquire all of its issued and outstanding common shares and convert Welcia HD will pay a consideration in cash for acquiring all the shares of
Marudai Sakurai Yakkyoku into a wholly-owned subsidiary of Welcia HD. Marudai Sakurai Yakkyoku, which will become its consolidated subsidiary.
1. Outline of the business combination
(1) Name of the acquired company and its business 2. Acquisition cost of the acquired company and details of the consid-
Name of the acquired company: Marudai Sakurai Yakkyoku Co., Ltd. eration to be paid
Business: Drugstore business Thousands of
Consideration for the acquisition
(2) Major reason for the business combination - Cash and deposit ¥14,500 $129,464
Acquisition cost 14,500 129,464
The Welcia Group, formed by Welcia HD and its subsidiaries, endeavors
to be the No. 1 drugstore chain in Japan in terms of both quality and Note: The acquisition cost above is an estimated amount from which the actual cost
may differ.
quantity.
The Welcia Group provides services such as a business infrastruc-
ture in the highly aging society to local consumers so that they can have 3. Major acquisition-related costs
convenient and healthy lives. The amount of major acquisition-related costs has not been determined
The Welcia Group has been developing the dispensable drugstore as of the reporting date.
business mainly in the Kanto region from the Tohoku district to the Kinki
district. 4. Amount of goodwill arising from the business combination, reasons
Marudai Sakurai Yakkyoku has developed its business mainly in for the goodwill arising from the business combination, and the
Aomori prefecture, where 64 drugstores and eight pharmacies are method and period of amortization
located. Acquiring Marudai Sakurai Yakkyoku ‘s shares will allow the The Company will account for this acquisition under the purchase
Welcia Group to further strengthen its business foundation in the Tohoku method.
region and enhance the efficiency by mutually sharing their expertise.
Goodwill is expected to arise under the acquisition; however, the
amount has not been determined as of the reporting date.
(3) Date of the business combination
September 1, 2017 (as scheduled) 5. Assets acquired and liabilities assumed at the acquisition date
The assets acquired and the liabilities assumed at the acquisition date
(4) Legal form of the business combination have not been determined as of the reporting date.
Acquisition of shares

Corporate Data
Headquarters 1-5-1 Nakase, Mihama-ku, Chiba-shi, Chiba 261-8515, Japan

Representative Motoya Okada, Representative Director, President and Group CEO
Founded 1758
Established September 1926
Number of Employees 518,997
Fiscal Year End End of February
Annual Shareholders’ Meeting Held by the end of May
Stock Exchange Listing Tokyo Stock Exchange
Independent Auditor Deloitte Touche Tohmatsu LLC
Sumitomo Mitsui Trust Bank, Limited
Transfer Agent
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8223, Japan
Number of Shareholders 709,325
Shares Issued and Outstanding 871,924,572
Website https://www.aeon.info/en/
Major Shareholders (As of February 28, 2017) Distribution of Share Ownership by Shareholder Type
Number of shares held Ratio of shares held
Name (Thousands of shares) (%)
Mitsubishi Corporation 40,422 4.80
Mizuho Bank, Ltd. 33,292 3.96
Japanese Financial Institutions 33.84%
The Master Trust Bank of Japan, Ltd. 30,317 3.60 Japanese Individuals and Others 31.62%
(Trust Account)
Japan Trustee Services Bank, Ltd. Other Japanese Corporations 18.80%
25,664 3.05
(Trust Account) Foreign Institutions and Individuals 10.62%
AEON Environmental Foundation 21,482 2.55 Japanese Securities Companies 1.65%
The Cultural Foundation of Okada 21,040 2.50 Treasury Stock 3.47%
The Norinchukin Bank 18,133 2.15
Employees’ stockholding 13,630 1.62
association
Aeon Mutual Benefit Society 12,073 1.43
(Nomura Securities account)
Japan Trustee Services Bank, Ltd. 10,135 1.20
(Trust Account #7)
Notes:
1. Calculations of ratio of shares held exclude treasury stock (30,272,244 shares).
2. Shareholdings listed for The Master Trust Bank of Japan, Ltd. (Trust Account) and for the
Japan Trustee Services Bank, Ltd. (Trust Account and Trust Account #7) represent pooled
shares held in the form of securities investment trusts and other trusts.
Stock Price and Trading Volume

(Thousands of shares) Trading volume (left scale) Stock price (near right scale) Nikkei average closing price (far right scale) (Yen) (Yen)
140,000 2,500 25,000
120,000
2,000 20,000
100,000
80,000 1,500 15,000
60,000 1,000 10,000

40,000
500 5,000
20,000
0 0 0
2/2014 2/2015 2/2016 2/2017

Aeon’s Website
Our website covers activities and data not presented in the integrated report. Sections of the website present a broad variety
of information.
Corporate Investor Relations Environmental and Social Report
https://www.aeon.info/en/ https://www.aeon.info/en/investors/ https://www.aeon.info/en/environment/
The corporate section presents information This section presents management policy, Our Environmental and Social Report
for various stakeholders. Please access financial and performance data, stock presents our basic environment and CSR
the latest company information and information, IR materials, and other policies and specific initiatives.
news releases here. information.
Aeon History Museum

The Aeon History Museum presents
the significance and essence of the
Basic Principles Aeon has created
and refined throughout its history.
Visits are available with Aeon
employees or by reservation. Please
call 81-43-212-6614.
Address: Aeon Head Office Annex

2F, 1-5-1 Nakase, Mihama-ku,
Chiba-shi, Chiba

Headquarters: 1-5-1 Nakase, Mihama-ku, Chiba-shi, Chiba 261-8539, Japan Website
December 2017

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Aeon Report

AEON Report 2017 1

Pursuing peace, respecting humanity, and contributing to local communities,

On the basis of the Aeon Basic Principles, Aeon practices its

2 Aeon Report 2017

Introduction 4 Information Security 53

Corporate Governance 40 Support After the 2016 Kumamoto Earthquakes 148

● Report Period ● Target Audience

4 Aeon Report 2017

Trees Planted and Total Participants

Aeon Report 2017 5

Pursuing peace, respecting humanity, and contr

6 Aeon Report 2017

Environmental change forecast

wth strategy Financial strategy

Responding Create workplaces Collaborate

Aeon Basic Principles

Aeon Report 2017 7

Aeon responds to diverse customer

8 Aeon Report 2017

Aeon will expand the reach of regional ecosystems to contribute to

Aeon Report 2017 9

Group Management of Our Multifaceted,

Approximately 300 companies in Japan and

to capture economies of scale and generate

More Efficient Back Shared Best Practices

Business Fields Where Aeon Is the Leader (Fiscal 2016)

¥3,000 ¥2,900 ¥270 ¥4,500

¥623 ¥267 ¥65

Social Conditions in Japan Aeon Innovations

1970s Establishment of chain stores, development of shopping centers

1980s Development of new businesses and formats, expansion in Southeast Asia

1990s Development of large food supermarkets, rollout of drugstores

Aeon Report 2017 11

12 Aeon Report 2017

25,300(As of February 28, 2017)

A Corporate History An Educational System to Human Resource Deployment That

Aeon Report 2017 13

Small-sized Store Business

General Merchandise Store Business* Supermarket and Discount Store Business*

14 Aeon Report 2017

Shopping Mall Development Business Services & Specialty Store Business

* Changes in Reportable Segments

Aeon Report 2017 15

China South Korea

India Vietnam Philippines

16 Aeon Report 2017

Aeon Co., Ltd.

Headquarters Headquarters Headquarters

1991 Aeon Hometown Forests Program started

1996 First store in mainland China opened

2011 Headquarters for ASEAN established

2011 Headquarters for China established

2012 “Aeon Cheers Club” activities started in Malaysia

2012 “Aeon Happy Yellow Receipt Campaign” started in China

2014 The ﬁrst store in Vietnam and Cambodia opened

2014 “Aeon Cheers Club” activities started in China

2015 First store in Indonesia opened

Australia 2016 Supermarket Business started in Myanmar

Aeon Report 2017 17