Environment : Creation of Circular Economy Business

In our drive to promote the efficient use of resources and to maximize customer value, we are working to create businesses based on a circular economy model. Our first business model is our "sharing service." The service consists of bicycle parking areas; three were created inside Tsunashima SST*¹ and at Hiyoshi Station. On top of this, 30 IoT-linked electrically-assisted bicycles with power-saving smart lock have been made available to residents of the town, employees at commercial facilities, and the neighborhood in a trial project to study how to operate and manage an IoT-linked electrically-assisted bicycle service. During this trial period, we are gathering and analyzing data, including users' needs for bicycles, areas of movement, and travel distances, to create an optimum management system for this bicycle service. We also provided IoT-linked electrically-assisted bicycles in the shared bicycle station in TENKUU no MORIZONO MIYOSHI MIRAITO, a large, newly developed residential area in Miyoshi City, Aichi Prefecture, marketed by Toyota Housing Corporation of the Prime Life Technologies Group.*² This was our first time to supply IoTlinked electrically-assisted bicycles and we plan to expand sales in the future.

Moreover, from January 2022 to January 2024, we started trial of an IoT-linked electrically-assisted bicycle sharing service for residents of apartments in Japan^*3. Demand for electrically-assisted bicycles has recently increased due to their convenience and comfort for short-distance trips. However, owning an electrically-assisted bicycle is sometimes difficult for those living in an apartment with a small parking space or because use of the bicycle is infrequent. For this reason, we decided to conduct a field trial of a closed bicycle sharing service where the IoT-linked electrically-assisted bicycles are shared among residents of the same apartments, to assess the feasibility of the service and identify potential issues in service operations. In this trial, six households in "noiful base Komagome"^*4, a rental property managed by our group company, share three IoT-linked electrically-assisted bicycles stationed in the apartment. Residents can reserve and unlock the bicycles using a dedicated application. The property manager monitors the usage of the IoT-linked electrically-assisted bicycles through a customized management software. When a bicycle's battery becomes low, the manager replaces it with a fully charged one stored in the charging locker. We examined the possibility of increasing property value for properties far from the nearest station. Based on the results from this trial, we aim to develop a new and highly convenient transportation service.

As a model for products as a service, we are implementing a service to provide cooling value using display cases with refrigerators/freezers. This service providing cooling value is used by customers in the food retail industry, mainly in supermarkets. Instead of selling the refrigeration equipment such as showcases, the Panasonic Group provides the value of "food refrigeration" itself and charges the customers a monthly service fee. We also respond to the requests and store creation requirements of customers with the provision of a refurbishment scheme. We inspect and repair the freezers and refrigerated showcases used in stores in the customer's chain so that they can be reused, such as when other stores are renovated. Furthermore, as a new service, we also provide a "monitoring service" that combines digital and real-life support such as maintaining the energy-saving in stores and everything from the monitoring of refrigeration equipment such as showcases to preventive maintenance, inspection services, and suggestions regarding aged equipment. These services are expected to reduce maintenance and energy costs, and at the same time it will facilitate cheaper, low-budget store renovations by making business management more efficient.

As another model for providing cooling value, we also offer a rental service for the VIXELL^® cold-insulating transportation containers that realize the safe and secure transportation of pharmaceuticals^*5. Biopharmaceuticals such as anticancer drugs and coronavirus vaccines require strict temperature control during storage and transportation. As globalization advances in the pharmaceutical industry, cold-insulating containers are also being used in the import and export of pharmaceuticals. However, efforts to spend the time and money required to recover and reuse the containers have not become sufficiently established and the current situation is that the cold-insulating containers are being thrown away after use. In response to this, as an effort to realize a sustainable society, we started a service in April 2023 where we not only rent out VIXELL boxes as shipping containers, but also collect the VIXELL boxes from the export destinations ourselves, refurbish them, and then rent them out to other customers. This service covers not only exports from Japan, but also from Europe, and we plan to increase the number of regions covered in the future.
Furthermore, in April 2024, in response to customer requests, we also began renting out the VIXELL Pallets, which are suitable for greater volumes of cargo transportation^*6. The VIXELL Pallet follows the characteristics of the VIXELL box, which are to be robust, lightweight, and to stay cool for a long period of time. As a result, it is not necessary to charter a refrigerated truck as the VIXELL Pallets can be used to transport the cargo in general transportation trucks containing loads from multiple customers. Furthermore, the width of the VIXELL Pallets is approximately 1,000 mm, so their dimensions are suitable for the standard logistics services within Japan and we believe that they can contribute to the solving of driver shortages occurring due to law changes in 2024.

Another IoT-based service that we offer is the Akari E Support^*7 service, a lighting leasing service for corporate customers. By paying a monthly fee, customers can enjoy the LED lighting of their choice, as well as additional services such as repairs, without owning the lighting. The monthly fee includes the long-term leasing fee for the LED lighting, repairs to maintain lighting performance, general insurance for movable properties, and energy-saving certificates, thereby reducing the costs for maintenance and energy.

Another example is the offer for an optional service for Panasonic laptop users called Battery Life Cycle NAVI.^*8 The service is designed to prolong the life and increase the value of our products. Through this service, the full-charge battery capacity is automatically monitored and when the capacity deteriorates beyond a specific criterion, a notice is displayed on the laptop screen. The customer can then apply for a new battery, which is sent to them at no extra charge. This enables users to continue enjoying the extended operational hours of a new battery while maintaining their long-used and familiar PC.

We plan to improve our group's Air Conditioner Cleaning Service in Japan*⁹ in early November 2022 by newly setting up a website dedicated for cleaning orders and a cleaning notice service (free of charge) for models covered by the service. To date, the timing for cleaning air conditioners has been left to the discretion of customers. This new service helps customers know the appropriate timing to order cleaning. For conventional air conditioners subject to cleaning, the notice is submitted according to the number of years since purchase. For IoT-linked air conditioners, the number of years since purchase and operational hours etc. are used to determine the cleaning timing. The cleaning order (chargeable) website under development will improve customer convenience by offering easy access to our cleaning service. The technician disassembles the indoor unit into its components - the louver, fan, filter, etc. - and cleans each part by hand. Also, the heat exchanger is cleaned with high-pressure water. We provide the service so that customers can enjoy their air conditioners over many years.

In Europe, we offer a remote monitoring service for the Aquarea Air-to-Water Heat Pump.
This cloud-based maintenance service currently in operation in Denmark constantly monitors the operations of the heat pump and detects any faults immediately. We have already established a service system for prompt inspections and repairs according to the equipment condition in several countries, and we plan to expand this service system further in the future. The use of IoT can ensure the prolonged life of the products, while at the same time improving their safety, reliability, and convenience.

Road tunnels are an indispensable social infrastructure in our life. We provide a total air ventilation solution to maintain a clean air flow in the tunnel environment, as well as a maintenance service^*10 for such ventilation equipment. The service offers regular checks and overhauls on the air ventilation equipment, including the jet fans used as a part of the above solution, thereby minimizing functional deterioration from aging and ensuring product safety over a longer period of time.

We refurbish home appliances, such as washing machines, refrigerators, and TVs, collected after use, to a reusable state for reselling.^*11 Those products that satisfy the high quality standards set by the Panasonic Group are then made available for sale. For example, TVs are inspected to ensure they do not carry any scratches, damage, or missing parts in the main body and accessories that could cause a malfunction. They are also thoroughly cleaned, and the image quality is checked.
Any failed parts are replaced, and all the products are tested for product safety. To meet the Group standards, the display output is adjusted, and performance tests are conducted. Only after all these processes have been completed, the products are finally put on sale for customers.

In addition, we are also promoting the following activities based on a circular economy concept. One example is building renovation: A building that we had used as a showroom and for other purposes for nearly 20 years was renovated through a joint effort with our partners. It has been transformed into a business and commercial complex named TENNOZ Rim^*12 which includes a co-working space, studio, laboratory, lounge and cafe. We consider renovation projects enabling more effective use of existing structures with additional performance features to be better than activities related to new buildings, as a circular economy business.

We started a food subscription service demonstration^*13 in the cafe in the TENNOZ Rim building. Customers can subscribe to a fixed-rate food service that includes a reusable cup made of resin with a high cellulose fiber content, and they can order one item of food or drink per day served in the reusable cup they bring to the cafe. This service contributes to the reduction of disposable plastic food containers. The project also helps attract people to the Tennozu area, which is recently promoting itself as a center of culture and arts, and contributes to building a circular economy by disseminating eco-conscious containers and reducing plastic waste.

The Revalue Project converts factory wastes into completely different products that offer new value through creative design. To date, the factory wastes generated from production of irons, rice cookers, and system kitchens have been converted into bookends, lighting, and tables through collaboration with our partner companies. This project received a 2022 Good Design Award (Business Model category) in recognition of the business value it offered. We have also started a business to utilize factory offcuts generated in production. This is achieved by the three approaches of data utilization, ecological secondary use, and collaboration with creators.The factory offcuts of synthetic marble, which is used to make kitchen counters, has particularly grown into a promising project. We continue to offer new value through expanding collaborative creation.

As another subscription model, we started a service for our rental housing, "noiful," in January 2022. Noiful^*14 offers a rental service for the latest home appliances pre-installed in a rental property, including support services to explain how to use the appliances, repairs and replacements, and appliance cleaning when moving in and out. In addition to the conventional home appliance package, from March 2024 we started a new full-furnishing plan that offers residences complete with furniture and home appliances.^*15 In the domestic real estate market, housing stock is on an increasing trend due to the population decrease etc. This becomes a range of social issues, such as an increase in aging buildings and more vacancies. Noiful offers "plentiful life without owning" to tenants, enabling people to move houses more easily, which should help invigorate the rental housing market. This novel solution also contributes to solving the social issue of increasing vacancies by adding a value to the rental property for owners and management companies. Noiful is also designed to be a business model offering a recurring and stable high income, and new value to the three parties usually involved in the business: property owners, management companies, and tenants. The reuse and recycling of home appliances reduces environmental impact by eliminating the necessity of disposal and contributes to building a sustainable society and life.

As another subscription model, we have launched a monthly flat rate cleaning platform service using RULO Biz, a professional-use small robot vacuum cleaner in April 2022^*16. RULO Biz is one of the industry's smallest cloud-based commercial robot vacuum cleaners. It is suitable for cleaning small spaces with many obstacles, such as exclusively-owned areas of office buildings, shops, and restaurants, and supports labor saving and automation of dust collection work. In addition, we aim to improve cleaning quality by automatically creating cleaning maps using our own laser SLAM technology, centrally managing the maps through cloud management, and visualizing cleaning results. With the introduction of RULO Biz, users can resolve labor shortages, reduce cleaning costs, and keep the initial cost down through the monthly flat rate system. In addition to the RULO Biz main unit and system usage fee, the monthly fee for this service includes regular annual inspections and maintenance, as well as the payment for a replacement unit in case of failure. Customers can therefore use it with peace of mind without hindrance to their cleaning schedule.

As a result of the application for the grant of the Subscription-Based Air Conditioner Promotion Model Project (hereinafter referred to as the Model Project) solicited by the Ministry of the Environment (Japan) in January 2022, our project was successfully adopted^*17. Death from heatstroke is a growing social concern, and about 80% of those who died from heatstroke across Japan were elderly persons aged 65 and above. In Tokyo's 23 wards, more than 80% of heatstroke deaths in 2021 were elderly persons aged 65 and above. Most of them were found dead indoors and some 90% of cases were not using an air conditioner. Of the cases where an air conditioner was not used, 20% did not have one installed. To prevent heatstroke, installing an air conditioner and promoting appropriate usage are important. However, the initial cost of installing an air conditioner can be an obstacle. To help prevent such cases of heatstroke, a major social issue, we have concluded a Comprehensive Partnership Agreement for further promoting the prevention of heatstroke and reducing CO₂ emissions with Kumagaya City in Saitama Prefecture, Kanuma City in Tochigi Prefecture, and installers in order to implement a Model Project Using Subscription-Based Services targeted at households with elderly members and children. Through public-private partnerships that take advantage of the respective strengths of public administration and private sectors, such as the sales scheme and support system of our group, and the security and field capabilities of local authorities (Kumagaya City, Saitama Prefecture and Kanuma City, Tochigi Prefecture), we have successfully created new value. In 2023, as in 2022, we concluded a contract with the Ministry of the Environment and implemented the analysis and verification of data on the use of air conditioners by elderly residents (in Kumagaya City, Saitama Prefecture, and Kanuma City, Tochigi Prefecture) (concluded on July 5, 2023). By combining IoT log data with quantitative questionnaires and home visit surveys, we analyzed how energy-saving air conditioners and the use of IoT have changed the use of air conditioners by the elderly , etc., and then reported the changes from last year's report to the Ministry of the Environment (end of February 2024). It is planned that the reports submitted will be delivered (made public) to the National Diet Library, etc.

Employment of paper packaging also reduces environmental impact and provides ease of use at the same time, encouraging environment-friendly consumption (consumer behavior that takes the environment into consideration).^*18, ^*19 As our first change, paper-based battery packaging was employed for some models of the EVOLTA NEO Battery in October 2021. The coverage of such paperbased battery packaging was widened to include more EVOLTA NEO Battery models, and the original EVOLTA Battery in April 2023. We also released an improved version of our eneloop rechargeable nickel hydride battery that also incorporates paper-based battery packaging. The new version offers longer usage duration per charge through its increased capacity while retaining the same number of recharges. Demand for environment-friendly packaging has been increasing in recent years due to the worsening effects of climate change and plastic waste problems. According to a survey conducted by the Panasonic Group, 90% of respondents thought that excess packaging and plastic are used in products in general, and 80% of them value environment-friendly packaging when purchasing products. For eneloop, the packaging materials have been reduced by between 38% and 70% compared to the conventional blister pack by adopting paper-based battery packaging. By increasing use of environment-friendly packaging in the eneloop lineup, we aim to reduce 5.7 tons of plastic and 21.5 tons of paper in our usage every year, making a combined total of approximately 27 tons of packaging. The elimination of shrink film to cover the batteries also makes it easier to open. The package can also be used as storage for unused batteries and be disposed of as recyclable paper or general waste. Less packaging materials reduces the environmental impact and easy-to-handle packaging reduces the labor of opening and disposing. We thereby offer a little help in the lives of our environmentally-conscious customers.

Under a partnership with Lawson, we are jointly working on energy saving, CO₂ emissions reduction, and more efficient usage of resources. The Lawson store opened in Nanjing in July 2020 was built with significantly less building waste through prefabricated construction and material recycling. The same kind of stores have also been built in Shenyang and Tianjin. Further, we started operating mobile convenience stores in Shenyang and Wuhan. The store vans are equipped with refrigerators and other electrical equipment realizing flexible and effective sales. In addition, since 2021, we have developed a service for the refurbishment and reuse of aged store equipment in Chongqing, Chengdu, Shanghai, Zhejiang, Jiangsu, and other regions. As of 2023, we have supplied refurbished equipment to several hundred stores and this extension of the service life of store equipment has made a contribution to the reduction of costs and the reduction of the amount of equipment discarded. In addition, model eco-friendly stores were opened in Shanghai in April 2021, and Dalian in July 2021. These next-generation stores boast high environmental performance through the latest energy and CO₂ emissions saving solutions, including an Energy Management System (EMS) that visualizes and controls electricity usage by refrigerators and air conditioners.

Products containing a significant amount of recycled materials are also considered as a part of our circular economy businesses, as they contribute to efficient resource utilization. One such product example is a series of our cordless vacuum cleaners. The MC-NS10KE is a new cordless stick vacuum cleaner with the Clean Dock exclusively designed by the Panasonic Group. It was released on December 6, 2023, as a model with the use of recycled resin increased to around 40% of the entire product.^*20 In February 2024, we released another circular economy focused model, the MC-PB60J cordless stick bag-type vacuum cleaner. It contains 95% recycled resin(biomass content, etc.) and acquired the industry's first Biomass Mark as a domestic home cordless stick cleaner (by our research as of February 29, 2024).^*21

In June 2022, we began installing collection boxes for used dry batteries at 31 local 7-Eleven stores in Thailand, in cooperation with CP ALL Plc., the operator of 7-Eleven. In March 2024, we established a scheme to recycle the collected used dry batteries manufactured by us, in partnership with UMC Metals Ltd., a Thai steelmaker. This initiative allows us to melt our dry batteries, which do not contain environmentally harmful substances, and recover reusable materials, thereby contributing to efficient resource utilization. As of June 2024, we have achieved a total of 1,000 collection box locations at 7-Eleven stores.

The Panasonic Group will participate in the 2025 Japan World Exposition (Expo 2025 Osaka, Kansai, Japan). Our pavilion, "The Land of NOMO", was constructed under the theme of "Pavilion Born of Three Circulation" and will actively make of use recycled materials recovered from used home appliances, offcuts and waste materials from factories, and other products made from scrap developed by the Panasonic Group.^*22 Materials used during construction of the Panasonic Group Pavilion will be returned to the recycling scheme after the Expo with the aim of achieving the Japan Association for the 2025 World Exposition's recycling rate target of 98.1% (by weight).

As described above, we are working to create circular economy businesses. We completed mapping out the relationships between our existing businesses and a circular economy based on the analytical method that we developed in fiscal year 2020. According to this mapping, we are steadily converting our businesses to a circular economy structure and three more circular economy businesses were created this fiscal year in addition to our ten existing ones. We are continuing to expand the scale of our circular economy business.

*1 A next-generation sustainable smart town that was built in Yokohama City, Kanagawa Prefecture, in March 2018. It is being managed by the Tsunashima SST Council organized by Panasonic and 10 other companies in various industrial fields to engage in innovative, eco-friendly activities and to create new services through collaboration among urban community developers, residents and local governments. (https://tsunashimasst.com/EN/)
*2 See https://news.panasonic.com/jp/press/data/2020/10/jn201014-3/jn201014-3.html
*3 See https://news.panasonic.com/jp/topics/204533.html
*4 The first property rented under the "noiful LIFE" property renovation and management service, operated by Living Appliances and Solutions Company. The service is designed to increase the property value and ensure stable renting operations by refurbishing existing properties in a tasteful style and with matching electrical appliances installed. Location: Nakazato 2-21-5, Kita City, Tokyo, Japan
*5 See https://www.panasonic.com/jp/business/vixell.html
*6 See https://news.panasonic.com/jp/press/jn230620-1
*7 See https://www2.panasonic.biz/ls/lease/lighting-e-support/
*8 See https://panasonic.biz/cns/pc/letsnote/and_connect/battery.html
*9 See https://news.panasonic.com/jp/press/data/2021/09/jn210921-5/jn210921-5.html
*10 See https://www2.panasonic.biz/jp/air/fan/douro/
*11 See https://ec-plus.panasonic.jp/store/page/product/refurbished2307/
*12 See https://www.tennoz-rim.tokyo/
*13 See https://news.panasonic.com/jp/press/data/2020/09/jn200910-1/jn200910-1.html
*14 See https://news.panasonic.com/jp/press/data/2022/01/jn220119-1/jn220119-1.html
*15 See https://news.panasonic.com/jp/press/jn240314-6
*16 See https://www.panasonic.com/jp/company/pmj/new-business/solution/rulo-biz.html
*17 See https://news.panasonic.com/jp/press/jn220425-1
*18 See https://panasonic.jp/topics/2023/03/000000746.html
*19 See https://news.panasonic.com/jp/press/jn230330-1
*20 See https://ec-plus.panasonic.jp/store/page/contents/cleaner-NS10KE-sus/
*21 See https://panasonic.jp/soji/products/stick/mc-pb60j.html
*22 See https://news.panasonic.com/jp/press/jn230712-1