Responsible Investment Policy(Last Updated: December 2023)
1.

Purpose(1) BackgroundEndeavour United Co., Ltd. (the "Company") and its group companies (the "Group" or "we") provide
capital in the best possible way to solve various management issues faced by Japanese companies,
thereby aiming to enhance corporate value in the long term together with portfolio companies. We
take a respectful approach to build a cooperative relationship with the wide range of stakeholders
including business partners and relevant financial institutions. With this investment philosophy, theGroup understands that environmental, social and governance (ESG) issues have a significant impact
on both our own management and our portfolio companies' management.
In line with our investment philosophy aimed at enhancing corporate value, we have initially codified
our Responsible Investment Policy in 2016, then revised drastically in 2022 in order to further
integrate the procedures for responsible investment incorporating ESG risks and opportunities intovalue creation in our investments. We are committed to regularly reviewing and updating this Policy
to ensure its ongoing alignment with our evolving practices and steadfast dedication to Responsible
Investment.
The Group understands that systemic sustainability issues, such as climate change, significantly
impact our company's performance. In addition to the compliance with applicable ESG-related laws
and regulations, the Group believes that we can meet the expectations of stakeholders by proactively
considering ESG issues and identifying opportunities that will lead to value creation.
This Policy ensures our commitment to ESG based on the expectations of stakeholders, andinternational standards such as the Principles for Responsible Investment (PRI), to the extent thatsuch commitment is consistent with our fiduciary duties.
(2) Our proactive stance to the achievement of SDGs
The Group expects the management of portfolio companies to integrate the consideration of ESG
risk and opportunity that will lead to the enhancement of long-term corporate value, and will provide
guidance and support through investment activities. The Group understands the importance ofachieving the Sustainable Development Goals (SDGs) set by the United Nations and makes every
effort to contribute to SDGs in its investment activities including contribution to local community1andeconomy

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businessstage/industry/characteristics. While aiming to achieve various sustainability outcomes through ourinvestment activities, we particularly focus on reducing greenhouse gas (GHG) emissions, increasing
the added value of its business, and supporting retention and creation of employment opportunities.
(3) Stewardship
The Group believes that the purpose of stewardship, which is maximizing overall long-term value
for investors, is consistent with the Policy and can be achieved through investment activities basedon this Policy. The potential risk of conflicts of interest among the parties involved in transactions ismanaged in accordance with applicable laws and regulations, investment contracts (LPA), andinternal rules. If necessary, the Group will take appropriate measures such as suspending transactions,changing conditions, or disclosing information to and obtaining approval from investors.
In addition to ESG-related regulations in Japan and overseas, the Group will closely monitor therequirements from regulatory authorities and policy makers in order to reflect them in our investment
activities where applicable. Moreover, with regard to critical policy issues that impact the long-term
interests of our investors, we will seek effective engagement with policymakers either independently
or in collaboration with other financial institutions.
2.

Key ESG factors

We will consider the risks and opportunities associated with ESG factors (provided here as
illustrative examples and not limited to the items listed) both in pre-investment phase for evaluation
for investment opportunities and in the investment phase in the aim of value creation of the portfolio
companies.
(1) Environmental
Environmental factors include prevention of pollution (air, water, soil contamination, noise, vibration,
ground subsidence and offensive odor, etc.), natural disasters, waste management, reduction of GHG
emissions, reduction of food loss and waste, use of renewable energy, efficient use of raw materials,etc. We will also take appropriate measures to avoid negative impacts on the natural environment(natural capital) and ecosystems/ecosystem services (biodiversity). In addition, climate change factor
includes transition risks such as regulatory, technological and market changes, and physical risks
such as increased frequency and severity of extreme weather events and sea level rise.
(2) Social
Social factors include supporting retention and creation of employment opportunities, optimizing
2labor management, ensuring occupational health and safety (including prevention of industrial
accidents and injuries, etc.), improving the working environment, and ensuring the quality and safetyof products and goods, while human rights throughout the supply chain are also considered.
Human capital, including education and skills development, diversity, equity and inclusion, is also
an important concept directly related to stable business operations.
(3) Corporate governance

Governance factors include exclusion of relations with antisocial forces, prohibition of money
laundering, etc., thorough corporate ethics, establishment of organizational and internal control
systems, cyber security, and compliance with applicable laws and regulations.
3.

Scope

This Policy applies to investment in portfolio companies over which the Group maintains control
following the enforcement of this Policy. In cases where the Group has limited control in aninvestment, the Group will encourage the management of the portfolio company to identify andmanage ESG risks and opportunities that will lead to the enhancement of corporate value inaccordance with this Policy.
This Policy also applies to investments made before the effective date of this Policy, where the Group
maintains ownership, through engagement with the management of the subjected portfoliocompanies.
4.

Commitment

As part of its ESG activities under this Policy, the Group will comply with laws and regulations
applicable in the countries and regions in which the Group and its portfolio companies and theiraffiliates, etc. conduct business.
Based on the Principles for Responsible Investment (PRI), the Group will consider ESG issues in its
investment decisions and portfolio management, and work to maintain and enhance the value ofportfolio companies, thereby stabilizing and improving long-term investment returns.
5.

Roles and Responsibilities

Roles and Responsibilities in relation to ESG are as follows.
(1) Board of Directors
The Board of Directors has fiduciary responsibility and accountability to investors and oversees the3status of ESG implementation.
(2) Management Committee
The Management Committee is chaired by the Representative Director and is responsible forformulating, implementing, and revising this Policy. Its responsibilities include: (1) developing
governance structure to implement ESG integration; (2) overseeing the implementation of ESG
investment; (3) determining material ESG issues; and (4) reporting to the Board of Directors on theimplementation of ESG investment at least annually.
(3) Investment Committee
The Investment Committee consists of members of the Management Committee and the Company's
outside directors and advisors. At the pre-investment phase, the Investment Committee considers anddecides whether to invest, including consideration of ESG risks and opportunities that will lead tovalue creation. During the investment period, the Investment Committee receives reports on theInvestment Team's activities, including material ESG issues.
(4) ESG Screening Committee
The ESG Screening Committee consists of senior management equipped with expertise in ESG, theCompany's outside directors and advisors. It analyzes and evaluates investment projects with respect
to ESG issues and reports to the Representative Director whether critical ESG issues have been
identified alongside its advice on the investment where appropriate.
(5) ESG TeamThe ESG Team promotes effective implementation of responsible investment under the ManagementCommittee. Specifically, it (1) supports the Investment Team to incorporate ESG factors into
investment activities, (2) plays coordinating role on ESG reporting, and (3) plans and implementsinternal training programs on responsible investment.
(6) Investment TeamThe Investment Team is responsible for ESG investment practices throughout the entire investment
cycle, from deal sourcing to exit. Specifically, its roles include: (1) selecting portfolio companies andutilizing negative screening; (2) conducting due diligence and ESG materiality analysis; and (3)assisting portfolio companies in identifying and managing ESG issues during the investment period.
(7) Employees
Employees strive to stay abreast of latest developments in responsible investments through4

orientation at the time of joining the company, internal training, and external training, etc.
6.

ESG Integration Processes

The Group will promote responsible investment activities aimed at enhancing the corporate value of
portfolio companies through risk assessment and value creation throughout the investment process.
(1) Screening
Screening will be used based on the filters set in ESG Negative Screening List to exclude companies
matching specific ESG criteria. If the business or activity of a company is listed on the ESG Negative
Screening List, no investment will be made in such company. In addition, no investment will bemade in businesses that violate public order and morals, nor in activities and businesses that mayhinder the achievement of various SDGs.
(2) Due diligenceThrough due diligence during the investment decision-making phase, ESG materiality analysis will
be performed to identify material ESG risks and opportunities that will lead to value creation. During
the investment decision-making process, ESG factors that will lead to the enhancement of corporate
value will be assessed. ESG materiality analysis for potential portfolio companies will be conductedusing internationally recognized and accepted standard, such as the SASB framework.
(3) Engagement with portfolio companies
The Group will pursue the sustainable growth of portfolio companies throughout the investment
period by identifying risks and opportunities that will lead to value creation and by applying
measures that support the enhancement of corporate value.
The engagement with portfolio companies can include the following measures.
⚫

Development of policies (ESG materiality analysis for portfolio companies) anddevelopment of ESG governance systems⚫

Goals and KPIs setting⚫

Development of ESG initiative policies and ESG action plans according to ESG
issues identified through pre-investment screening and materiality analysis⚫

Provide knowledge, tools and support on management of ESG issues to portfoliocompanies⚫

Reporting from portfolio companies

In the case of investing in a portfolio company over which the Group has control, the Group will
require the portfolio company to establish ESG goals and an ESG action plan, and to provide
5appropriate reporting on ESG activities at least once a year.
During the investment period, the Investment Team will continuously monitor the management ofESG risks and opportunities that will lead to value creation for portfolio companies and support theiractivities. The Investment Team will also report regularly to the Management Committee and reporton material ESG issues to the Investment Committee.
(4) ExitAt the time of exit, the Group will disclose significant ESG factors, impacts, and measures for
managing ESG factors when considered necessary.
7.

Communication and Transparency

The Group will disclose ESG information to investors on an appropriate and regular basis to ensure
the transparency of the Group's activities based on responsible investment. In the case where theGroup has limited control over a portfolio company, it will encourage the portfolio company to reporton ESG issues.
In the event of a serious accident, or a serious ESG-related incident due to environmental problems
or legal violations at a portfolio company, it will immediately be reported to the Management
Committee to assess the impact of the incident. In light of the materiality of the incident, it will bereported to the Company's Board of Directors as necessary. In addition, if the incident has asignificant impact on investment performance, it will be reported to investors in a timely manner.
8.

Review

This Policy will be reviewed annually by the Management Committee and revised as needed.

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