Furukawa Electric Group Integrated Report 2022

FURUKAWA ELECTRIC GROUP

2022

INTEGRATED REPORT

https://www.furukawa.co.jp/en/About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

About the Furukawa Electric Group Integrated Report 2022
Editorial Policy

Scope of This Report

Since fiscal 2012, Furukawa Electric Group has published
its Sustainability Report, containing Environment, Social,
Governance (ESG) and other non-financial information
beside business results, strategies, and other financial
information.
Since fiscal 2020, we have been publishing the
Furukawa Electric Group's integrated report in order tohelp investors and other stakeholders better understandour Group's efforts and measures to improve corporate
value over the medium- to long-term.
We sincerely hope that this report will help you
understand our value creation process directed atachieving Furukawa Electric Group Vision 2030, as wellas our efforts to strengthen the foundation of our ESG
management. We have used the following guidelines forreference.
International Integrated Reporting Framework (International

PeriodCoveredFiscal 2021, from April 1, 2021, to March 31, 2022

Publication
Timeframe

Publication date:
October 31, 2022
Planned publication of next edition:
October 2023

Organizations
coveredThis report covers Furukawa Electric Co., Ltd.
and group companies in Japan and overseas.
Where activities are limited to specific regions orcompanies, this fact has been clearly indicated in
the reporting.

Disclaimer
Regarding
Forecasts andProjections

This Integrated Report includes statements
concerning the future strategies and earnings
forecasts of Furukawa Electric Group. These
forward-looking statements are based on
information that is currently available to theGroup. As it is subject to changes in the businessenvironment surrounding the Group, the actual
strategies and business may differ from thoseprojected.

Integrated Reporting Council (IIRC))
The Guidance for Collaborative Value Creation(the Ministry of Economy, Trade and Industry)

Contents(Note) Includes selected information on past
initiatives and activities during fiscal 2022.

Guidance on Climate-related Financial Disclosure(TCFD) Guidance 2.0 (the Ministry of Economy,

About Furukawa Electric Group

Trade and Industry)

01 About the Furukawa Electric Group

Information Disclosure System and Positioning of This Report

02 Furukawa Electric Group’s Values

This Integrated Report has concisely stated importantfinancial and non-financial information regarding
Furukawa Electric Group with the aim of promoting
a better understanding of our medium- to longterm initiatives and measures for the improvement ofIntegrated Report 2022

Management Strategy
04 President’s Message
10 Innovation History of

Furukawa Electric Group

14 Changes in the External Environments
and the Social Issues Surrounding
Furukawa Electric Group

16

Furukawa Electric Group’s
Sustainability
Achieving Vision 2030

22 Stakeholders and Materiality
24 Message from the General Manager of
the Strategy Division

30 Medium-term Management Plan

2022-2025 (2025 Mid-term Plan)

34 Message from the General Manager of
the Finance & Accounting Division

38 Business Overview

50 Materiality of Revenue Opportunities
Creating Businesses that Solve
Social Issues
Intellectual Property

58 Furukawa Electric Group’s

Digital Transformation (DX)

Integrated Report

62 Massage from Outside Directors
66 Materiality of Risks

Corporate GovernanceGroup Governance/Risk Management
Supply Chain Management
Human Rights and Labor Practices
Developing Business Activities
that Consider Climate Change
Strengthening Human Capital Management
and Organizational Execution Abilities

Medium-term Management Plan

https://www.furukawa.co.jp/en/ir/management/feature.html

86 Management Analysis of Operating
Results and Financial Position

90 Consolidated Financial Statements

IR Information

https://www.furukawa.co.jp/en/ir/

Financial Data

https://www.furukawa.co.jp/en/ir/achievements/

Securities Report /Quarterly Report

92 Company Profile and Stock/https://www.furukawa.co.jp/ir/library/sr/index.html(Only available in Japanese)

94 Participation in Initiatives/

https://www.furukawa.co.jp/en/ir/library/finalreport/

Dividend Information
External Evaluation

Sustainability

https://furukawaelectric.disclosure.site/en/

https://furukawaelectric.disclosure.site/en/themes/175

Corporate Information/Data

88 Main Financial and Non-Financial Data

Corporate website https://www.furukawa.co.jp/en/

Sustainability Book

Detailed

Communications Solutions
Energy Infrastructure
Automotive Products & Batteries
Electronics Component Materials
Functional Products

60 Furukawa Electric’s Executives

Coverage

20 Value Creation Process Directed at

Management Foundation

Summarized

12 At a Glance, Furukawa Electric Group

corporate value by investors and other shareholders.
Please also refer to Furukawa Electric’s website and otherreports, which post or publish other information notcovered in this report or more detailed information.

Financial Results / FACT BOOK

Corporate Governance Reporthttps://www.furukawa.co.jp/company/governance.html(Only available in Japanese)

Information Disclosure Based on the TCFD Recommendations

https://furukawaelectric.disclosure.site/en/themes/199

Intellectual Property Reporthttps://www.furukawa.co.jp/en/rd/ip-report/

Furukawa Electric Review

https://www.furukawa.co.jp/en/rd/review/

95 Background for the Furukawa ElectricGroup Integrated Report 2022

Financial

Non-financial

INTEGRATED REPORT 2022

01

Values

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Furukawa Electric Group’s Values
Furukawa Electric Group Philosophy

Furukawa Electric Group,
Vision 2030

Core Value

In order to build a sustainable world and make

Corporate
Philosophy(items only) (Revised April, 2019)1

Human rights

2

Labor practices

3

Environment

4

Products and services

5

International businesses andtransactions

Live up to the expectations and trust invested in us by society, with fairness and integrity.

6

Fair competition

Apply the sum total of our expertise to satisfy our customers and grow with them.

7

Relations with customers, partners,
and society

8Management and preservation ofCompany assets

9Disclosure of information

people’s life safe, peaceful and rewarding,Drawing on more than a century of expertise in the development and fabrication of

Furukawa Electric Group will create solutions
for the new generation of global infrastructureadvanced materials, we will contribute to the realization of a sustainable society throughcombining information, energy and mobility.

continuous technological innovation.

With an eye to the future, the Furukawa Electric Group management team pledges to:Management
Philosophy

The Furukawa Electric GroupCSR Code of Conduct

Continuously strive to achieve world-class technological innovation, and transform ourselves in every area of endeavor.
Nurture human resources at every level, so that we can become a more diverse and creative organization.

Duties and obligations of senior

10 management and employees

Overall Concept of Furukawa Electric Group’s Value

The Founder’s Thoughts

Furukawa ElectricGroup Philosophy

Furukawa Electric Group Philosophy is a clear statement of what we have aimed to become from the time thefirm was created to the present and will continue to be the basic to the Group in the future, through Corporate
Philosophy and Management Philosophy.

Mr. Ichibei Furukawa, the founder of
Furukawa Group, said,

Core ValueFor the achievement of the sustainable growth of the Group based on the Group Philosophy, the Core Value shows
the five values that we wish to particularly emphasize and enhance even more.

based on his wish to “brighten Japan,” that
we must"Value employees,
Value customers,
Value new technology, andContribute to society."
Since its foundation in 1884,
Furukawa Electric has inheritedthese words in its DNA and has grown.

Furukawa Electric Group
Vision 2030

Furukawa Electric Group Vision 2030 is a visionary outlook of the Group, withthe time frame set to 2030, based on our conception of broad aspects of the futuresociety and the Group’s Corporate Philosophy.

2025 Mid-term Plan is a

Furukawa Electric Group
Medium-term Management Plan 2022-2025(2025 Mid-term Plan)

milestone for achieving
Vision 2030.

We are determined to receive and pass onthese three valuable things and contributeto the realization of a sustainable society as

Business Activity

members of society who forge the future.
The Furukawa Electric GroupCSR Code of Conduct

In conducting corporate activities based on the Furukawa Electric Group Philosophy and Core Value, theFurukawa Electric Group CSR Code of Conduct defines fundamental rules of behavior that Furukawa
Electric Group executives and employees should follow from the perspective of corporate social responsibility.
2020

02

FURUKAWA ELECTRIC GROUP

2025

2030

INTEGRATED REPORT 2022

03

Top Message

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Review of Fiscal 2021, “Fiscal year 0” of the 25 Mid-term Plan
In the last fiscal year ended March 31, 2022, which was
positioned as the “fiscal year 0” of our 2025 Mid-term
Plan (hereinafter, 25 MTP), we focused on winning rather
than surviving and laid the groundwork for strengthening
management through emphases on business
transformation, the launch and development of new
businesses, and capital efficiency. Until now, we havesurvived and at times thrived essentially by responding
to the needs of our customers, but we recognize that
we may not have made sufficient intentional efforts tomanage the business toward what we wanted it to be. In
order to leave that passive approach in the past and in its
place survive and thrive, in the fiscal year 0 (FY0) of the
25 MTP we laid the groundwork for proactively striving
to what we want to be.
During that year, supply chain disruptions due to thecontinued spread of COVID-19 and the fragmentationof the international community upset our plans anddefied our countermeasures but as a result, we believethat we have finally rid our system of all the weaknesses
that plagued the Group. I am confident that we madethe right decision to strengthen our corporate structure
in order to resolve various issues and transform thecorporate group so as to enable it to achieve the 25 MTP.
We reviewed the existing business portfolio andfocused on launching and developing new businesses
such as Michi-tenTM (an inspection system for lightpoles,
traffic signals and other roadside structures) , as an
outcome of our business transformation efforts. I alsofeel that our work is helping the effort to resolve social
issues such as those caused by demographic changes.
The various initiatives we pursued in FY0 weresometimes difficult to carry out, but by implementing
the initiatives we improved the organizational capabilities
to accomplish tasks as a team. I am hoping that thisenables us to carry out the 25 MTP with confidence.

Achieving the Vision 2030 as well as the 2025 Mid-term Plan as milestones

Keiichi Kobayashi
President and Representative Director
Furukawa Electric Co., Ltd.

Aiming for a transformation into a
company esteemed for solving social
issues, we made ESG central to ourimplementing the 2025 Mid-term Plan.
04

FURUKAWA ELECTRIC GROUP

The Furukawa Electric Group’s vision for 2030 is tobecome a Group that is indispensable to solving social
issues. We believe that we have gained insight into howsociety in 2030 will be, and gained confidence that we
can contribute to that future society – this is behind thatvision. We have then concluded that the following social
issues are relevant for us in the perspective of 2030:
the realization of a Beyond 5G (B5G) society, carbon
neutrality, next-generation infrastructure enabling us toenjoy freedom of movement, and extension of healthy life
expectancy. We want to have a solid presence in theseareas, and also to focus on the realization of a circular
economy as a social issue that spans across these areas.
The 25 MTP is positioned as a milestone toward realizing
the Vision 2030. It was formulated based the dual approachof backcasting from the Vision 2030 and forward-looking
from the present. I am often asked why we use the term
“forward-looking” instead of “forecasting,” which is the
opposite of “backcasting.” I like using the term “forwardlooking” because what we want to achieve toward the
Vision 2030 has already been decided.
We believe that the value creation process is extremely
important for achieving the Vision 2030 and the 25 MTP.
Through repeated discussions among our partners,
we have embodied the value creation process in our
strategy for solving social issues from a long-term
perspective that points toward the Vision 2030.
Since the 25 MTP has been clearly positioned asa milestone toward achieving the Vision 2030, themanagement team, including myself, is determined not

to present any situation threatening achievement of the
25 MTP. With this in mind, the main pillars of the 25 MTP
we defined are “maximizing profits in existing businesses
by focusing on capital efficiency” and “building afoundation for creating new businesses by strengthening
development and proposal capabilities.” In promoting
these initiatives, we will also focus on “strengthening thefoundation for ESG management,” by placing ESG at thecenter of management. We are aware that if we fail toproperly implement ESG management, we risk being cut
loose from our mega value chain. We will therefore exert
efforts to be deeply conscious of collaborating with ourpartners in executing the ESG initiatives.

Priority measures

01
Maximize profits inexisting businesses
through a focus on
capital efficiency
directed at a 2025
time horizon

02

Build a foundation
for creating new
businesses bystrengthening
development andproposal
capabilities

03
Strengthen thefoundation for ESG
management

INTEGRATED REPORT 2022

05

Top Message

New targets set in the 2025
Mid-term Plan
In my view targets that objectively and calmly evaluate
the progress of the plan are indispensable to steadily
advance the 25 MTP. In FY0, when we sought toreinforce our corporate structure, we were able to have
our Group evaluated by ROIC*1 and FVA*2. Using thecurrent status as was thus defined as a foothold, we will
work on maximizing profits in existing businesses underthe 25 MTP.

About Furukawa Electric GroupThe 25 MTP has also clearly identified non-financial
elements as sustainability targets in addition to theconventional financial targets. We can put ESG at thevery heart of our management by clarifying sustainability
goals, such as related to carbon neutrality, humancapital, and human rights. With regard to intellectual
property, we have set the IP landscape implementation
rate as a sustainability indicator for revenue
opportunities (see P56-57 for details on IP landscape).
In the past few years, the Group’s intellectual property
has been highly evaluated by people in various fields. We
will place more importance on intellectual property thanever before as it gives us strength from the viewpoint ofcarbon neutrality and the circular economy.
In terms of shareholder returns, despite the ups anddowns of our business performance, we have traditionallytended to focus too much on stable dividends. Under the
25 MTP, we announced our cash allocation policy and set
a numerical target for the dividend payout ratio of 30%
for consolidated net income for the first time. During the
25 MTP period, we want to create a situation where weare constantly profitable with compounded interest andachieve stable shareholder returns through profit growth.

Maximizing profits in existing businesses through a focus on capital efficiency
with 2025 time horizon
One pillar of the 25 MTP is maximizing profits in existing
businesses. Our Group has competitive products, but
in the past, we commercialized some businesses basedon the notion that “this is a good product,” rather thanthe perspective of “what is the added value” or “whatcustomers want.” In some of these cases, a large capital
investment was made when the business was growing
steadily, but then when it started to fall, the factory’s
operating rate dropped, but we kept running the factoryeven if the profit was lower, and the business ended up
falling to a stalemated business.
In order to prevent such a recurrence, in addition to
improving our products, we directed attention to thecreation of Koto, an extra-alpha service based on theperspective of “what customers want.” We want togenerate more cash by going beyond the functions of the
product itself and shifting gears to enter this customers’

desiderata perspective.
Toward this end, we intend to thoroughly reorganize
the portfolio of existing fields, identify businesses thatshine when polished, and add more value to existingproducts to improve them.
Our approach to improve the product mix is totransform the large-scale, stalemated business into
the specialized aggregated business , and not to enter
the competition for market share in the fragmented
businesses. For businesses that we need to expandin scale, we seek to earn profits while attaining target
scale. In addition, with an eye on the creation of new
businesses, we will monitor the ways we can earn anadmirable ROIC of businesses that we deem necessary
for the future of the Group, and be alert to issues, andthen calmly make decisions and flexibly respond.

Utilizing ROIC and FVA to optimize the business portfolio
Adoption of the ROIC management may lead to adownsizing equilibrium trap, but in the years leading up
to the launch of the 25 MTP, we focused on changing ourmindset and moving into an ROIC management mode.
This has led the existing businesses into a growth spiral,
enabling us to objectively evaluate the business portfolio

using the growth curve of the market as well as ROIC
and FVA of each business. At present, if the ROIC spreadis 1.0% or more, we consider it to be a business that canearn profit from compound interest.
Our Group’s businesses support social infrastructure
and can be said to be B-to-B-to-C (with various C’s,

Management Strategy

such as Customer and Citizen) business or B-to-G(Government) business. In order to support social
infrastructure and constantly support the resolution ofsocial issues, we ourselves need to continue growing.
To this end, we are aiming to achieve an ROIC spread of
1.0%. Only when this is achieved, I believe that we canbecome a company that is truly trusted by society.
Until now, we have received proposals such as “If weManagement Foundation

Corporate Information/Datastop investing in this system, a billion yen of profits will
be generated,” but with such a shrinking equilibrium
approach, we cannot achieve the milestone set in the
25 MTP. I cannot live just for the present but, as the
15th president of Furukawa Electric that has a 140-year
history, I believe that my mission is to firmly pass thebaton to the next generation and help our Group move
forward to the Vision 2030.

Build a foundation for creating new businesses by strengthening development
and proposal capabilities
To create new businesses, we will thoroughly utilize ourfour core technologies and focus on contributing to therealization of the following three themes: (1) carbon
neutrality, (2) adaptation to the declining labor force dueto the declining birthrate and aging population, and (3)a society where various things can be simultaneously
performed (such as being able to watch videos while
the car drives itself=). We consider the third one tobe the most important social challenge. Since ourGroup’s products are to support society, we believe that
“supporting” and “being utilized” will undoubtedly be key
words for us to tackle social issues.
Another method we are using for the 25 MTP is to do
the groundwork for the creation of new businesses. With
regard to carbon neutrality, for example, bipolar leadstorage batteries are being developed by the Group’s
specialized team. As for projects which cannot be realized
by the Group alone, such as the creation of green LP gas
using our original catalyst (Ramune CatalystTM) technology,
we are actively promoting co-creation with partners. Also,
the Next-Generation Photonics Business Creation Project
has been launched under the direct control of myself,with the aim of creating photonics products that in the
coming years will show material results in playing a role insupporting and being utilized in a society.
In order to realize a circular economy, we believe it isimportant to promote business together with external
partners. In conventional corporate management, eachcompany focused most to enhance its strength and had its

own ecosystem. However, we have begun to learn that acompany cannot complete a viable ecosystem by itself, andneeds to cooperate with other companies to form a loop
for running a circular economy. In other words, rather thancompeting, a company needs to resonate its ecosystemwith the ecosystem of customers and partners, andcollaborate, similar to the way that an orchestra’s musicians
can make pleasing sounds together. We would like to cocreate a high-quality ecosystem through the integration oftechnologies and resources with customers and partners.
In the creation of new businesses, intellectual property
is important in improving the level of technology. We
have had the idea of “defensive intellectual property” asa base for such creation, but from now on, I would like toalso embrace the idea of “offensive intellectual property.”
Based on the 2021 revision of the Japan’s Corporate
Governance Code, we intend to create new value and leadto the creation of new businesses during the 25 MTP bystrategically utilizing the Group’s intellectual property that
we have cultivated over many years.
Realization of a circular economy in concert with others

ComplementaryPartners

Complementary

Furukawa
ElectricGroup

Customers

SocialissuesSocialissuesSocialissuesSocialissuesCollaborate in concert with partners through the resonance of the ecosystems

Carbon neutrality is an important bundle of issues of risks and opportunities
The Group’s basic approach to carbon neutrality consistsof three parts: (1) not to eliminate but to reduce direct
CO2 emissions (Scope 1 and 2) ,(2) not to eliminate but
to reduce CO2 emissions in society (Scope 3) , and (3)to capture or transform the emitted CO2. In particular,
we intend to thoroughly work on our Scope 1 and 2
reduction efforts as they mean Scope 3 reduction forour customers. In order to ultimately achieve carbon
neutrality by 2050, we are committed to steadily

reducing CO2 emissions and aim at achieving the revised
Environmental Targets 2030 and the sustainability
targets of the 25 MTP.
Our Group’s renewable energy usage rate was 17.1%
in Japan and 10.9% overseas in fiscal 2021, which
we recognize is the result of efforts made by ourpredecessors. For example, to make copper requiresa large amount of electricity and we are proud to havebeen using hydroelectric power since 1906.

*1 ROIC: Return on invested capital*2 FVA: Furukawa value added to invested capital

06

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

07

Top Message
In addition, triggered by the shutdown of our copper
electrolytic refining facilities in 1988, our Group has
been continuing to use scrap metal returned from
customers by placing them directly in a melting furnace
for manufacturing. As a result, we have honed our hightechnical ability to reuse scrap metal in manufacturing.
This is what we call closed-loop recycling. Furthermore,
the production of electrolytic copper foil normallyrequires the use of pure metal materials, but we havethe technology to produce electrolytic copper foil using
100% recycled copper, and we have completed to acquire
the verification of UL2809 (Underwriters Laboratories’
Recycled Content Validation Mark) for our products using
100% recycled copper. We are also promoting the useof recycled materials in the Functional Plastics business.
Use of the recycling technology is enabling us to reduce
CO2 emissions over the entire product life cycle. It is an
important initiative that can contribute to the reduction of
Scope 3, including reduction for customers, and this has
been realized thanks to our strength cultivated throughthe history of the Group.
Carbon neutrality is considered as an important business
opportunity to achieve the Vision 2030, and we are actively

About Furukawa Electric Group

engaged in technological development and infrastructuredevelopment. A prime example is our technology for
producing green LP gas with Ramune CatalystTM, an originalcatalyst that utilizes metals and polymers—our coretechnology. This technology can transform CO2 emitted bysociety, and was used for the Torch*3 of this year’s Ichigo
Ichie Tochigi National Sports Festival.
Furukawa Electric Group’s Initiatives forrecycling-oriented production activities
Conductive materials, copper strips,
and high-performance materials
Cables and copper products forelectronic components, etc.

CopperCopper smelter

Use of 100%
recycled
materials
Copper foil
business

Copper

Raw material
recycling
Stripping ofelectric wires
Regenerating
Plastic
manufacturer

Plastics

Used electrical cables,
copper wires andcables, plastics, etc.

Customersandmarkets

Plastics

Functional Plastics Business

Functional plastic products
using recycled materials

A company cannot survive without securing human capital“Strengthening human capital management and organizational
execution abilities” has been identified as one of our materiality
themes and is an important issue in management strategy.
We believe that a company will not survive without securing
human capital. Today’s young people tend to have a mental
model of whether they can be engaged in solving social issues
or improve their well-being when choosing a company to join.
In the past, a company chose people to be employed. Now, weare entering an era in which young people, with such a mindset
to solve social issues, choose a company to join.
By accurately understanding such a change, we havebeen able to consider what we could do to secure humancapital, and formulated the Furukawa Electric Group Vision
for Our People in 2018. This Vision provides a vision for
individuals, defines the role of superiors, and defines theproper basic attitude toward people, while preserving thecompany’s DNA. The Vision is shared in-house and is used

Management Strategy

Management Foundation

Corporate Information/Data

How I see the current composition of the Board of Directors and what needs
to be strengthened
From the perspective of governance, we have improved
the independence of directors, the skill matrix, andchanged both the length of service of directors, and thesystem to appoint the Chairman, who is not involved inbusiness execution, to chair the Board of Directors, andnow have five executive directors and five independent
outside directors in the Board.
The current members of the Board of Directors
including new directors are selected with an emphasison the balance of skills matrix, and I find that we havea good mix of people for the start of the 25 MTP.
However, just as the skill matrix required is different in
the phase to introduce ROIC management and the phaseto actually promote it, the status of the skill matrix willchange according to changes in the external environment
and the level of management. We will therefore continue
to consider at appropriate times the selection of
directors with the skills needed for management andstrengthening the Board of Directors.

Management aspirations for the next four years
The poster for the 25 MTP, “Road to Vision 2030,”
expresses our strong commitment to transform and takeon challenges toward achieving the Vision 2030. The
next four years will be spent to build a solid foundation
for the 25 MTP so as to transform us into a corporategroup that is indispensable to solving social issues suchas carbon neutrality by 2030.
The path depicted on this poster is clean and straight
but, in reality, it would not be so easy. We are now

engaged in the struggle of blowing away various
constraints using our “ability to accomplish” as aweapon. We have to break away from the conventional
rigid mindset of how Furukawa Electric is supposed tobe. With a mindset of integrated growth as Furukawa
Electric Group, we will position ESG in the center of ourmanagement, and will continue to transform ourselves
into a sustainable corporate group. We appreciate yourcontinued support for Furukawa Electric Group.

to build a human capital management system. In part forthe purpose of instilling the “ability to accomplish” by ateam as part of our culture, we believe that all employees
should take the development of the workforce as theirmajor collective mission. This has been incorporated into
the managers’ evaluation index to further improve it.
Managers are also reminded of the “Furukawa Seven” –seven principles for formation of the mindset and actionsof supervisors in the workplace. As a neat measure to
make it better known by employees, we have arranged
a mechanism using a smartphone app that enables
employees to share goals they want to be aware of, andshare concerns over human capital development (among
other subjects), and allows others to respond with advice
in the comment section or by pushing a “like” button.
Through such measures, we are advancing leadershipreforms starting from the workplace.

We respond to human rights and ESG risks in the supply chain
As ways to strengthen our human rights and supply
chain initiatives, we have formulated our Human
Rights Policy based on the United Nations Guiding
Principles on Business and Human Rights, and revised
our CSR Procurement Guidelines. The materiality of
governance already includes supply chain management
as a sub-materiality. At the end of last fiscal year, we
reviewed materiality and added human rights andlabor practices. In light of the current global situation,
human rights can be a subject that can involve
significant risk. If we take action without recognizing
the negative impact on human rights, we may be
excluded from the supply chain, products, services,or labor markets. With this in mind, we will continue
to take various measures based on our Human Rights
Policy and CSR Procurement Guidelines.
*3 The Torch is a symbol of the Sports Festival, similar to the Olympic flame.

08

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

09

Innovation History

About Furukawa Electric GroupManagement Strategy

Innovation History of Furukawa Electric GroupManagement Foundation

Corporate Information/Data(Billions of yen)
1,2001884 Foundation & Dawning of a New Era

Drawing on more than a century of expertise in the development and fabrication of advanced
materials, Furukawa Electric Group has contributed to the realization of a sustainable society through2018

continuous technological innovation since its foundation in 1884.

2017
2016

Furukawa Electric Group has supported the establishment of Japan’s social infrastructure andcontributed to the global sustainable development for 138 years.

2019
2020

900

2001

1900-

2003

Helping to Establish Japan’s Social Infrastructure

Four Core Technologies
Since Furukawa Electric’s foundation in 1884,
Furukawa Electric Group has accumulated material
technologies by expanding from copper smelting
and electrical cables to a wider range of areas. By
adding high-frequency electronics technology tomaterials technology, we currently have four coretechnologies—metals, polymers, photonics andhigh-frequency.

MetalsPolymers

1983

Four CoreTechnologies
Highfrequency

600

1982

Photonics

300
1974

Trends in the net sales
Non-Consolidated

1971

Consolidated

1889

1897

1964

1890

1900

1915

1910

Meiji Period

Opened Honjo Copper
Smeltery and Yamada Cable
Works

1958

Installed an antenna and feedline on Tokyo Tower

1982

Completed large-scale powertransmission line installationin Iran

10

1930

1940

0

1950

Taisho Period

1889

Started Japan’s firstelectrodeposit copper trial
operations

1964

Developed a fully automatic
high-precision six-high rolling
mill

1983

World’s first successfulcommercialization of an
optical fiber composite Oil
Filled (OF) cable

FURUKAWA ELECTRIC GROUP

1960

1970

1980

1990

2000

Showa Period

1897

Started manufacturing
electric copper wires

1971

Installed a communications
network in Bangkok,
Thailand2001

Acquired Lucent
Technologies’ optical fiber
division (US)1915

Manufactured Japan’s firstsubmarine electric cable

1974

World’s first successful fieldtrial of optical fiber cable

2003

Received the Golden
Hadron Award from CERN
for superconducting wirematerials

2010

2021

Heisei Period

1937

Laid the world’s first nonloaded carrier submarine
cable in the Tsushima Strait

1974

Established company in Brazil
manufacturing and selling
aluminum power cables

2016

Newly established an open
lab “Fun Lab®” within
Yokohama Works

Examples of the recent development of technology for solving the social issues

1884

1937

1920

Catering to demand for electricity and communications in
the then undeveloped Japan, Furukawa Electric expanded
production to include various rubber and cotton-covered
wires, and in 1915 manufactured the nation’s first submarine
electric cable. The company continued to support theestablishment of Japan’s social infrastructure with its global
quality technical capacity, such as by installing an antenna on
Tokyo Tower, the country’s largest radio tower at the time.

1960Expanding Overseas

1958
1884

The origins of our company can be traced back to 1884,
when Ichibei Furukawa first smelted copper in Honjo,
Tokyo and Yamada Cable Works began manufacturing
electrical cables in Takashima-cho, Yokohama.

2017

(FY)

Reiwa Period

2018

From this period, Furukawa Electric launched its full-scale
efforts to enter the global market with the hope of spreading its
technical strength around the world. While building up a trackrecord in the Middle East, Southeast Asia, and elsewhere, itestablished manufacturing plants from Southeast Asia all theway to Brazil, laying the foundations for today’s globalization.
In 1987, additionally, a new R&D laboratory wasestablished at Yokohama, which is one of the funding
places of Furukawa Electric. Since then, Yokohama
R&D laboratory has created various new technologies
and new products that lead the world.

2000Continuing to support people and society by ourGroup’s versatile technologies
Sampling of narrow linewidth &high output power micro ITLA for
beyond-100Gbps optical digital
coherent transmission

2019

Developing thin ultra-high countmulti-core optical fiber cable withthe world’s highest core density

2020

For the advancement of technology and the global
environment changes such as climate change, Furukawa
Electric Group have continued to support people and society
by our Group’s versatile technologies centered on four coretechnologies—metals, polymers, photonics and high-frequency.

2016Award of contract fordevelopment of high voltage
dynamic export submarine cablefor floating offshore wind power
plants2020

Developing bipolar lead storage
batteries that contribute to utilization ofrenewable energy and reduce the total
cost to less than half that of lithium-ion
storage batteries for power storage.

2020
Several nm

Porousmaterial

Catalyst

Launching sales of the “BRACETM”
Blue-IR hybrid laser

Strengthening the development of new technologies
and new services that solve the social issues
Toward solving various social issues, based on the
Furukawa Electric Group Vision 2030, “In order to build
a sustainable world and make people’s life safe, peacefuland rewarding, Furukawa Electric Group will create
solutions for the new generation of global infrastructure
combining information, energy and mobility.”, Furukawa
Electric Group have carried out research and development
through collaboration with various partners.

Developing technology for
producing green LP gas with the
Ramune CatalystTM

INTEGRATED REPORT 202211

At a Glance

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

At a Glance, Furukawa Electric Group

Overview of Furukawa Electric

Consolidated
net sales

Consolidated
operating income

billion yen

billion yen

930.5

Group in Fiscal 2021

Net income
attributable toowners of theparent company

11.4

10.1

billion yen

Greenhouse gas
emissions*1(Scope 1, 2)

640

Number of Group
employees

Number of Group
companies*2

50,867103 t-CO2e

124

Denmark*1 Combined total amount for Furukawa Electric, 31 domestic and 59 overseas group companies*2 Combined total for Furukawa Electric, 109 consolidated subsidiaries and 14 equity-method affiliates

Business Overview by Segment for Fiscal 2021

RussiaGermany
Czech
Hungary

U.K.

Spain

Italy

Business Overview by Geographic Segment for Fiscal 2021

Infrastructure
Communications Solutions
Sales

191.3bn

Operatingincome¥Major business

3.8bn

¥

Manufacture and sale of information and communication
network configuration products

Energy InfrastructureSales

105.7bn¥

Major business

Operatingincome1.4bn¥

Manufacture, sale, and installation of power cables, etc.

Consolidated net sales

North andCentralAmerica

Sales ratio

11.0%

Major businessGroup employees in total
Group companies in total

86.0 billion yen
23 10 t-CO
3,194
18

-¥

4.6bn

Manufacture and sale of various automotive productsElectronics Component Materials
Sales

250.8bn¥

Operatingincome¥Columbia

4.8bn

Argentine

Greenhouse gas emissions

Japan

Group employees in total
Group companies in total

Sales ratio

26.0%

26.1%

Consolidated net sales

China

Functional Products

130.0bn¥

Major business

Services and Development, etc.
Operatingincome

7.6bn¥

Manufacture and sale of various functional products
processed with plastics and non-ferrous metals

Sales

34.5bn¥Major business

OperatingincomeGreenhouse gas emissions
Group employees in total
Group companies in total

1.4bn

100.5 billion yen
130 10 t-CO
4,859
18
3

13.5%

Sales ratio

3.6%

Asia

Greenhouse gas emissions
Group employees in total

FURUKAWA ELECTRIC GROUP

3

2e

China
Japan

TaiwanVietnamThailand

Malaysia(ex. Japan and
China)

461.5 billion yen
288 10 t-CO
11,029422eLogistics, real estate leasing, hydroelectric power generation,
research and development of new products, etc.

Group companies in total

12

India

-¥

Consolidated net sales

Sales ratio

2eBrazilConsolidated net sales

Manufacture and sale of copper products for electronicequipment materials

Major business

Sales ratio

Sales

3

MexicoAutomotive Products & Batteries

249.9bn

2eGreenhouse gas emissions

U.S.A

Electronics & Automotive Systems¥

3

Consolidated net sales

South
America,
Europe, andothersSales ratio

19.9%

Sales

Group employees in total
Group companies in total

Design and construction of information and communication
networks

OperatingincomeGreenhouse gas emissions

91.7 billion yen
89 10 t-CO
5,809
13

190.9 billion yen
110 10 t-CO
25,97633
32ePhilippines
Singapore
Indonesia*1 The number of group companies
in Japan includes Furukawa
Electric.
*2 Net sales by region are based on
the location of customers and areclassified by country or region.
*3 Greenhouse gas emissions
by region are based on thelocation of the companies andare classified and calculated bycountry or region.

INTEGRATED REPORT 202213

Changes in the External Environments and the Social Issues Surrounding Furukawa Electric Group

Changes in the external environments and thesocial issues surrounding Furukawa Electric Group
Furukawa Electric Group, Vision 2030

In order to build a sustainable world andmake people’s life safe, peaceful andrewarding, Furukawa Electric Group will
create solutions for the new generationof global infrastructure combining
information, energy and mobility.

Vision for 2030 in each domain
Support through photonics technology and build social infrastructure
Revolutionary optical fiber

Fusion of photonics & electronics,
quantum repeater

Data center cooling systems

Energy lasers

Information

V2X, 5G-AP

Through our extensive experience and technological capability, make a tougher infrastructure
and realize a recycling-based society
EnergyExtra-high voltage power cable

DC power cable

DC microgrids

Superconductors

Mobility

Peripheral monitoring radar

In-vehicle & infrastructurecommunications devices

Intelligent walkwaysTM

Management Strategy

Management Foundation

Corporate Information/Data

Changes in the external environments and the social issues
We consider that the business environment surrounding
Furukawa Electric Group, which is a premise of the 2025
Mid-term Plan, will be changing in a discontinuous andirreversible manner. For example, expected changes
include the following: ESG/SDGs will become amanagement challenge which is critical for the survival ofcompanies; in the era of the 100-year life, a new lifestyle
will emerge and become common; the domestic market

will shrink due to a declining and aging population; and wewill see the rapid progress of digital transformation (DX).
In such an environment, there will be growing expectations
for addressing social issues, including the realization of B5G*
realization of carbon neutrality; realization of the nextgeneration infrastructure enabling free flow of people andgoods in a safe, secure and comfortable manner; an increase inhealthy life span; and the realization of the circular economy.

Politics

EconomyIncreased awareness of ESG/SDGs as a core pillar of
corporate management
Accelerated initiatives for realizing a carbon neutral society
Globally increased political divisions
Further confrontation between nations will have a major
impact on global affairs

Shrinking markets in Japan
Zero growth and shrinking labor market due to the aging anddeclining population
Growth in emerging markets such as Asia
Emerging countries will continue rapid growth, and somecountries will face fiscal weakness
Unwinding of extremely loose monetary policies
Reversal of monetary policies in response to inflation, andrising interest rates

Society

Technology

New lifestyles
Prolonged responses to COVID-19, work style reforms, 100year life expectancy
More frequent natural disasters and increased damage
More severe natural disasters, and increased demand forrenewing social capital
Changing concept of “mobility”
Evolution of digital technology, and changing concept ofmobility for people, goods and information

Rapid advances in DX
Level of engagement in DX will influence the competitive
position of companies
Widespread implementation of 5G, and advances in CASE
based on that foundation
Ultra-high speed telecommunications, multiple simultaneousconnections and ultra-low latency
Increased demand for electric power, and expansion ofoperations beyond traditional industry borders

Bipolar lead storage batteries

Realize safe, secure mobility through the provision of components, systems and applications
Lightweight aluminum

About Furukawa Electric Group

Social Issues
Increaseddata traffic
following
realization of aB5G* society

Realize a B5G* society

Realize a circular
economyProvide devices and services for life sciences and maintaining social infrastructure
Non-invasive blood sugar
measurement device

TelluminoTM

New domain

Michi-tenTM

Hall thruster power supply

Becomecarbonneutral in
2050

Become carbon neutral

Realize next generation infrastructure that enjoys universal mobility

To solve social issues, Furukawa Electric Group’s technologies,

products and services support society and are utilized.
ComplementaryPartners

Complementary

Furukawa
ElectricGroup

Customers

Social issues
Social issues
Social issues
Social issues

To create new value, collaborate in concert with partners throughthe resonance of the ecosystems

Advances in
xEV, CASE
and MaaS

Socialrequirements
for safety andsecurity

Realizationof a circular
economythroughcollaboration

Realize longer healthy life expectancy

Partnerships with multiple stakeholders*B5G: Beyond 5G

14

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

15

Sustainability

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Furukawa Electric Group’s Sustainability
The Group’s Basic Concept of Sustainability

Furukawa Electric Group Basic Policy on Sustainability

The mission of Furukawa Electric Group is to “contributeto the realization of a sustainable society,” as outlined in
its Corporate Philosophy and we aim to ensure that theenvironment, society, and economy continue to sustain
over the medium- to long-term, and that our Group will
make sustainable growth.
In response to the recent rapid changes in thebusiness environment surrounding our Group, we haveestablished Furukawa Electric Group Basic Policy on
Sustainability, as a basic idea for our Group to achievesustainable growth.

(Established in August 2021)

Furukawa Electric Group will:	in line with its mission of contributing to the realization of a truly
affluent and sustainable society, tackle important management issues(materiality) from the perspectives of both revenue opportunities andrisks, while focusing on the future of people and the planet.
	in order to have sustainable growth and contribute to theachievement of SDGs (sustainable development goals), strengthen
and create businesses that solve social issues, while focusing on
capital efficiency and continuing to transform its business throughcontinuous technological innovation centered on material
technologies and collaboration with various stakeholders.
	contribute to the sustainable development of society by
maintaining and improving sound and positive relationships with all
stakeholders through appropriate information disclosure and active
communication, while complying with laws, regulations, social
norms and ethics in Japan and overseas.

Review of ESG Management and Sustainability
In order to achieve the Vision 2030, we are promoting
ESG management, which aims sustainable growth of
the Group and medium- to long-term improvement incorporate value. In addition, “Strengthen the Foundation
~2016

2017

2018

of ESG management ” are listed in the impor tantmeasures of the Medium-term Management Plan 20222025 “Road to Vision 2030 -Transform and Challenge-.”

2019

2020

2021

2022

ESG management in general
Formulated the Furukawa Electric Group (FEG) Philosophy (2007)

ValuesFormulated the Core Value (2015)
Formulated the FEG Vision 2030
Revised the FEG CSR Code of Conduct (March, 2011) *1
Signed the United Nations Global Compact

Basic policy,
Promotion Framework

Formulated the FEG Basic Policy on Sustainability

Revised the FEG CSR Basic Policy (March, 2011)

Established the Corporate Sustainability Office
Established the FEG Sustainability Committee

Governance

Sustainability Promotion Framework

Basic policy

The “Furukawa Electric Group Sustainability Committee”(hereinafter, “Sustainability Committee”) wasestablished to consolidate discussions on sustainability
within Furukawa Electric Group and further enhance
the quality and speed of implementation thereof.
The committee is chaired by the President, vicechaired by the General Manager of the Strategy
Division, and composed of members of top
management. It meets to discuss sustainability issues

that concern Furukawa Electric Group and submits
proposals and reports to the Board of Directors.
The Corporate Sustainability Office serves as theorganizer, and the committee will generally meet
twice a year.
Additionally, as risk materiality matters areclosely related to management strategy risks of theGroup, they are therefore handled in collaboration
with the Risk Management Committee.

Submits proposals and reports

Submits proposals and reports

Sustainability Committee

Risk Management Committee

Committee chair: President

Committee chair: President
Vice chair: General Manager,
Risk Management Division

Collaboration

Committee members: Top management

Committee members: Top management

Organizer: General Manager, Corporate
Sustainability Office

Organizer: General Manager,
Risk Management Department

sustainability-related
basic policy

basic matters and current
progress on materiality
related to revenue
opportunities and risks

disclosure of basic
information related tosustainability

SDG activities andcommunity/social activities

other importantsustainability issues

Reviewed the materiality, and added“Human rights and labor practices” to sub-materiality

Furukawa Electric Group Responsible Minerals Sourcing Policy

Progress on the plans concerning supply chain and human rights
Feedback information from shareholders and institutional investors, etc.

16

The second Sustainability Committee(September 12, 2022)

Revised value creation process directed at achieving Vision 2030.

FURUKAWA ELECTRIC GROUP

Strengthened the independency of Outside Directors
A female Outside Director was appointed.
A female outside Audit & Supervisory Board member was appointed.
Reduced the number of the In-house Directors by 1

Evaluation of theeffectiveness of theBoard of Directors
Nominating/Compensation
Committee

Supply Chain,human rights

Started the evaluation of the effectiveness of the Board of Directors from 2015, and the summary of the result was published every year.
As a process to evaluate the effectiveness of the Board of Directors, the Chairman conducted the interviews every year.
An outside director became the chair of the Nominating/Compensation Committee (2016-)
Revised the directors’ compensation scheme*3

Partially revised the directors’ compensation scheme*4

Established the CSR Department (2007) and the Administration & CSR Division (2013) stablished the Risk Management Division and theE
Risk Management Department

Established the CSR and Risk Management Committee (2007)

Renamed the Risk Management Committee

 ormulated the Furukawa Electric CSR Deployment Guidelines for Business
F
Partners (2010)

Revised the FEG CSR Procurement Guideline 3rd edition

Formulated the FEG Human Rights Policy stablished the FEG Responsible
E
Minerals Sourcing Policy.

SocialBasic policy,
Promotion Framework

Formulated the FEG Vision for Our People
Established the Work Style Reform Project Team(2015)

 eorganized the Organization &R
Work Style Reform Team

Established the Diversity Promotion Section (2014)

Diversity &inclusion stablished the HR & Organizational Development
E
Depertment

Started the global human resources training (2006-)
Started the activities to transform leaderships “Furukawa Seven”
 tarted “Furukawa E-Survey”, aSsurvey on human capital andorganizational execution
capabilities
 ppointed two non-Japanese corporate vice presidents(CVPs)
A(2013), and increased the number of the non-Japanese CVPs
to four (2016)

Structured the non-Japanese CVPs
to three tructured the non-Japanese CVPs
S
to 2 people at present tructured
S
the femaleJapanese CVP
to twoAppointed a female-Japanese corporate vice president(CVP) (2015)

 tructured the female-JapaneseS
CVP to one at present

Environment(March 7, 2022)

Sustainability indicators and targets to be achieved
during the 2025 Mid-term plan.

The Chairman became the Director without the representative right of the Board of Directors (2016-)*2

Announced the FEG Health Management Declaration

The first and second sustainability committees
The first Sustainability Committee

Introduced the executive officers system (2003)

Increased the number of the Outside Directors to five as at present (2016-)

Human resource
development,
organizational
execution abilities

The sustainability Committee focuses on discussing the following items:

Established the Independence Standards for the Outside Officers (2015)

Board of Directors,
Audit & Supervisory
Board

Risk management
promotion framework

Board of Directors

Vice chair: General Manager,
Strategy Division

Separation ofsupervision andexecution

Established the Guideline on Corporate Governance (2015)

Sustainability indicators and targets for an internal management
Progress on the plans concerning supply chain and human rights
Integrated Report 2022
FY2021 ESG Awards, etc.

Formulated the FEG Basic Environmental Policy (2008)

Basic policy,
Promotion Framework

Formulated the FEG Environmental Vision 2050
Set the environmental targets 2030

 evised the environmental targets
R
2030

Established the FEG Environment Committee (2013)
Established the Environment Department

Climate change,
information disclosure

Acquired an SBT(2°C Targets) initiative certification

 cquired an SBT(well-below 2°C
ATargets) initiative certification

Expressed support for the recommendations of the Task Force on Climate- related Financial Disclosures (TCFD)*1 Combined the FEG Action Guidelines (formulated in 2004) with the CSR Code of Conduct*2 A imed for supervising execution by the management, including the President, from a
non-executive position*3 Consisted of the basic remuneration, short-term performance-linked remuneration, andmedium- to long-term performance-linked remuneration*4 Aimed at strengthening incentives

INTEGRATED REPORT 2022

17

Sustainability

About Furukawa Electric Group

Furukawa Electric Group’s ESG Management and Materiality
In order to achieve the “Furukawa Electric Group Vision
2030,” we are promoting ESG management, which aims
sustainable growth of the Group and medium- to longterm growth of corporate value.
We have defined “materiality” as importantmanagement issues that the Group should address inorder to achieve Vision 2030, and we defined materiality
in terms of both revenue opportunities and risks, inaccordance with the process of identifying importantmanagement issues. By working on the materiality,
we will achieve Vision 2030 and contribute to theachievement of the SDGs.

Improve capital efficiency
Importantmanagement
issues forachievement of
Furukawa
Electric Group,
Vision 2030

Creating businesses that support next-generation infrastructure
Creating environment-friendly businesses

318Open, Agile, Innovative

Building partnerships with various stakeholders

FURUKAWA ELECTRIC GROUP

Corporate Information/Dataright and labor practices” was moved to high area. We
assume “realize longer healthy life expectancy” as one of
the social issues we can contribute to, “health & welfare”
was also moved to medium area.
Taking consistency with the measures of the 2025 Midterm Plan, employee satisfaction and intangible assets
were revised to “employee engagement” and “intellectual
assets”, respectively.

Risks
Regularly reviewing the materiality

Reduce cost of capital
2020

Step

1

2030

capital efficiency, including cost of capitalOn the other hand, from a risk perspective, in order toachieve sustainable growth, it is essential that companies
develop business activities that take into account climatechange, and we see this as materiality. In addition, inorder to become a company that actively transforms
itself, we will strengthen the foundation of ESG
management and reduce the cost of capital by focusing
on the materiality of “strengthening human capitalmanagement and organizational execution abilities” and“building a governance system for strengthening risk
management” including corporate governance.
In addition, based on the change of recent businessenvironments and the increase in social requests, “humanright and labor practices” was added as the fourth
sub-materiality of “building a governance system tostrengthen risk management” at FY 2021.

Understanding andorganizing social issues

Step

2

External factors

Importance to shareholders and investors

 7 SDG goals and 169 targets
1
F TSE, MSCI and DJSI ESG evaluation
items, etc.
Japan’s Corporate Governance Code, etc ialogue with institutional investorsDImpact on ESG rating assessment, etc.

Internal factors

S

Strengthening human capitalmanagement and organizational
execution abilities

G

Building a governance system to strengthenrisk management
Corporate governanceGroup governanceSupply chain management
Human rights and labor practices

Identification ofmateriality

High-priority items are categorized byrevenue opportunity and risk aspects
and identified as materiality items.
The identified materiality items
are categorized and rearranged asimportant issues for achieving Vision
2030, and expressed as the materialityof three revenue opportunities andthe materiality of the E, S and G risks.

Importance to achieving Vision 2030

 iscussions of regular study groupDand workshops for the management
and executive officers
Discussions of the Risk Management
Committee

Importance toshareholders and investors

Importance to achieving
Vision 2030
Materiality of risks

Revenue opportunities

Climate change

E.D eveloping business activities thatconsider climate change

Risks

Human resource development
and employee engagement
Diversity

S.Strengthening human capitalmanagement and organizational
execution abilities

Corporate governanceRisk management
Subsidiary governanceSupply Chain (environment/society)
Human rights and labor practices

G.Building a governance system tostrengthen risk management

Materiality of revenue opportunities

Human rights andlabor practices

Materiality of risks
Developing business activities thatconsider climate change

3

The two axes of “importance toshareholders and investors” and“importance to achieving Vision 2030”
are evaluated for importance (high,medium, low) and prioritized.

Important issues for fulfilling“corporate social responsibility (CSR)” andstrengthening the trust of stakeholders

E

Step

Materiality map
evaluation

In identifying materiality, we identifiedsocial issues by referring to “external
factors” and “internal factors,” adjusted
duplicate items, and created a list ofitems.


Importantmeasures of the 2025
Mid-term PlanValues of Furukawa Electric Group
Business-related risks, etc

Low area

2

Revenueopportunities

Medium area

Creating businesses thatsolve social issues

Regarding reviewing the materiality at FY 2021, Japan's
Corporate Governance Code was added to one of the“External factors”, and important measures of the 2025
Mid-term Plan and business-related Risks were added to
one of the “Internal factors” in Step 1.
Concerning the “importance to achieving Vision 2030”
in Step 2, based on the change of recent businessenvironments and the increase in social requests, “human

Materiality

Materiality of revenue
opportunities

1

Management Foundation

Process of Identifying Materiality

High area

From the perspective of revenue opportunities, in orderto help solve various social issues through the businessactivities of the Group, we found it indispensable
to devise a transformation from the conventional“Product-Out” approach to “Outside-In” approach andidentified the “creation of businesses that solve social
issues” as materiality. Examples of these include the“creation of businesses that support the next generation
infrastructure,” which will serve as the foundation of thesociety anticipated in Vision 2030, and the “creation ofenvironmentally friendly businesses,” which contribute to
the realization of a carbon-free society and a recyclingbased society. We also accelerate the “creation of social
issue-solving businesses” through the slogan “Open,
Agile, Innovative,” which reflects the desire to become acompany that actively transforms itself, and the “Building
partnerships with various stakeholders,” focusing on cocreation with others. We will also work on improving

Management Strategy

Biodiversity(Land area/marine & river)

Sustainable tourism
Poverty
Food problems and foodsecurity
Health & welfare
Appropriate education
Deterrence of crime andviolence

Low area

Occupational health and safety
QualityCompliance
Anti-corruption
Information security
Sustainable resource management
Pollution prevention and chemical
substance management
Safe water and sanitary environment

Building sustainable cities
and communities
Sustainable economic growth
Clean energy

1.Creating businesses that solve
social issues

Innovation
Utilization of intellectual assets

2.Open, Aglie, Innovative

Partnerships

3.Building partnerships with various
stakeholders

Health & welfare

Not directly important issues
for achievement of Vision 2030

Medium area

*No particular order in the area

High area

Importance to achieving Vision 2030

*With regard to materiality, we distinguish between important issues for achieving Vision 2030 and important issues for fulfilling corporate social responsibility and strengthening
the trust of stakeholders.

INTEGRATED REPORT 2022

19

Value Creation Process

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Value Creation Process Directed at
Achieving Vision 2030
The Medium-term Management Plan 2022-2025 (2025 Mid-term Plan) is positioned as a milestone toward realizing
the Vision 2030.
We will surely execute the 2025 Mid-term Plan, which is formulated by the dual approach of backcasting from the
Vision 2030 and forward-looking from the present.
Furukawa Electric Group has developed capabilities for development and making proposals, without being limited to
specific markets and with its four core technologies—metals, polymers, photonics and high-frequency—centered oncapabilities to handle materials. Through these capabilities, we have gained the trust of customers.
For achieving the financial and sustainability targets set for 2025 Mid-term Plan, and for realizing sustainablegrowth of the Group and medium- to long-term growth of corporate value, we will strengthen and create businesses
based on an awareness of capital efficiency, and we will strengthen the management foundation directed at
reducing capital costs.

Furukawa Electric Group

Today

2025

Forward-looking

In addition, we will enhance our strengths, including utilization of intellectual property, and build a new businessmodel through open innovation and cocreation with our partners. At 2025, we will stabilize earnings in information,energy and mobility sectors, and realize growth through the strengthening of businesses that solve the social issues.
As a result, we will contribute to a changed information-, energy- and mobility-based society.
Toward 2030, we also realize leap through the creation of businesses that solve the social issues including the“creation of businesses that support the next generation infrastructure,” which would serve as the foundation of theintegrated society of Vision 2030, and the “creation of environmentally friendly businesses,” which contributes to therealization of a carbon neutral society and a recycling-based society.
On the other hands, we will strengthen the management foundation directed at reducing capital costs, while weparticularly recognize climate change, human capital management and organizational execution abilities, and building
a governance system as materiality of risks.

Corporate Philosophy
Medium-term Management
Plan 2022-2025

Backcasting

Financial targets /Sustainability targets*1 4 core technologies: metals, polymers, photonics and high frequency*2 Enhance utilization of intellectual property*3 B5G: Beyond 5G

Furukawa Electric Group Vision 2030
Revenue Opportunities
Revenue Opportunities

Revenue Opportunities

3

Businesses that support next
generation infrastructure

Build partnerships with various
stakeholders

Furukawa ElectricGroup’s businessmodel and strengths
4 core technologies*1
Development and proposal
capabilities not limited to
specific markets
Trusted by customers

FURUKAWA ELECTRIC GROUP

Stabilize profits in information, energy
and mobility

Risks

Risks

Information

EnergyRealize acirculareconomyMobilityS

Strengthen human capital management
and organizational execution abilities

New
domainRealize next generation
infrastructure that enjoys
universal mobility

Realize longer healthy life
expectancy

G
Build a governance system toCorporate governance / Group governance / Supply

Furukawa Electric Group20

Growth through thestrengthening of businesses
that solve the social issues

Contribute to realizing a society thatcombines these domains

Develop business activities thatconsider climate change

Realize a B5G*3 society

Become carbon neutral

Reinforce the strengths*2

E

Social issues

Environmentally friendly businesses

New business models

Risks

Strengthen the
managementfoundation directed
at reducing capital
costs

1

Leap forward through thecreation of businesses
designed to solve social issues

2

Open, Agile, Innovative

Create andstrengthenbusinesses basedon an awareness ofcapital efficiency

2030

strengthen risk management

Partnerships with multiple
stakeholders

chain management / Human right and labor practice

CSR Code of Conduct

INTEGRATED REPORT 2022

21

Stakeholders

About Furukawa Electric Group

Stakeholders and Materiality
Furukawa Electric Group aims at sustainable growth and increase in corporate value over the mediumto long-term by solving important management issues (materiality) with collaboration by various
stakeholders, with the goal of achieving the Vision 2030.
The Group will contribute to the sustainable development of society by maintaining and improving
sound and positive relationships with all stakeholders through appropriate information disclosure andactive communication.

Customers
We contribute to solving customers’ issues by developing business activities that leverage the strengths of the Group, in addition tomaintaining and improving the quality of the products, operations and services we provide.
Relevant materiality

Revenue opportunities

Risks

Creating businesses that solve social issues
Building partnerships with various stakeholders

Solving issues through the main businesses
Leveraging the strengths of the Group to solve customers’ issues
Realizing a circular economy

Main methods of communication

 issemination of information through the website, the Sustainability
DBook, and other means

Management Foundation

Corporate Information/Data

Employees
We endeavor to fulfill our social responsibilities, such as respect for human rights, occupational health and safety, and compliance,
and through employee engagement, we endeavor to strengthen human capital management and organizational execution abilities
that lead to increased corporate value.
Open,Agile,Innovative

Relevant materiality

Revenue opportunities

Strengthening human capital management and organizational execution abilities

Risks

Solving issues through the main businesses

Main methods of communication
Company newsletters, Intranet

Employee engagement

Management briefing by labor and management

Human capital development and fair evaluation and treatment

“Dialogue with the President” at each business site

Diversity & inclusion“ Furukawa E-Survey” on human capital and organizational
execution capabilities

Central Government and Local Governments
In addition to fulfilling our social responsibilities such as compliance with laws and regulations and tax obligations, we contribute tosolving issues facing international and local communities by developing business activities that leverage the strengths of the Group.
Creating businesses that solve social issues
Open,Agile,Innovative

Relevant materiality

Revenue opportunities

Risks

Building partnerships with various stakeholders

Solving issues through the main businesses

Dialogue in everyday businessDialogue at technology and other exhibitions

Management Strategy

 olving issues facing international and local communities by
S
leveraging the Group’s strengths

Main methods of communication
Dialogue through economic and industry organizations

Achieving carbon neutrality

 ooperation regarding surveys and questionnaires of the governmentCand local governments

Building a new social infrastructure in community

Participating in government-related projects

Realizing a circular economy

Partnership agreements with local governments

Partners*
In addition to building a sound supply chain that complies with laws and regulations, we promote businesses that realize thesustainability of the entire supply chain through co-creation with partners.
Relevant materiality

Revenue opportunities

Risks

We contribute to the development of local communities through social contribution activities related to fostering the next
generation, promoting sports and culture, and coexistence with the natural environment and local communities.

Building partnerships with various stakeholders
Building a governance system to strengthen risk management / supply chain management,
human rights and labor practices

Solving issues through the main businesses
Reducing greenhouse gas emissions throughout the supply chain
Human rights in the supply chain

Local Communities

Main methods of communication

Relevant materiality

Revenue opportunities

Dialogue in everyday business

Risks

―

Solving issues through the main businesses

Partners Meeting AQ (Self-Assessment Questionnaire) based on the CSR
S
Procurement Guidelines

Responsible mineral sourcing
Realizing a circular economy

Announcement of the Partnership Building Declaration

Tours of worksites
Cooperation and co-sponsorship of sports and traditional events―

Supporting and collaborating with local NPOs
Satoyama (villages and mountain landscapes) conservation activities* Furukawa Electric Group calls those who do business with us “partners” who collaborate with us to create value.

Shareholders and Investors

Global Environment

We appropriately return profits to shareholders, disclose information to shareholders and investors, seek to achieve sustainablegrowth, and seek to increase corporate value over the medium- to long-term through our business.
Relevant materiality

Revenue opportunities

Risks

Building a governance system to strengthen risk management / corporate governance

Solving issues through the main businesses

Main methods of communication
General Meeting of Shareholders

 ustainable growth and improvement of corporate value over theSmedium- to long-term

22

FURUKAWA ELECTRIC GROUP

Main methods of communication

Investor briefings
Individual meetings
 issemination of information through the website, shareholderDcorrespondence, and integrated report

We are pledged to fulfill our social responsibilities such as environmental conservation and compliance with environmental laws
and regulations. We also promote business activities that recognize environmental issues including climate change, as revenue
opportunities, and contribute to a sustainable global environment.
Relevant materiality

Revenue opportunities

Risks

Creating businesses that solve social issues / creating environmentally-friendly businesses
Developing business activities that consider climate change

Solving issues through the main businesses
Mitigating and adapting to climate change
Achieving carbon neutrality
Realizing a resource-recycling society

Main methods of communication
 nvironmental protection activities and climate change responseEthroughout the value chain
Participation in activities such as environmental NGOs, NPOs, and initiatives
Cooperating with ESG activities, including the environment of our customers
Use of renewable energy

INTEGRATED REPORT 2022

23

Message from the General Manager of the Strategy Division

About Furukawa Electric GroupAll of us at Furukawa Electric Groupwill take on the challenge oftransforming the Group so as to achieve
the 2025 Mid-term Plan and the Vision 2030.

24

Positioning of the 2025 Mid-term Plan

ROIC and FVA in the 2025 Mid-term Plan

The 2025 Mid-term Plan (hereinafter, 25 MTP)
has three characteristics from the viewpoint of therelationship with the Group’s Vision 2030.
First, the 25 MTP is positioned as a milestone
toward achieving the Vision 2030. We first took
up the concept of backcasting from our ideal
state in 2030 and then built up measures to be
implemented, to transfer to forward-looking with2025 as the horizon.
A second characteristic is to show the value
creation process. In our discussions of the 25 MTP
we identified key issues as materiality, and madeexhaustive consideration of the value creation
process based on these issues. It is precisely
because of this process that we have been able toclearly depict the value creation process toward2030 for the first time in the 25 MTP.
Lastly, financial, non-financial, and sustainability
aspects are all integrated. While the Vision 2030 isa declaration that the Group will engage in activities
with ESG and sustainability at the core of its
management, the MTP, which is its milestone, has
identified social issues that the Group can contributeto solving in the years up to 2030, and has adopted
the core strategy of strengthening and creating
businesses to solve those issues. For this reason,sustainability indicators and targets have been set
for the first time in parallel with financial indicatorsand targets, and specifically incorporated ESG andsustainability activities into the 25 MTP. In otherwords, we believe that we have completed drafting astrategy that integrates financial, non-financial, andsustainability aspects, which is so appropriate to be
introduced in the Integrated Report.

The 25 MTP introduced ROIC*1 and FVA*2 so as
to advance management with greater awarenessof capital efficiency and the cost of capital. The
corporate-wide ROIC is targeted at 6% or more by
fiscal 2025. From the perspective of using FVA as
an internal management indicator, we will create
an FVA tree for each business and incorporate
its indicators into specific KPIs, so that we canthoroughly implement the concept and actions
that emphasize capital efficiency in every cornerof the Group.
ROIC and FVA will also be used to review thebusiness portfolio. In the past, we adopted theperspective of capital efficiency as part of ourfollow-up efforts for low-profit businesses, but
we recognize that the background to objectively
manage the business portfolio was insufficient.
Specifically, we have introduced a system toevaluate the business portfolio using financial
indicators such as ROIC and FVA applied to past
performance and future business plans, and to
optimize investment allocation based on clearly
defined business positioning. The evaluation
criterion of the portfolio is based on financial
indicators related to profitability and future growth,such as ROIC spreads, but also incorporates ESG
factors such as carbon efficiency. By using this new
evaluation system, we hope to effectively review the
progress of the plan every year and boldly review thebusiness portfolio during the 25 MTP period.

FURUKAWA ELECTRIC GROUPManagement Strategy

Management Foundation

Corporate Information/Data

Satoshi Miyamoto
Director and Corporate
Executive Vice President
General Manager of theStrategy Division*1 ROIC: Return on invested capital*2 FVA: Furukawa value added to invested capital

INTEGRATED REPORT 2022

25

Message from the General Manager of the Strategy Division

Setting of sustainability indicators in the2025 Mid-term Plan
In order to enhance corporate value and reduce
capital costs over the medium- to long-term, nonfinancial elements need to be managed in conjunction
with financial indicators. The 25 MTP has therefore
set sustainability indicators to monitor progressof material issues (materiality), which consist ofboth revenue opportunities and risks. We plan toimplement the PDCA (Plan-Do-Check-Act) evaluation
cycle, establish a system to steadily implement
measures, verify annual progress, and follow up.
In addition, as companies nowadays are strongly
required to contribute to ESG and the SDGs, we intend to
disclose the progress of these sustainability goals to clearly
disclose the Group’s stance toward ESG management.

Information area: Vision and strategy for 2030
In today’s world of digital information, such as
artificial intelligence, autonomous driving, andmetaverse, the realization of a B5G*3 society requires
processing of massive data traffic at higher speed in
all places. In light of the ongoing changes in the social
environment, our vision for 2030 in the information
area is intended to stably support the “realization of a
B5G society” by building a stable digital information
platform using photonics and other core technologies
and contributing to the resolution of the social issue
of facilitating increasing information traffic.
Toward 2025, the milestone on the road to 2030,
we intend to strengthen existing businesses suchas optical fiber cables and semiconductor lasers for
optical communications. In particular, demand for
optical fiber cables is expected to grow steadily as

About Furukawa Electric Group

information traffic in overall society increases. Our
focus will be on high-value-added products such as
rollable ribbon cables and special fibers, and on selling
solutions and complete systems, not just products.
The Group's business that can contribute to B5G
society is not only Communications Solutions
Business. Semiconductors are the most importantcomponents that support communication
infrastructure, and tapes used for production ofsemiconductors, which is one of our core products,
are indispensable. In order to respond to thegrowing demand and cutting-edge needs of thesemiconductor market, we will start construction ofa new manufacturing plant for semiconductor tapes
this year, and plan to increase production capacity
and introduce the latest equipment to produce
differentiated, high-performance products.
The 25 MTP is not only intended to strengthen
existing businesses, but also to work on building afoundation for new businesses to flourish in 2030
and beyond. One of these is the development of
infrastructure for the creation of the next-generation
photonics business. Samples of external lightsources for CPO (Co-Packaged Optics), which is theinitial phase of photonics-electronics convergence
using our photonics technology, have already been
shipped. Although the ultimate goal of CPO is to
be used in society after 2030, the creation of new
businesses is by no means a dream, and we are
steadily advancing the efforts.

Energy area: Vision and strategy for 2030
Achieving carbon neutrality is undoubtedly one of
the most important issues for the entire world. In the
Vision 2030, we have identified “achieving carbon
neutrality” in the energy area as one of the social
issues to be solved. With this aim in mind, we intend
to contribute to the resilience of energy infrastructure
and the realization of a resource-recycling society,utilizing the experience and technological capabilities
we have cultivated in the electric power sector.
Complying with the 25 MTP, our basic stance is to“thoroughly strengthen” the energy infrastructurebusiness, an existing business that handles power
cable systems and other products. Specifically, weplan to maximize profits by targeting ultra-high voltage
underground transmission cables in Japan, power
cables for renewable energy generation, and submarine
power cables in Asia. In the renewable energy market
in particular, we will steadily implement existing andapproved offshore wind power projects, and will seek tobook orders for solar and onshore wind power projects.
Looking ahead to 2026 and beyond, we areenhancing our technological development*3 B5G: Beyond 5G

26

FURUKAWA ELECTRIC GROUPManagement Strategy

capabilities in the field of undersea powertransmission systems for next-generation floating
offshore wind power generation. This has been
adopted as a Green Innovation Fund project by
NEDO*4, which has accelerated its development.
A common issue with renewable energy such as
solar and wind power, is fluctuations in the amountof power generation. The efficient use of thesetypes of energy requires power storage. Furukawa
Electric together with Furukawa Battery, theGroup company, is developing bipolar lead storage
batteries which are safe, low in cost, and recyclable
with a long product life. Demonstration experiments
have already begun, and we will cooperate, withbipolar lead storage batteries, with a project througha collaborative arrangement with the governmentof Kamimine-cho (Saga Prefecture) and the Kyushu
Electric Power Group. In pursuit of commercializationand mass production of the batteries, we recognizethat we need to expand business by emphasizing“soft” aspects such as related system construction,
maintenance, and service businesses, on top ofproviding products, or “goods”.
Similar to the information area mentioned above, we
are working to build a foundation for new businesses
in the energy area in anticipation of 2030 and beyond.
One of these technologies is our proprietary Ramune
CatalyticTM technology, which generates green LP gas
from raw materials that are not dependent on fossil
fuel. This project has also been adopted by the NEDO
Green Innovation Fund. Going forward, we aim to
conduct a demonstration using a small test machinein 2023 and follow that with a field demonstration
test in 2025, with the target of commercializing thetechnology by 2030. Currently, we are conducting
joint tests and field trials with universities, local
governments, and partners for distribution and sales.
This can be said to be a representative example
of our efforts to “build partnerships with various
stakeholders” under the 25 MTP.

Mobility area: Vision and strategy for 2030
We see that the needs and attitudes relating tomobility are changing drastically with the penetrationof ESG concepts and changes in lifestyles. We
recognize that the realization of next-generation
infrastructure in line with these changes is theideal way to solve social issues by businesses in themobility area. We aim to contribute to the realizationof next-generation infrastructure by providing
components, systems, and applications that meet thesocial issues envisioned in the Vision 2030, such as
the promotion of xEV, CASE and MaaS.
With regard to existing businesses, we intend

Management Foundation

Corporate Information/Data

to thoroughly strengthen wiring harnesses in the
Automotive Products Business. In particular, aluminum
wire harnesses are products that integrate the Group’s
core technologies. We have integrated manufacturingof products, from aluminum rough wire to aluminum
fine wire. The Alpha Terminal, which has excellent anticorrosion properties, uses the Group’s original alloy. In
addition, the aluminum wire and the alpha terminal are
welded for connection by using the Group’s fiber laser.
Since the use of aluminum wire harnesses
leads to reduction in vehicle weight, we have theadvantage of contributing to carbon neutrality bycurbing energy consumption by end products. In
manufacturing these products, we use recycledmaterials and renewable energy. In addition to
reducing the Group’s CO2 emissions (Scope 1 andScope 2), we also contribute to the reduction of
Scope 3, in other words, the reduction of CO2
emissions by customers who use our products.
In the mobility area, a next-generation infrastructurebusiness which integrates information, energy, andmobility areas, can be a new business opportunity
for infrastructure development during the 25 MTP
period. This is a business that goes beyond theconventional provision of “goods.” A prime example
is “next-generation urban development” that utilizes
ICT. Furukawa Electric’s Hiratsuka Works started ademonstration test using our proprietary Intelligent
sidewalkTM technologies and traffic monitoring radarin fiscal 2021. On top of utilizing our technologies
that have been used and improved over the years, weare collaborating with various partners in the sensor
technology and ICT service business in the test. Hereagain, “building partnerships with various stakeholders,”
stated in the 25 MTP, has been materialized.

*4 NEDO (New Energy and Industrial Technology Development Organization) is a national research and development agency in Japan.

INTEGRATED REPORT 2022

27

Message from the General Manager of the Strategy Division

New areas: Vision and strategy for 2030
We are constantly searching for new social issues thatcan be solved by using the Group’s technologies andbusinesses. This means acquiring profit opportunities
in new areas. In the meantime, we also feel we should
not overextend the scope of business. Our criteria for
determining whether or not to engage in a new business
are the capital efficiency and the affinity with the Vision
2030. What we want to emphasize in a new business isthat the Group’s technology and experience are highly
regarded as indispensable, and that we can act as amain player in the ecosystem surrounding the business.
Based on these perspectives, we believe that
we should focus on the life sciences and social
infrastructure DX areas as new fields. In terms ofresolving the issue of the aging of people and social
infrastructure, these areas have a high affinity with theelements of the Vision 2030—to “Build a sustainable
world and make people’s life safe, peaceful andrewarding.” Further, we can take advantage of ourstrengths in the four core technologies and ability todevelop and make proposals in new markets.
Noteworthy is the Michi-tenTM series, a new businessin the social infrastructure DX area, which was alreadycommercialized in 2021. It is expected to expand themarket horizontally to infrastructure such as railways, as
more efficient maintenance and management of social
infrastructure is certain to be required in the future.
TelluminoTM is another new business in the life sciencearea and is targeted for commercialization in 2023.

Developing business activities that consider
climate change
Furukawa Electric Group is committed to carbon
neutrality not only from the perspective of profit
opportunities but also from the perspective of risks.
In 2021, we formulated the Furukawa Electric Group
Environmental Vision 2050. In order to achieve carbon
neutrality by 2050, as declared in the Vision, we haverevised the Environmental Targets 2030, and also
obtained WB2°C (well-below 2°C) certification from
Science based Targets (SBT). Going forward, ourchallenge will be how to achieve these goals.
First, with respect to Scope 1 and 2, in addition
to continuing energy-saving activities and the useof electricity generated by the Nikko hydroelectric
power station, we are introducing solar power
generation facilities at each of our major production
sites and affiliates. We are also working on switching
to electricity derived from renewable energy. In
particular, in the copper foil business, which consumesa large amount of electricity, we have switched all of
the electricity purchased at our domestic plants to

About Furukawa Electric Groupelectricity derived from renewable energy.
We are also striving to reduce GHG emissions
throughout the value chain (Scope 3). It is difficult toquantify CO2 emissions, including Scope 3, but from thisfiscal year, we began full-scale analysis of the carbon
footprint of our major products. We will continue towork on reducing CO2 emissions throughout the value
chain through co-creation with customers and partners.

Strengthening human capital management
and organizational execution abilities
Human capital is our most precious asset. Based on thisrecognition, we have identified “strengthening humancapital management and organizational execution
abilities” as our materiality in the Vision 2030. As abasic approach to human capital management, wehave formulated the People Vision, which summarizes
the ideal profile of employees and the approach topersonnel development. The People Vision consistsof three ways of thinking: (1) improving employee
satisfaction and autonomy and having each deliver thebest of their capabilities; (2) enhancing team strength
through leadership development and organizational
culture reform; and (3) strengthening human capitaland organizational execution by improving systems
such as evaluation, compensation, hiring, and rotation.
Concerning the first point of making individuals deliver
the best of their capabilities, we started the Furukawa
E-Survey, a survey of human capital and organizational
execution capabilities, including elements of employee
engagement, targeting the entire Group from this fiscal
year. With the aim of visualizing the status of personnel
and organizations, we survey the degree of empathy for
the Vision, the degree of satisfaction with the systemand treatment, the state of organizational management,
motivation for work, and human relationships. Basedon the results, we plan to formulate and implement
personnel measures. The Employee Engagement Score
has also been set as a sustainability indicator. We will
make a target for fiscal 2025 by next fiscal year andsteadily implement personnel measures.
Moving on to the second point of viewing theleadership, we have established the Furukawa Seven*5,
which consists of a basic mindset as a leader and six
action principles. This was launched in fiscal 2020 for
general managers and above, including executives.
Currently, about 1,300 managers, including managers,
are engaged in this activity, and I feel that the Furukawa
Seven activities are beginning to permeate but there
is still room for improvement in terms of whether thisapproach is being put into practice in our daily work.
We will therefore continue the efforts.
Concerning the third point of strengthening the humancapital base, we believe that it is important to ensureManagement Strategy

diversity along with the compensation system. Although
the shares of women in new graduates and managers arehigh compared to the industry average, we feel further
efforts are needed relative to the domestic average.
Based on this recognition, we have set our target for theshare of women in managers in 2025 and 2030, which
are also set as sustainability indicators in the 25 MTP.
One of the challenges we face in achieving our goals
for female managers is a very limited pool of female
employees. In order to overcome this situation, we
need to actively recruit new female graduates froma medium- to long-term perspective and make midcareer hiring of women in the short-term, to expand thepool of female candidates for management positions.
We also recognize the need to actively expand positions
that they can fill. In addition, from the perspective ofchanging the mindset of female employees so as to be
more constructive about their career advancement,
we are promoting individual development and active
promotion of management-level candidates. We
also want to accelerate the improvement of various
systems, such as support for balancing life events andwork, and creating a rewarding work environment.

Human rights, labor practices and supply
chain management
The Group’s human rights initiatives are basedon the three requirements of the United Nations
Guiding Principles on Business and Human Rights:
Establishment of human rights policy; implementationof human rights due diligence; and establishment ofremedy mechanism.
Starting with the establishment of human rights
policy, the Furukawa Electric Group CSR Code of
Conduct was revised in 2019, the Human Rights Policy
was established in 2020, and the CSR Procurement
Guidelines based on these were revised in 2021.

Management Foundation

Corporate Information/Data

Next, with regard to the implementation of humanrights due diligence, we have distributed SAQ*6 basedon the revised CSR Procurement Guidelines since last
fiscal year, and conducted surveys and analysis for ourdomestic Group companies and partners. Recognizing
the importance of this SAQ, we incorporated the SAQ
implementation rate into the sustainability indicatorsof the 25 MTP in order to include key partners ofGroup companies, including overseas ones. We wererelieved not to find any major problems in the supply
chain according to the results of the SAQ assessment
last year. In case a problem is discovered, we will takeprompt action to resolve them.
With regard to the establishment of a remedy
mechanism, we already have the mechanism but
recognize that there is room for improvement. So
we will proceed to establish a more effective system
during this fiscal year.

Toward the start of the 2025 Mid-term Plan
The 25 MTP is positioned as a milestone toward achieving
the Vision 2030. In other words, unless the MTP strategies
are steadily implemented, we will not know whether we
can survive and thrive in 2030 and beyond. With thisdetermination, all of us in the Group are determined
to take on the challenge of transforming the Group toachieve the 25 MTP and Vision 2030. The new 25 MTP
incorporates social issues and materiality that we want toresolve in 2030, as well as discussions on the value creation
process based on these issues, so I am confident that thedirection of the 25 MTP will not be shaken. If the pace ofchange in society and the economy increases rapidly, andthe impact of the risks posed by the change increases, we
intend to be agile in reviewing individual strategies andmeasures while maintaining the plan’s direction. We will
make our best efforts to make the 25 MTP keep evolving
in response to changes in the external environment.
*6 SAQ: Self-Assessment Questionnaire*5 Furukawa Seven: Seven Principles for Leaders28

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

29

Medium-term Management Plan 2022-2025

About Furukawa Electric Group

Furukawa Electric Group Medium-termManagement Plan 2022-2025 (2025 Mid-term Plan)
Basic Concept

Management Foundation

Corporate Information/Data

Sustainability targets
Materiality
Sustainability indicators

FY2021
resultScope

FY2022targetFY2025targetCreating businesses that solve the social issues

Backcasting from the ideal state articulated in Vision
2030, we defined the target state in 2025 which is a
halfway point as a milestone. To achieve it, we formulated

a new Medium-term Management Plan“Road to Vision
2030 -Transform and Challenge-” for 4 years ending infiscal 2025.

Financial targets/Sustainability
targets2025

Backcasting

through a focus on capital efficiency” and “Building afoundation for creating new businesses by strengthening
development and proposal capabilities.” We will also work
on “Strengthening the foundation for ESG management”
to support the above-mentioned priority measures.

:Prepare to address in order to further shine
New businesses to berealized by 2030

New

Enhance under the 2025
Mid-term Plan

Markets
Existing

Electric cable system

Thoroughly
enhance

115%

125%

Implementation rate of IP landscaping for strengthening thebusinesses and themes for creating new businesses

Group

17%

30%

100%

Reduction rate for GHG emissions (Scope1,2) (compared to FY17)

Group

29.0%

17.7%

28.3%

Ratio of renewable energy to electricity consumption

Group

10.9%

11.5%

13%

(3) Strengthening the foundation
for ESG management

To strengthen and create businesses through a focus on capitalefficiency, we introduce ROIC*1 and FVA*2 as management
indicators, and set financial targets for fiscal 2025, it setssustainability targets (non-financial targets) for FY2025 in
response to the important management issues (materiality)

Bipolar lead storage
batteries

Next generation urban
planning

directed at achieving Vision 2030. We have worked to integrate
the financial and non-financial/ sustainability strategies, as wellas enhance the disclosure of information concerning climatechange (carbon neutral), human capital, intellectual property,
supply chains and human rights*1 ROIC: Return on invested capital *2:FVA: Furukawa Value Added to invested capital. FVA is introduced as an internal management indicator from fiscal 2022

Financial targets

Furukawa Electric

—

Start
measuring

FY2023
Set targets

Share of women in managers

Furukawa Electric

3.8%

4.5%

7%

Share of career track hires in total new hires (including new graduates
Furukawa Electricand mid-career hires, for management, career track, and clerical positions)

36%

30%

30%

Ratio of follow-up on risk management activities for all risk domains

Group

88%

93%

100%

Ratio of SAQ implementation based on the CSR Procurement
Guidelines for major suppliersGroup

Furukawa Electric
20%

Global20%

Global100%

Implementation rate of human rights training for managerial positions

Group

—

Start in Japan

Global100%

FY2025 target

ROIC (after tax)

2.5%

3%

6% or more

ROE

3.7%

5%

11% or more

Net D/E ratio

1.0

1.0

0.8 or less

29.8%

30%

35% or more

Net sales

930.5 billion yen

1,050 billion yen

1,100 billion yen or more

Operating income

11.4 billion yen

22.5 billion yen

58.0 billion yen or more

Net income attributable to owners of the parent company

10.1 billion yen

14.0 billion yen

37.0 billion yen or more

Average copper price (JPY/Kg)

1,136

1,260

1,085

Average exchange rate (JPY/USD)

112

120

110

10%

1. M
 ake the current status
and positioning visible
Automotive Products & Batteries
Functional Products
Communications
Solutions
Energy5% Infrastructure0%

Bubble size: Absolutevalue of NOPAT (FY21→ FY25)

Furukawa ElectricGroup in total
Electronics Component
Materials-5%

profit base. Based on that, we decide the allocationof investment.. In addition to the current position ofeach business, we refer to potential for future growth,competitive status among competitors and carbon
efficiency. And then, we promptly take necessary
actions. For example, businesses located at a rightupper bule area make a search for growth opportunities
including M&A, and businesses located at the left-lower
red area decides the need to withdraw.

0%

5%

10%

ROIC (FY21 → FY25)

15%

20%

2. D
 ecide the allocation ofmanagement resources(investment)

Next generation

GrowingHigh

8%Issuesexist
Low

Strategic
restructuring
Low

Strength- Profit
enbase
earnings

0% Medium 1.2% HighROIC spread

3. R
 eorganize the businessportfolio

Search for growth opportunities,
including M&A+ Potential for
Decide the need to withdraw
future growth+ Competitive
Create / approve a
Rejectedstatus among
restructuring plan(withdraw)
competitors
Define the requirements+ Carbon
for withdrawal
efficiency(Restructuring planis set) Monitor the If the limits
arenumerical
breached,
requirements forwithdraw,
withdrawal
in principle
If the limits are not breachedContinuethe business

FY2022 forecast

We steadily optimize the business portfolio and aim toachieve ROIC of at least 6% by fiscal 2025.
First, we make the current position of each businessvisible toward optimizing the business portfolio. Fromthe viewpoint of growth (Average sales growth rate) andprofitability (ROIC spread), specifically, each business isclearly classified by the business position divided into sixclassification such as next generation, growing, issues
exist, strategic restructuring, strengthen earnings andWithdrawal isconfirmed

FY2021 result

Equity capital ratio

Employee engagement scores

Business portfolio optimization and allocation of management resources

New

Numerical management targets

FURUKAWA ELECTRIC GROUP(100%)

Green LP gas

Products
Tape for semiconductor
processGroup

Building a governance system to strengthen risk management(2) Building a foundation for creating new
businesses by strengthening development andproposal capabilities.

Next generation
photonics

Existing
Wire harness

R&D expense growth rate for new businesses (compared to FY21)

Strengthening human capital management and organizational execution abilities

Under the 2025 Mid-term Plan, we place an emphasis onenhancing/creating businesses that solve social issues ineach or combination of Information, Energy and Mobility
areas; and, as measures to increase revenue, we will
work on “Maximizing revenues in existing businesses

Optical fiber and cable70%

Developing business activities that consider E climate change

2030

Issues to be addressed (Priority measures)(1) Maximizing revenues in existing businesses
through a focus on capital efficiency

64%

Average sales growth rate

Forward-looking

61.9%

Open, Agile, Innovative/ Building partnerships with various stakeholders

Sales CAGR (From FY17 - FY21 to FY21 – FY25)

Today

Group

Sales ratio of environmentally friendly products

Furukawa ElectricGroup, Vision 2030

2025 Mid-term Plan
“Road to Vision 2030 -Transform and Challenge-”

30

Management Strategy

INTEGRATED REPORT 202231Medium-term Management Plan 2022-2025

About Furukawa Electric Group

Allocation of management resources (CAPEX / strategic investment)

Business Management using ROIC and FVA

During the 2025 Mid-term Plan, capital expenditureis estimated to be 190 billions of yen. We implement
well-defined investments and controlled execution by
investment allocation based on the current position of

To disseminate ROIC/FVA throughout the Groupand connect concrete improvement activities with
the ROIC/FVA for each business, we create an
FVA/ROIC tree subdivided into action items andnumerical targets to improve the ROIC/FVA. Like
this, by visualizing improvement goals as an FVA
tree diagram for each business and introducing
a system to implement the PDCA (Plan-DoCheck-Act) evaluation cycle, we will improve thecorporate-wide ROIC/FVA.

each business. In addition to CAPEX, it sets strategic
investments of 50.0 billions of yen in the 2025 Midterm Plan. For the purpose of the Group’s growth, we
implement flexible investments including M&A.

Investment allocation andpositioning of the business

CAPEX

Investment
allocation

Increase production of
optical devices
Rationalize the opticalfiber and cable business

Functional
Products

Rationalization
investment

Growing

Profit base

Nextgeneration

Strengthen
earnings

Issues exist

Infrastructure

FY22 – FY25
cumulative

Increaseproduction oftape forsemiconductor
process

Maintenance & renewal
investment
Positioningof thebusiness

Communications
Solutions

Service andDevelopments, etc.

Facility
expansion investment

190.0

Longer cable lengths

billion yen

Automotive Products& Batteries

Strategic
restructuring

Allocation of management resources (R&D investment)

Increase harness
production (Including
BCP related responses)

R&D expenses

Automotive Products and Functional Products. We
also allocate R&D investments for new businesses
including both new domains, such as life science andsocial infrastructure, and the domains that combine
information, energy and mobility.
Communications
Solutions

Service andDevelopments, etc.

Functional
Products
Data center
products

FY22 – FY25
cumulative

100.0

Automotive Products& Batteries
EnergyInfrastructure

Electronics
Component Materials
Electronics & Automotive Systems[Automotive Products]
Wire harnesses
Steering roll connectors(SRC)
Peripheral monitoring radar

Priority domains

FY2021...

FY2025...

FY2030RR cable, optical devices, networking systems
Wire harnesses, SRC, peripheral monitoring radar
Data center products

Information/energy/mobility
Newbusinesses
New domains

Fusion of optical / electronics,
wireless power transmission, etc.

Hybrid lasers

Well-defined
investments andcontrolled
execution

ROIC

Extraordinary
gain/loss

Net sales

Net sales

Cost of sales or

Marginal profit

Income tax

SG&A

Fixed costs

Invested
capitalWorking
capitalNotes and accounts
receivable-trade

WACC

Non-current
assetsInventories

Cash & otherinvestments

Notes and accounts
payable-trade

Cost ofcapitalterm Plan. Through investment in growth domains andsecuring a financial foundation for achieving growth, we
aim to sustainably increase corporate value.

2025 Mid-term Plan(FY2022 – 2025) cumulative

Transform the business structure of the overall group
Set a framework for strategic investments(billionyen

Sale of assets etc.

3,000

30.0

(including crossshareholdings)

2,500
Stabilize financial health
Maintain and improve the credit rating

2,000

Healthy capital / debt structure

1,500

Procure capital through interest-bearing debt
based on consideration for the balance withearnings capability (EBITDA)

1,000

Strategic
investments

50.0Management focused on capital efficiency

Operating cash
flow

240.0

Investments

190.0

500
Set a quantitative target for the dividend payout
ratio
Payout ratio of 30%

30.0

0
Cash-in

Shareholders
returnCash-out

designated stable and ongoing shareholder returns as abasic policy and will issue a performance linked dividend
based on a payout ratio of about 30% of consolidated net
income attributable to owners of the parent company.

During the 2025 Mid-term Plan (fiscal year ending March2023 – March 2026), along with working to increase
corporate value through profit growth and focusedinvestments in growth domains, Furukawa Electric has
Annual dividend per share (yen)Life sciences, social infrastructure DX, etc.

Materiality Open, Agile, Innovative/ Building partnerships with various stakeholders
Indicator

ResultSustainability indicator

FY2021

FY2022

FY2025R&D expense growth rate for new businesses (compared to FY21)(100%)115%

125%

FURUKAWA ELECTRIC GROUP

ROIC
spreadCAPEX allocation based on the positioning of thebusiness
Actively invest in businesses that will drive growth

Indicator andtargetGroup

OperatingincomeShareholder returns

Timing of profit
contribution

Communications Solutions
Automotive Products
Functional Products

NOPAT“Well-defined investments and controlled execution”,”
Secure a healthy financial foundation” and “Clarify thepolicy for shareholder returns (payout ratio of 30%)”
are a basic concept of capital policy in the 2025 Mid-

Clarify the policy
for shareholder
returns

Infrastructurebillion yen

FVA

Corporate Information/Data

Capital and cash allocation policy

Secure a healthyfinancialfoundationrollable ribbon (RR)
cable
optical devices
networking systems

New business-related domain[New domains]
Life sciences
Social infrastructure DX, etc.

Electronics & Automotive Systems

Includes 16 billions of yen in DX investment and 6.0 billions of yen in
investment of environmental responses

With an emphasis on profit creation during the 2025
Mid-term Plan, we implement R&D investments toincrease profits in new businesses that is anticipated to
grow toward 2030. We set the priority domain of eachbusiness, particularly, for Communications Solutions,Management Foundation

Energy Infrastructure

Electronics
Component Materials

32

Management Strategy

TargetConsolidated net income
attributable to owners of
the parent company
Dividends payout ratio

60

60

60

FY2020

FY2021

FY2022(forecast)

FY2025(forecast)

FY2020

FY2021(result)

FY2022(forecast)

FY2025(forecast)10.0 billion yen

10.1 billion yen

14.0 billion yen

37.0 billion yen or more

42.3%

41.8%

30.2%

30%

INTEGRATED REPORT 2022

33

Message from the General Manager of the Finance & Accounting Division

We will improve capitalefficiency and cash
generation capabilities ofthe businesses, and increase
corporate value

details of the investments. With regard to inventories, we
flexibly responded to changes in customers' productionplans and prolonged transport lead times, and tightly
managed inventories. These efforts which create somepositive outcomes. While we had a tough time in regard
to financial and performance aspects, we made steadyprogress in implementing measures including necessary
investments in line with the milestones toward achieving
the Vision 2030.
Although revenue, financial indicators, and cash flows
were by no means satisfactory, we believe that we laid agood groundwork in fiscal 2021 for the 2025 Mid-term
Plan (25 MTP).

Use of ROIC and FVA in executing thebusiness portfolio strategy

Akihiro Fukunaga

Under the 25MTP, which started in the current fiscal
2022, we have revised our approach to allocating
investment to each business. In the past, the so-called“build-up method” was used to estimate and assess
the amount of investment required for each businessto achieve the plan. We now have introduced the “cashallocation” method in which we formulate cash flowsthat can be earned during the 25 MTP, and then use thatas the basis to make optimum investment allocation.
We have also adopted ROIC (return on invested capital)and FVA (Furukawa value added to invested capital) as
management indicators for evaluating various businesses
in order to effectively allocate investment based on
the positioning of each business. This is a key point andis intended (1) for efficient investment allocation toestablish a foundation for creating new businesses thatwill be realized by 2030 and (2) for maximizing profits ofexisting businesses and revitalizing the business portfoliowith a focus on capital efficiency toward achieving the
Vision 2030.
The cumulative investments of the 25 MTP (fiscal 20222025) are roughly planned to be capital expenditures of
190 billion yen, R&D investments of 100 billion yen, andadditional strategic investments of 50 billion yen.
Although we have not decided where strategic
investment funds will be allocated, we have secured
them for funding M&As or large-scale independent
investments, particularly in new business areas. As for
R&D investments, we have continued investing more than
20 billion yen per year since fiscal 2018. While we have
had a difficult time in terms of financial performance,
we strongly believe that R&D related to new businesses
and particularly cutting-edge technologies should becontinued in order to achieve the Vision 2030 and passon achievements to the Group’s business beyond that.
That is why we have strategically allocated money in R&D
in the 25 MTP.

Review of fiscal 2021 results
We made a good start of the fiscal year, by recoveringfrom the impact of COVID-19 in the previous year.
However, the semiconductor shortage and other issuesof supply and procurement of raw materials as well as
supply chain disruptions, the increase in manufacturing
and transportation costs caused by the spread of
COVID-19 in Southeast Asia, and other factors, severely
affected our business from the third quarter. Despite thatvolatile environment, we managed to improve operating
income from 8.4 billion yen in fiscal 2020 to 11.4 billion
yen in fiscal 2021. Extraordinary income decreased
from the previous year but we secured net income of
10.1 billion yen, a similar level to that of fiscal 2020, withFURUKAWA ELECTRIC GROUPManagement Strategy

Optimum allocation of investment
Director and Corporate Senior Vice President,
General Manager of the Finance & Accounting Division34

About Furukawa Electric Groupa contribution by the improvement in profit in equity
method affiliates and a decrease in extraordinary losses.
Concerning the balance sheet, rising copper prices andthe depreciation of the yen in foreign currency translation
contributed to boost total assets. Noteworthy points
include an increase in inventories, including portions thatare strategically secured to cope with prolonged lead times,
thus being necessitated by rapid fluctuations in customer
production plans, the operational impact of lockdowns, andsupply chain disruptions. The increased inventories also led
to an increase in interest-bearing debt.
In fiscal 2021, we also consistently adhered to efforts
on behalf of capital efficiency and reduced the amountof capital investments by reviewing the implementation
timing based on demand trends and reexamining theManagement Foundation

Corporate Information/Data

In the previous mid-term plan (20 MTP), in order topromote capital efficiency management, we used “returnon operating assets” as a management indicator to follow
low-margin business. This indicates how much operating
income is generated from important operating assets(inventories + tangible and intangible fixed assets). The
use of this indicator has led to improved capital efficiency
through business restructuring, business transfer, andbusiness downsizing and withdrawal. In fiscal 2020,
Rating and Investment Information, Inc. (R&I) upgraded
Furukawa Electric from B rating to A rating for the firsttime in 19 years. However, the return on operating assets
was not sufficiently relevant to compare to the cost ofcapital and improve corporate value, or to motivate thetransformation of our business portfolio.
Therefore, in the 25 MTP, we are adopting FVA as aninternal management indicator to prevent the businessfrom falling into a shrinking equilibrium trap due to the
pursuit of ROIC and ratios. We will establish a scheme
to use FVA so as to create corporate value that exceeds
capital costs and to continuously improve corporate value.
Let me explain FVA a little more specifically. We willclassify our businesses into 28 categories and set WACC
(weighted average cost of capital) for each businesscategory to ensure that each business has ROIC thatexceeds WACC. At the same time, we also aim for an“amount” of increase in corporate value. In setting the
WACC for each category, we have incorporated ESG
factors in addition to factors such as profitability andgrowth potential, and we believe that a distinctive featureof this scheme is the orientation for ESG management at
the business level.

INTEGRATED REPORT 2022

35

CFO Message

Based on these new indicators, including ROIC and FVA,
we will sharpen the investment selection, be conscious ofwhat to stop in addition to what to grow, decisively move
forward with the transformation of the business portfolio,
and induce both appropriate allocation of management
resources and evaluation of departmental performance.
We will thereby focus on capital efficiency while
maintaining an awareness of capital costs and promoting
business management that enhances corporate value.
With the introduction of ROIC and FVA, we refer to bothindicators more commonly in management discussions,and I feel a real change in our mindset, through greater
consciousness of the cost of capital. I believe that thismindset needs to be further instilled within the Group.
The FVA value driver tree clarifies the link between activity
indicators of each division and the improvement in corporate
value, and we are promoting activities to incorporate these
indicators into KPIs for each division. We will also enhance
educational programs so that people in charge of eachbusiness unit or division can become aware of the linkage
between their work and the corporate-wide FVA.
From the current fiscal 2022, a new committee toconsider portfolio management, chaired by the General
Manager of the Strategy Division , has been established.
I myself, as vice chair, will make efforts to enhance theeffectiveness of this committee.
Furthermore, in evaluating the business portfolio, we
consider not only growth potential and marketability,
but also environmental considerations such as carbon
efficiency and contribution to sustainability indicators,
as important factors. Our Group places ESG as thecornerstone of management. We believe that financeand sustainability are two sides of the one coin, and byincorporating them into investment decisions, we will
advance ESG management and achieve the Vision 2030.

Generate cash and establish a soundfinancial base
Under the 25 MTP, we aim to build a sound and robust
financial base with a goal of achieving a net D/E ratio of
0.8 or less. The Group has received an “A-“ rating from theRating and Investment Information, Inc. (R&I). Considering
the current and future economic and financial conditions, weneed to further evolve and enhance our financial position.
In particular, Europe and the United States have begun
a greater shift from zero interest rates. Their monetary
policy changes have started to show effects, and theinterest burden on foreign currencies is expected to
become even heavier in the future. The similar scenario
may need to be assumed for Japan as well. Even in suchan environment, it is essential to maintain and further

36

FURUKAWA ELECTRIC GROUP

About Furukawa Electric Group

improve a stable financial standing in order to procure
funds in a stable manner—and at the right time andat the right cost, and to make flexible investments at
the right time without missing an opportunity. We willcontinue financial management with a mindset to not
merely maintain but improve our credit rating.
Although it is extremely difficult to achieve bothinvestment for growth and improvement of financial
standing, the capital and liability composition of the 25
MTP has been determined based on simulations that take
into account risk factors based on future investment andprofit plans. We believe that we can promote the 25 MTP
and at the same time maintain R&I’s Issuer Rating of A.
As CFO, I will be insistent on achieving both. As we move
forward on our growth path, I will step on the accelerator
as needed, and step on the brake appropriately. This will
be my way to fulfill my role for achieving both.
We do not plan to have a cash inflow from interestbearing debt under the 25 MTP, as we aim at maintaining
and further improving our sound financial base. We
have always maintained a strong commitment to cash
generation, and we believe that if we do not allocate
the use of cash within the scope of the cash generated
through our business activities, corporate financial
discipline will be hurt. Under the 25 MTP, we will further
emphasize this commitment, and cherish our policy of
allocating cash to investments and shareholder returns
within the range of cash earned through business andcash proceeds from asset sales, including reduction ofcross-shareholdings. We will thus stick to a policy of notincreasing interest-bearing debt.
With regard to shareholder returns, we have been able
to set an explicit numerical target of a dividend payout
ratio of 30% in the 25 MTP. In the past, there was the riskof extraordinary losses arising from compliance violations
and quality issues such as recalls, and there was also
the challenge of not having stable “profit attributable toshareholders.” To this end, our basic policy has been to
manage the company with a focus on capital efficiency
and to maintain a balance between providing shareholder
returns and making strategic growth investments,
fostering next generation new businesses, and improving
financial health. And we paid stable dividends.
Now we have thoroughly instilled awareness ofcompliance and quality within the Group througheducation to prevent recurrence, and have continued
to develop a corporate-wide risk management system,
which has eliminated these issues. As we have eliminatedthe uncertainty of extraordinary losses on future profitsand have increased the certainty of future profits, I am
pleased that we can clearly present our shareholder
return policy in the 25 MTP.

Management Strategy

Toward the start of the 2025 Mid-term Plan
In order for Furukawa Electric Group to survive andthrive, we must become a company that can earn
through compound interest by constantly securing an
ROIC spread of 1% or more and a stable ROE of 11%
or more, and become a company that can live strongly
on its own. Until now, we have worked hard to createa scheme using ROIC and FVA in order to be profitableby ourselves. During the 25 MTP period, we are using
these metrics as our weapon and improve businessportfolio management. We thereby aim to establish a
growth trajectory and thrive along a growth curve. In
the meantime, VUCA (volatility, uncertainty, complexity,
and ambiguity) is becoming more and more evident
in the external environment, resulting in heightenedrisks including geopolitical division among nations,
intensifying natural disasters, and the COVID-19 andother epidemics. Even if a certain risk is assumed inManagement Foundation

Corporate Information/Dataadvance, the situation can change suddenly in just one
day, and it is not known when, where, and what kind ofrisk will occur. It is therefore important to anticipate andcarefully prepare for various risks.
In the wake of the recent spread of COVID-19 andsupply chain disruptions, major issues that the Group
must address have already been identified. Currently,
we are responding to these issues in line with the "premortem thinking" that assumes the future situation andthen works backward to prepare for it.
The 25 MTP was formulated based on the idea ofbackcasting from the Vision 2030, and then forwardlooking from the current state as a milestone. As CFO,
I will be Open, Agile, and Innovative in keeping withthe pre-mortem thinking, even in a rapidly changing
environment. We are committed to steadily achieving
profit targets and the financial targets set as milestones
each year. We will make sure to implement the 25 MTP
so as to earn the trust of our stakeholders.

INTEGRATED REPORT 2022

37

Business Overview

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Business Overview / Review of Fiscal 2021

Infrastructure

Communications
Solutions

The subsidiary in North America made efforts to improve
plant productivity of optical fiber cables and to expand salesof special fibers and other value-added products. In SouthAmerica, sales of products for FTTH and LAN solutions
increased, while in Japan, sales of network-related products
remained firm. In addition, demand for digital coherentrelated products recovered, resulting in increases in bothsales and profit for this entire sub-segment. However, partly
due to delays in improving productivity and a surge in raw
material prices and transportation costs, profits recoveredfrom the depressed level due to the impact of COVID-19 but
did not recover to the level before the COVID-19 pandemic.

Percentage of total sales

Net sales / Operating income

Net sales (left)
200

19.9%

150

EnergyInfrastructure

In the Power Cable Division, the domestic undergroundcable business, including renewable energy-related
business, performed well, and the Industrial Cable& Power Cable Accessories Division increased bothsales and profit, reflecting a recovery from theimpact of COVID-19 in the previous fiscal year.

(Billion yen)

166.4

158.3

Automotive Products& Batteries

Electronics& Component Materials

Sales and operating income increased mainly due tostrong demand for automotive and electronics-related
products, an improvement in the product mix andproductivity, driven by expanded sales of high value-added
products, and the impact of soaring copper ingot prices.

0
-0.2

-50
2019

38

FURUKAWA ELECTRIC GROUP

2021

(FY)

Net sales / Operating income

Net sales (left)

Operating Income (right)(Billion yen)(Billion yen)

150

11.0%

100

6
114.5

105.7

100.9

50

0
-2

-1.9
2020

2021

(FY)

Net sales / Operating income

Net sales (left)

Operating Income (right)(Billion yen)

300

26.0%

2

1.4

0

Percentage of total sales

4

0.1

200

(Billion yen)

257.6
10.9

100

30

249.9

235.1

20
10

5.0

0
-100
2019

2020

0
-10

-4.6
2021

(FY)

Net sales / Operating income

Net sales (left)

Operating Income (right)(Billion yen)(Billion yen)

300

26.1%

9
251.7

250.8

200

198.0

Percentage of total sales

3
0.9
2020

0
2021

(FY)

Net sales / Operating income

Net sales (left)

Operating Income (right)(Billion yen)(Billion yen)

150

13.5%

6

4.8

3.9

100

2019

Functional
Products

-2.5

2020

0

In the AT (Advanced Technology Tape) & Functional Plastics
Division, the Thermal Management Solution & Products
Division, and the Memory Disk Division, sales of data
center-related products were firm in the first half, but
demand decreased in the second half due to a shortageof semiconductors among customers. In the Copper Foil
Division, orders for copper foil for circuits increased after afire at a Taiwanese subsidiary’s plant in 2019, and demandfor copper foil for batteries steadily recovered. The overall
segment increased sales and profit despite the impact of asurge in some transportation costs and raw material prices.

2.5

1.6

0

Percentage of total sales

Electronics & Automotive Systems

5

3.8

50

2019

Electronics & Automotive Systems

7.5

-50

The Automotive Products Division achieved a recovery insales, as sales of wire harnesses were firm, despite the impact
of global automobile production cuts due to shortages ofsemiconductors and plastics, while the adoption of aluminum
wire harnesses in new models, which contribute to the
reduction of vehicle weight and environmental impact, also
progressed. Profits, however, decreased from the previous year
due to the lockdowns caused by the impact of COVID-19 atsome locations in Southeast Asia in the first half of fiscal 2021,
a drop in factory operating rates, prompted by the resurgenceof COVID-19 since the fall of 2021, and increased expenses,
arising from urgent transportation of products to customers
to fulfill our product supply responsibility to customers.

10

191.3

100

Percentage of total sales

Infrastructure

Operating Income (right)(Billion yen)

100

115.9
7.5

50

15

130.0

114.7

10
6.3

7.6
5

0

0
2019

2020

2021

INTEGRATED REPORT 2022

(FY)

39

Business Overview

About Furukawa Electric GroupManagement Strategy

Management Foundation

2025 Mid-term Plan Targets (Net sales, Operating income, ROIC)

Infrastructure

Net sales (left)

Operating income (right)(Billion yen)

240

Communications
Solutions

191.3

180

Director, Corporate Senior Vice
President and General Manager ofCommunications Solutions Division

Hideya Moridaira

215.0

Business environment

Strengths and challenges

Key revenue
opportunitiesI ncrease in global communications traffic(High speed, large capacity, low latency, lowpower consumption)
IoT progress, 5G/B5G/6G
Changing workstyles and lifestyles

Strengths of theDivision

 lobal production bases that extend into theGgrowing markets
Differentiation by utilizing high-performance
products and technologies (optical fiber, cable,
digital coherent related, network technologies, etc.)

Major risks andthreats

Russia-Ukraine situation, US-China relations
Global supply chain issues
Rising energy and raw material costs
Global semiconductor shortage

Challenges of theDivision

 rovision of optimal solutions to the market byP
making the most effective use of our global
production bases while taking into consideration
the business environment shown on the left

Business Overview / Products and Services
The Communications Solutions Division is made up of the Optical Fiber and Cable products Division, FITEL products
Division and Broadband Solutions Business Division, and it is involved in the manufacture and sale of products fortelecommunications infrastructure and the design, installation and service of telecommunications networks.
Optical Fiber and Cable Products

FITEL Products

Broadband Solutions Business

5G/B5G

Carbon neutral

Main products ptical cables inOgeneral (including
rollable ribbon cables)
Optical connection
products

 ariable wavelengthVlaser modules (ITLA*)L aser module for
excitation

Telecommunications
Video broadcasts
Data centers igital coherent
D
Signal light sourcesE xcitation light sources
for signal opticalamplification

Mainapplications

Telecommunications
Video broadcasts
Data centersMaincustomers

Telecommunications providers
OTT
Telecom construction companies

System vendors
Transmission device
manufacturers

 TTH system devices
F(including highdefinition images
and low-latencytransmission systems)
Radio system

Network routers

 etal cutting, welding,M
etc.

Telecommunication
and broadcast services
Video transmission
Wireless infrastructure

 igh speed,Hhigh capacity
telecommunications
service
VPN construction

 anufacturers ofMprocessing machines,
etc.

Telecommunications
providers (CATV
providers)
Municipalities

Telecommunication
providers
General companies

Industrial fiber lasers

40

FURUKAWA ELECTRIC GROUP

12

5

120

8

0

5.0

3.8

60

4

-5

0

0

5

10

15

20 (%)

Vertical axis: Sales CAGR (from FY17-21→FY21-25)
Horizontal axis: ROIC (FY21→FY25)
Bubble size: Absolute value of NOPAT (FY21→FY25)

FY2022(E)FY2025
As of 2022/8/4 Target

The Communications Solutions Division will further evolve its long-cultivated communication element technology
and create solutions to contribute to the “creation of a social infrastructure that integrates information, energy, andmobility,” as set forth in Vision 2030.

Main Strategies to Achieve the 2025 Mid-term Plan
Communications

Provide high-value-added product solutions that contribute to “power saving” of information transmission
by standing in a key position in the supply chain.

Nontelecommunications

Provide high-value-added products and services that contribute to the generation, transmission, anddetection of information and energy that lead to the improvement of safety and affluence in daily life
Increase sales of high-value-added optical fiber and cable products and accelerate expansion of the
networking system businessContribute to the realization of the IOWN concept and the construction of an integrated information
infrastructure through semiconductor lasers, optical fibers, and IP network devices and systems

Key Measures in the 2025 Mid-term Plan: Maximize profits in existing businesses
through a focus on capital efficiency directed at 2025
Optical fiber and cable
Increase sales of high value added products and accelerate the expansion of the networking systems businessInitiatives for realizing thestrategy

Business environment

Business strategy

Medium- to long-term growth of opticalfiber demand

Growth markets and strengths of the
products / technology
Increase sales of high value added products
Triple sales of rollable ribbon cable
North America opticalcable sales

FY20

Diversifying customer requirements* ITLA: Integrable Tunable Laser Assembly10

Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”

 AGR +5% (Estimate by Furukawa Electric)
C
Continued global expansion of FTTH/5G
Continued infrastructure investment inNorth America
Improved supply / demand balance

Resilientinfrastructure

(%)

16

11.5

FY2021

Environmental analysis of the information and communications solutions business(Billion yen)

230.0

0

 ow loss fibers
LLow bending loss
fibers for building/residential applications
Special fibers

Corporate Information/Data ow cost, energy saving
LMulti-core, high fiber countEasy installation and design flexibility
Short delivery lead times, improved
customer service
Low unemployment rate and rising wages(North America)

FY21

FY22

FY25

Strengths of the business model
developed in Central & South America
Expand the networking systems business
Focus on America, Europe and Asia, andincrease sales by 30%

FY21

FY22

Continue to increase productivity andreduce costs
Respond to growing demand in North
America and Europe markets
Increase sales of specialty fibers
Enhance R&D and partnerships
For submarine cableNon-telecommunications fields(Energy transmission, sensing, aerospaceand medical)
Strengthen cooperation within the group
Unify and promote the brands
Consolidate/expand the product portfolio
Strengthen sales and marketing“ Laserway Solution “ : Solutions for realizing acomplete transition to optical
LAN networks

FY25

INTEGRATED REPORT 2022

41

Business Overview

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data2025 Mid-term Plan Targets (Net sales, Operating income, ROIC)

Infrastructure

Net sales (left)(Billion yen)

Operating income (right)

160

EnergyInfrastructure(Billion yen)

(%)

8

10

6

5

4

0

2

-5

130.0
120

105.7

115.0
4.5

80

Corporate Executive Vice President
and General Manager of Energy
Infrastructure Division40

Takamitsu Kozuka

1.4

1.5

FY2021

FY2022(E)00Environmental analysis of the energy infrastructure businessBusiness environment

Key revenue
opportunities

Major risks andthreats

 elay in securing personnel necessary forDbusiness expansion
Change in customers’ timing of implementationof largescale projects
Supply disruption of major materials

Strengths of theDivision

Challenges of theDivision n abundant track record of ultra-high-voltage
A
lines and submarine cables in Japan and overseas
Technology development centered on thesubmarine cables
High-value-added power cables utilizing development
technology of polymer and metal materials
 teady order receipt for renewable energyS(offshore wind power) projects, and securing of
manufacturing capacity
Profit improvement in the low- to mediumvoltage power cable businessStrengthening of sale of product with services
for the development of DC (wide-areainterconnection) business

10

15

Expand business by contributing to the construction of secure, safe, and comfortable social infrastructure with unique
technologies and products

1

Security

Carbon neutrality by 2050

Safety2

Disaster prevention and mitigation(disaster-resilient community development)

3

ComfortBuilding next-generation infrastructure to cope withdeclining birthrate and aging population(comfortable community development)

Main Strategies to Achieve the 2025 Mid-term Plan
Strategic investments for growth in target segments to achieve both business expansion and capital efficiency management
Electric powerbusiness

Target segment Ultra-high voltage underground lines in Japan / Renewable energy in Japan (submarine

and underground lines) / Overseas submarine lines (Asia)

Business Overview / Products and Services
The Energy Infrastructure Division is made up of the Power Cable Division and Industrial Cable & energy mix
conversion. Power Cable Accessories Division, and it is involved in the manufacture, sale and installation of ultra-highvoltage, high voltage and medium to low voltage power cable and equipment. The Power Cable Division was newly
established following the reorganization in October 2016 and has steadily been developing its business base

Key Measures in the 2025 Mid-term Plan: Maximize profits in existing businesses
through a focus on capital efficiency directed at 2025

Industrial Wires and Equipment

Target segment

S ocial infrastructure / Renewable energy in Japan / Disaster prevention and mitigation /Next-generation infrastructure

Power cable systems
Leverage the group’s strengths to secure profit growth and medium- to long-term business growthBusiness environment
Medium- to long-term market growth inJapan

Social infrastructure arbon neutral by 2050
C
Launch of offshore wind projects
Start of wide-area DC interconnection projects
Increase resilience of the power gridContinued trunk line renewal

Renewable energy
Disaster prevention
and mitigation(Water pipes)

Next-generation
infrastructure
Main products

Main applications

Main customers

Power source (approx.)
Undersealines (cables, parts, andinstallation work)
Water pipes (including installationwork)

Industrial wires

Developmentof backbone electric
power networks
L arge plants
Renewable energy (onshore wind,solar, offshore wind private cables)Offshorewind submarine lines
Water pipes for remote islands


Solar
power generation systems
Indoor wiring for factories,
buildings, etc.
Wiring of factory equipment/
switchboards/control panels
Wiring of moving machinesWiring for onboard electrical equipment

Electricalmaterials for distributionlines
Direct and branch cable connections
Insulation and protection forconnectors
Electric power supply to railroad cars


Power
(transmission) company
Renewable energy power
generation SPCs and EPCs


Renewableenergy power
generation SPCs and EPCs
Local governments

Construction contractors
Electronic appliancemanufacturers
Railroad companies
Shipbuilding companies

Electric
power companies
Construction contractors
Railroad companies

 igh voltage/high voltage
Hunderground lines (cables, parts,
installation work)

FURUKAWA ELECTRIC GROUP

20 (%)FY2025
As of 2022/8/4 Target

Industrial wire andequipment businessElectric Power

42

5

Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”

Strengths and challenges

 apid expansion in demand, particularly forRrenewable energy projects
Increase in demand for products that are easy toinstall due to labor shortage

0

Vertical axis: Sales CAGR (from FY17-21→FY21-25)
Horizontal axis: ROIC (FY21→FY25
Bubble size: Absolute value of NOPAT (FY21→FY25)


Electric
power distributionaccessories and overheadtransmission line accessories

Renewable

24%

Nuclear

6%

Thermal,
LNG,
Coal,
Oil, etc.

36-38%
20-22%

76%
41%

FY2019FY2030Source: R eview of energy supply and demand in FY2030(related document) Issued in October 2021 by the
Agency for Natural Resources and Energy

Insufficient installation capacity at themarketBusiness strategy
Insufficient installation capacity at the market
Leverage the strengths to grow profits

Japan extra-high voltage underground cable— Increase grid resilience, secure stable electricity
supplyRenewable energy (submarine / underground cable)—E xtensive experience and technological capability
Overseas (Asia) submarine cable— Respond to demand for high quality infrastructure

Respond to offshore wind power andwide-area interconnections
Secure medium- to long-term business growth
Triple sales in FY2025, and achieve 2021
further growth in 2030
2021
2030
Further installation of offshore wind power

Renewable energy
Strengthen wide-area(submarine / underground cable) interconnections

Increase sales 300%

(Install a submarine DC cable network)

Initiatives for realizing thestrategy
Secure orders and profits in the target
domains
Increase cable manufacturing
capacity
Double capacity in FY2025(compared to FY2017)
Increase installation capacity
Double capacity in FY2025(compared to FY2017)
Promote technology development
DC / extra-high voltage cable and components
NEDO / GI Fund projects(high voltage dynamic cable, TLP floating
structures, submarine cable laying vessels)

Strengthen the renewable energy / DCbusiness
Intangible sales:

Provide project support services (planning,
operation, maintenance)

FY21

FY22

FY25

INTEGRATED REPORT 2022

43

Business Overview

About Furukawa Electric GroupManagement Strategy

Management Foundation

2025 Mid-term Plan Targets (Net sales, Operating income, ROIC)Electronics & Automotive Systems

Net sales (left)

Operating income (right)(Billion yen)(Billion yen)360

Automotive Products& Batteries

330.0

295.0

120

Corporate Senior Vice President
and General Manager of Automotive
Products Division

6.0

0

Shigenobu Abe-4.6

Environmental analysis of the automotive products business

Key revenue
opportunities

Major risks andthreats

 ew opportunities to respond to requests forN
multifunctionality and modularization of vehicles
Strengths of thefor CASE promotion such as xEV and MaaSE xpand products for eco-friendly future wiring
Division
systems for safe vehicles as electrification
accelerates toward carbon neutrality

 echnological capabilities for commercializationTby integrating the Group’s accumulated coretechnologies and in-vehicle technologies
Eco-friendly product capabilities to contribute tovehicle weight reduction with aluminum
harnesses (α terminals) that utilize green energy
and to power source management, for the
expansion of electrification for carbon neutrality

 harp fluctuations in customer production due
S
to semiconductor shortage
Supply chain disruption caused by COVID-19
Raw material price hikes, logistics disruption,and container price hikes

 reate next-generation products in the convergenceCof information, energy, and mobility throughco-creation and development with partners
Promote automation to strengthen BCM
compliance and ensure stable supply of highquality products

Business Overview / Products and Services
The Automotive Products & Batteries Division is comprised of the wire harness business, theautomotive products business (e.g., steering roll connectors, lead battery state detection sensors), and the battery
business conducted by the listed subsidiary Furukawa Battery Co.

5

7

0

0

-5

-70

0

5

10

15

20 (%)

Vertical axis: Sales CAGR (from FY17-21→FY21-25)
Horizontal axis: ROIC (FY21→FY25
Bubble size: Absolute value of NOPAT (FY21→FY25)

FY2022(E)FY2025
As of 2022/8/4 Target

Main Strategies to Achieve the 2025 Mid-term Plan
Wire harnesses

Increase adoption and promote weight reduction due to superiority and reliability of α terminals /Respond to next-generation wiring systems through differentiation based on software scalability

SRC

Develop SRC in response to high-speed communication and the evolution of cars

BSS

Improve fuel efficiency and power costs, and secure power supply reliability

Radar

Expand high-performance next-generation products (respond to cybersecurity as well) for automotive
applications / Enter new markets such as construction and agricultural machinery, forklifts, andtransportation infrastructure
Develop products adapted to higher voltage, higher current and market expansion

Key Measures in the 2025 Mid-term Plan: Maximize profits in existing businesses
through a focus on capital efficiency directed at 2025
Bipolar lead storage batteries
Contribute through safe, long-life, low cost, recyclable batteries

Business strategy

Initiatives for realizing thestrategy

Maintain superiority in aluminum harnessesE xpand the harness business andincrease profitability
Reap the benefits from theinvestments in increased production

Secure orders and make α terminals thedefacto standard
Promote awareness of the superiority andreliability

Business environment

Energy Infrastructure

Increased customer needs for lighter weight ccelerated shift to EV in response to theAtrend toward
carbon neutral
SafetyLight weight

Aluminum wire harness use
Expand from 56 models of 6 manufacturers in the endof FY21 to 100 models of 8 manufacturers in FY25
Wire Harness saies revenue
Firm order
More
than
60%

Electrification
CN

Demand assumption: CAGR of +4 - 5%

Key products

Quasi-millimeterwave radar teering rollS
connector (SRC) ead battery stateLdetection sensor(BSS) roducts using flatP
cable

Aluminum harnesses
Corrosion-proof
terminal (α terminal)

High voltage products

Main applications

 dvanced driverA
assistance systems(ADAS)

Connector for airbags

 ehicle power sourceVmanagement

 lectricity supply andEsignal transmission
for sliding doors andlong slide seats educe the weight ofRvehicle wiring (W/H)

 iring for electricWvehiclesMain customersJ apanese automobile
manufacturers

T ier1

J apanese automobile
manufacturers

Automobile
manufacturersJ apanese automobile
manufacturersJ apanese automobile
manufacturers

FURUKAWA ELECTRIC GROUP

14

As decarbonization accelerates toward carbon neutrality, we will evolve existing products and create new businesses
in response to demands for global environmental consideration and safety, and contribute to power management,
vehicle weight reduction, safety, and electrification.

High voltage products

44

10

Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”

Strengths and challenges

Challenges of theDivision

(%)

21

16.5

249.9

240

FY2021Business environment

Corporate Information/Data(Estimate by Furukawa Electric)I mpact of the semiconductor shortage is
expected to remain ongoing until FY23
Continued supply chain issues
Further BCM related requirements from
customers
Soaring transportation expenses willremain prolonged

40%
FY21

50%

FY22

FY23

FY24

FY25

High
probablyorder
Approaching
the customer
Aluminumhamess raito

Promote redundancies/ resilience in the
supply chain
Enhance the supplemental production
systems at multiple sites
Bridge production, optimized production
network Secure “strategic space”
Reduce required manpower and space
through automationI ntegrated production from the aluminum
casting to cable manufacturing and laser
machining of the terminals
High corrosion resistance of
the α terminals
Prepare a response for next generation
wiring systems (from FY25)
Strengthen cooperation within the group
Unify and promote the brands
Consolidate / expand the productportfolio
Strengthen sales and marketing

INTEGRATED REPORT 2022

45

Business Overview

About Furukawa Electric GroupManagement Strategy

Management Foundation

2025 Mid-term Plan Targets (Net sales, Operating income, ROIC)Electronics & Automotive Systems

Net sales (left)(Billion yen)

Electronics
Component Materials

300

250.8

Operating income (right)

280.0

225

Corporate Vice President and General
Manager of Electronics Component
Materials Division

Takashi Yamamoto

150

7.0
4.8

Key revenue
opportunities

Major risks andthreats

Strengths of theDivision eeds for alternative materials due to risingN
prices of raw materials
Supply chain disruption due to geopolitical risks
and natural disasters

Challenges of theDivision

 aterial development and proposal capabilities
M
tailored to customer needs
Provision of high-performance, high-quality,
oxygen-free copper and copper alloy products
Production system for copper strip products
using renewable energy from hydroelectric power
generation
 aise presence in key markets by strengtheningRmarketing capabilities
Shift to low environmental impact manufacturing
processes and contribute to carbon neutrality inthe value chain

Business Overview / Products and Services
The Electronics Component Materials Division handles electric conductors, magnet wires, and copper & highperformance material products and is mainly engaged in the manufacture and sale of wires, automotive parts, andcopper products for electronics device materials.
Electric Conductors (Magnet Wires)

Copper Strips

Electrification (case)Carbon neutral
5G/B5G
Healthcare
Main products

Main applications

Main customers

46

 opper wires,Caluminum wires
 arious cables
VWire harness

 lectrical cableEmakers (internal-use)

FURUKAWA ELECTRIC GROUP

 xygen-free copperO
wires

Fine wires

 agnet wires forMalternators
Magnet wires for EV
motors obile phoneM
inductors
Relays (general use,
for automobiles)

 lectrical wire makers
EMotor makers

Electronics
component makers

 opper alloy strips
C
and thin plates

Oxygen-free copper
GOFC

 i-Ti alloy (wireN
tubes)

 obile phone terminals
MAnti-corrosion terminals
for automobiles
S emiconductor leadframes hielding strips
SSubstrates for heatdissipation

Stent guide wires

 erminal makers
TS emiconductor
component makers(internal-use)

 lectrical cable makers
EHeat pipe makers(internal-use)

10

7.5

5

5

0

2.5

-5

0

0

5

10

15

20 (%)

Vertical axis: Sales CAGR (from FY17-21→FY21-25)
Horizontal axis: ROIC (FY21→FY25
Bubble size: Absolute value of NOPAT (FY21→FY25)

FY2022(E)FY2025
As of 2022/8/4 Target

Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”

Strengths and challenges

I ncrease in demand that stems from vehicle
electrification and automatic driving
Increased requirement for non-magnetic andheat dissipation characteristics to satisfy
increased data trafficIncreased needs in minimally invasive medical
treatment

(%)

10

4.0

75

FY2021

Environmental analysis of the electronics component materials business(Billion yen)

260.0

0

Business environment

Corporate Information/Data

Medical productmanufacturers

We will contribute to solving social issues by developing materials and providing products with characteristics that meetcustomer needs in the automotive and information communication/electronics markets, and via clean manufacturing.

Main Strategies to Achieve the 2025 Mid-term Plan
Contribute to the realization of a sustainable society in the overall value chain through recycling-oriented
production activities ontribute to vehicle electrification by expanding sales of oxygen-free copper and copper alloy products
CContribute to the growing electronic component market by increasing production capacity of enamel wires
Increase added value by expanding copper alloys and plating products and improving product mix
Contribute to advanced medical care by increasing production capacity of nickel-titanium alloy products and developing new products

Key Measures in the 2025 Mid-term Plan: Maximize profits in existing businesses
through a focus on capital efficiency directed at 2025
Copper and high-performance materials
Develop high-performance materials with characteristics that meet customer needs and improve profitability
through clean manufacturing

Business environment

Business strategy

Vehicle electrification and autonomous
driving
As automobiles become more electronic,
the market for high-performance
communication devices, sensors, control
devices and passive components has
expanded

Development of high-function materials withcharacteristics that meet customer needs
Reduce device heat generation
Reduce malfunction ofelectronic components
Powersemiconductors(Image)5x increase in GOFCTM
volumeGreater demand for high-performance
products due to increased data trafficI ncreased demand for copper productswith conductive, thermal and nonmagnetic properties
Difficulty in procuring various metalmaterials due to supply chain disruptions
caused by geopolitical risks and natural
disasters

FY20

FY21

FY25

Clean manufacturing
Production using carbon-neutral energy
such as hydroelectric power
More recycling forresource conservation

Initiatives for realizing thestrategy
Maximize profits with limited
manufacturing capabilities
Product mix restructuring
Expand sales and establish a production
system for optical submarine cables that
support the global network, power
semiconductors, and oxygen-free copper
strips (including GOFC TM heat-resistantoxygen-free copper strips) for heatdissipation components
Expand sales of original alloys for highspeed communications-compatible
electronic devices (EFHD, high-resistancematerials)

Furukawa Nikko Power Generationhydroelectric power generation

INTEGRATED REPORT 2022

47

Business Overview

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data2025 Mid-term Plan Targets (Net sales, Operating income, ROIC)Net sales (left)

Operating income (right)(Billion yen)(Billion yen)240

Functional
Products

155.0
180

165.0

130.0

19.5

120

Corporate Senior Vice President
and General Manager of Functional
Products Division

Ryoji Ono

FY2021Business environment
 urther increase in demand for communications
Fand social infrastructure, driven by growth indata traffic and the proliferation of 5G
Solving SDGs, carbon neutrality and other social
issuesMajor risks andthreats

 upply chain insecurity (including geopoliticalS
risks, wars)
Semiconductor supply uncertainties, rawmaterial price hikes, etc.

Strengths of theDivision ifferentiated, advanced technology
Ddevelopment capability and patents
Fast, detailed, integrated services of technology
and sales

Challenges of theDivision o sustain and improve design and developmentTcapabilities that continue to create technologicaldifferentiation
Further promote advanced BCP throughoptimization of bases, etc., and initiatives to reduce
environmental impact such as carbon neutrality

Business Overview / Products and Services

AT & Functional Plastics

Memory Disk

Main customers

-5
0

5

10

15

20 (%)

Vertical axis: Sales CAGR (from FY17-21→FY21-25)
Horizontal axis: ROIC (FY21→FY25
Bubble size: Absolute value of NOPAT (FY21→FY25)

FY2022(E)FY2025
As of 2022/8/4 Target

Continue to develop products that respond swiftly to changes in customer needs, and to provide electronics
products with high-functionality or differentiation in the expanding market to support the telecommunications andsocial infrastructure markets.
Contribute to the realization of a sustainable society and establish a next-generation profit base with our products
for Society 5.0 for SDGs and differentiating strength to solve social issues to create a mechanism for carbon neutrality
Advanced technology
tapes (AT)

Solve issues related to semiconductor manufacturing processes and thermal issues associated with highspeed communications and increased information capacity
Contribute to national resilience and disaster prevention and mitigation through hard infrastructure,
products for disaster prevention and mitigation, and high-performance foaming products

Thermal management
Deliver differentiated thermal solutions that push semiconductor capabilities to their limits
solutions and products
Memory disks
Copper foil

Continue to provide high-function materials based on our long-cultivated technological capabilities
Contribute to high-speed communication through stable supply of reliable copper foil with low environmental impact

Tape for semiconductor process
Secure a stable supply network and continue to provide high performance/ well differentiated products and improve
profitability through clean manufacturing ape forT
semiconductor
process

 able protective pipesCTroughs made fromrecycled materials
Insulation materials

 opper, etc. includingCheat sinks and heatpipes

 urface protection,S
immobilizing, etc.
during semiconductor
wafer processing

 rotective pipes forP
underground cableTroughs for holding
cablesInsulation for air
conditioning ducts eat dissipation andHcooling of CPUs andpower semiconductors,
electronics
components, highoutput LED lighting, etc.

S emiconductor
manufacturers
Foundry
manufacturers

 eneral construction
G
companies andsubcontractors
Railroads
Highway public
corporations and roadsubcontractors
Air conditioning duct
manufacturers

 ata center operators
D
telecommunications
base station operators
Smartphone, PC
manufacturers
Manufacturers of power
conditioners for railroads
and solar powerL ighting equipment
manufacturers, etc.

 luminum blanks forA
HDD

 DD for use in dataH
centers, desktop
PCs and monitoring
cameras lectrolytic copperEfoil for printed wiringboards lectrolytic copperEfoil for batteries

 ircuit boards forCcommunication
devices and electronic egative electrodeNmaterials for lithium
ion batteries used forEVs, mobile phones,
power tools, etc.

FURUKAWA ELECTRIC GROUP

Business environment

Business strategy

Medium- to long-term demand growth in
the semiconductor market
Increased requirements for lower
environmental impact

Continued semiconductor demand growth
Secure a stable supply network

Global semiconductor market

Increase sales
1.8 times

 ircuit board material makers
CL ithium ion battery makers

Expand production capacity
CAPEX: Approx. JPY 7.0 bil. (FY22-FY25)
Start construction in Sept. 2022 with mass
production planned to start in April 2025

New building and manufacturing
line at the Mie Works
FY21

 DD substrateH
manufacturers

Initiatives for realizing thestrategy*Implement measures toreduce environmental impact
Waste heat collection
Solar power(Billion $)
1,000

0

*AT : Advanced Technology Tape

48

6

Key Measures in the 2025 Mid-term Plan: Maximize profits in existing businesses
through a focus on capital efficiency directed at 2025

Communication
infrastructure
Disaster prevention
and reduction

Main applications

0

Main Strategies to Achieve the 2025 Mid-term Plan

Copper Foil

Renewable energy

Main products

12

Provide solutions through co-creation with customers:
To support the expanding telecommunications and social infrastructure market, based on our strengths in proposing
and developing new products that meet customer needs

Functional plastics

The Functional Products Division is made up of the AT (Advanced Technology Tape) & Functional Plastics
Division, Thermal Management Solution & Products Division, Memory Disk Division and Copper Foil Division, and it isinvolved in the manufacture and sale of functional products made from plastics and nonferrous metals.
ThermalManagement
Solution & Products

5

Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”

Strengths and challenges

Key revenue
opportunities

18

0

0

Environmental analysis of the functional products business

10

8.5

7.6

60

(%)

24

2021

2025

2030

Market changes and technology issues
More heat generated from the wiring due
to higher densities
Thinner wafers as a result of 3D stacking
in response to increased data volume

FY25

Device & process advancements
Enhance the strengths in technology &MONOZUKURI ontinue to provide high performanceC/ well differentiated products
Adhesive, thermal conduction, base film design

Response to technology issues
Response to heat generation
Increase heat dissipation using adhesive
film with high thermal conductivity
Response to thinner wafers
Optimize through the base film andadhesion control

INTEGRATED REPORT 2022

49

Materiality of Revenue Opportunities

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Creating businesses that solve social issues
Furukawa Electric Group will leverage its four core technologies of metals, polymers, photonics and high-frequency,
which have been cultivated over many years with a focus on materials capabilities, to create businesses that solve
social issues through open innovation and co-creation with diverse stakeholders, thereby making great strides
forward. In this section, we will explain our efforts to create businesses that solve social issues by utilizing theGroup’s technologies in each of the four areas (information, energy, mobility, and new areas) that we have specificallyenvisioned based on the Vision 2030.

Information

Creation of photonics products to solve social issues in 2030
Based on its core technologies, the Group has theimportant task of contributing to the realization of nextgeneration networks as a partner in the IOWN concept*1.
Toward the year 2030, we aim to create photonics productsthat will play a role in supporting and being utilized in asociety in which various things are “simultaneously realized”
through the use of photonics and wireless technologies. To
this end, in fiscal 2022, we launched the “Next Generation
Photonics Business Creation Project Team” under the
direct control of the President.
In fiscal 2021, we developed the world’s first ExternalLight Source (ELS) for Co-Packaged Optics (CPO), which

will be introduced into next-generation network switch
equipment in data centers, by utilizing our photonics
technology of high-power compound semiconductor
lasers and optical packaging technology, and sample
shipments will begin in fiscal 2022. Through the provisionof ELS for CPO, we will contribute to the realization of ahigh-capacity information and communication and highefficiency energy society.
Our mission is to create photonics products that willsolve social issues in 2030 by steadily advancing otherproduct groups from the ground up.

EnergyDevelopment of bipolar lead storage batteries that contribute to utilization of renewable energy
We are jointly developing bipolar lead storage batteries,
a next-generation type of storage battery that has been
considered difficult to put to practical use, by combining
the metal and polymer technologies we have cultivatedover many years with the battery technology of The
Furukawa Battery Co.
Bipolar lead storage batteries have a simple structurethat enables high battery capacity, and they also do not
require temperature control when operating, making
them highly economical and reducing the total cost toless than half that of lithium-ion storage batteries. This
product can contribute to the stable supply of power
Factors in the social issues thatshould be resolved

MetalsPolymers
Plastic molding
technology

Creation

of p

prod
hotonics

olve soc
uc ts to s

ial issues

in 2030

Photonics

2030

2022

Excitation lightsource for Raman
amplifiers

Opticalamplification chipfor silicon photonics

High-speed
modulator
moduleHigh-power DFB
external lightsourceUltra-compact
wavelength
tunable laser

New functional
optic fibers*1. IOWN concept: An abbreviation for “Innovative Optical and Wireless Network.” The concept of a network and information processing infrastructure including
terminals that can provide high-speed, large-capacity communications and vast computing resources beyond the limits of conventional infrastructure byutilizing innovative technologies centered on optics.

Achievements of initiatives in FY2021 onward xhibiting an External Laser Source for Co-Packaged Optics
E
at OFC2022

Contributing to the realization of next-generation network switch servers
in data centers
https://www.furukawa.co.jp/en/release/2022/comm_20220307.html

50

FURUKAWA ELECTRIC GROUP

Main products andservicesstorage battery andFurukawa Leadpower supply technology
Battery UltraBatteryTM technology

Thin lead foil
Long-life

Adhesiontechnology

Social issues

Stakeholder trust

Compact, lightweight, normal
temperature, safety

Core technologies

generated by renewable energy.
In fiscal 2021, we undertook activities in cooperation with
our partners, including the announcement of cooperation
based on this product in a municipality project.
Furthermore, in fiscal 2022, we shipped the first sample
to the municipality. We will work on mass production,
mainly in the field of power storage in the renewableenergy market, which is expected to expand in the future,in order to achieve our sales target of ¥3 billion for fiscal
2025. Through the launch of this product and partnerships,
we aim to achieve carbon neutrality, infrastructureenhancement, and a resource-recycling society.

Bipolar leadstorage batteries

Development
and proposal
capabilities not
limited to specificmarkets
Technology forjoining dissimilarmaterials
Ability to develop
the optimum
materials forthe required
characteristics

Furukawa
Electric

Open, Agile,
Innovative
Partnerships
Co-creation
partners (local
municipalities,
etc.)

Creation of social issuesolving businesses
Stable supply of renewableenergy (safe, not temperaturecontrolled, high-capacity
storage batteries)

Realizeinfrastructureenhancement

Furukawa
Battery

Step 1: E arly realization of productcommercialization
Step 2: Business expansion throughKotozukuri (creation of an extraalpha service)

Realize carbon
neutrality

Expanded use of leadstorage batteries, whichhave an establishedrecycling system

Realize a resource
recycling-basedsociety

Commercialization and Practical Application Roadmap Aimed at Creation of Businesses that
Solve Social Issues
Products andservices
Bipolar leadstoragebattery

FY2021

FY2022

FY2023

Started sample
shipments, plan
to start productsupplyFY2024FY2025

FY2030

Sales on scale of¥3 billion

Business
expansion
through
Kotozukuri

Achievements of initiatives in FY2021 onward aser Light Sources to enable ultra-wide spectral
Lbandwidth for Optical Communications

Increasing capacity of Metro and Long-haul optical communication
networks for 5G and beyond
https://www.furukawa.co.jp/en/release/2021/comm_20210607.html

 upplied bipolar lead storage battery to the EV Urban
S
Development ProjectContributed to EV-centered urban development and strengthening
electric power resilience ipolar lead battery demonstration test started in off-gridBpower supply system for Ogi City Hall in Saga Prefecture
https://corp.furukawadenchi.co.jp/ja/news/news-20220914.html(Only available in Japanese)

https://www.furukawa.co.jp/release/2021/kenkai_20211224.html(Only available in Japanese)

INTEGRATED REPORT 2022

51

Materiality of Revenue Opportunities

About Furukawa Electric Group

EnergyManagement Strategy

Management Foundation

Corporate Information/Data

Mobility

Technology for Producing Green LP Gas with Ramune Catalyst™*1

Development of Blue-IR hybrid laser “BRACETM” that contributes to the electrification of mobility

In addition to contributing to carbon neutrality by
2050, we are developing catalyst technology to convert
greenhouse gases such as carbon dioxide and methane
into LP gas as a raw material, with the aim of contributing
to the establishment of social infrastructure that enables
local production for local consumption of energy and“grow local, continue local”*2 for rich local resources.
In fiscal 2022, our “development and demonstration ofgreen LP gas synthesis technology by innovative catalysts
and processes” was selected for the “Development of Fuel
Production Technology Using CO2, etc. Project: Developmentof Green LP Gas Synthesis Technology Without Using Fossil

As the move toward carbon neutrality is accelerating globally,
demand for the electrification of mobility is expected to
grow further. Furukawa Electric has developed the Blue-IR
Hybrid laser*1 BRACETM equipped with a high-brightness
blue laser diode module jointly with Nichia Corporation. This
product can contribute to the improvement of productivity(quality and processing speed) in the process of welding
copper, which is a conductor in lithium-ion batteries,
motors, inverters, and other components that are key
components for electric mobility, as well as labor saving inFuels,” a Green Innovation Fund (GI Fund) project of the
New Energy and Industrial Technology Development
Organization (NEDO), a national research and development
corporation. In addition, green LP gas made from biogas
derived from cow manure in Tochigi Prefecture was also
provided as part of the fuel for the torch*3 of the “Ichigo
Ichigo-kai Chigi National Athletic Meet and Tochigi Games.”
We will continue to contribute to the realizationof carbon neutrality and the building of new social
infrastructure in communities through co-creation
with a wide range of stakeholders, including Hokkaido
University and local municipalities.

Factors in the social issues thatshould be resolved

SocialissuesStakeholder trustCore
technologies

Realize carbon
neutrality

MetalsCreation of social issue-solving businesses

Build a new business model for biofuel that enables local
consumption of local production, storage and transportation

Ramune catalyst™

Metal catalyst
Catalyst
technology

Several nm

Catalyst

Porousmaterial

BiofuelCatalyst
characteristics

Help local communities
become independent
Local
community

Greenhouse gases (CO + methane)

Localcommunity2

Cleanenergy(LP gas)Core
technologies

Photonics
Optical fiber
Town planningfor mitigating
disasters

Opticalcomponents
Semiconductor
laser diodes (LD)

Normal householdenergyDevelopment
and proposal
capabilities
not limited
to specificmarkets

MetalsLivestock manure
Local
community

Hokkaido University
Joint research anddevelopment of metal
catalyst fixation
technology

Livestock manure dairy &livestock industries

Co-creation partners(local municipalities, etc.)

Emergency
energyEnergyFormation of a regional
recycling symbiosis zone

Local
community

Regional
revitalization& stimulationof regional
economies

Optimummaterial
Welding
parameters

Open, Agile,
Innovative
Partnerships

Blue-IR Hybrid
laser BRACE TM

Copper foil
weldingNichiaCorporation

Fiber laser
weldingtechnology

Polymers
Material
processing
Technology

Products andservices

Highestperformance
GaN laser diodes
in the world

NITTOKU

Copper,aluminum,galvanized steel,dissimilar metal
weldingWirewelding

Winding machine
FA*2 solutions

Welding aluminum materials for automotive applications
Aluminum wire harness & alpha terminal welding

Creation of social issuesolving businesses

Increasedstorage
capacity oflithium-ion
batteries

Smaller motors
for xEV

Growth of the xEV market

Development and proposal
capabilities not limited to specificmarkets

SocialissuesStakeholder trust

Copper processing, high output lasers, highquality welds

Solve customers’ issues by providing solutions

Expectations for biofuels, long-life
catalysts, manure disposal

Factors in the social issues thatshould be resolved

the manufacturing process. Furthermore, in response to
the issues of the amount of spatter during processing andthe narrow application area for weldable thickness, theBRACETMX, which we launched in fiscal 2021, has been able
to cover the main areas for copper materials used in xEV
powertrains by further increasing the output of the blue
laser. We will continue to provide new copper processing
solutions to solve our customers’ challenges and contributeto the expansion of demand for electric mobility based on
the acceleration of carbon neutrality.

Realize carbon
neutrality

Lighter weight,
improved fuelefficiency of vehicle*1. Blue-IR Hybrid Laser: A hybrid laser combining a high-power blue oscillator featuring the world’s highest-performance GaN laser diode (LD) from Nichia
Corporation with a high-brightness blue laser diode module that combines Furukawa Electric’s laser module assembly technology with a near-infrared (IR)single-mode fiber laser*2. FA: Factory automation

Open, Agile, Innovative Partnerships*1. Ramune catalyst™: Furukawa Electric has succeeded in fixing a metal catalyst inside a porous material. This catalyst has flocculation and coking resistance, which
has been an issue with conventional catalysts, and is highly active and long-lived in dry reforming reactions where synthesis gas is obtained from biogas. We named
the catalyst Ramune Catalyst™ because the way the catalyst is fixed inside the porous material resembles a bottle of ramune (a Japanese carbonated soft drink).
*2. Grow local, continue local: This expresses in addition to local production for local consumption, passing on regional resources and cultures to the next generation.
*3. Torch: The Torch is a symbol of the Sports Festival, similar to the Olympic flame.

Commercialization and Practical Application Roadmap Aimed at Creation of Businesses that
Solve Social Issues
Products andservices

FY2021

Technology for
producing LPG
with Ramune
Catalyst™

FY2022

FY2023
Demonstration
by small test
machineFY2024FY2025

FY2030Field
demonstration
tests

Practical use

Achievements of initiatives in FY2021 onward dopted in “Development of Green LP Gas Synthesis
A
Technology,” a NEDO Green Innovation Fund project

Toward the realization of sustainable green LP gas without relying on fossil fuels
https://www.furukawa.co.jp/release/2022/kenkai_20220523-2.html(Only available in Japanese)

Succeeded in synthesizing green LP gas from biogas, a world firsthttps://www.furukawa.co.jp/release/2022/kenkai_20220523.html(Only available in Japanese) urukawa Electric and Shikaoi Town, Hokkaido Sign
F
Comprehensive Collaboration Agreement

 urukawa Electric and Hokkaido University established anFendowment field

Toward the Realization of a carbon-free and Recycling-Oriented Societythat Maximizes the Utilization of Local Resources
https://www.furukawa.co.jp/release/2022/kenkai_20220818.html(Only available in Japanese)52 reen LP gas supplied for torch fuel as the official supplierGof the Ichigo Ichie Tochigi National Sports Festival.

FURUKAWA ELECTRIC GROUP

Collaboration aimed at the realization of a carbon-free society and arecycling-oriented society
https://www.furukawa.co.jp/release/2022/kenkai_20220819.html(Only available in Japanese)

Commercialization and Practical Application Roadmap Aimed at Creation of Businesses that Solve
Social Issues
Products andservices

FY2020

FY2021

Blue-IR hybrid
laser BRACE TM

BRACE TMI
commercialized

BRACE TMX
commercialized

FY2022

FY2023Further advancement

FY2024FY2025

Sales target: At
least ¥10bn

Achievements of initiatives in FY2021 onward urukawa Electric and Nichia Form a Business Alliance inFCore Technology (Laser Processing) Supporting the
Production of Mobility Electrification

Deepening market exploration and co-creation by integrating production
bases for blue laser diode modules and opening joint operation labs forlaser processing
https://www.furukawa.co.jp/en/release/2021/kei_20210426.html

 tarting Sales of the “BRACE™ X” Blue-IR Hybrid Laser
S
with a 1kW blue laser

The blue laser output is 7 times higher than the current model, and it will
reduce power consumption when welding by at least 30% compared to thecompany’s other products
https://www.furukawa.co.jp/en/release/2021/kenkai_20211124.html

For details, please see our website page “Industrial Lasers.”
https://www.furukawa.co.jp/fiber-laser/en/

INTEGRATED REPORT 2022

53

Materiality of Revenue Opportunities

About Furukawa Electric GroupNew areas54

FURUKAWA ELECTRIC GROUP

Corporate Information/Data

Environmentally friendly products and “e-Friendly” accreditation system

Michi-ten Create andmanage records
Snap
Just
drive

1 Driving recording

2 Image analysis

3 Creation of digitalrecords (checklists, etc.)

Recordupdating

Video data
extraction

•Type
•Map
•Latitude and •Photographs,
longitudeetc.

Michi-ten Detailed
inspections
Assist5 Onsite verification and result recording

Easy
inspection

Michi-ten Daily
Cruise patrols
Recordupdating

4 Digitization of patrol operations

Definite
judgments

Preventive
maintenancewithoutomission

Since 2008, Furukawa Electric Group has comprehensively evaluated products (including
services) for their entire product lifecycle and defined those that contribute to a reduction
in environmental impact or have a positive environmental impact as environmentallyfriendly products. We strive to raise the proportion of these products. The “e-Friendly”
mark, an environmental mark indicating that the product is an environmentally friendly
product, is displayed on the exterior and in catalogs for applicable products.

Achievements of initiatives in FY2021 onward ompleted the “Demonstration Experiment for EfficientC
Implementation of Inspection Work for Small Road Fixtures”
with Utsunomiya City

https://www.furukawa.co.jp/release/2022/kenkai_20220428.html(Only available in Japanese) ompleted the “Road Sign Maintenance DX Project,” aCdemonstration experiment with the City of Nagoya

Using proprietary RPA and drive recorders, we contribute to the efficiency
of inspection work as stipulated by the Ministry of Land, Infrastructure,
Transport and Tourism
https://www.furukawa.co.jp/release/2022/kenkai_20220516.html(Only available in Japanese)
For details, please see our website page “Maintenance andmanagement solutions for roadside fixtures.”https://www.furukawa.co.jp/en/product/development/
infra/maintenance.html

equipped with TelluminoTM to further reduce the burden on
patients, contributing to the development of implantable
medical devices such as CV ports.

e-Friendly markCategories of environmentally friendly products
The Group’s environmentally friendly products fall under one of the following four categories.

Screening

Development of TelluminoTM, a technology that enables visual confirmation of the location of
implantable medical devices from outside the body
In recent years, advanced medical technology has enabled
a wider use of minimally invasive treatments using
implantable medical devices*1.
Subcutaneous implantable ports for drug infusion (CVports)*2 are widely used around the world for therapeutic
applications involving drugs as effective implantable
medical devices that reduce the burden on patients andlabor on the part of healthcare professionals. However, theact of inserting a dedicated needle to inject a drug into a
CV port (puncture) requires indirect confirmation of the
CV port’s implantation position by palpation, and accurate
confirmation of the position requires appropriate training
and skill of the puncturer. This can cause stress on both thepuncturer and the patient at the time of puncture.
TelluminoTM, developed by Furukawa Electric, is a medical
solution technology that uses a mechanism allowing
multiple LED light sources to be mounted on the CV port
by turning on the LED light sources without contact andmaking the location of the CV port easily visible fromoutside the body. The position of the CV port can be seen
with the naked eye without the use of special equipment or
drugs such as X-rays or contrast media, allowing medical
personnel to puncture the CV port more reliably in a shorttime and reducing the mental and physical burden on thepatient caused by the use of equipment or drugs.
In the future, we will improve the design of CV ports

Management Foundation

Environmentally Friendly Products

Michi-tenTM series of maintenance andmanagement solutions for roadside fixtures
Accidents due to aging road fixtures (road signs, roadlighting, guardrails, etc.) are occurring throughout Japan.
Although systematic maintenance and management offacilities is important to prevent accidents from occurring,
many municipalities and road administrators are expected
to find it difficult to sustain inspection and maintenancework on a vast number of road fixtures due to labor
shortages and financial challenges caused by the adventof a society with a shrinking population.
Consequently, Furukawa Electric has developed
proprietary digital transformation (DX) technology andis providing the Michi-tenTM series of maintenance andmanagement solutions for roadside fixtures to realize
new maintenance cycles. This enables highly accurate
and efficient inspection and maintenance of road
fixtures, which were previously handled only manually.
The Michi-tenTM series has started being introduced atmany municipalities and road administrators already.
Moreover, with the aim of achieving even more advanced
technology, we are conducting demonstration tests incooperation with municipalities and road administrators.
We will continue to provide services based on DX solutions
to solve infrastructure maintenance issues facing Japanesesociety and contribute to “safe, secure, and comfortable living”.

Management Strategy

Category

Description

Prevention of global warming

Products that have the function of reducing greenhouse gas emissions or contributing to their absorption or fixation

Zero emissions

Products using recycled materials, products designed to facilitate recycling of components, products that reduce theamount of waste by using materials and designs that facilitate volume reduction, and products with common designs
for components and products

Environmentally sensitive
substance-free

Products that do not increase the use of ozone-depleting substances in the manufacturing process, that containhazardous substances in the product below the specified value, and that do not generate hazardous substances above
the specified value during use and disposal

Saving of resources

A product that is resource-saving overall due to reduced use of raw materials and parts, reduced use of scarce resources,
improved product life, easier maintenance of parts and products, and reduced use of resources for packaging materials

In fiscal 2021, we positioned the “Sales ratio ofenvironmentally friendly products” as a sustainability
indicator for the revenue opportunity materiality of
the “creation of social issue-solving businesses andcreation of environment-friendly businesses.” We aim
to achieve our sustainability target of “a ratio of 70% of
environment-conscious product sales” in fiscal 2025.
In addition, we have set the “ratio of renewable energy
to electricity consumption” as a sustainability indicator
for the risk materiality “development of business activities
that consider climate change*.” For more than a century,
the Group company Furukawa Nikko Power Generation
Inc. has been generating hydroelectric power using waterfrom Lake Chuzenji in Nikko, famous for the Kegon Falls.
Most of the power required at Furukawa Electric’s Nikko
Works is provided by this hydroelectric power generation.
Copper products and superconductive products areregistered as certified environmentally friendly productsof Furukawa Electric Groupbecause the electricity
used in the manufacturing
process at the Nikko Works
is supplied by renewableenergy (hydroelectric power
Furukawa Nikko Powergeneration).
Generation Inc.’s hydroelectric
power generation*For details, please see “Efforts to reduce greenhouse gas (GHG) emissions: Use of renewable energy” on page 79 of this report.

Indicators and targets
Materiality “Creating businesses that solve social issues / Creating environment-friendly businesses”
Indicator*1. Implantable medical devices, such as cardiac pacemakers and artificial
joints are devices implanted in the body.
*2. Subcutaneous implantable port (CV port) is implanted under the skin andused to administer drugs.

Achievements of initiatives in FY2021 onward

(
Group

 eveloped technology to visually confirm the location ofD
implantable medical devices from outside the body

The turning on of the light indicates the location of the port for drug
injection, reducing the burden on patients and healthcare professionals
https://www.furukawa.co.jp/release/2021/kenkai_20210927.html(Only available in Japanese)
For details, please see our website page
“Internal medical device location detection solutions.”
https://www.furukawa.co.jp/tellumino/(Only available in Japanese)

Target: Sustainability indicator)

FY2021

FY2022

FY2025

Sales ratio of environmentally friendly products

61.9%

64%

70%

Environmentally friendly product dataE xpansion into Life Sciences as a New Business Sector

Established a joint development agreement with Atonarp Inc., thedeveloper of an advanced optical measurement platform
https://www.furukawa.co.jp/en/release/2021/kei_20210524.html

ResultFurukawa
Electric

Group

Unit

FY2017FY2018FY2019FY2020

FY2021

Cumulative no. of cases of environmentallyfriendly products recorded

Cases

116

121

126

130

131

Environmentally friendly product sales ratio

%

51.1

64.8

66.4

68.4

74.3

Cumulative no. of cases of environmentallyfriendly products recorded

Cases

92

105

137

149

156

Environmentally friendly product sales ratio

%

32.6

40.5

56.2

58.2

61.9

For details, please see our website page
“Environmentally Friendly Products”
https://furukawaelectric.disclosure.site/en/themes/102

INTEGRATED REPORT 2022

55

About Furukawa Electric Group

2Intellectual Property Strategy of Furukawa Electric Group
Our Group’s basic policy is to consider intellectual property an important management resource and to make use of it. We
promote group and global intellectual property activities by integrating business, R&D, and intellectual property.
The basic policy consists of the following three pillars:(1)

IP Landscaping to strengthen
management and businessstrategy planning capabilities

Strengthen management and business strategy planning capabilities byusing IP Landscaping, which analyzes and utilizes intellectual property
information by incorporating it into strategy planning processes.

(2)Open & Closed strategies forutilizing intellectual property

utilization, creation, and then protection)* that
Run a cycle (analysis
starts with analysis
utilization of intellectual property, and formulate
and implement Open and Closed strategies to enhance businesscompetitiveness.

(3)

Reduction of intellectual
property risks to ensurestable business execution

Recognize infringement risk, technology outflow risk, contract risk, andcounterfeit risk, as four frequent risks with a significant impact, andcontinuously reduce such risks to ensure stable business execution.

* Basic concept of promoting intellectual property management: In order to enhance our business, we implement intellectual property strategies for our uniquedifferentiating technologies and run a cycle starting with analysis utilization of intellectual property.

Based on (1) to (3) above, we are working from the two major perspectives of risk minimization and chance maximization
to realize the Furukawa Electric Group Vision 2030 and achieve the SDGs.

Management Foundation

Corporate Information/Data

Chance maximization

We seek new business fields and business models
through IP Landscaping, which analyzes the competitiveenvironment and market environment including intellectual
property information of our own and other companies.
In order to realize a leap forward through the creation ofbusinesses that solve social issues, we will promote the useof IP landscapes in businesses that support next-generation
infrastructure and environmentally friendly businesses
while supporting the development of foundations for thecreation of new businesses toward 2030.

Implementation of IP landscaping

Business strengthening theme

New markets

Intellectual Property

Management Strategy

New business creation theme

Information area

Energy area

Information area

Energy area

Theme 1

Theme 1

Theme 2

Theme 3 4

Mobility area

New areas

Mobility area

New areas

Theme 1

Theme 1 2

Theme 2

Theme 3CD
AB
Information area

Existing markets

Materiality of Revenue Opportunities

In the Ansoff Growth Matrix (see right), we have so far expanded
our intellectual property portfolio and reduced business risks forexisting products in existing markets. Going forward, we will
focus on business enhancement and new business creation
themes in the other three domains, and by strengthening ourability to formulate management and business strategies
through the use of IP landscapes, we will support creating newvalue and acquiring revenue opportunities.

Theme 3 4 5 6Energy area
Theme 2

Existing products

New products

Indicators and Targets

1

Materiality “Open, Agile, Innovative” and “Building partnerships with various stakeholders”
Risk minimization

Indicator(

We minimize business risks by protecting our unique
technologies that differentiate our products from otherswith intellectual property rights and technical know-how.
In the areas of information, energy, and mobility, wedevelop and thoroughly use the intellectual property
portfolio on the basis of detailed competitor analysis inorder to grow by enhancing businesses that solve social
issues. We also support maximizing the revenue of existing
businesses with a focus on capital efficiency toward 2025.

Number of domestic intellectual property rights held
Research

9%475

Other businessdivisionsFiber cable

11%

33%

1,736

571

Total

5,175

15%

28%

759

1,438

Number of foreign intellectual property rights held
Research

8%

Approximately half of the intellectual property rights(patent rights, utility model rights, design rights, andtrademark rights) held by the Company comprises a
portfolio of optical fiber cables (Optical Fiber and Cable
Products Div.), power cable systems (Power Cable Div.),
wire harnesses (Automotive Products Div.), and tape forsemiconductor manufacturing (AT and Functional Plastics
Div.). In these businesses, we will utilize intellectual
property through the Open and Close strategy andstabilize business execution by reducing intellectual
property risks.

4%

196

AT and functional
plastics

Automotive
products

Expand the intellectual property portfolio

Power

327

Fiber cable

40%
1,547

334

Total

3,869

Power

1%
49

AT and functional
plastics
Automotive
products

I P landscape implementation rate for business enhancement andnew business creation themes*1

Group

21%
809

TargetFY2021

FY2022

FY202517%30%

100%*2*1 T
 he business enhancement and new business creation themes include “maximizing the profitability of existing businesses with a focus on capital efficiency toward2025” (e.g. fiber optic cables, power cable systems) and “establishing foundations for creating new businesses by 2030” (e.g. bipolar lead storage batteries).
*2 This means that all projects have been implemented with respect to the business enhancement and new business creation themes set as of 2022.

Number of rights held in Japan(Cases)6,000

Patents

Designs

Number of foreign rights held
Trademarks(Cases)Utility models

6,000

4,000

4,000

2,000

2,000

0

Patents

Designs

Trademarks

Utility models

0
2016

2017

2018

2019

2020

2021

2016

(FY)

2017

2018

2019

2020

2021

(FY)

Intellectual property (patent) data

9%

Other businessdivisions

ResultSustainability indicator)

Furukawa
Electric

Patents

FY2017FY2018FY2019FY2020

FY2021

Number of patents held in Japan

Cases

4,644

4,605

4,523

4,388

4,423

Number of foreign patents held

Cases

2,507

2,712

2,910

2,976

3,160

* The increase or decrease in the number of patents includes the results of periodic update of inventories of patents held.

For details, please see the “Intellectual Property
Report” on Furukawa Electric’s website.
https://www.furukawa.co.jp/en/rd/ip-report/

21%

803

56

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

57

DX

About Furukawa Electric Group

Digital Transformation (DX) of
Furukawa Electric Group
The Basic Concept of the Digital Transformation (DX) Strategy
Furukawa Electric Group will plan and formulate a DX strategy based on the following ideas, referring to the Ministry of
Economy, Trade and Industry’s Furukawa Electric Group will plan and formulate a DX strategy based on the following ideas,
referring to the Ministry of Economy, Trade and Industry’s.
1

Position DX as a top-down management strategy in the medium-term plan, and create and share the vision and policy
across the entire company.

2

Provide an overall picture of the target areas, and for each area, organize and present targets for achieving a competitive advantage
by 2030.

3

Formulate a plan for human resource development and recruitment by clarifying the image and goals of the required
human resources.

4

In order to optimize the entire process using digital technology, develop data infrastructure that spans the entire process,as well as data infrastructure that spans manufacturing, sales, and logistics by product unit.

Management Strategy

Taking up the Monozukuri DX and the Kotozukuri DX fromthe viewpoint of a value chain, the Monozukuri DX helps
improve the quality, productivity, and maintenance offactories, mainly by digital improvement, and contributes
to raising profitability. AI-driven automated manufacturing
and visual inspection with support from AI are highly
expected internally and many projects are under way.
Some of them are already adopted and are being operated
at mass production plants.
In the meantime, planning of new products anddevelopment of new materials by use of AI functions
are also within the scope of the Monozukuri DX but canbe considered as providing the entry to the upstream ofthe value chain. In order to advance product design andPursuit by digital twins and deepening of technology to realize it*1: Monozukuri means production’ or ‘making of things’ in Japanese.
*2: Kotozukuri means “creation of an extra-alpha service’ in Japanese.

Transformational
areas
Value
innovation
Remote support

Operationalinnovation

Process
innovation

Knowledge database
Natural language
processing

Many
Visualinspection projects

Promotion ofcomprehensive
efficiency of facilities

Simple replacementof human work

58

FURUKAWA ELECTRIC GROUP

SafetyPrevention
Technology transfer

Material design

Kotozukuri DX
Services, usage of data

Optimal value
suggestion

Monozukuri DX
Improving the efficiencyof manufacturing

Simulation

Attribution
analysis

Kotozukuri DX
New DX BusinessPhysical condition
prediction

Alerting

Forecast

Automatic
control andprevention

Technology
deepeningmaterial design, we are working on Materials Informatics
using AI and accelerating development of new materials.
Moreover, with the aim of expanding into services andmaintenance by use of technology, we put efforts todevelopment of DX technology for detection of thelocation and movement of wild animals and the DX for the
primary industry (AI dairy farming) as new DX business of
Kotozukuri. We are looking forward to additional cases of
expanded use of technology.
As such, we are working to go beyond smiling-face curve
status with margins being higher toward the upstream end
and a downstream end, and to take a wider view of thevalue chain as our business field.

Monozukuri DX
Focus on digital
improvement
Electronics &Core
Infrastructure
Automotive
technologies
Systems

Digital Innovation Center: Establishment and activities
marketing. With the aim of reinforcing corporate-wide DX
promotion, the Digital Innovation Center was transferred
within the Strategy Division in April 2022, to enhance DX
planning and drafting, and build a stronger DX workforce.
The Digital Innovation Center’s activities can be looked
at as having two axes: “deepening of technology” and“transformational areas.” On the technology axis, weare keen to deepen tasks by advancing from 1) simple
replacement of human work to 2) construction of data
analysis infrastructure, and then to 3) attribution analysis andforecast, and further to 4) automatic control and prevention.
In terms of transformational areas, we consider all threeareas of DX: (1) Monozukuri*1 DX: Process Innovation; (2)Kotozukuri*2 DX: Operational Innovation; and (3) Kotozukuri
DX: New DX Business. We are increasing the number of DX
projects in both Monozukuri and Kotozukuri. As our Group
receives requests for work for process innovation, we willdevelop capability from activities in this field.

Corporate Information/Data

DX2.0 digitalization enables a move of the smiling-face curve to upstream and downstream

Materiality: “Open, Agile, Innovative”, “Creating businesses that solve social issues”
As part of our commitment to quality and reliability, we
have been working on statistical analysis technology
for a long time, and in the 2010s, we also introduced
technologies such as big data analysis and deep learning.
With these technologies as elemental technologies, we
set up the Digital Innovation Center within the Research& Development Division in April 2020 in order to establish
digital technologies, represented by AI/IoT, as fundamental
technologies that support the entire company.
The Digital Innovation Center serves as the core of ourgroup, with the aim of strengthening digital technology
to achieve the SDGs and solve social issues. We areworking to create high added value by leveraging AI andmanufacturing innovation based on digital technology. Asa core organization for digital technology that is developed
and used throughout the company, we are promoting thedevelopment of digital software infrastructure throughactivities that integrate R&D, manufacturing, ICT, andManagement Foundation

Added value
andprofitability

New Monozukuri

MI* material design; use of
products and data

Product planning andmaterials development

MetalsHigh
Polymers
frequency
Functional
Photonics
Products

New Kotozukuri

Assembly, processing,
distribution and sales

Service andmaintenance

Creation of the value base
Upstream

Existing business fields+ Service and maintenanceNew digital businessIn close contact to final users
Business process

Downstream (customers’ side)*MI: Material Infomatics

Materiality: “Strengthening human capital management and organizational execution abilities”
Development and strengthening of in-house digital human capital
As part of efforts to strengthen digital-savvy personnel,
we are strengthening recruitment of new graduates andincreasing those on a career track. For recruitment of new
graduates, we are increasing our contacts with informationrelated departments of universities that we have had little
contact with so far. One of such examples is participation ina social collaboration course of the Department of Computer
Science of the Tokyo Institute of Technology. For careertrack hiring, we are working to make our DX initiatives more
widely known. Nevertheless, digital talent is short in supply
across the entire industry, and there is a limit to enhancing
our digital workforce by hiring people. So, we are also
developing digital-savvy personnel in-house. Our research
department has been using the e-learning programs of
Aidemy, Inc. since 2018. In addition to the ease of use of its
e-learning capability and its technology that covers systemdevelopment, Aidemy’s vision (economic implementationof AI and support for in-house production of companies)
and the activity concept of the Digital Innovation Center
resonated. So, we entered into a capital and businessalliance with Aidemy in June 2021.
We have defined our digital human capital as being madeup of three types—DX planners, digital technology specialists,and digital users—and have set the recommended content
for each. As for DX planners, key people must be developedon the business side, so on-the-job training in a DX promotion
project and e-learning are combined to train them. As digitaltechnology specialists, AI engineers and software engineers
in the Digital Innovation Center are being trained in greaternumber and in terms of greater depth, in order to accelerate
AI/IoT in-house implementation. The target for digital users
is all employees, whose digital literacy will be improved bydigital introduction and utilization seminars, and e-learning
being offered to them.

Achievements of initiatives in FY2021 onward
Furukawa Electric and Aidemy Conclude Capital andBusiness Alliance
Joint realization spanning DX human resource development to new
business development
https://www.furukawa.co.jp/release/2021/kei_20210622.html(Only available in Japanese)

For details, please see our website page
“Digital Innovation Center”
https://www.furukawa.co.jp/en/rd/profile/digital.html

INTEGRATED REPORT 2022

59

Furukawa Electric’s Executives

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Directors and Audit & Supervisory Board Members (as of June 23, 2022)
Directors

Mitsuyoshi Shibata
Chairman of the Board
Director
Tenure as Director: 12 years eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Nominating / Compensation
Committee: 100% (8/8)

Keiichi Kobayashi
President
Representative Director
Tenure as Director: 7 years

Osamu Tsukamoto

Takashi Tsukamoto

Yoshiro Miyokawa

Yukiko Yabu

Tamotsu Saito

Director (Outside, part-time)

Director (Outside, part-time)

Director (Outside, part-time)

Director (Outside, part-time)

Director (Outside, part-time)

Tenure as Director: 9 years

Tenure as Director: 1 years

Tenure as Director: 3 years

Tenure as Director: 3 years

Tenure as Director: 1 year eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Nominating / Compensation
Committee: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Nominating / Compensation
Committee: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (12/12)
Nominating / Compensation
Committee: 100% (7/7)

 eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Nominating / Compensation
Committee: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Nominating / Compensation
Committee: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (12/12)
Nominating / Compensation
Committee: 100% (7/7)

Corporate Vice Presidents who are not
Directors, and Senior Fellows(as of September 16, 2022)

Corporate Senior Executive Vice President
HiroyukiOgiwara-Corporate Executive Vice President
Takamitsu
KozukaGeneral Manager, Energy Infrastructure DivisionCorporate Senior Vice Presidents

Satoshi Miyamoto

Akihiro Fukunaga

Hideya Moridaira

Yoshio Masutani

Director
Corporate Executive Vice
President,
General Manager, Strategy Division

Director
Corporate Senior Vice President,
General Manager, Finance &Accounting Division

Director
Corporate Senior Vice President,
General Manager, Communications
Solutions Division

Director
Corporate Senior Vice President,
General Manager, Global Marketing
Sales Division

Tenure as Director: 3 years

Tenure as Director: 3 years

Tenure as Director: New

Tenure as Director: NewMeeting attendance (FY2021)

Meeting attendance (FY2021)

Meeting attendance (FY2021)

Meeting attendance (FY2021)

Board of Directors: 100% (16/16)

Board of Directors: 100% (16/16)

Board of Directors: -Board of Directors: -Foad
Shaikhzadeh

President, Furukawa Electric LatAm S.A (Brazil)

Ryoji Ono

General Manager, Functional Products Division

Shigenobu Abe

General Manager, Automotive Products DivisionCorporate Vice Presidents

Audit & Supervisory Board Members

Jun Goto

Managing Director, Furukawa (Thailand) Co., Ltd.

Gyula
Besztercey

President, Furukawa Electric Institute of Technology Ltd. (Hungary)

Toru Fukushima

General Manager, Sustainable Energy Succession Project Team and
Deputy General Manager, Research & Development Division

Keiichiro
UrakamiTeruyoshi
UchidaMichihiro
ShimadaToshio Yanagi
Eiichi Nishimura
Toshihiko Ota

Nozomu Amano

Yoshiaki Mizota

Masao Terauchi

Kunihiko Sakai

Sayaka Sumida

Takao Shiomi

Audit & Supervisory Board
Member (Full-time)

Audit & Supervisory Board
Member (Full-time)

Audit & Supervisory Board
Member (Full-time)

Audit & Supervisory Board
Member (Outside, part-time)

Audit & Supervisory Board
Member (Outside, part-time)

Audit & Supervisory Board
Member (Outside, part-time)

Tenure as Audit & Supervisory
Board Member: 4 years

Tenure as Audit & Supervisory
Board Member: 3 years

Tenure as Audit & Supervisory
Board Member: New

Tenure as Audit & Supervisory
Board Member: 4 years

Tenure as Audit & Supervisory
Board Member: 2 years

Tenure as Audit & Supervisory
Board Member: 1 year eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Audit & Supervisory Board
Meeting: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Audit & Supervisory Board
Meeting: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: Audit & Supervisory Board
Meeting: - eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Audit & Supervisory Board
Meeting: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (16/16)
Audit & Supervisory Board
Meeting: 100% (8/8)

 eeting attendance (FY2021)
M
Board of Directors: 100% (12/12)
Audit & Supervisory Board
Meeting: 100% (7/7)(Note) Meeting attendance (FY2021)· In fiscal 2021, 16 Board of Directors meetings and eight Audit & Supervisory Board meetings were held. In fiscal 2021, The Nominating/Compensation Committee consists of five or
more members selected from among the Directors by the Board of Directors, In addition, we have a “Nominating/Compensation Committee” with a majority of the members being
Outside Directors to ensure objectivity and transparency regarding deliberation and decision procedure of nomination/compensation for directors and officers. In fiscal 2021, eight
Committee meetings were held.

60

FURUKAWA ELECTRIC GROUP· Mr. Takashi Tsukamoto (Outside Director), Mr. Tamotsu Saito (Outside Director) and Mr. Takao
Shiomi (Outside Audit & Supervisory Board Member) were newly elected at the 199th Annual
Shareholders Meeting held on June 24, 2021. Therefore, their meeting attendance numbers
differ from those of other Outside Directors or Outside Audit & Supervisory Board Members.

General Manager, Chubu Branch, Global Marketing Sales Division
General Manager, MONOZUKURI Innovation Division
General Manager, Incubator Department, Research & Development
Division
General Manager, Risk Management Division
General Manager, Power Cable Division, Energy Infrastructure
Division
General Manager, Next Generation Photonics Business Innovation
Project

Takashi
Yamamoto

General Manager, Electronics Component Materials Division

Mami Masuda

General Manager, Investor Relations Department, Finance &Accounting Division and General Manager, Public Relations
Department, Strategy Division

Kazunori Saka

Deputy General Manager, Global Marketing Sales Division

Akira Fujisaki

General Manager, Research & Development Division

Katashi Hanaya

General Manager, Business Transformation Team

Shozo Yano

General Manager, AT & Functional Plastics Division, Functional
Products Division

Takaaki Sugii

Deputy General Manager, Strategy Division

Senior Fellows
Akihiko
Kasukawa
Michio Okubo
Hiromi Ohashi

Senior Fellow, Telecommunications & Energy Laboratories,
Research & Development Division
General Manager, Intellectual Property Department, Research &Development Division
Deputy General Manager, Next Generation Photonics Business
Innovation Project

INTEGRATED REPORT 2022

61

Message from Outside Directors

About Furukawa Electric Group

Takashi Tsukamoto

Osamu Tsukamoto

Yukiko Yabu

Outside Director

Outside Director

Outside Director

Management Strategy

discussion, paying attention to how to advance themanagement processes with what kind of a medium- tolong-term vision, in order for our Group to grow sustainably
and continue to be a presence needed by society.

Optimize a business portfolio by making full use of
ROIC and FVA

Message from Outside Directors

We will advance the monitoring of Furukawa’s
aggressive and future-oriented 2025 Midterm Plan and support the sustainable growthof Furukawa Electric GroupKey points of the 2025 Mid-term Plan taken up
by outside directors
Takashi Tsukamoto The 2025 Mid-term Plan (25 MTP) wasannounced in May 2022 , one year later than initiallyplanned. Since February 2020, the Board of Directors
had discussed it ten times, and each time the meeting
was prolonged due to intense heated discussions. We
discussed the value creation story—a growth scenario forachieving the Furukawa Electric Group Vision 2030, and
had in-depth discussions on what should be achievedin the 25 MTP, which ends at the halfway point of the
Vision 2030. The main focus of the discussion was how
to solve social issues by leveraging the strengths of ourbusiness, and we reaffirmed that the sustainability ofsociety (resolution of social issues) and the sustainabilityof the Group are two sides of the same coin. Therefore, in
addition to our existing financial targets, we have set new

non-financial targets (sustainability targets) under the 25
MTP. I find this to be an important point.
Osamu Tsukamoto I myself have focused on identifying thepremise of the 25 MDP, which are changes in the businessenvironment that are significant in magnitude to thecorporate management. The broadening of global politicaldivisions, the expansion of new lifestyles in an era where
many people live to be 100, and other factors could be
risks to Furukawa Electric Group but we had to identify
social issues that our Group could contribute to solving
through our businesses. In this regard, I believe that we,the outside directors with experience and knowledge in awide range of fields, have played a significant role.
Yabu
As Director Osamu Tsukamoto mentioned,
I was very grateful for outside directors with respective
perspectives and experiences, including myself, forthe opportunity to discuss the medium-term plan withexecutives from a higher perspective. I took part in theYabu
I recognize that Furukawa Electric’s
strength is competitive products that leverage Furukawa’s
expertise in advanced materials. At the same time,
however, I feel that there are challenges in improving the
profitability of existing main businesses. The 25 MTP has
introduced ROIC*1 and FVA*2 as evaluation tools, andwe began restructuring and rebuilding of the businessportfolio. This is a very important initiative for us as we
aim at sustainable growth, and I believe that we must
accelerate our efforts.
Also, one of the main pillars of the 25 MTP is to “build afoundation for creating new businesses.” Here we need toevaluate new businesses over the medium- to long-term.
I think it may require a system for positively valuing boldchallenges through methods other than ROIC and FVA.
Osamu Tsukamoto Many of the new businesses that you,
Director Yabu, talked about are moving from the R&D
stage to the social implementation phase, but it takes timeto earn profit from them. That is why we have reached
the conclusion that, in order to advance the challenge ofcreating new businesses, we need to be strongly consciousof maximizing earnings of the existing businesses with anemphasis on capital efficiency under the 25 MTP.
Takashi Tsukamoto ROIC and FVA are effective evaluation tools,
but what counts is to make full use of these tools and build
an optimal business portfolio. Our business is diverse, andin order to make appropriate management decisions, weneed to constantly review the business portfolio by using
certain measurements that cover diverse businesses. I
believe that we made a significant advance by making
use of ROIC and FVA, visualizing the positioning of thebusinesses, writing “prescriptions” for each business basedon its characteristics, and taking a step forward towardmaking optimal allocation of management resources.

Develop new businesses based on core technologies
and through co-creation with various stakeholders
Osamu Tsukamoto Responding to market needs in a timely

manner is critical to the advancement of new businesses. To
this end, we need to break away from being limited by theprinciple of self-sufficiency and promote co-creation withexternal partners beyond the boundaries of the Group. In

Management Foundation

Corporate Information/Datathe discussion of the 25 MTP, both internal executive officers
and outside directors expressed opinions on this point
and reaffirmed its importance. Successful examples of cocreation with specific partners include a new industrial laser
business that combines our optical laser technology with thetechnology of a welding processing manufacturer.
Takashi Tsukamoto Recently, the term “social problem-solving
business” is becoming a buzzword in the business world,but saying this word 100 times would not create a new
business. It is extremely important to think from thebottom up about what kind of social issues we can solve
based on our businesses and technologies. I believe that
we should start from social issues that we can and wantto solve using our technology, dig deeper based on ourown foundation, and then produce a variety of new ideas.
Yabu
With regard to “bottom-up”, given the factthat approximately 70% of Furukawa Electric’s employees
in the main career track are engineers (technicalgraduates), I am hoping that these engineers themselves
reflect on the themes needed for society based on our
technologies, discover new business opportunities fromthe frontlines, and strengthen efforts to commercialize
and earn profit from them. To this end, our workforce
needs to communicate with various external stakeholders
and enhance their ability to act, execute, and makeproposals with an open mind. This is indeed what
President Kobayashi has been advocating: a continuous
practice of “Open, Agile, and Innovative.”

The challenge is how to makedecisive decisions to optimize thebusiness portfolio by making fulluse of ROIC and FVA

Takashi Tsukamoto, Outside Director
He joined the Dai-Ichi Kangyo Bank (now Mizuho Bank) in 1974.
He has served as Executive Officer in charge of Financials andRepresentative Director of Mizuho Financial Group and has provided
useful recommendations based on his abundant experience andadvanced knowledge in overall corporate management, including
finance and accounting. He has served as Outside Audit & Supervisory
Board Member of the Company since 2017 and as Outside Directorof the Company since 2021.

*1 ROIC (Return on invested capital) *2 FVA (Furukawa value added): Value added to invested capital62

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

63

Message from Outside Directors

Great potential for contributing to carbon neutrality
Yabu
I recognize that carbon neutrality is an
important topic for our Group in terms of solving social
issues through technology. The Group’s basic approachis clarified through the following three approaches. Firstis not to produce but to reduce CO2 emissions. This is
the so-called Scope 1 and 2 reductions. We set a target
to reduce CO2 emissions by 28% by fiscal 2025 and by
46% reduction by fiscal 2030 (compared to fiscal 2017),
and we believe that while achieving this we can continue
to be the supplier selected by our customers. Next isa Scope 3 initiative of “reducing or not emitting CO2
from society,” that is, “reducing emissions throughout
the value chain for products.” Our third approach is toplace importance on storing or transforming the emitted
CO2. I feel that our Group’s products and technologies
can make a significant contribution to the last two
initiatives, and I think we should appeal this more to ourstakeholders.
Takashi Tsukamoto We contribute to the reduction of CO
2emissions in society by utilizing our technologies andexpertise in materials. This is a unique approach of
Furukawa Electric to carbon neutrality, which I highly value.
Osamu Tsukamoto One of the technologies where I personallysee great potential is bipolar lead storage batteries.
Compared to lithium-ion batteries, the cost is relatively
low, the risk of fires and explosion is extremely low, andToward achieving carbon neutrality,
Furukawa Electric has great potential
with its technologies and productsthat symbolize its uniquenessOsamu Tsukamoto, Outside Director
He joined the Ministry of International Trade & Industry (now the
Ministry of Economy, Trade & Industry) in 1977. He has madeuseful recommendations based on his long-standing involvement
in industrial policy at the Ministry and particularly his extensive
knowledge in the field of environment and energy. He has been an
Outside Director of the Company since 2013.

64

FURUKAWA ELECTRIC GROUP

About Furukawa Electric Groupthese batteries would be recyclable, environmentallyfriendly, and suitable for decentralization. At present,
development is progressing one step short of market
launch, and I hear that various business negotiations
are underway. This is an initiative that symbolizes ouruniqueness as a company that contributes to “reducing
and not emitting CO2 in society.”
The green LP gas generation technology using Ramune
CatalystTM is another proprietary technology thatconverts methane gas generated from livestock excreta
into green LP gas. It has been adopted as a project by
the NEDO Green Innovation Fund and targets to be
implemented in society. This is also used in projects
that form a Regional Circular and Ecological Sphere(Regional CES; created by the Japanese Government
in 2018). By promoting initiatives in cooperation withlocal governments, we will ultimately be better known
in society.

Actively promote diversity & inclusion
I regard human resources as nonfinancing capital that leads to the creation of futurefinancial value. In particular, “diversity & inclusion” is anextremely important management strategy issue for theGroup, which has a diverse business portfolio and aims
to be a business that solves social issues. Management
also wants to respond to this challenge with a sense ofcrisis. That is why we have set a goal of nearly doubling
the ratio of women in managers to 7% by 2025, as oneof the sustainability indicators in the 25 MTP. Diversity
is also indispensable for innovation. New businesses
and products are created only when different values
collide with each other. I intend to provide advice andsupport concerning workstyles and management basedon my own business experience and initiatives at othercompanies in which I was involved as an officer.
Osamu Tsukamoto Outside directors, including myself, haveconstantly sought promotion of female employees,
including promotion to executive candidate status. We
hear from the executives, nevertheless, that female
employees of the target age group have not increased.
Nonetheless, I am expecting that we will continue tomake efforts.
Takashi Tsukamoto Furukawa Electric Group has a long
history and a warm, wonderful corporate culture, but I
sense that it may create a homogeneous environment.
Diversity & inclusion is considered as an important
theme to break away from the limitations imposed bysuch an environment, and as Director Osamu Tsukamoto
mentioned, outside directors have been repeatedly
YabuManagement Strategy

Management Foundation

Corporate Information/Dataasking, “can we speed up the efforts?” and “can weset more aggressive numerical targets?” I understandthat it cannot be achieved overnight, but I really feelthe need to transform corporate-wide management toincorporate opinions of not only all genders but also nonJapanese employees.

Visualize the business status of each region toraise responsiveness to risks
Takashi Tsukamoto With regard to group governance, I feltthat the remaining challenge was that area strategies ineach region were not necessarily optimized from a global
perspective. However, the COVID-19 pandemic resulted
in surfacing of supply chain problems. Meanwhile, inorder to deal with the problems that have emerged, an
emergency management team was tentatively set up
and functioned for about 10 months from the COVID-19
outbreak to March 2021, and executives and employeesof each business unit and headquarters held online
meetings, sharing information digitally, and exchanged
information every week. This was an epoch-making
effort. Although this initiative itself was completed in
March last year, this cross-sectional framework sustains
and is still being used for group governance.
Osamu Tsukamoto I also recognize that a global risk
management system has been developed. However,given the increasing unpredictability of political risks
and other factors which are emerging as risks, such asincreased transportation costs, I believe that we needto implement more detailed risk management on a
global basis.
Yabu
In the so-called age of VUCA (volatility,
uncertainty, complexity, ambiguity), we must speedily
understand the situation that we are in and promptly
take action. In addition to the previous discussions,
the Board of Directors needs to more closely andcontinuously monitor various issues, such as strategies
and governance related to intellectual property, and thestate of the supply chain, including human rights issues,
as Director Osamu Tsukamoto said.

Human resources are important
non-financial capital. Diversity &inclusion is an extremely importantmanagement strategy issue

Yukiko Yabu, Outside Director
She joined Matsushita Electric Industrial Co. (now Panasonic
Corporation) in 1981. She provides useful recommendations basedon her extensive experience and advanced knowledge in marketingand product development from the customer perspective cultivatedat the company. She has been an Outside Director of the Company
since 2019.

As an outside director, I will fulfill therole of monitoring while being conscious of the weightof responsibility, I felt during my involvement with the
25 MTP. I am also determined to be mindful of ourdiverse stakeholders, including shareholders, promptly
give candid opinions as necessary, and support thesustainable growth of the Group.
Osamu Tsukamoto As Director Takashi Tsukamoto andDirector Yabu mentioned, I also recognize that it isextremely important to monitor the progress of the 25
MTP and provide appropriate advice. At present, theexecutive side and the outside directors are engaged
in free and vigorous discussions. The executive side
sincerely takes our advice and comments, and seriously
respond to them. Appropriate tensions and relationshipsof trust have been established, and I am all for thisrelationship to be further evolved.
Yabu

We will fulfill our role to monitor the progress ofthe 2025 Mid-term Plan
Takashi Tsukamoto I highly evaluate the 25 MTP as anaggressive and future-oriented medium-term
management plan. In addition to monitoring theexecutive side to clear the milestones, I would like to bea part of the plan’s driving force by adding pressure on
the accelerator to increase the growth of the Group.

INTEGRATED REPORT 2022

65

Risk Materiality

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Corporate Governance
Basic Views on Corporate Governance

Board of Directors

Based on the “Furukawa Electric Group Philosophy”,
Furukawa Electric Co., Ltd. and Furukawa ElectricGroup secure the transparency and fairness and strive
to enhance its performance by promptly responding tochanges in the business environment and the market
through efficient management based on prompt
decision making. At the same time, we ensure soundmanagement by establishing and strengthening aninternal control system and applying it effectively. We
uphold the basic policy of seeking to expand and develop
our operations on a sustainable basis and to raise
corporate value through these efforts. In accordancewith the following views, we seek to strengthen andenhance our corporate governance.

Given its fiduciary responsibility and accountability toshareholders, the board is responsible for promoting
sustainable corporate growth and the increase of corporate
value over the medium- to long-term and enhancing
earnings capability and capital efficiency. The board
oversights and determines the matters listed below:

1

We secure the rights and equal treatment of shareholders.

2

We consider interests of stakeholders including shareholders, andcooperate appropriately with them.

3

We ensure appropriate information disclosure and transparency.

4

Given its fiduciary responsibility and accountability to shareholders,the board of directors carries out effective oversight of managementfrom objective standpoint, respecting the independent directors’ role
for the oversight.

5

We engage in constructive dialogue with shareholders who haveinvestment policies in accordance with interests of mid- tolong-term shareholders.

Guideline on Corporate Governance
Based on the “Basic Views on Corporate Governance,”
we adopted the “Guidelines on Corporate Governance”
as a policy to enhance corporate governance.
For further details, please see our corporate website.
https://www.furukawa.co.jp/company/pdf/policy.pdf(Only available in Japanese)

Determination of corporate governance-related matters.

2

Establishment and amendment of business strategies and oversightof execution of such strategies and plans by management.

3

Setting capital allocation policy.

4

Appointment and dismissal of executives including representative
director and corporate vice president, and determination of thecompensation of them (including delegating these to Nominating/Compensation Committee).

5

Establishment of an internal control system relating to complianceand financial reporting and risk management systems, and oversightof them.

6

Decision on important business matters.

7

Others prescribed by the applicable laws and regulations etc.

FURUKAWA ELECTRIC GROUP(As of June 23, 2022)

Chairman of
the Board
ChairmanConnect between the Outside
Directors and the Executive
Directors.

Board ofDirectors

11 members

Discussion
and decision
Super vising

Executive Directors

Outside Directors

President and othergeneral managers ofthe major business andcorporate divisions areconcurrently appointed
as directors.

All 5 members are
independent.

5 members

At present, Furukawa Electric’s Board of Directors
consists of 11 Directors, five of whom are Outside Directors(all independent officers). The Board is chaired by the
Chairman, who is a non-executive director without the
representative right of the Board of Directors.
In fiscal 2021, 16 Board of Directors meetings were
held and the Directors made important decisions on theexecution of operations, checked the progress of themedium-term management plan and the management
goals, such as the annual budget, and deliberated corporate
governance and other basic management matters.

5 members

Draw attention Make opinions
Audit & Supervisory
Board Members

In-house

All 3 members are
independent.

OutsideShareholders’Monitoring and supervising

Appoints

Board of Directors
Consults andCommits

AuditsSubmits reports

Nominating / Compensation Appoints
Committee
Supervising

Audit & Supervisory Board

6 Audit & Supervisory Board Members(3 members are outside and independent)

President
Collaboration

Sustainability
Committee

Provides guidance
Monitors
Provides guidanceCommunications Solutions Division

Optical Fiber and Cable Products Div. / FITEL Products Div. / Broadband Solutions Business Div.

Energy Infrastructure Division

Power Cable Div. / Industrial Cable & Power Cable Accessories Div.

Electronics Component Materials Division

Electric Conductor Div. / Copper & High Performance Material Products Div.

Accounting
Auditors

Collaboration

Auditsaccount

Internal Audits

Submits reports

Management
Committee

Monitors

Submits
reports

Audits

7 Directors (5 members are outside)

Business
operation
Risk Management
Committee

Appoints

Audits account

11 Directors (5 members are outside and independent)

Submits
proposals
and reports

Meeting

Appoints

Audit & Supervisory Board and each its member auditor
collect information about management under statutory
investigation authority and report and express theirviews to the board meetings and the management froman independent and objective standpoint as a fiduciaryto shareholders. Auditors ensure coordination withinternal audit department through regular meetings, andreport the policy, plan and result of auditing to the board
regularly.
Full-time auditors attend the meetings such as
Management Committee which decides major businessmatters, and they report information obtained fromthese audit activities to the part-time and outside
auditors. We strengthen our audit function by appointing
an assistant staff to the auditors who is dependent ofmanagement.
At present, the Audit & Supervisory Board consists of 6
members (3 members are outside and independent).
In fiscal 2021, eight Audit & Supervisory Board
meetings were held.

Nominating/Compensation Committee

6 members

Corporate governance organization chart (As of June 23, 2022)

Operations

66

Board of Directors and Audit & Supervisory Board

A position of non-executive
without the representative right.

1

Corporate Governance System
We consider that the effectiveness of the audit on theexecution of the duties by the Directors is secured, basedon the coordination with the accounting auditors andthe internal auditing department, while maintaining theinstitutional independence of the Audit & Supervisory
Board Members and of the Audit & Supervisory Board
from the Board of Directors. We have therefore adopted
the current “Audit & Supervisory Board” type of thecorporate governance structure.
In addition, we have a “Nominating/Compensation
Committee” to complement oversight function of the Board.
The Nominating/Compensation Committee consists of fiveor more members selected from among the Directors by the
Board of Directors, with a majority of the members being
Outside Directors. The chair of the Nominating/Compensation
Committee is selected from among the Committee members,
generally from among Outside Directors.

Audit & Supervisory Board(Auditing Department)

The Nominating/Compensation Committee consistsof five or more members selected from among the
Directors by the Board of Directors, with a majority ofthe members being Outside Directors. The committee
deliberates succession plans for officers and thepresident/CEO, officer compensation and other matters,
aiming to ensure objectivity and transparency regardingthese matters and to enhance corporate governance.
At present, the Nominating/Compensation Committee
consists of seven members, five of whom, including theCommittee Chair, are Outside Directors. Committee
consists of seven members, five of whom, including theCommittee Chair, are Outside Directors.
In fiscal 2021, eight Committee meetings were held.
The committee members deliberate upon the nextmanagement team and directors’ compensation, etc.

Headquarters
Strategy
戦略本部 Div.

Finance & Accounting Div

MONOZUKURI
Innovation Div.
ものづくり改革本部

Risk リスクマネジメント本部
Management Div.

Research & Development Div

Global Marketing
営業統括本部 Sales Div.

Provides support and guidanceNominating/Compensation Committee(As of June 23, 2022)

Functional Products Division

AT & Functional Plastics Div. / Thermal Management Solution &Products Div. / Memory Disk Div. / Copper Foil Div.

Automotive Products Division

Subsidiaries andaffiliatedcompanies

Committee

7 directors

In-house Outside

Outside Director

INTEGRATED REPORT 2022

67

Risk Materiality

About Furukawa Electric GroupManagement Strategy

View Concerning Candidates for Members of the Board of Directors

Outside Directors’ Expertise and Principal Activities

Policy on Nominating Candidates for Directors
With respect to board members (Directors and Audit &Supervisory Board Members), the Company believes that
their skills, knowledge and experience, as well as multiple
views from diverse board members, in terms of gender

Outside Directors have extensive experience at financial
institutions, trading companies, or operating companies,
and expert knowledge/experience regarding laws, financials,
accounting, industrial policies, and other areas. The Board of
Directors makes decisions by respecting Outside Directors’
opinions and comments from diverse perspectives basedon their extensive experiences.
The Outside Officers’ meetings are regularly conducted
so that Outside Officers can exchange opinions while
establishing a shared understanding of the Company froman objective viewpoint and submit the resulting opinions to
the Board of Directors if necessary. The Outside Officers’
meeting consists of Outside Directors and Outside Audit &Supervisory Board Members and the secretary of Outside

Candidates for Outside Director
The Group should select a well-balanced mix ofpeople with various skills and backgrounds, suchas persons with experience in corporate
management and public policy, engineers withtechnological expertise, and experts in law,accounting, or other areas.

and international experience, contribute to the Group’s
global business operations and appropriate oversight/
auditing. Based on this perception, the Company selects
candidates for board members as follows:

Candidates for Outside Director
The Group should select a well-balanced mix of people with various skills and backgrounds,
such as persons with experience in corporate management and public policy, engineers withtechnological expertise, and experts in law, accounting, or other areas. Candidates for
Director: In light of the consideration of the Furukawa Electric Group’s business of having
many affiliates around the globe and various business lines, the Group should select persons
who have a sufficient skill set, knowledge and experience so that they will contribute toimproving the Furukawa Electric Group’s corporate value.

Management Foundation

Corporate Information/Data

Officers* is selected from among Independent Outside
Directors.
In fiscal 2021, four Outside Officers’ meetings were held.
Outside Officers’ Meeting(As of June 23, 2022)
Outside Audit & Supervisory
Board Members

Outside Directors

3 members

5 members

Meeting chair: the secretaryof the Outside Officers* Secretary of Outside Officers serves as the chair of Outside Officers Meeting, reports
what was discussed at the Outside Officers Meeting to the Board of Directors andmanagement as needed, and acts as a liaison of outside directors to cooperate withthe management team or the Audit & Supervisory Board (meeting).

Skill matrix for Directors and Audit & Supervisory Board Members
Name

Directors

Taking into account expected roles and responsibilities of theBoard of Directors (i.e. (1) establishing corporate philosophy/business principles and setting strategic direction; (2)establishing an environment that supports appropriate risktaking; and (3) effectively overseeing the managementfrom an independent and objective standpoint), andtoward realizing new Medium-term Management Plan
“Road to Vision 2030” which covers a period ending infiscal year 2025 as well as “Furukawa Electric Group
Vision 2030”, the Company identified the following 7 key
areas of experience and expertise the Company expects
from Directors and Audit & Supervisory Board Members:
corporate management, finance/accounting, legal affairs/
compliance, environment/energy, technology/ IT, sales/
marketing, and international experience/knowledge.
The Company will review and update these key
areas, as necessary, in response to changes in theexternal environment/business environment, etc.
The following skill matrix shows current skills of
Directors and Audit & Supervisory Board Members.
The Company selected Directors and Audit &Supervisory Board Members by ensuring the balance
between areas of expertise and experience.
Details of skillsets
Have experience in serving as Representative Director or
equivalent (i.e. an officer with a broad scope of
responsibilities that are similar to that of an officer)

Finance/accounting

Have experience/expertise in finance/accounting; havesignificant experience as the person in charge of finance/accounting division

Legal affairs/
complianceHave experience/expertise in establishing legal/compliancesystem, etc.; have significant experience as the person in
charge of legal affairs/compliance division

Environment/
energyHave extensive experience, expertise and/or network in thearea of environment/energy

Technology/IT

Have experience/expertise in R&D, IT, DX, etc.; havesignificant experience as the person in charge oftechnology/IT division

Have experience/expertise in sales/marketing; have
Sales/marketing significant experience as the person in charge of sales/
marketing divisionInternational
experience/
knowledge

Have experience in running a company abroad or haveinternational knowledge of international trade or a relevant
specialized area

Audit & Supervisory Board Members

Corporate
management

Independent
Officer

Position in Furukawa
Electric

Mitsuyoshi Shibata

Chairman of the Board
and Director

Keiichi Kobayashi

President andRepresentative Director

Osamu Tsukamoto

Director(Outside, part-time)

Takashi Tsukamoto

Director(Outside, part-time)

Yoshiro Miyokawa

Director(Outside, part-time)

Yukiko Yabu

Director(Outside, part-time)

Tamotsu Saito

Director(Outside, part-time)

Satoshi Miyamoto

Director andCorporate Executive Vice
President

Akihiro Fukunaga

Director andCorporate Senior Vice
President

Hideya Moridaira

Director andCorporate Senior Vice
President

Yoshio Masutani

Director andCorporate Senior Vice
President

Nozomu Amano

Audit &
Supervisory Board Member(Full-time)

Yoshiaki Mizota

Audit &
Supervisory Board Member(Full-time)

Masao Terauchi

Audit &
Supervisory Board Member(Full-time)

Kunihiko Sakai

Audit &
Supervisory Board Member(Outside, part-time)

Sayaka Sumida

Audit &
Supervisory Board Member(Outside, part-time)

Takao Shiomi

Audit &
Supervisory Board Member(Outside, part-time)

Company
Management

Finance/
Accounting

Legal Affairs/
Compliance

Environment/
EnergyTechnology/
IT

Sales/
MarketingInternational
Experiences andKnowledge(Note) The above table does not list all of the areas of experience or expertise each person has but shows the areas the Company highly expects in particular.

68

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

69

Risk Materiality

About Furukawa Electric Group

Implementation Procedure for the Evaluation of the Effectiveness of the Board of Directors
For the purpose of improving the function of the Boardof Directors, we have been working on analyzing andevaluating the effectiveness of the Board of Directors
every year since fiscal 2015. Through this continuous
process, necessary measures are taken in order toimprove issues or further reinforce strengths reported
through the verification of the suitability of the Board of
Directors’ functions.
Since fiscal 2017, in addition to having a questionnaire
filled in by all members of the Board of Directors andthe Audit & Supervisory Board Members, an individualinterview has been conducted by the Chair of the Board(an interview with the Chairman is conducted by an
Outside Officer other than the Chair), for the purposeof providing a deeper understanding of the responses
to the questionnaires. More substantive analysis andevaluation have thus been implemented.

FY2020
Questionnaire
Implementationof the anonymousquestionnaire

Implemented
from FY2017,
aiming at a deeper
understanding of
the responses tothe questionnaire

Effectiveness of the Board of Directors

System related to support and cooperation with the Outside
Officers
Roles and expectation for the Audit & Supervisory Board
Members
Relationship with the shareholders and other stakeholders
Others(The Board of Directors in general, individual and peer evaluation)

70

The remuneration of directors and officers shall be determinedin a way that encourages each officer to exert his/her abilities tothe maximum level and proactively fulfill his/her duties, so that
the Company Group will increase its corporate value andachieve sustainable growth while contributing to society
through its business activities.

Outline of the Directors’ and Officers’ Remuneration
The remuneration of the Company’s directors and officers is comprised of basic remuneration, short-term
performance-linked remuneration and medium- to long-term performance-linked remuneration.

Remuneration
item

Summary

Basic remuneration

Basic remuneration is paid in cash in a fixed amount every month. The amount paid to each person
differs depending on their role, i.e., management supervision role or business execution role, andposition.

Short-term
performance-linked
remuneration(individual)(Payment ratio:
0~200%)

This remuneration is paid to each officer. The remuneration amount for each person is determinedby the Nominating/ Compensation Committee after evaluating their actual performance versus
the business plan*1 of the division in charge and the progress of implementing measures during theprevious fiscal year. The determined amount is paid in cash every month.

――

Short-term
performance-linked
remuneration (entire
Company) (Payment
ratio: 0~200%)

The remuneration amount, which is paid in cash once a year, is determined by the Nominating/Compensation Committee, using consolidated operating income as the base*2 for evaluation.

――

Medium- tolong-term
performance-linked
remuneration(Payment ratio:
0~130%)

This remuneration is under the stock remuneration program (“the Program” in this column). Under
the Program, the Company’s stocks, funded by the Company and acquired through the Trust, aregranted.
In the Program, three fiscal years constitute a performance period, and the Company
contributes funds up to a maximum amount of 450 million yen per performance period to the Trust
as remuneration for Directors and Officers.
Directors and Officers are granted a pre-determined number of points depending on theirtitles/positions every year as the basis of their rights to receive the Company’s stocks*3.
After the end of each performance period, the number of points qualifying Directors andOfficers to receive the Company’s stocks are finalized after an adjustment for certain cases*4,
according to the criteria for comparing changes in the Company’s stock price with that of the
TOPIX during the period. If any Directors and Officers retire from their positions during the period,
an adjustment is to be made in a similar manner.
In principle, upon their retirement, Directors and Officers receive the Company’s stocks fromthe Trust, and the number of such stocks corresponds to the number of points finalized during theirterm of office.*5――

Next FY

Outside officers’
Meeting

Completion of
the analysis andevaluation

Compilation of
the opinions on
the results of thequestionnaire.

Confirmation of thestatus of ensuring theeffectiveness of theBoard of Directors

Publish the analysis
and evaluation
results.

The businessexecution andthe managementof the Board of
Directors basedon the actions

2020. As a result of discussion with due consideration to
many proposals and opinions from Directors and Audit &Supervisory Board Members, we have decided to makefurther improvements regarding the following items.

Future initiatives based on the results of analysis and evaluation for FY2021

Medium-term management
plan, business portfolio
review, group and global
management

In reporting the formulation and the progress of the medium-term management plan to the Board of Directors, enhance
discussions on reviews of business portfolio, allocation of management resources and important issues on group andglobal management. In addition, continue to establish a detailed plan for the annual agenda and ensure sufficient time fordeliberation of important agenda items, to further enhance discussions.

Provision of information tooutside officers

In order to obtain appropriate involvement and advice of outside officers on the Board of Directors, take advantage ofopportunities to deepen understanding of each agenda item of the Board in advance, such as pre-briefing sessions of theBoard for outside officers, and continue to provide invitation and information of internal events to help outside officers
understand the Company and the Group. In addition, appropriately set opportunities for communication among outside
officers to deepen discussions among outside directors and exchange outside directors’ opinions freely.

Sustainability related(including ESG and SDGs)

Discuss countermeasures for important management issues directed at achieving “Furukawa Electric Group, Vision2030” in the process of formulating the medium-term management plan.

Risk management related

Increase awareness of companywide risks and enhance countermeasures suitable for the priority of risks.

Dialogues with stakeholders

Continue dialogues with shareholders and investors and reports on their opinions to the Board of Directors. In addition,enhance reports to the Board and discussions on opinions of all non-shareholder stakeholders, including employees.

FURUKAWA ELECTRIC GROUP

Based on the policy, the committee confirms validity,
effectiveness and appropriateness of plan design andlevel of remuneration every year, by means of outside
survey that is comparing the Company’s remunerationlevel with those of other similar size 30 manufacturing
companies.

Recipients

Item

https://www.furukawa.co.jp/company/governance.html(Only available in Japanese)

Corporate Information/Data

Policy Regarding the Determination of Individual Remuneration for Each Remuneration System

Results of the Evaluation of the Effectiveness of the Board of Directors and Future Initiatives

For details, please see our website page
“Corporate Governance”

Policy for Directors’ and Officers’ Remuneration
The Company has the following policy for the directors’
and officers’ remuneration, which is determined by the
Nomination/Compensation Committee.

Management of the Board of Directors

Multiple
Discussions by the
Board of Directors

Given the results of the effectiveness evaluation of
the previous year, the Board of Directors continued to
implement measures to further improve its effectivenessand worked on analyzing and evaluating it again in fiscal

Management Foundation

Design of Programs for Directors’ and Officers’ Remuneration

Evaluation Items on the Effectiveness of theBoard of Directors

Flow of the Board of Directors Effectiveness Evaluation
Individualquestionnaires by
the Chairman

Management Strategy

Directors,
excludingOutsideDirectors

OutsideDirectors

Corporate Vice
Audit &
Presidents
Supervisory
who are not
Board
Directors, andMembers
Senior Fellows*1. W ith the aim of comprehensively evaluating the achievement of individual divisions, the actual performance versus the plan for operating profit and inventory
reduction, the achievement of the goals for safety and quality, and the readiness for risk are scored and evaluated as total points.
*2. In order to properly and clearly reflect the Company’s performance in the fiscal year, consolidated operating income (11,428 million yen in fiscal 2021) is adopted as an indicator.
The correspondence table between consolidated operating income, which is an evaluation standard, and the amount paid by the rank of each position, is regularly reviewed by
the Nominating/Compensation Committee to ensure that the level is appropriate, taking into account the consolidated operating income of the past few years. The
correspondence table between consolidated operating income and the amount paid by the rank of each position was revised at the Board of Directors meeting held on April 28,
2022. The revised correspondence table is shown as below.
(Unit: JPY thousand)Consolidated Operating Income
Officer classification

650-(JPY 100 million)

550-650(JPY 100 million)

450-550(JPY 100 million)

350-450(JPY 100 million)

250-350(JPY 100 million)

150-250-150(JPY 100 million)(JPY 100 million)

Chairman of the Board

19,50016,08812,675

9,750

7,800

4,875

―

President (Representative)

34,00028,05022,10017,00013,6008,500―

20,80017,16013,52010,400

8,320

5,200

―

16,50013,613

10,725

8,250

6,600

4,125

―

10,000

8,250

6,500

5,000

4,000

2,500

―

5,400

4,455

3,510

2,700

2,160

1,350

―

Corporate Senior Executive
Vice President
Corporate Executive Vice
President
Corporate Senior Vice
President
Corporate Vice Presidents /Senior Fellows

INTEGRATED REPORT 2022

71

Risk Materiality

About Furukawa Electric Group*3. The total points granted to Directors and Officers during each period is limited to 180,000 points, and 1 point corresponds to 1 share of the Company’s common stock.
After determination and approval at the Board of Directors meeting held on April 28, 2022, points granted to each position during the period from April 1, 2022 toMarch 31, 2025 are shown in the table below.
Number of points
granted

Officer classification

Maximum number of shares (per eligible
period)Chairman of the Board

7,640

29,796

President (Representative)

9,340

36,426

Director and Corporate Senior
Executive Vice President

4,800

18,720Management Foundation

Corporate Information/Data

Remuneration for Directors and Audit & Supervisory Board Members for Fiscal 2021
Total remuneration by type (JPY millions)

Officer classification

Total
remuneration(JPY millions)

Basic remuneration

Short-term
Short-term
Medium- to long-term
performance-linked performance-linked
performance-linked
remuneration
remuneration (entire
remuneration(individual)
Company)

Number of
subject officers(persons)

Directors (excluding Outside directors)

340

248

36

-

55

7

Audit & Supervisory Board Members(excluding Outside Audit & Supervisory
Board Members)

91

91

-

-

-

3

Outside Officers

110

110

-

-

-

11

74

74

-

-

-

7

36

36

-

-

-

4

Corporate Senior Executive
Vice President

3,930

15,327

Director and Corporate
Executive Vice President

3,930

15,327

Corporate Executive Vice
President

3,060

11,934

Outside Directors

Director and Corporate SeniorVice President

2,190

8,541

Corporate Senior Vice
President

Outside Audit & Supervisory Board
Members

1,310

5,109

Director and Corporate Vice
President

1,310

5,109

Corporate Vice President /Senior Fellows

660

2,574

1. The amounts and numbers of officers in the above table include three Directors and one Audit & Supervisory Board Member who retired from the positions
due to the expiry of their terms at the end of the 199th Annual Shareholders Meeting held on June 24, 2021 as well as amounts of their remuneration. As for
Mr. Takashi Tsukamoto, who retired from the position of Audit & Supervisory Board Member due to the expiry of his term at the end of the above-mentioned
Shareholders Meeting, and was appointed as Outside Director at the above-mentioned Shareholders Meeting, the above table includes amounts of his
remuneration during his term as Audit & Supervisory Board Member and during his term as Director separately in the respective columns.
2. Short-term performance linked remuneration (the entire Company) refers to the remuneration to be paid to seven Directors (excluding Outside Directors). For
fiscal 2021, this remuneration was not paid because the performance did not meet the qualified level for payment.
3. The amount of medium- to long-term performance-linked remuneration is calculated by deeming the number of shares equivalent to the points granted forthe current fiscal year under the Stock Remuneration Plan as the remuneration for fiscal 2021.

*4 In order to appropriately reflect increase in corporate value to the remuneration amount, and to share the incentive for increasing corporate value withshareholders, we adopted the Company’s stock price as the performance indicator. The specific number of points to be granted (finalized points) is calculated
by multiplying the cumulative total points granted in the evaluation period by the payout ratio which is determined on the basis of the degree of divergence
between the volatility of the Company’s stock price and the volatility of TOPIX (Tokyo Stock Price Index).
Formula for calculating the degree of divergence
Degree of divergence = Volatility of the Company’s stock price / Volatility of TOPIX Volatility of the Company’s stock price = Average stock price of the Company in the
final year of the evaluation period / Average stock price of the Company in the year prior to the start of the evaluation period Volatility of TOPIX = Average TOPIX in the
final year of the evaluation period / Average TOPIX in the year prior to the start of the evaluation period.
Actual degree of divergence
0.59
Rate correspondence table for each degree of deviation
Deviation (Scope)X≥1.3

1.3>X≥1.2

1.2>X≥1.1

Payout Rate (%)

130

120

110

1.1>X≥0.95 0.95>X≥0.85 0.85>X≥0.75 0.75>X≥0.65 0.65>X≥0.55 0.55>X≥0.2
100

90

80

70

60

0.2>X

50

0

Formula for calculating each officer’s points during the evaluation period
Finalized points = (Cumulative total points granted to each officer during the evaluation period) x (Payout ratio for the evaluation period)“Payout ratio” represents the percentage of change in the actual remuneration amount as a result of performance evaluation, where the standard amount of
the medium- to long-term performance-linked remuneration is 100%.
*5 At the time of their retirement, Directors and Officers receive the Company’s stocks and money calculated by the following formula (1) and (2) as the medium- tolong-term performance-linked remuneration. The “number of points convertible into share units” of the calculation formula 1) and 2) shall be (Cumulative total points
as of the vesting date x Payout ratio - Number of points corresponding to a fraction of shares). The vesting date is defined as the first end date of June after theretirement of Director or Officer, and after the closing of the last fiscal year, in which he/she is eligible for receiving points.
1) Number of the Company’s shares to be granted = (Number of points convertible into share units) x 0.7
If there is a fraction of shares of the Company upon calculation by the above formula, such shares will be disregarded.
2) Amount of money to be paid = (Number of points convertible into share units x 0.3 + Number of points corresponding to a fraction of shares) x Market value of
the Company’s stock as of the vesting date
If there are any points corresponding to a fraction of shares upon calculation by the formula “the number of points convertible into share units x 0.3,” such afraction will be rounded up to a share unit and added to the number of share units.

Policy Regarding the Determination of the Percentage of Individual Remuneration for Each Remuneration System
As for the percentage of each component of
remuneration, it is designed that the higher the officer’srank, the larger the percentage of performance-linked

remuneration. When the aggregate total of the standard
percentage of each component is 100%, the percentage
of each component is shown below:

Basic remuneration

Short-term
performance-linked
remuneration(individual)

55%

12%

12%

21%

100%

President (Representative)

51%

15%

15%

19%

100%

Director and Corporate Senior Executive Vice
President

55%

15%

15%

15%

100%

Director and Corporate Executive Vice
President

58%

14%

14%

14%

100%

Director and Corporate Senior Vice President

68%

11%

11%

11%

100%

Corporate Senior Executive Vice President

54%

16%

16%

14%

100%

Corporate Executive Vice President

56%

15%

15%

14%

100%

Corporate Senior Vice President

67%

13%

13%

8%

100%

Corporate Vice President / Senior Fellows

71%

16%

8%

5%

100%

Officer classification
Chairman of the Board

Short-term
Medium- to long-term
performance-linked
performance-linked
remuneration (entire
remuneration
Company)

Total(Note) “Policy Regarding the Determination of the Percentage of Individual Remuneration for Each Remuneration System” was revised at the Board of Directors
meeting held on April 28, 2022.

72

Management Strategy

FURUKAWA ELECTRIC GROUP

Succession Plan
The Nominating/Compensation
Committee checks an update of
the succession plan for the CEO
and the development of thenext generation of managers,and deliberates such mattersas the selection of candidates
for the next generation ofmanagers and the effectivenessof their development process.

Furukawa Electric Co. Ltd.
Guideline on Corporate Governance (extract)
Chapter 3 Corporate Governance System
Section 3 Nominating/Compensation Committee
3. Succession Plan
(1) B ased on the Furukawa Electric Group Philosophy and a concrete management strategy, a succession plan for the
President/CEO is deliberated and determined by the Nominating/Compensation Committee, are annually reviewed by theCommittee.
(2) Each Succession plan for Corporate Vice Presidents is annually reviewed and submitted to the Nominating/Compensation
Committee, then the Committee checks an update of the succession plans for Corporate Vice Presidents.
(3) T he Company makes efforts to systematically develop the next generation of executives. Candidates of prospective
president and corporate vice presidents selected by succession plans obtain advice from outside consultants, take training
for the development of executives, and transfer to a different division to acquire necessary experience.

Policy-holding Shares
Each year, the Board of Directors verifies the validityof all listed shares of the policy-holding shares, anddecides to continue holding some of the shares from theviewpoint of their relationship with the Company and of
the cooperative relationship. We intend to reduce theshares deemed unsuitable for holding.
Policy on Policy-holding Shares
We will hold the shares if they are deemed to besignificant from the viewpoint of improving capitalefficiency or from need for the Company’s businessactivities, and will reduce the shares if they are deemed
to be unsuitable for holding. Each year, the Board of
Directors shall conduct a verification of the validity of alllisted shares of the policy-holding shares. The verification
shall be conducted from a comprehensive perspective,
including the creation of business opportunities, themaintenance and strengthening of business relationships
and cooperative business relationships, as well as thecomparison of quantitative benefits derived from theholdings of shares with the cost of ownership calculatedby the market value and capital cost of the shares.

The Board of Directors most recently examined theappropriateness of the policy-holding shares at a meeting
held in December 2021. As a result of the verification, we
reduced some policy-holding shares, including one listed
stock (435 million yen). Our policy-holding shares as ofMarch 31, 2022 include 17 listed shares (23,061 million yen).

Policy-holding Shares Recorded on the Balance Sheetand the Number of Companies
Acquisition valueMarket price impact

Number of companies(Million yen)
40,05529

2016

42,85536,248
29

2017

24

2018

24,38723,061

18

17

17

2019

2020

2021

22,825(FY)* Policy-holding shares are defined as the shares subject to “investment shares
held for other than purely investment purposes” in the Securities Report.

INTEGRATED REPORT 2022

73

Risk Materiality

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Group Governance
While respecting the independence of each affiliatedcompany’s management, Furukawa Electric shallunderstand the overall status of its management,
including compliance and risk management, and provide
appropriate management guidance, including advice andsupport on the establishment of each company’s legal
and internal control systems. That is how we ensure thesoundness of each company’s management, and we also
strive to strengthen the entire Group’s management
structure and to increase corporate value.
Furukawa Battery Co. and Totoku Electric Co.— oursubsidiaries — are listed on the Tokyo Stock Exchange.
With the aim of maximizing corporate value as a group,
we will continue to analyze the significance of the holdingof listed subsidiaries in light of the proper allocation ofmanagement resources across the entire Group.
Given the fact that there is a structural conflict ofinterest risk between the Company and minority
shareholders of its listed subsidiary, we havetaken measures to secure the interests of minority
shareholders of the listed subsidiaries. Specifically,
the ratio of independent outside directors (outside
directors who report to the Tokyo Stock Exchange
as independent directors) at their Board of Directors
has been increased to represent more than a third. In
addition, both Furukawa Battery Co. and Totoku Electric
Co. have established a Conflict of Interest Management
Committee as an organization to examine the rationality
and fairness of transactions with their parent company.
Independent outside directors represent a majority of
the Committee at both companies. We will continue
to work with the listed subsidiaries to establish andstrengthen an effective governance system that
effectively utilizes independent outside directors.

Risk Management

The Furukawa Electric Group’s financial results andfinancial situation are affected by the economic conditionsin the various markets in which the group sells its products
and provides services.
The important risks that have the potential to affectthe financial results and financial situation are listed, as
shown on the right. Based on how the risks are perceived,
they have been divided into “Management strategy
risks” and “Operational risks”. When implementing
responses to each risk, particularly for the management
strategy risks, rather than being independent risks, they
are recognized to be mutually related.

See details on our corporate website for“Business-related risks”.
https://www.furukawa.co.jp/en/ir/management/risk.html

Overview of Risk Management and System
Furukawa Electric Group has established the Risk
Management Committee, which comprises management
as members, with the President as chair and the General
Manager of the Risk Management Division as vice chair.
The committee is structured to supervise and promote risk
management, internal control and compliance.
Furukawa Electric Group Risk Management Committee
conducts regular risk assessment to determine what
risks exist, define important risks that require acompanywide response, and prioritize measures tocounter these risks. Through specialized committee
activities in segment-specific areas— occupational
health and safety, quality control, the environment,
and disaster prevention and business continuity
management—we are enhancing our system to manage
risks related to our business activities. In addition to thissystem, important decision making is conducted by the
Board of Directors and the Management Committeeor through the approval processing system, after the
expected risks based on each case have been clearlypresented and acknowledged.

Business-Related Risks

Business portfolio

Regional strategy
and international
political economics

Human resourcesand organizations

Human rights

Climate change(carbon neutral)

Governance

Employee healthand safety

Raw material and fuelprice fluctuations

Inventory valuation

Quality(product defects)

Information systems andinformation security

Exchange rate,interest rate and shareprice fluctuations

Creation of new
businesses

Environmental pollution
and environmental
regulations

Capital procurement

Credit management

Legal violations

Tax compliance

Deteriorated
construction project
profitability

Asset impairment

Research &development andIntellectual property

Raw material
procurement

Investment in
non-current assets

Impact of disasters
or infectious disease

Operational risks

Board of Directors
Submit proposals and reports

Risk Management Committee
Committee chair: President
Vice chair: General Manager,
Risk Management Division
Committee members: Top management
Organizer: General Manager, Risk Management Department

Furukawa Electric Group
Quality Management Committee
Committee chair: President
Committee members: Management
Organizer: General Manager, Quality Promotion Department

Furukawa Electric Group
Occupational Health and Safety Committee
Committee chair: President
Committee members: Management
Organizers: General Manager, Safety Promotion
Department,
General Manager, HR & Organizational
Development Department

Efforts to risk management activity
For the purpose of continually enhancing and deepening
an activity on the risk control of Furukawa Electric Group,
we have assessed the control activity on each item of the“business-related risks.” Those results are totalized andsummarized, and then the overall assessment of the risk
control activity is annually and regularly reported to Risk
Management Committee.
In addition, “the Ratio of follow-up on risk management
activities for all risk domains,” that contains items of thebusiness-related risk, has been assigned as a sustainability
indicator. Then, its indicator has been monitored toenhance the improvement of the control activity.

Furukawa Electric Group’s risk domains
Management strategy

Intellectual property
and brandMarketing, sales
and orders

Disclosure and brand

Information systems
and information
security

Procurement

Personnel and labor

Environment

Manufacturing

Accounting/financial
and tax matters

Tangible assets

Delivery, distribution
and inventory assets

Legal and compliance

QualityAccident and disaster

Research &development

Furukawa Electric Group Environment Committee
Committee chair: General Manager, Risk Management Division
Committee members: Management
Organizers: General Manager, Environment Department,
General Manager, Facility Strategy Department,
Facility Assets Department

Committee chair: General Manager, Risk Management Division
Committee members: General managers of each business division,
divisional representatives, etc.
Organizer: General Manager, Risk Management Department

FURUKAWA ELECTRIC GROUPManagement strategy risks

Risk Management Promotion Framework

Metrics and Targets
Materiality“Build a governance system to strengthen risk management/Group Governance”

Central Disaster Prevention and Business Continuity
Management Promotion Committee

74

Business-related Risks (classification and risk item)

Indicators(
CONSOLIDATED: Sustainability Indicator)

Ratio of follow-up on risk management activities for all risk domains

ResultTargetFY2021

FY2022

FY2025

88%

93%

100%

INTEGRATED REPORT 2022

75

Risk Materiality

About Furukawa Electric GroupManagement Strategy

Management Foundation

Supply Chain Management

Human Rights & Labor Practices

Basic Policy on Procurement

Basic Policy on Human Rights

In accordance with the Furukawa Electric Group
Procurement Policy, we undertake f procurement
activities with fairness and integrity, and are fully
considerate of corporate social responsibilities towardrealizing a truly rich, sustainable society. We also
contribute to creating global infrastructure combining
information, energy, and mobility by collaboration withpartners*1 based on relationships of trust with them.

*1: Furukawa Electric Group calls those who do business with us “partners” who collaborate with us to create value.

Furukawa Electric Group Procurement Policy
123

Under Furukawa Electric Group Philosophy, the Group
understands that the human rights of everyone affectedby its globally expanding business activities must be
respected. The Group respects human dignity and all
human rights that are recognized internationally. We are

Corporate Information/Datapromoting initiatives to respect human rights along withexpectations for companies by the United Nations Guiding
Principles on Human and Business Rights: Establishment of
human rights policy; implementation of human rights due
diligence; and establishment of remedy mechanism.

Establishment of Human Rights Policy

Fairness and Integrity
We are open to any and all business partners in accordance with the principle of free competition and we all act with fairness
and integrity.

Compliance with Laws and Regulations and CSR Procurement
Toward the realization of a sustainable society, we conduct our procurement activities considering environment preservationand safe operation in comply with all applicable laws and regulations and we do fulfill our Corporate Social Responsibility.

Partnership
We always value relationships of mutual trust with our business partners to create new values by collaboration. We pursue to
optimize our procurement conditions from the viewpoint of quality, cost, delivery, technological capabilities and CSR activities.

In accordance with the International Bill of Human Rights(Universal Declaration of Human Rights and International
Covenants on Civil and Political Rights), International
Labour Organization’s (ILO) Fundamental Rights at Work,and the United Nation’s Guiding Principles on Human andBusiness Rights, the Group has established Furukawa
Electric Group Human Rights Policy.

Furukawa Electric Group Human Rights Policy (items only)(established on January 27, 2020)

1

Positioning

6

Training

2

Scope

7

3

Responsibility to respecthuman rights

Compliance with applicablelaws and regulations

8

Dialogue and consultation

4

Human Rights Due Diligence

9

Information disclosure

5

RemedyFor details, please see the “Human Rights” on
Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/95

CSR Procurement Activities
As part of activities in keeping with the best interests ofthe environment and society in general, Furukawa Electric,in its procurement activities, conforms to various CSR
practices and standards. The implementation rate of aself-assessment questionnaire (SAQ) survey, based on
the Furukawa Electric Group CSR Procurement Guidelines(3rd Edition), revised in fiscal 2021, has been adopted as asustainability indicator, and the SAQ survey was conducted
to 56 major partners. We will expand the SAQ target to thepartners of our Group companies to achieve the fiscal 2025
target of 100% implementation, and better understandand reduce risks in the supply chain.

Responsible Mineral Procurement Efforts
The Group policy on responsible minerals procurement
is clearly stated in our CSR Procurement Guidelines andis made known by our Group companies and partners.
Given the recent changing trend toward mineral
Furukawa Electric Group
Responsible Minerals
Sourcing Policy

procurement and the heightened demand in society,
we have established the Furukawa Electric Group
Responsible Minerals Sourcing Policy.

Furukawa Electric Group shall not procure tantalum, tin, tungsten, gold, and other minerals associatedwith human rights violations, environmental degradation, corruption, conflicts, and other incidents inconflict-affected and high-risk areas. We will work to correct any concerns about risks that arise in our
supply chain and engage in responsible minerals sourcing throughout the entire supply chain.

(established on September 12, 2022)

Collaboration with external organizations
In order to prevent or mitigate the adverse effects associatedwith mining of minerals in conflict- or high-risk areas, we havejoined the Responsible Minerals Trade Working Group of
the Japan Electronics and Information Technology Industries

Association (JEITA) in addition to making our own efforts,
and are working to resolve issues related to conflict minerals
around the world and to improve our supply chain conflictminerals research activities through intra-industry collaboration.

Building a governance system to strengthen risk management / Supply chain management76

with the results of the Compliance Awareness Survey of
employees that is conducted separately.
In addition, as part of our human rights due diligence,in fiscal 2022 we started providing Group managers
with education on the negative impacts on humanrights (human rights risks) that may be involved in ourbusiness activities. This initiative has been assigned asustainability indicator, “the rate of implementation of
education on human rights risks for managers,” and wetarget 100% implementation of the training for global
managers by fiscal 2025. The education program will be
gradually expanded from Group companies in Japan tooverseas to prevent and mitigate human rights risks.

Establishment of remedy mechanism
As a point of contact for reporting adverse impacts onhuman rights, we are establishing for employees aninternal whistle-blowing system involving third parties.
Further, for stakeholders other than employees, theJapan Center for Engagement and Remedy on Businessand Human Rights (JaCER), established mainly by theMateriality

Indicator

Result: Sustainability indicator)

F Y2021

F Y2022

F Y2025

SAQ implementation rate based on the CSR Procurement Guidelines

Furukawa Electric
20%

Global20%

Global
100%

(
Group

In response to changes in social demands forhuman rights, such as forced labor, child labor, anddiscrimination, and increased interest in human rights
throughout the supply chain, Furukawa Electric Groupbegan implementing human rights due diligence infiscal 2021. In fiscal 2021, we conducted a self-assessment
questionnaire (SAQ) based on the Furukawa ElectricGroup CSR Procurement Guidelines (3rd edition) for
79 of our group companies in Japan and overseas and
56 of our major partners to evaluate human rights. As aresult of the SAQ, no significant negative human rights
impacts were found, but we still plan to take necessary
corrective actions as may be called for in conjunction

CSR Committee of the Japan Electronics and Information
Technology Industries Association (JEITA), is utilized. We
will respond with objectivity and transparency so that
our mechanism will be similar to a grievance mechanismthat ensures the effectiveness required by the UN
Guiding Principles on Business and Human Rights.

Indicators and targets

Indicators and targets
Materiality

Implementation of human rights due diligence

FURUKAWA ELECTRIC GROUP

Building a governance system to strengthen risk management / Human rights and labor practices

Target(Group

Indicator

Result: Sustainability indicator)

F Y2021

F Y2022

F Y2025—

Started from Group
companies in Japan

Global100%

Implementation rate of human rights training for managerial
positionsTargetINTEGRATED REPORT 2022

77

Risk Materiality

About Furukawa Electric Group

Development of Business Activities that
Consider Climate Change
Furukawa Electric Group Basic Environmental Policy (Formulated in 2008, revised in April, 2011)
Basic Philosophy

ActionGuidelines

We, the employees of the Furukawa Electric Group, recognize that conservation of the global environment is a serious
issue confronting the international community, and we pledge to contribute to a sustainable future for the world throughtechnological innovation that utilizes our strength in advanced materials.

1

We shall comply with environmental laws and regulations as well as the demands of our customers and others, setting
ever higher environmental targets as we continuously improve our global environmental conservation efforts.

2

We shall strive to develop products that are friendly to the Earth, and create new environmental businesses.

3

We shall strive to reduce environmental risk by incorporating anti-climate change and resource conservation/recycling
considerations, as well as a reduction in the use of environmental impact causing substances, across the entire product lifecycle.

4

We shall evaluate the ecological impact of all of our businesses, and strive for the conservation of biodiversity andsustainable use of resources.

5

We will seek harmony with the natural environment and local communities through dialogue with our stakeholders.

Furukawa Electric Group Environmental Vision 2050 (Formulated in March, 2021)
Through the provision of environmentally friendly products and services and recycling-based production
activities, contribute to the realization of a sustainable society throughout the value chain1
2
3

Contribute to a carbon-free society

Aim to reduce greenhouse gas emissions throughout the value chain (Greenhouse gas emissions
from business activities (Scope 1 & 2): Challenge target of zero emissions in 2050)

Contribute to realizing a recycling-based society for water & resources

Minimize water usage, and promote the use of recycled materials, including waste plastic,
throughout the value chain

Contribute to society in harmony with nature

Minimize the impact on ecosystems through value chain management that includes raw materials

Scope 1: Direct emissions from the company’s plants and offices
Scope 2: Indirect emissions from the electrical power and heat paid by the company

Environmental Targets 2030 (Formulated in March, 2019, revised in Febrary, 2022)
Contribute to a carbon-free society

1(1) Greenhouse gas emissions from business activities (Scope 1 & Scope 2): Reduce by at least 46% compared to FY2017(2) Greenhouse gas emissions in the value chain (Scope 3):(1) Efficient use of water resourceWater consumption:

Reduce by at least 10% compared to FY2020 (per unit of net sales)(2) Efficient use of metals and plastics
New material*1 consumption:

Reduce by at least 10% compared to FY2020 (per unit of net sales)

Single-use plastic*2 consumption:

Reduce by at least 25% compared to FY2020 (total volume).

The Group obtained SBT*3 WB2°C (well-below 2°C) certification from SBTi (Science Based Targets Initiative) for the company’s greenhouse gas reduction targets in July 2022.
*1 New material: virgin materials for electrolytic copper, new aluminum ingots, and plastics, etc.
*2 Single-use plastic: disposable plastics used in containers, plastic bags, etc.
*3 SBT: Science Based Target.

Furukawa Electric Group’s Basic Policy for Carbon Neutrality
Three Carbon Neutrality Initiatives

1
2
3

78

Eliminate or reduce direct
CO2 emissions
Eliminate or reduce CO2
emissions by society
Capture or transform theCO2 that is emitted

FURUKAWA ELECTRIC GROUPManagement Foundation

Corporate Information/Data

Efforts to Reduce Greenhouse Gas (GHG) Emissions: Use of Renewable Energy
In our efforts to reduce Greenhouse Gas (GHG) emissions in business activities, we are promoting energy saving andfuel conversion at our factories, and the use of renewable energy throughout our domestic and overseas Group
companies.
In fiscal 2021, “Ratio of renewable energy use to total consumption” are assigned as a sustainability indicator, and wewill improve renewable energy use to achieve the fiscal 2025 target of 13%.
Usage of hydroelectric power and solar power:
The subsidiary of the Company Furukawa Nikko Power Generation Inc. owns four
power plants and supplies electricity generated by hydroelectric power. It covers
100% of the electricity for Nikko Works, and copper strip products are produced
using hydroelectric power. In addition, solar power systems are installed for
utilization in Copper Foil Div., Mie Works, domestic Group companies Totoku
Electric Co., Ltd., Furukawa Automotive Systems Inc., and production sites atoverseas Group companies in Mexico, China, and India. We will continuously
move ahead on the installation of the solar power system.
Introduction of electricity derived from renewable energy:
At overseas group companies, electricity derived from renewable energy is usedat production sites in Germany, Italy, Hungary, and the Philippines. Also in Japan,
from April 2021, at Hiratsuka Works, from April 2022 onwards at domestic
production sites in Copper Foil Div., Chiba Works, and Mie Works have partiallystarted introducing electricity derived from renewable energy. Since July 2021, theheadquarters of Furukawa Electric has been located in Tokiwabashi Tower, and allelectricity used at Tokiwabashi Tower building is derived from renewable energy.

Solar power generation panels installed at the
Headquarters of Furukawa Automotive Systems Inc.
(operation start, January 2022)

Solar power generation panels installed at the Imaichi
East Plant of the Copper Foil Division (operation start,
February 2019), and introduction of electricity derived
from renewable energy (operation start, April 2022)

Efforts to Reduce GHG Emissions Throughout the Value Chain
We are working on reducing GHG emissions in the
upstream operation of the value chain: use of aluminumbare metal, manufactured by hydroelectric power, tomake aluminum wire rods—the material of aluminum
wiring harnesses; and use of recycled copper to makecopper foil raw materials. In the downstream operationof the value chain, we adopt Life Cycle Assessment tomake visible the reduction of GHG emissions from ourcore products, such as aluminum wiring harnesses andcopper foil, when used in customers' products.
We thus promote GHG emissions reduction acrossthe upstream and downstream operations of value
chain, in addition to reducing GHG emissions frombusiness activities.

Reduce by at least 20% compared to FY2019

Contribute to realizing a recycling-based society for water and resources / Contribute to society in harmony with nature

2

Management Strategy

Materiality

Specific Measures and Examples of Technology
Development

Raw materials

Production

Product uses
Aluminum wire
harnesses

Aluminumsubstrate

Aluminumdrawing stock

Aluminum
conductor wire

Raw materials madeusing hydroelectric
power (Indonesia)

TMS (Indonesia)

FAPV (Vietnam)

Original copper
alloysαterminal, etc.

FAS
Headquarters

Solar power

FAS Mie WorksFALP(Philippines)

Geothermal
power

FEAP
(Philippines)

Solar power

FURMEX(Mexico)Solar power

FME (India)

Solar power

Copper substrate
Recycled copper

Nikko Works
Hydroelectric power(Furukawa Nikko Power Generation)

Solar power

Reduce CO2 through thepartial use of recycledcupper material(Risk)Development of business activities thatconsider climate change nergy saving, fuel conversion, and recycling rate improvementE
Use of renewable energy > P.79

Recycled copper

Reduce GHG emissions throughout the value chain > P.79

(Revenue opportunities)
Creation of social issue-solving businesses andcreation of environment-friendly businesses
Formation of partnerships with diverse
stakeholders

Development of bipolar lead storage batteries > P.51
Development of the Blue-IR hybrid laser BRACETM > P.53

Reduce CO 2 throughthe use of recycledcupper material

Electrolytic
copper foil
Copper foil products
containing 100%
recycled copper

Copper Foil Division(Imaichi East Plant)

Contribute to reducing
CO2 through the use ofaluminum wire harnesses

Wire harnesses &components

Solar power
Electricity derived fromsubstantial renewable energy

Contribute to reducing
CO2 through the use of
copper foil for lithiumion batteries(Completed UL 2809
validation in July, 2022)

 evelopment of technology for producing LPG with metalD
encapsulated zeolite > P.52

INTEGRATED REPORT 2022

79

Risk Materiality

About Furukawa Electric Group

Information Disclosure Based on TCFD Recommendations
In January 2020, recognizing that climate-related risks
and opportunities are an important management issue,
Furukawa Electric Group declared its endorsement of
the Climate-related Financial Information Disclosure
Task Force (TCFD). At the same time, we participatedin the “Climate-related risks and opportunities scenario
analysis support program in line with the TCFD,”
implemented by the Ministry of the Environment. In
order to realize a sustainable society, we will continue to
use TCFD to strengthen our relationships of trust with
our stakeholders. Seeking to contribute to the realizationof a sustainable society, we will continue to use TCFD tostrengthen our trust relationships with our stakeholders.
The status of the Furukawa Electric Group’s responses
since fiscal 2021 is as follows:

Management Strategy

Management Foundation

Corporate Information/Data

Risk management
The Group’s overall risk management
 he Risk Management Committee has the function of supervising and promoting risk management. The Committee meets every six monthsT
to discuss issues such as risk management, internal control, and compliance. Subcommittees are established for each risk of high importance,such as environmental risk.
In fiscal 2021, we categorized risk items into management strategy risks and operational risks, based mainly on the perspective to recognize therisk. We then recognized “climate change (carbon neutrality)” and “impact of disasters, infectious diseases, etc.” as management strategy risks.
For details, please see the “Business-Related Risks” on Furukawa Electric’s website. https://www.furukawa.co.jp/en/ir/management/risk.html

Climate change (carbon neutrality)

For details, please see the “Information Disclosure Based on
TCFD Recommendations” on Furukawa Electric’s website.

 limate-related risks are considered as the priority issue for environmental risk, and are of direct concern to general managers of eachCbusiness division and divisional representatives, who are members of a special committee, Furukawa Electric Group Environmental
Committee. The Committee meets every three months, examines climate-related risks, and reports and proposes on the monitoring statusof climate-related risks and environmental issues to the Management Committee and the Board of Directors.

https://furukawaelectric.disclosure.site/en/themes/199

I n fiscal 2021, we discussed whether to raise the 2030 environmental target for reducing greenhouse gas emissions (Scope 1 and 2) to a levelthat is consistent with our aim to become carbon neutral in 2050.

GovernanceI nternal carbon pricing (using a shadow price) has been calculated since fiscal 2019. By visualizing carbon prices for each business unit, we
encourage the units to be prepared to avoid climate change risks for decarbonization. Based on the quarterly evaluation and posting effectsof the Environmental Committee, a renewable energy introduction plan is being promoted for any unit that does not meet the target.

 ecognizing that climate-related risks and opportunities are important management issues (materiality), the Board ofR
Directors and the Management Committee conducted the following discussions related to climate change. The Board of
Directors also reports and shares quarterly progress related to climate change.
Board of Directors

May 2022

Impact of disasters, infectious diseases, etc.

Formulated sustainability indicators and targets

Management Committee

Nov. 2021-Feb. 2022

Revised the Environmental Targets 2030 and applied for SBT certification

Sustainability Committee

March 2022

Formulated sustainability indicators and targets

 or risks related to the impact of natural and other disasters, infectious diseases, etc., the Central Disaster Prevention and BCM Promotion
F
Committee meets every three months to establish Business Continuity Management (BCM), identify business continuity risks, including
natural disasters, and promote and manage the identification process.

StrategyFurukawa Electric Group’s definition of the period to consider climate-related risks (transition risks and physical risks) and opportunities

Metrics and Targets

Medium-term

Up to fiscal 2025

Period up to achieving the 2025 Mid-term Plan and sustainability targets

Formulation of sustainability indicators and targets

Long-term

Up to fiscal 2030

Period up to achieving the Vision 2030 and the Environmental Targets 2030

Super-long-term

Up to fiscal 2050

Period up to achieving the Environmental Vision 2050I n fiscal 2021, we set the reduction rate for GHG emissions (Scope 1 and 2) and the ratio of renewable energy to total electricity consumption
as sustainability indicators to measure the progress of our materiality “developing business activities that take into account climate change.”
Our aim is to achieve our 2025 sustainability targets.

Scenario AnalysisI n fiscal 2019, we participated in the Scenario Analysis Support Project for Climate-related risks and opportunities in line with the TCFD,
conducted by the Ministry of the Environment. We identified climate-related risks (transition risks and physical risks) and opportunities andconducted scenario analysis for the infrastructure businesses (optical fiber and cable products of the Communications Solutions Businessand power cables of the Energy Infrastructure Business). We then identified climate-related risks and opportunities and conducted a scenario
analysis for the automotive products business in fiscal 2020 and for the AT & functional plastics business and the copper & high-performancematerial products business in fiscal 2021. We are progressing step-by-step for each business field.

Materiality

Indicator(I n examining the “different climate-related scenarios, including a 2°C or lower scenario” recommended by the TCFD, we examined a “2°C or
lower scenario” and a “4°C scenarios” by referring to several existing scenarios published by the International Energy Agency (IEA) and theIntergovernmental Panel on Climate Change (IPCC).

Transition
risks

Identified climate related risks and opportunities
Policies andregulations
Markets

Risks
Physical
risks

Acute

Chronic

Carbon tax on GHG emissions
Increase in renewable energy procurement costs
Increase in procurement costs of materials (copper, aluminum, plastics) due tocarbon tax
Damage to buildings due to large-scale disasters (large typhoons, heavy rains, heavy
snow, lightning strikes) caused by abnormal weather

4°C

↓↓

→

↓↓

→

→

→

Shut down of coastal factories caused by flooding↓↓↓

Operation suspension caused by drought↓↓↓

Supply chain disruption of customers or suppliers caused by weather disaster

Increase in revenue and profit from accelerating development of 5G/B5G*1 alongwith the construction of smart cities and the surge of communications traffic

Markets
Opportunities

Increase in revenue and profit from demand growth for products related totelecommunications, semiconductor memory, 5G and smartphones
Increase in revenue and profit from demand growth for submarine cables and theenhanced core transmission network along with the increase in renewable energy
generation

↑↑

↑

↑↑

↑

Group

Base
year

ResultFY 2021

TargetFY 2022

FY 2025

Environmental
targetChallenge
targetFY 2030

FY 20502017-29.0%-17.7%-28.3%-46%

Zero emission

—

10.9%

11.5%

13%

—

—

Reduction rate for GHG emissions (Scope 3)

2019

-1.0%

-4%

-10%

-20%

—

Water usage (per unit)

2020

-9.7%

-2%

-5%

-10%

—

Usage of new materials (per unit)

2020

—

—

—

-10%

—

Usage of one-way plastics (total amount)

2020

—

—

—

-25%

—

Ratio of renewable energy to electricity
consumption

Business impact
2°C or less: Sustainability indicators)

Reduction rate for GHG emissions (Scope 1, 2)A ssessment of impact on business in 2030 (↓- negative impact, ↑- positive impact, → - minor impact)
Category

Developing business activities that consider climate change

For details of Scope 1, Scope 2, and Scope 3 by category, please see the “Information Disclosure Based on TCFD Recommendations; Metrics
and Targets” on Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/199

Future responses
In fiscal 2021, we included the AT & functional plastics business and the copper & high-performance material products business in our
scenario analysis. As a result, items common to the entire company regarding climate risks and opportunities, as well as items characteristicof each business, have become more visible. The issue that remains is to deepen each scenario analysis and integrate them. In order toachieve the Vision 2030 and the Environmental Vision 2050, we will conduct business impact assessments and take countermeasures, andactively disclose information to strengthen relationships of trust with our stakeholders.

Increase in revenue and profit from demand growth for products along with
automotive electrification and weight reduction
Products and services

Increase in sales from demand growth for low-carbon and carbon-free products andrecycled products in response to requests for CN*2 and CE*3

*1: B5G: Beyond 5G *2: CN: Carbon Neutrality *3: CE: Circular Economy

80

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

81

Risk Materiality

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Strengthening Human Capital Management
and Organizational Execution Abilities
Human Resource Management Policy
Furukawa Electric Group maintains a basic policy of securing
diverse human resources and supporting the growth ofpeople who continue to take on challenges, and believes
that strengthening human capital management andorganizational execution abilities is the most important
challenge (material issue) the group faces for the realizationof the Furukawa Electric Group Vision 2030.

Role of the Individual
Based on the Furukawa Electric Group Vision for Our People,
the group strives to share an ideal of human resources within
the group, construct a personnel management system basedon common guidelines, and take individual measures (i.e.,
training systems, consultation systems, and compensation
and benefit plans) to ensure that diverse human resources areable to work autonomously and successfully.

Furukawa Electric Group Vision for Our People

Overall Image of the Initiatives for “Strengthening Human Capital Management andOrganizational Execution Abilities”
We break down the "Role of the Individual, Role of the
Leader and Principles of Human Resources," expressed
the Furukawa Electric Group Vision for Our People, into
Furukawa Electric Group Vision for Our People82

the main initiatives and future direction for strengthening
human capital management and organizational
execution abilities, as shown below.

Materiality “Strengthening human capital management and organizational execution abilities”

TargetCategory

Individual

Increase satisfaction at workand engagement
Become more independent
Expand individual capabilities

Work style reforms
Job rotation program
Professional program

Superiors

Support the growth of each
employee
Build good teams
Achieve results as a team

Formulate and implement “Furukawa Seven”
Promote 1on1
Measure the Human Capital management andorganizational execution abilities
Advance the behavior reform program

Transform leadership
Accelerate the changes to the o rganizational
cultureBasicstanceSecure diversity
Promote new challenges
Implement fair, open systems
that are trusted by employees

Promote diversity
Target management system
Various interview systems
Establish and brush up the new personnel
compensation system

Utilize career-track hiring, and promote diverse
personnel in the workplace
Realize a culture that promotes new challenges inboth dialogue (feedback and career interviews)
and systems (side job in the company, clearly
defined compensation)

FURUKAWA ELECTRIC GROUP

Development of global human resources
In accordance with “Furukawa Electric Group Vision for
Our People”, we are training human resources who haverich humanity and strong challenge spirit, for the sake ofour group development. The state of our leaders affects
corporate culture and reflects in our business results, which
is why we give training at each level to develop leadership,
and construct relationships between people by “dialogue”
among all our employees. We work hard to instill a mind
that is interested in people and respects others.
We started our Global Business Leader (GBL) training
in 2006 in order to develop personnel who will take on
the role of management in the future. Since fiscal 2013
this has been reformed to Global Mindset Program(GMP), with its extra emphasis on global human resource
education. We have also operated a Global Development
Program (GDP) for overseas local employees since 2010
with the aim of strengthening links within Furukawa
Electric Group, the curriculum being partly shared with
the GMP. Furthermore, in fiscal 2014 we launched the
Global Challenge Program (GCP), which dispatches young
employees to foreign countries. We are working to alignthese various programs to develop human resources who
can play a dynamic role on the global stage.

Global Human Resource Training System

Development of management personnel(succession planning)
Furukawa Electric's management personnel
development system ensures that candidate humanresources are selected and given opportunities todevelop in the following two tiers:
1) The manager and pre-manager tier2)The general manager tier for corporate vice president
candidates
Selection is based on internal and external
assessments. To help candidates develop, we provide
individual internal training programs and personnel
transfer plans and promote their participation inexternal training. We also prepare succession plans forimportant positions within Furukawa Electric Group andsupervise successor development and preparation. We
systematically position human resources in coordination
with management personnel development plans.
Regarding the succession plan, the Nominating/Compensation Committee, mainly consisting of outside
directors, monitors the appropriateness and theoperations of the management personnel development
system. The committee also discusses the appointmentsof corporate vice presidents and selects personnel for
the CEO succession plan, and systematically implements
initiatives over a multi-year period.

Training global human resources

SP*
Generalmanagers
Sectionmanagers

Renewed andcontinued

Global Mindset
ProgramRecommend
key people
in eachdepartment
for training as
global humanresources

GBL

FY 2006–2012

GMP

Global Development
ProgramGDP

FY 2013–(For local employees)
Partially carried out
jointly

Data Base
Assistantmanagers

Global Business
LeaderDiversity
Global Mind Set
Global Leadership
Business Situation

Global Challenge
Program

GCP(Overseas training
program)

FY 2010–

Mini MBA
Accounting
Strategy,etc.

1 One Furukawa Course(Overseas training program)

2 Frontier course (JICA)*SP: Succession Plan

Main initiatives and future direction
Career design training
In-house secondary job system
Train management personnel

Realize work styles not limited to particular workplaces
Increase the desire for independent career formation
Capability development through training andplanned assignments

INTEGRATED REPORT 2022

83

Risk Materiality

About Furukawa Electric Group

Roles of Leaders

Employee Engagement
In fiscal 2021, we included the Employee Engagement
Score as a sustainability indicator in the 2025 Mid-term
Plan, and plan to set a sustainability target for fiscal 2025
in fiscal 2023. In fiscal 2022, we launched the Furukawa

openly as possible and encourage each other, under theconcept of enjoying change, taking on challenges, andaccomplishing them.
Two years passed since the start and we have begun tosee changes in leaders’ attitudes and behavior. However,
we will still have a long way to go to see positive impacts
on members, realize good team cycles, and bring about
results. We aim to achieve “results as a team” by 2025.
1 important mindset and 6 action standards

Corporate Information/Data

Have gratitude
and trust

M indset

Take theinitiative

Communicate
to be understood

A ctionA ctionA ctionDisabled
peopleWhile anticipating an increase in the statutory employment rate in Japan, we aim to steadily achieve the statutory
employment rate.

A ctionNonJapanese

We will assign the right person in the right position from a global perspective, based on the need to meet eachbusiness strategy and from the viewpoint of strengthening management capabilities.

Mid-career
hiringWith the intention of accelerating the strengthening of expertise and diversification of perspectives, we will
actively promote mid-career hiring of diverse human resources.

Empowerand hold
accountable

A ctionA ction

E-Survey, a survey on human capital and organizational
execution capabilities, including elements of employee
engagement, for the entire Group.

Strengthening human capital management and organizational execution abilities
Indicator

ResultBasic Policy on Diversity & Inclusion

Encourage
the challenges

Seven principles for leaders

Listen anddialogueset up a Diversity Promotion Section, and are working
on various measures such as organizational mind
fostering, women’s career formation support, promotionof autonomous work-life management, etc., aiming atbuilding an environment where diverse human resources
can be active.

Taking discussions and the impact on decision-making into account, we set a target share of women in managers at
30%, a level which is generally said to have an impact on decision-making. Keeping the target in mind, we will strive toenhance our human capital pipeline starting from the hiring phase and onward, to developing core human capital.

F u ru k awa S e ve n

Giveappropriate
feedback

Using Diverse Human Resourcesl
One of our Group’s management philosophies is to“nurture human resources at every level, so that wecan become a more diverse and creative organization”.
It is essential for the progress of our Group’s global
management to create a corporate culture in whichmore diverse personnel can succeed. In April 2014, we

Women

Indicators and Targets

Furukawa ElectricManagement Foundation

Basic Approach to Human Capital

Driving Leadership Transformation:
Furukawa Electric’s Seven Principles for Leaders
In order to continue generating corporate value in a fastchanging, uncertain environment, a working team can deliver
results only when the psychological safety of its members
is ensured. For this reason, we have adoptedestablishedthe Seven Principles for Leaders (Furukawa Seven), which
consists of one basic mindset and six action principles for aleader to build a good working team. To put these to work,at the start of every day our officers and executives, anddepartment and section managers recitedeclare theseprinciples and act according to themly every day. Our efforts
at on leadership transformation also include use of behavior
retention tools such as special mobile apps, and 360°
feedback surveys of the target personnel.
Adherence to the Furukawa Seven has been practiced
by about 500 officers and general managers of Furukawa
Electric and Group companies in Japan since fiscal
2020, and by a total of about 1,300 employees including
managers since fiscal 2021. In addition, we ask otherregular employees to make efforts similar to those of
their leaders, as they are pre-positioned to understandthe leader’s efforts, and support and cooperate withthem. We also make various efforts to work together as

Materiality

Management Strategy

Target( :Sustainability indicator)

FY2021

FY2022

FY2025

Employee Engagement Score−

Start measurement

Setting in FY2023

The Activity to Promote Women’s Careers
In April 2016, we acquired recognition of Level Threestatus of the “L-Mark”, which is an accreditation foroutstanding companies in the implementation of
initiatives related to the promotion of women’s careers.
Since fiscal 2018, we have developed new targets andaction plans.

*A summary of our company’s initiatives is available on the Ministry of Health, Labour andWelfare’s “Enterprise database promoting women’s success”.
https://positive-ryouritsu.mhlw.go.jp/positivedb/detail?id=529 (Only available in Japanese)

Promotion of the Employment of People with Disabilities
Furukawa Electric established special subsidiary Furukawa
New Leaf in fiscal 2004 to create an environment wheremore people with disabilities are able to work in a better
setting, provide a place for them in society so that they
are able secure stability and peace of mind, and develop
independent workers who abide by rules and actively
participate in society.

The subsidiary employs 52 people with disabilities at threelocations (Hiratsuka, Chiba and Mie). They are engaged
in cleaning and electric wire disassembly. Furukawa New
Leaf is proactively contributing to the community, focusing
on recruitment and training and increasing the numberof jobs it provides by including positions for workers withdisabilities when we start new businesses.

Promoting Mid-Career Hiring
With the intention of accelerating the strengthening ofexpertise and diversification of perspectives, we actively
promote mid-career hiring of diverse human resources. In

fiscal 2021, we made the ratio of career track hiring among
total new staff hiring as a sustainability indicator, and aim
to maintain the ratio at 30% every year.

Objectives related to support the success of women in the workplace1

We aim for 7% of females in managerial positions by fiscal 2025

2

We aim for 15% of females in chief positions by fiscal 2025

3

We aim for 40% of females in university graduates recruits byfiscal 2025

Indicators and Targets
Materiality

Strengthening human capital management and organizational execution abilities
Indicator

Actual result( :Sustainability indicator)

FY2021

FY2022

FY2025

FY2030

3.8%

4.5%

7%

15%

Share of women in manager candidates*

11%

−

15%

20%

Share of women in new hires*2

20%

−

40%

40%

Employment rate of people with disabilities*3

2.32%

−

2.40%

2.65%

Share of career track hires in total new hires*4

36%

30%

30%

−

Share of women in managers*

1

1

Furukawa
Electric

Target*1 As of March 31, the end of fiscal year *2 New hires (both career track and clerical positions) as of April 1 of fiscal year *3 As of June 1 of fiscal year
*4 New hires include new graduates and mid-career hires, for management, career track, and clerical positions

84

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

85

Management Analysis of Operating Results and Financial Position

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Management Analysis of Operating
Results and Financial Position
Overall Business Condition and Business Results
In fiscal 2021, the global economy continued to recover as
restrictions on socioeconomic activities were gradually eased
due to progress in infectious disease countermeasures andvaccinations in various countries in response to the COVID-19
pandemic. However, since the end of 2020, the pace ofeconomic recovery has slowed due to the resurgence of
COVID-19 infections caused by new variants and other factors.
In addition, since February 2022, concerns have been evident
regarding the impact of the unstable supply and price surgeof crude oil, natural gas, and various raw materials caused by
the situation in Russia and Ukraine, as well as the impact of
economic sanctions against Russia and the implementation ofcountermeasures by Russia.
In the United States, the economy remained firm due to anincrease in personal consumption and a recovery in capital
expenditures against the backdrop of economic stimulus
measures and improvement in the employment and income
environment. In Europe, the economy continued to recover,supported by a recovery in personal consumption, despite
the impact of the resurgence of COVID-19 in winter. In China,
the pace of economic recovery was moderate due to a local
containment policy against COVID-19, which restrained
personal consumption, and a decrease in investment ininfrastructure and real estate development due to government
investment restraint measures.
In Japan, the economy was generally stagnant in the firsthalf of the fiscal year, and the recovery in the employment
environment and personal consumption was moderate asa state of emergency was declared and priority measures
to prevent the spread of COVID-19 were implemented. In
the second half of the year, capital investment and personal
consumption traced a recovery trend against the backdrop of
relaxation of restrictions on socio-economic activities. However,
the economy did not fully recover due to the impact of supply
constraints on semiconductors and other products that havecontinued since 2021 and the resurgence of COVID-19 driven
by new variants since January 2022.
In this environment, Furukawa Electric Group has continued
to implement various measures to strengthen its corebusinesses, such as communications, energy, and automotive
products. In particular, in order to cope with the surge in raw
material prices and transportation costs, we have been working
at improving productivity and reducing costs in North America
in the communications sector, promoting order-taking activities
that emphasize securing profits in the energy sector, and taking
measures to deal with the decline in factory utilization rates
due to COVID-19 in the automotive sector.
Toward achieving the Furukawa Electric Group (FEG) Vision
2030, we pursued ESG management, and to lay the foundation86

FURUKAWA ELECTRIC GROUP

for the implementation of a new medium-term management
plan, we have made efforts to reform our business inanticipation of environmental changes, to launch and nurture
new businesses, and to strengthen management with anemphasis on capital efficiency.
As measures to promote ESG management, in order toachieve the FEG Environmental Vision 2050, which sets thechallenging goal of reducing greenhouse gas emissions to zero inbusiness activities by 2050, we revised the FEG Environmental
Targets 2030, which sets new targets such as higher reductionof greenhouse gas emissions and reduction of water usage.
We have also promoted organizational culture reform throughinitiatives to build successful teams and training employees toacquire the skills necessary to promote and sustain reforms.
In addition, in order to promote CSR activities, including
human rights-related measures throughout the supply chain,
we have been taking measures according to the FEG CSR
Procurement Guidelines for Group companies in Japan andoverseas as well as our major suppliers. As part of business
transformation that anticipates changes in the environment,
we have built a framework for reviewing the business portfolio.
In addition to creating new businesses throughout the Group,
we have promoted a shift to target management with a greaterawareness of capital costs in order to strengthen managementwith an emphasis on capital efficiency.
Sales of the Group as a whole increased in fiscal 2021 due to(1) a recovery of the Communications Solutions segment fromthe decline in fiscal 2020, with a contribution by an increasein sales of optical fiber cables in North America, (2) steadycapturing of robust demand for automotive and electronics-

Financial Position
Total assets at the end of fiscal 2021 increased 103.8 billion
yen from the end of fiscal 2020 to 935.9 billion yen. Inventories
increased 43.3 billion yen, notes and accounts receivabletrade and contract assets increased 38.4 billion yen, securities
increased 15.1 billion yen, and property, plant and equipment
increased 13.4 billion yen. Cash and deposits decreased 19.2
billion yen. Working capital, which is current assets less current
liabilities, increased 8.6 billion yen from the end of fiscal 2020
to 123.2 billion yen.
Details of property, plant and equipment and intangible assets(Billion yen)

12

930.5

Total assets

Ratio of overseas sales

Operating income

Net sales(Billion yen)

1,000

related products in the Electronics Component Materials
segment, and (3) the impact of soaring copper ingot prices.
Profits improved from fiscal 2020 but only marginally, due inpart to soaring raw material prices and transportation costs,
despite our efforts to improve productivity and the productmix, including expansion of sales of strategic products.
As a result, net sales were 930.5 billion yen (up 14.6% fromthe previous year), operating income was 11.4 billion yen (up35.6%), and ordinary income was 19.7 billion yen (up 279.0%)
on a consolidated basis. Net income attributable to ownersof the parent company was 10.1 billion yen (up 0.9%) due
to extraordinary income (including gain on disposal of noncurrent assets) of 9.6 billion yen and extraordinary losses(including impairment loss) of 8.8 billion yen. Overseas sales
were 469.0 billion yen (up 24.6% year-on-year), and the ratio ofoverseas sales was 50.4% (up 4.0 percentage points from theprevious year).

(%)(Billion yen)

100

11.4

1,000

832.0

811.6
750

9

500

6

50

250

3

25

75

8.4

0

0
2020

2021

2020

(Billion yen)

(FY)

Net income attributable toowners of the parent company(Billion yen)

19.7

20

2021

12

10.0

6

500

3

250

0
2021

(FY)

(FY)

Annual dividend per share
100

540.4

75

621.8

2021

(FY)

60.0

60.0

2020

2021

50
25

0
2020

2021

(Yen)

1,000

10

2020

2020

10.1
750

0

(FY)

Total liabilities

9

5.2

0
2021

(Billion yen)

15

5

250

2020

0
2020

2021

(FY)

Cash and cash equivalents at the end of fiscal 2021 were 67.6
billion yen (19.6 billion yen less compared to the end of fiscal
2020). Net cash flow from operating activities decreased by
13.3 billion yen (12.8 billion yen less than in fiscal 2020) due to adecrease of 36.0 billion yen in inventories and a decrease of 28.2
billion yen in notes and accounts receivables-trade and contract
assets, etc., despite an increase of 20.4 billion yen in profit before
income taxes and an increase of 33.7 billion yen in depreciation.
Net cash flow from investment activities decreased 40.1 billion
yen (38.2 billion yen less than in fiscal 2020) mainly due topurchase of property, plant and equipment of 36.5 billion yen
and purchase of intangible assets of 3.5 billion yen. Net cash flowfrom financing activities increased 35.0 billion yen (0.1 billion yen
less than in fiscal 2020) mainly due to net increase in commercial
paper of 24.0 billion yen, proceeds from long-term loans payableof 16.0 billion yen, and cash dividends paid of 4.2 billion yen.

Basic Policy on Profit Distribution and Dividends

500

0

(FY)

Ordinary income

50.4

Cash Flows

935.9

750
46.4

fluctuated due to an increase in 38.1 billion yen for capital
expenditures, a decrease in 33.7 billion yen for depreciation,
and a decrease due to disposals and sales.
Total liabilities increased 81.4 billion yen from the end of fiscal
2020 to 621.8 billion yen. Interest-bearing debt, including debts,
corporate bonds and commercial paper, increased 51.5 billion
yen compared to the end of fiscal 2020 to 342.1 billion yen.
Net assets increased 22.4 billion yen from the end of fiscal
2020 to 314.1 billion yen. Retained earnings increased 5.8
billion yen due to an increase in profit attributable to owners of
the parent company and other factors, and total accumulated
other comprehensive income increased 13.7 billion yen. The
equity capital ratio fell 1.4 percentage points from the end of
fiscal 2019 to 29.8%.

(FY)

We aim to manage the company with a focus on capitalefficiency and have set forth a basic policy of balancing
between providing shareholder returns and making strategic
growth investments, fostering next generation new businesses,
and improving financial health.
Under this basic policy, we focus on expanding profits in
key business areas (infrastructure/automotive markets) that
support the Group’s sustainable growth, and prioritize capital
investment and R&D for the creation of new businesses,
thereby strengthening the Group’s profitability and continuing
to improve its financial structure. We have adopted returnto shareholders as one of the priorities of management andcontinue our stable dividend payment.
For fiscal 2021, we paid annual dividends of 60 yen per share,in view of the financial results of the year.

INTEGRATED REPORT 2022

87

Financial and Non-Financial Data

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Financial and Non-Financial Data
Medium-term management plan

Operating results(fiscal year)

Financial position(at the end of fiscal year)(fiscal year)

Per share data*2(fiscal year)

RatiosFurukawa G Plan 2020

(Millions of yen)

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

Net sales

918,808

924,717

931,781

867,817874,879

843,344967,333

991,590

914,439

811,600

930,496

Operating income

15,947

17,76325,456

17,873

27,116

38,62344,80440,842

23,565

8,429

11,428

Ordinary income

12,872

17,612

25,532

18,59818,71036,02446,90839,07822,771

5,189

19,666

Net income attributable to owners of
the parent company

11,123

3,576

5,608

7,355

10,007

17,57028,547

29,10817,63910,001

10,093

Capital investments (CAPEX)

33,58147,77237,43630,67425,68731,58438,53950,03653,14439,96338,144

Depreciation

39,21635,347

28,10622,50823,23523,307

25,10626,271

29,42332,16333,721

Research and development expenses

18,94920,21017,461

16,59916,845

17,454

19,532

21,141

21,65020,217

20,761

Net assets

197,569

222,843

199,733

214,743

198,587

237,051

272,071

279,911

273,030

291,617314,062

Total assets

790,114819,702714,845734,125

705,725

750,126

808,632

818,021794,616

832,044935,876

144,694

165,739

177,237

190,741

173,163

206,712236,518

247,659

240,280

259,870279,219

Operating assets

370,989

396,951

294,333

307,688298,228

319,588341,825

364,456

386,176

387,832

444,800

Balance of inventory assets

94,888104,249

93,66899,443

93,167104,355

113,792

122,890

115,862

120,836

164,116

Cash flows from operating activities

30,77454,947

18,912

41,48941,56940,402

38,42946,46041,942479

13,269Cash flows from investing activities

20,252

44,93940,29023,533

1,947

36,361

34,31931,042

33,1191,908

40,074

Cash flows from financing activities

22,845

11,402

29,917

15,537

20,942

10,378

1,943

19,414

171

35,14035,020Net income per share (Yen)

15.75

5.07

7.94

10.42

14.17

249.17405.05412.98250.20141.88143.40Net asset per share (Yen)

204.9

234.7

251.0

270.2

2,452.6

2,933.2

3,355.8

3,513.6

3,408.9

3,686.4

3,967.1

Operating income margin on sales (%)

1.74

1.92

2.73

2.06

3.10

4.58

4.63

4.12

2.58

1.04

1.23

Equity capital ratio (%)

18.3

20.2

24.8

26.0

24.5

27.6

29.2

30.3

30.2

31.2

29.8

Return on operating assets (%)

4.3

4.5

8.6

5.8

9.1

12.1

13.1

11.2

6.1

2.2

2.6

ROE (%)

7.2

2.3

3.3

4.0

5.5

9.3

12.9

12.0

7.2

4.0

3.7

ROA (%)

1.6

2.2

3.3

2.6

2.6

4.9

6.0

4.8

2.8

0.6

2.2

Total asset turnover ratio (times)

1.14

1.15

1.21

1.20

1.22

1.16

1.24

1.21

1.13

1.00

1.05

Equity capital
1

Cash flows

Furukawa G Plan 2015

New Frontier 2012 Furukawa G

3

Figures are rounded down to the nearest one million yen. Other figures of financial data and non-financial data are round to the nearest value.

(FY)

Climate change data
Greenhouse gas emissions(Scope1,2)

Unit
103 t-CO2e

Greenhouse gas emissions
103 t-CO2e
Furukawa(Scope3)
Electric+
Energy consumption
1,000 kℓ
Domestic
and overseas
Total electric power consumption
GWh
group
companies
Renewable energy
GWh

Furukawa
Electric+
Domestic
group
companies

Energy consumption

2018

2019

2020

2021

903

843

742

648

640

1,636

1,689

4,736

4,160

4,687

419

424

396

351

372

1,387

1,379

1,293

1,179

1,242

110

123

142

121

135

%

7.9

8.9

11.0

10.3

10.9

10 t-CO2e

443

387

342

316

288

Renewable energy ratio to electric
power consumption
Greenhouse gas emissions(Scope1,2)

2017

3

1,000 kℓ

198

198

191

176

181

Total electric power consumption

GWh

644

643

613

569

579

Renewable energy

GWh

110

109

113

94

99

%

17.1

17.0

18.5

16.5

17.1

Renewable energy ratio to electric
power consumption

For details of Scope 1, Scope 2, and Scope 3 by category, please see the “Information Disclosure Based on TCFD
Recommendations; Metrics and Targets” on Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/199

88

FURUKAWA ELECTRIC GROUP*1 Operating Assets are the total of inventory and tangible and intangible fixed assets.
*3 Return on operating assets is the ratio of the operating income over operating assets.

(FY)

Human capital andorganizational data
Group

(FY)

Unit

2017

2018

2019

2020

2021

Executives data

Employees in total*1

Persons

51,92552,21550,232

48,44950,867

Directors*1

Employees in total*1

Persons

3,704

3,816

3,925

4,084

4,201

%

9.1

9.2

10

12

12

Years old

44.5

44.2

44.1

43.8

43.8

Employees’ average length of service*1

Years

20.0

19.6

19.4

18.8

18.4

Employees’ average annual salary*1

Yen

7,391,204

7,350,787

7,207,737

Persons

92

104

111

119

119

%

34

30

28

28

20

Persons

515

507

502

520

522

%

7.0

7.1

8.8

10

11

Persons

936

960

940

964

1053

%

3.3

3.2

3.4

3.4

Share of women in employees
Employees’ average age*1

New hires in total*2
Furukawa
Electric*2 W
 e conducted a one-for-ten reverse stock split of our company’s common shareseffective October 1, 2016

Share of women in new hires
Manager candidates in total*

1

Share of women in manager candidates
Managers in total*1
Share of women in managers

Persons

12

12

12

12

11

11

Outside directors

Persons

5

5

5

5

5

5

Independent
directors

Persons

3

3

5

5

5

5

Female directors

Persons

0

0

1

1

1

1

Audit & Supervisory
Board members*1

Persons

6

6

6

6

6

6

Outside members

Persons

3

3

3

3

3

3

Independent
members

Persons

3

3

3

3

3

3

Female members

Persons

0

0

0

1

1

1

Executive officers*2

Persons

25

26

25

27

27

25

3.8

Female executive
officers

Persons

1

1

1

1

2

1

Foreign executive
officers

Persons

4

4

3

3

3

2

Persons

2

2

2

1

1

3

6,915,840 6,961,974

Employment rate of people withdisabilities*3

%

2.23

2.12

2.14

2.09

2.32

Share of career track hires in total new hires*4

%

19

18

26

23

36

*1 A s of March 31, the end of fiscal year
*3 A s of June 1 of fiscal year

Unit 2017 2018 2019 2020 2021 2022

*2 New
hires (both career track and clerical positions) as of April 1 of fiscal year
*4 New
hires include new graduates and mid-career hires, for management,
career track, and clerical positions

Furukawa
Electric

Senior Fellows*2*1 Numbers of directors and Audit & Supervisory Board members are as of the end of fiscal
year, but are as of June 23 for fiscal 2022.
*2 N umbers of executive officers and Senior Fellows are as of April 1.

INTEGRATED REPORT 202289Consolidated Financial Statements

About Furukawa Electric Group

Consolidated Financial Statements

Consolidated Statement of income (Millions of yen)

AssetsCurrent assets

84,362

65,153

Notes and accounts receivable-trade

191,930—

Notes, accounts receivable-tradeand contract assets—

230,326

Securities

2,923

3,257

Merchandise and finished goods

38,21059,932Work in process

34,512

Raw materials and supplies
Other

894

1,048

429,812502,963

Total; Current assets

Commercial paper

30,00054,000

Income taxes payable

2,033

2,649

40,116

Provision for product defectcompensation

4,022

3,045

48,11464,067

Other

30,653

41,157

235,399

246,887

Machinery and delivery
equipment

446,936475,919

Tools, furniture and fixtures

74,52075,229Land

35,12735,935

Leased assets

1,257

1,273

Right-of-use assets

11,39015,078Construction in progress

27,10820,074

Accumulated depreciation

584,996

610,235

Total; Property, plant andequipment

246,744

260,163

Intangible assets
Goodwill

1,450

573

Other

18,79919,947

20,25020,520Investments and other assets
Investment securities

101,708

116,767

Investments in capital

8,965

6,082

Deferred tax assets

6,948

7,899

Net defined benefit asset

6,859

8,127

Other

11,78814,264

Total;Non-current assets
Total; Assets

1,034
135,236912
152,228

402,231432,912832,044935,876

Total; Current liabilities

FURUKAWA ELECTRIC GROUP

60,121

77,033315,204

379,716

Non-current liabilities
Bonds payable

30,00040,000Long-term debt

127,094

133,120

Provision for environmental
measures10,2299,343

Net defined benefit liability

44,51443,806

Asset retirement obligations

1,323

1,485

Other

12,061

14,340Total; Non-current liabilities

225,222

242,097

Total; Liabilities

540,426

621,813

Net assets
Shareholders' equity
Capital stock

69,39569,395

Other capital surplus

23,02823,178Retained earnings

168,542

174,346576

901

260,388

266,018

Treasury shares
Total; shareholders' equity
Accumulated other comprehensive
incomeValuation difference on
available-for-sale securities
Deferred gains or losses on hedges

13,92912,446

2,677

2,963

Foreign currency translation
adjustment

13,295817

Remeasurements of defined
benefit plans

3,829

3,024

Total; Accumulated othercomprehensive income

518

13,201

Non-controlling interests

31,747

34,843291,617314,062

832,044935,876

Total;Net assets
Total; Liabilities and net assets

90

127,988
115,000

Buildings and structures

Total; Investments and otherassetstrade

115,502103,523

Property, plant and equipment

Allowance for doubtful accounts

Notes and accounts payable Short-term debt

Non-current assets

Total; Intangible assets

As of March 31, As of March 31,
2021
2022

Current liabilities

Cash and deposits

Allowance for doubtful accounts

Liabilities

Management Foundation

Corporate Information/Data

Consolodated Statement of Cash Flows (Millions of yen)for the Fiscal
for the Fiscal
Year EndedYear Ended
March 31, 2021 March 31, 2022

Consolidated Balance Sheet (Millions of yen)
As of March 31, As of March 31,
2021
2022

Management Strategy

Net sales
Cost of sales

811,600
682,288930,496
791,804

Gross profit

129,311

138,691

34,621
86,260120,881
8,429

38,85088,413
127,263
11,428

SG&A
Selling expenses
G&A expenses
Total; SG&A
Operating income
Non-operating income
Interest income
Dividend income
Profit in equity method affiliates
Foreign exchange gains
Gains on valuation of derivatives
Other
Total; Non-operating income
Non-operating expenses
Interest expenses
Loss in equity method affiliates
Loss on valuation of derivatives
Other
Total; Non-operating expenses
Ordinary income
Extraordinary income
Gain on disposal of non-current assets
Gain on sales of investment securities
Insurance claim income
Reimbursement of social
contributions for the prior year
Other
Total;Ordinary income
Extraordinary losses
Loss on disposal of non-current assets
Impairment loss
Business restructuring expenses
Provision for product defectcompensation
Loss on transfer of business
Loss on COVID-19
Other
Total; Extraordinary losses
Profit before income taxes
Income taxes-current
Income taxes-deferred
Total; Income taxes
Net income
Net income attributable to noncontrolling interests
Net income attributable to ownersof the parent company

Cash flows from operating activities
Profit/Loss before income taxes
Depreciation
Interest and dividend income
Interest expenses
Loss (Profit; )in equity method affiliates
Foreign exchange losses(gains; )Loss (gain;()) on disposal of non-current assets
Loss (gain; )in sales of marketablesecurities and investment securities
Insurance claim income
Reimbursement of social contributions
for the prior year
Impairment loss

611
1,690
—
502
—
1,918
4,723

549
1,611
9,045
1,496
72
1,735
14,510

3,586
893
1,167
2,316
7,963
5,189

3,375
—
—
2,897
6,272
19,66622,144
9,521
1,281

2,082
1,859
2,051

—

2,722

482
33,430864
9,580

Income taxes (paid; ) refund

1,303
2,542
—

1,296
1,489
2,303

Loss on COVID-19 paid

4,820

703

3,770
1,385
3,481
17,303
21,316
6,047
3,171
9,219
12,097

120
780
2,123
8,816
20,430
5,673
1,517
7,190
13,239

2,095

3,145

10,001

10,093

Consolidated Statement ofComprehensive income (Millions of yen)for the Fiscal
for the Fiscal
Year EndedYear Ended
March 31, 2021 March 31, 2022

Net income
Other comprehensive income
Valuation difference on availablefor-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined
benefit plans, net of tax
Share of other comprehensive
income of entities accounted forusing equity method
Total;Other comprehensive income
Comprehensive income
Comprehensive income
attributable toComprehensive income
attributable to owners of parent
Comprehensive income attributable
to non-controlling interests

for the Fiscal
for the Fiscal
Year EndedYear Ended
March 31, 2021 March 31, 2022

12,097

13,239

2,945

1,853

4,235
244

205
10,876

8,124

638

294

5,065

15,84427,941

14,521
27,76025,88823,814

2,053

3,946

Loss on valuation of inventories
Business restructuring expenses
Loss (gain; ) on sale of businesses
Loss on COVID-19
Decrease (increase; ) in notes andaccounts receivable - trade
Decrease (increase; ) in notes, accounts
receivable - trade and contract assets
Decrease (increase; ) in inventories
Increase (decrease; ) in notes andaccounts payable - trade
Increase (decrease; ) in liability for
retirement benefits
Increase (decrease; ) in provision for
product defect compensation
Other
SubtotalInterest and dividend income received
Interest expenses paid
Insurance claims received
Business restructuring expenses paid
Cash flows from operating activities
Cash flows from investing activities
Decrease (increase; ) in time deposits
Purchase of investment securities
Proceeds from sales and redemption of
investment securities
Proceeds from sales of investments in
subsidiaries resulting in change in scopeof consolidation
Purchase of investments in subsidiaries
resulting in change in scope of consolidation
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sales of non-current assets
Decrease (increase; ) in short-termloans receivable
Other
Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease; ) in short-termloans payable
Net increase (decrease; ) in commercial
papersProceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of bonds
Proceeds from non-controlling shareholders
Payment for purchase of common
treasury stock
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Other
Cash flows from financing activities
Effect of exchange rate change on cash
and cash equivalents
Net increase (decrease; ) in cash andcash equivalents
Cash and cash equivalents at beginning of
the year
Increase in cash and cash equivalents fromnewly consolidated subsidiary
Decrease in cash and cash equivalents
resulting from exclusion of subsidiaries fromconsolidation
Increase in cash and cash equivalents
resulting from merger
Cash and cash equivalents at end of the year

21,31632,163
2,302
3,586
893
338
20,84020,43033,721
2,160
3,375
9,045
1,309
786

9,166

1,513

1,281

2,051

—

2,722

2,542
1,246
—
3,770
1,385

1,489
373
2,303
120
780

13,788——28,208

13,77036,005

12,161

11,922

1,059

1,049

13,706

796

2,246
7,852
3,287
3,603
8,209
1,281
—
1,088
479

3,333
5,179
2,473
3,429
6,867
2,051
1,563
755
13,269

4
2,112

645
2,353

14,804

2,462

2,306

595

—

266

33,386
7,325
22,37036,493
3,521
2,220

3,540

72

2,110
1,908

2,144
40,0742,008

17,08515,00024,00055,96530,100—452

16,04924,776
10,000
—

9

359

6,001

4,240

521

825

1,651
35,1401,912
35,020594

1,815

32,15820,13987,189582——

87,18967,632

INTEGRATED REPORT 2022

91Company Profile and Stock / Dividends Information

About Furukawa Electric GroupManagement Strategy

Management Foundation

Corporate Information/Data

Company Profile and Stock / Dividends Information
Company Profile

Furukawa Electric Co., Ltd. Organization Chart(As of Apr.1, 2022)

Company name

Keiichi Kobayashi

Founded1884

Established

June 25, 1896

Business Transformation Team
Next Generation Photonics Business Innovation Project Team
Strategy Div.

Corporate Planning Dept.
Digital Innovation Center

ChairmanPresident(As of March 31, 2022)(Years ended March 31, 2022)

Number of employees(As of March 31, 2022)

Risk Management
Div.

Number of shareholders

Common Stock 49,322 persons

Minimum trading units

100 shares

Shareholder
register agent

3-3 Marunoichi 1-chome, Chuo-ku,
Tokyo, Japan
Mizuho Trust & Banking Co., Ltd.

Risk Management Dept.

Fiscal year

From April 1 to March 31

Environment Dept.

Shareholders’ meeting

June each year

Chiba Works

Accounting auditor

Deloitte Touch Tohmatsu LLC

Tokiwabashi Tower, 6-4 Otemachi
2-chome,
Chiyoda-ku, Tokyo 100-8322, Japan

Head office
TEL.

Secretary Office

Nikko Works
Hiratsuka Works

Websitehttps://www.furukawa.co.jp/en/

Consol. Subsidiaries

109

Finance &Accounting Div.

Equity-method affiliates 14

Investor Relations Dept.

(As of April 1, 2022)

Sustainable Technology Laboratory

Planning & Administration Dept.
Facility Assets Dept.

Quality Promotion Dept.
Safety Promotion Dept.

28,240,357 shares

14,486,357 shares

Securities
companies

Domestic
companies

4.9%

6.8%

3,493,639 shares

4,807,163 shares

Number of shares

Shareholding
ratio

11,103,100
3,999,200

15.72
5.66

2,413,500

3.42

2,278,000
1,699,900
1,365,050
1,329,045
1,269,310

3.23
2.41
1.93
1.88
1.80

1,091,900

1.55

1,050,000

1.49

1. Shareholding ratio is calculated with the number which deducted 49,786 shares of the Company’s treasury stock.
2. In addition to the 2,413,500 shares in a retirement benefits trust mentioned above, Mizuho Bank, Ltd. has a further 173 shares in the Company.

Global Trade Control Dept.
Business Management Dept.
Sales Dept.

Cash Dividends per Common Share

Kansai Branch Office

Fiscal year

Chubu Branch Office
Kyusyu Branch Office

Okinawa Sub Branch

Hokkaido Branch Office
Tohoku Branch Office
Chugoku Branch Office

Shikoku Sub BranchSocial Design & New Business Development Dept.

Tohoku Branch

20.5%

BNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1
Asahi Mutual Life Insurance Company
FURUKAWA CO., LTD.
DFA INTL SMALL CAP VALUE PORTFOLIO
Custody Bank of Japan, Ltd. (Mizuho Trust & Banking; Employee Retirement Benefit Trust,
FURUKAWA CO., LTD. Account)
Custody Bank of Japan, Ltd. (Mizuho Trust & Banking; Employee Retirement Benefit Trust, Asahi
Mutual Life Insurance Company Account)

NF Production System Dept.

Okinawa
Sub Branch

40.0%

sharesCustody Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Mizuho Trust & Banking; Employee Retirement Benefit Trust, Mizuho
Bank Account)
Custody Bank of Japan, Ltd. (Trust Account 4)Intellectual Property Dept.

Global Marketing
Sales Div.

Financial
Institutions

70,666,917

The Master Trust Bank of Japan, Ltd. (Trust Account)

Procurement Dept.

Hokkaido Branch

Foreigncorporations

Strategic Planning Dept.

Incubator Dept.

MONOZUKURI
Innovation Div.

19,589,615 shares

Global Management OfficeTelecommunications & Energy Laboratories

Domestic Locations (Furukawa Electric Co., Ltd.)

Total number ofshares issued andoutstanding

27.7%

Name of major shareholders

Automotive Products & Electronics Laboratories(As of March 31, 2022)

0.1%

49,786 shares

Individuals,
others(As of March 31, 2022)

Finance & Accounting Dept.
Corporate Management Dept.

Research &Development Div.

Treasurystock

Major Top 10 Shareholders of The Company andthe Company’s Capital Contributions to Such Shareholders

Mie Works
Yokohama Works+81-3-6281-8500(As of March 31, 2022)

Legal Dept.
Administration Dept.

50,867 (consol.)
4,201 (non-consol.)Tokyo Stock Exchange, Prime Market(from April 4, 2022)

Common Stock 70,666,917 shares

Strategic HR Management Dept.

¥930,496 million (consol.)¥292,424 million (non-consol.)

Stock exchange listings

Common stock issued

Corporate Sustainability Office

HR & Organizational Development Dept.

Net sales

5801

Common Stock 250,000,000 shares

ICT Strategy Planning Dept.

¥69,395 million(As of March 31, 2022)

Stock code on the Tokyo
Stock Exchange

Number of sharesauthorized

Public Relations Dept.

Paid-in capital

Distribution of Ordinary Stock Among
Shareholders(As of March 31, 2022)

Auditing Dept.

Furukawa Electric Co., Ltd.

President

General Stock Information

2017

2018

2019

Total Shareholder Return (TSR)
2020

2021

Fiscal year

2017

2018

2019

2020

2021

144.8

(113.5)(113.5)(113.5)(113.5)(113.5)Interim dividend (yen)

0

0

0

0

0

TSR (%)(TOPIX)(%)

Year-end dividend (yen)

80

85

85

60

60

High (yen)

7,230

5,760

3,305

3,115

3,110

Total dividend (yen)

80

85

85

60

60

Low (yen)

3,985

2,453

1,620

1,746

2,050

73.9

55.4

82.0

63.7

Communications Solutions Div.
Optical Fiber and Cable Products Div.
FITEL Products Div.

Nikko Works
Copper Foil Division

Head Office
Chubu Branch
Chugoku Branch

Mie Works

Energy Infrastructure Div.
Chiba Works

Kansai Branch
Shikoku Sub BranchPower Cable Div.
Industrial Cable & Power Cable Accessories Div.

Haneda Office
Yokohama Works

Kyushu Branch

Broadband Solutions Business Div.

Electronics Component Material Div.
Electric Conductor Div.
Copper & High Performance Material Products Div.
Functional Products Div.

Hiratsuka Works

AT & Functional Plastics Div.
Thermal Management Solution & Products Div.
Memory Disk Div.
Copper Foil Div.

Stock Price and Trading Volume
Closing price(yen, points)

8,000

TOPIX

Trading volume (right axis)(millions of shares)

20

6,000

15

4,000

10

2,000

5

0

0
2017/4/3

2018/4/2

2019/4/1

2020/4/1

2021/4/1

2022/3/31

Automotive Products Div.

92

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2022

93

External Evaluation / Participation in Initiatives

About Furukawa Electric Group

External Evaluation
Furukawa Electric became a constituent of the following ESG-related indices, and received external evaluation andcertifications as follows during a period from April 1, 2021 to July 31, 2022.
FTSE4Good Index Series/FTSE Blossom Japan Index Series

MSCI Japan Empowering Women Index (WIN)Furukawa Electric was selected as a constituent of the FTSE4Good IndexSeries and the FTSE Blossom Japan Index Series of FTSE Russell (June2022).

Furukawa Electric was selected as a constituent of the MSCI Japan
Empowering Women Index (WIN) (June 2022).

FTSE4Good Index Series
https://www.ftserussell.com/products/indices/ftse4good
FTSE Blossom Japan Index Series
https://www.ftserussell.com/products/indices/blossom-japan

THE INCLUSION OF Furukawa Electric Co., Ltd. IN ANY MSCI INDEX, AND
THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEXNAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT ORPROMOTION OF Furukawa Electric Co., Ltd. BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE
MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF
MSCI OR ITS AFFILIATES.

S&P/JPX Carbon Efficient Index

SBT (Science Based Targets)

Furukawa Electric was selected as a constituent of the S&P/JPX Carbon
Efficient Index, within the “Capital Goods” industry group, with decileclassification “8” and carbon disclosure status as “disclosed” (March
2022).

The Furukawa Electric Group’s targets for reducing greenhouse gas
emissions by 2030 were certified by the SBT (well-bellow 2oC) (July 2022).

CDP

MSCI ESG Rating

Furukawa Electric received an “A: Leadership Level” evaluation for“Climate Change” of the CDP in 2021, and was also selected as a “Supplier
Engagement Leader” in the CDP Supplier Engagement Rating (SER)(February 2022).

Management Strategy

Management Foundation

Corporate Information/Data

Background for the Furukawa ElectricGroup Integrated Report 2022
I would like to say a few words on this occasion of issuing
the Furukawa Electric Group Integrated Report 2022.
The Corporate Sustainability Office, which edits andpublishes integrated reports, was established in April
2019 to assist the Group’s ESG management andSDGs initiatives. This fiscal year marks its fourth year.
During this period, we have elaborated the Guidance
for Collaborative Value Creation in our own way,
incorporated ESG and sustainability into management
strategies and underlying policies and conditions in orderto achieve the Vision 2030, and on numerous occasions
checked on the consistency of the story while building
the “value creation process directed at achieving Vision2030”. We published our first Integrated Report, for2020, where we disclosed material management issues(materiality) requiring attention on the path towardachieving the Vision 2030. In the Integrated Report 2021,
while the formulation of a medium-term management
plan was postponed for one year, we presented ourapproach to the value creation process and disclosed thestatus of initiatives for each materiality.
And, this fiscal year we were able to include the value
creation process, which incorporates the Mediumterm Management Plan 2022-2025 (2025 Mid-termPlan) announced in May 2022, in this Integrated Report
2022. In addition to messages from the President and
the General Manager of the Finance & Accounting
Division, the General Manager of the Strategy Division

explained the 2025 Mid-term Plan, which is positioned
as a milestone in progressing toward the Vision 2030,
and the three Outside Directors’ dialogue concerning
this is presented in this Report. We hope you will takethis opportunity to deepen your understanding of theGroup’s value creation process toward 2030 and the2025 Mid-term Plan.
We are committed to further improving thequality of integrated reports, enhancing information
disclosure and transparency, and promoting dialogue
with stakeholders. We would appreciate hearing yourunrestrained comments or requests in this regard.

October 2022

Shuichi Tanaka
General Manager
Corporate Sustainability Office
Strategy Division

Furukawa Electric received a “BBB” evaluation for the MSCI ESG Rating(February 2022).

Participation in Initiatives

Furukawa Electric participates in the following ESG-related initiatives.

United Nations Global Compact
Furukawa Electric has been involved theUnited Nations Global Compact since
February 24, 2020.

For details, please see Furukawa Electric’s website.
External evaluation
Participation in initiatives

94

https://furukawaelectric.disclosure.site/en/themes/109
https://furukawaelectric.disclosure.site/en/themes/110

FURUKAWA ELECTRIC GROUP

Task Force on Climate-related Financial
Disclosures

Furukawa Electric expressed approval of therecommendations by the Task Force on Climate-related
Financial Disclosures(TCFD) in January 2020.

For inquiries
Investor Relations Department
Finance & Accounting Division
Furukawa Electric Co., Ltd.
Tokiwabashi Tower, 6-4, Otemachi 2-chome, Chiyoda-ku, Tokyo
100-8322, Japan

Editing and Publication
Corporate Sustainability Office
Strategy Division
Furukawa Electric Co., Ltd.

Inquiry form
https://www.furukawa.co.jp/srm/form/index.php?id=enir

INTEGRATEDINTEGRATED REPORTREPORT 2022
2022

95
95