85

TOKYO CENTURY CORPORATIONThe Tokyo Century Group’s Climate Change Initiatives

1

Reduction of greenhouse gas emissions
volumes and other measures to address
climate change risks

Greenhouse Gas Emissions and Reduction Targets

2

POINT 1

Greenhouse Gas Emissions (thousands of t-CO )Reason for Increase: New inclusion of newly operational biomass
co-firing power plant of Shunan Power Corporation and newly
consolidated hotel business in scope of calculation from fiscal 2022

2

Fiscal 2020 Fiscal 2021 Fiscal 2022

Scope 1 andScope 2

Scope 1

4

11

Utilization of growth opportunities toexpand environment-related businesses,
services, etc.

POINT

1,083

Scope 2*1

8

9

15

Total

12

20

1,098

Fiscal 2030: 50% reduction
Fiscal 2040: Net-zero emissions

Reduction
Targets*2

POINT 1

2. Transition Plan for Biomass Co-Firing Power Plant

To reduce direct emissions, Tokyo Century is planning a phased shift fromgasoline-fueled vehicles to electric vehicles (EVs) and other electrified
vehicles for its Company fleet. In addition, gas-powered equipment will be
replaced with electric equipment or with equipment that is more energy
efficient or more efficient overall while offices will be relocated to buildingsthat utilize renewable energy. For indirect emissions, we will seek to effectively switch to renewable energy by procuring green power and purchasing certificates verifying that our power does not come from fossil fuels.

Greenhouse Gas Emissions by Scope 3 Category

2

2020

Scope 3

2021

90%

(FY)

Fiscal 2030

Fiscal 2021
(Base year)

Fiscal 2023

1,340,000
t-CO2

Category 6: Business travel
Category 7: Employee commuting
Category 11: Use of sold products
Category 12:	End-of-life treatmentof sold products
Category 13:	Downstream leased
assetsCategory 15: Investments

Procurement of white pellets
Procurement of black pellets
Based on a feasibility study assuming use of Ministry of Economy,
Trade and Industry subsidiary program for engineering andverification projects for reducing emissions from basic material industries

Procurement of ammonia

Tokyo Century will increase the biomass co-firing rate at its newly operational plant while adopting black pellets, which feature high combustion
efficiency, prefaced on assumptions of future technological developments. At the same time, we will transition to the burning of ammonia, which
does not emit greenhouse gas emissions.

POINT 2

Process%

Expansion of EV Offerings and Entry into EV Battery Businessin Auto Leasing and Car Rental Businesses

52

18
2
2017

2018

2019

2020

2021

2022

(FY)

Specialty
Financing rovision of EVs to the NTT Group, in light of declared commitment
P
to transition completely to EVs (participation in EV100 initiative), andpromotion of EV adoption by other customers
Commencement of transactions of electric taxis and buses and otherelectrified micro-mobility options
Enhancement of value chain to provide EV-related services

Adoption of Renewable Energy in Real Estate Business doption of electricity sourced from renewable energyAInstallation of solar panels on Company-owned properties

 ttps://www.aviationcapitalgroup.com/wp-content/uploads/2023/08/2022h
ESG-Report.pdf

cross-Group coordination to create new businesses, we formed the GX Task Forcein April 2023. This task force is charged with sharing expertise and knowledge
among operating segments and facilitating a unified approach toward customers.

Environmental
InfrastructureInternational
Business

Promotion of greenhouse gas emissions reduction initiatives to develop businesses andservices that contribute to the resolution of social issues and to improve customer value proposition

CH AP TE R 7

Automobility

GX Task Force40

of Airbus SE, offers a 20% reduction in greenhouse gas emissions compared with prior aircraft. The Tokyo Century Group is committed toincreasing the portion of its aircraft portfolio accounted for by such ecofriendly aircraft and thereby reducing greenhouse gas emissions.
Another pressing task in reducing the emissions of the aviation industry
is the shift toward sustainable aviation fuel. Recognizing the business
opportunity this shift represents, we are assessing how we can act totake advantage of this opportunity.

ESG Strategies

3146

Notes:
1. For more information on calculation methods and other details, please refer toTokyo Century’s latest sustainability data book.
2. To view the environmental, social, and governance report of Aviation CapitalGroup, please refer to the following website.

The Tokyo Century Group recognizes the need for a concerted approach toward green
Equipment
Leasing

POINT 1100
Ratio
of New Technology Aircraft among theTokyo
Century Group’s Fleet
80
60

POINT 2

Based on this recognition as well as the necessity of cross-organizational,

33%
reduction120

0and enhancing the range of environment-related services it supplies to customers.

Fiscal 2040

Effective zeroCO2 emissions

Fiscal 2025

11%
reduction

40

transformation (GX) if it is to achieve its goal of carbon neutrality while also expanding

Carbon credits

Greater than
50% reduction

Aviation Capital Group LLC (ACG), an aircraft leasing subsidiary, andother aviation business companies are pursuing reductions in greenhouse gas emissions by introducing into their fleets new technology aircraft with high levels of fuel efficiency. The A320neo, a mainstay aircraft

20

Formation of GX Task Force

Increase toammonia
co-firing rate

Carbon dioxide capture and storage / carbon
dioxide capture, utilization, and storage

For more information on the transition road map, please refer to the following website.
 https://www.tokyocentury.co.jp/assets/pdf/sustainability/220901_newsrelease02_en.pdf

For more information, please refer to Tokyo Century’s latest sustainability data book.
 https://www.tokyocentury.co.jp/en/sustainability/databook/TOPIC

Use of greater
quantities of
black pellets

Use of blackpellets

Final Target

Use of ammonia
Use of black pellets
2026–2028(Ahead of
Use of ammonia
schedule)

Introduction of Highly Fuel-Efficient,
New Technology Aircraft in Aviation Business

t-CO2

Category 1: 	Purchased goods
and services
Category 2: Capital goods
Category 3: 	Fuel- and energyrelated activities
Category 4: 	Upstream transportation and distribution
Category 5: 	Waste generated inoperations

Expansion of scope of calculation, refinement ofcalculation methods, and promotion of initiatives for
reducing greenhouse gas emissions

Biomass co-firing
Use of white pellets

Medium-Term / 2030 Target

Scope 3 Emissions Reduction Initiatives

Scope of Calculation

Reason for Increase: New inclusion of Aviation Capital Group LLC and three aviation businesssubsidiaries and shipping business in scope of Category 13 calculation in fiscal 2021

FutureDirectives

Point

Total

7,727,000

Category 13

7,727

Short-Term Target

8%

6,195

2022

Immediate Target

Category 1(thousands of t-CO2)

1,044*3 Verification by Japan Credit Rating Agency, Ltd.

CO2 emissions (emissions intensity)*1 Location standard*2 Reduction in comparison with base amount (1,365,000 t-CO2) calculated
by combining fiscal 2021 emissions with estimated annual emissions associated with biomass co-firing power plant of Shunan Power Corporationand hotel businessGreenhouse Gas Emissions (thousands of t-CO )Approximately 98% of the Tokyo Century Group’s total greenhousegas emissions are attributable to emissions from its biomass co-firing
power plant. Targeting the accomplishment of net-zero greenhouse gas
emissions as quickly as possible, with the goal of fiscal 2040, we haveformulated a transition road map, which has received third-party verification.*3 Measures are currently underway based on this road map.

Transition Road Map for Biomass Co-Firing Power Plant

Reduction of CO2
emissions

The Tokyo Century Group’s Management Philosophy calls on us to contribute to the creation of an environmentally sound, sustainableeconomy and society. We recognize the fight against climate change as an important opportunity for growth toward accomplishing thisobjective, and a concerted Groupwide response is thus being furnished to address climate change. One of the key issues of Tokyo Century’smateriality is “contribution to decarbonized society,” and we are striving to help resolve social issues while achieving ongoing growth andimprovements to corporate value.
In its response toward climate change, the Tokyo Century Group is accelerating reductions to its greenhouse gas emissions. At the sametime, we are positioning environment-related businesses as opportunities for growth. By creating businesses and services that contributeto the environment in relation to renewable energy and circular economies, the Group aims to ensure that its services are competitive while
increasing the value it provides to customers.

Scope 1 and Scope 2 Emissions Reduction Initiatives
1. Direct Emissions and Indirect Emissions Originatingfrom Energy Use

Combustionrelated challenges

Importance of Responding to Climate Change

POINT

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TOKYO CENTURY CORPORATION88

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Human Resource and Organizational Strategies
Tokyo Century carries out human resource and organizational strategies to foster people with a propensity for self-transformation and who
possess creativity and ambition and are thus capable of advancing its management and business strategies.

Details of Human Resource and Organizational Strategies
Tokyo Century is moving forward with a variety of initiatives aimed at the development of highly capable organizations and the empowermentof individual employees.
Category

Directives under Medium-Term Management Plan 2027

Major Initiatives

Overview of Human Resource and Organizational Strategies
Management and Business Strategies
Creation of value by maximizing asset and partner value through development of“Finance × Services × Business Expertise” concept

Improvement of employee
engagement

Transformation to play a central

Development of organizations in which employees
are highly motivated and capable of transforming
themselves to bring about change C Biz Challenge Project (new business proT
posal system)
Career Challenge Program (internal recruitment system)TC-Mee+ (internal communication enhancement project)360-degree evaluations
One-on-one meetings
Major KPIs and Targets of Medium-Term
Management Plan 2027

role in establishing businesses• Employee engagement index: Maintainand improve ratio of positive responses

Desired Human Resources
People with a propensity for self-transformation and who possess creativity and ambition
 ecruitment of individuals with specialized experR
tise who can lead transformation of management
and business strategies

Propensity for self-transformation: Exceptional ability to evolve and transform into the typeof person one aspires to be
Creativity: An excellent capacity to overcome one’s past limitations to create new value

Steady advancement of two overarching strategies
for supporting management and business strategies

Human Resource Strategies

Organizational Strategies

Recruitment and cultivation of human resources capableof transforming themselves to bring about change

Development of highly capable organizations andempowerment of individual employees• Acceleration of human resource recruitment anddevelopment initiatives• Organizational management• Allocation and positioning of human resources• Promotion of diversity, equity, and inclusion• Development of safe and secure workplaceenvironments• Branding

Trusting relationships with
Tokyo Century

Improvement of employee engagement

Organizational Strategies

Fulfilling work

Virtuous Cycle
Sense of pride in work

Appropriatecompensation

Health of employees andtheir families

Elements of well-being

Appealing workplaceenvironments

 stablishment of Basic Policy on Health andE
Productivity Management (fiscal 2021)
Other KPIs and Targets

 ultivation of health awareness and support forC
prevention, early diagnosis, and treatment of
illnesses
Improvement of productivity through developmentof comfortable and motivating workplacesPromotion of systems that reward ambition
 reation of frameworks for communication andCknowledge sharing

Promotion of diversity,
equity, and inclusion

Branding
Opportunities for­learning and careerdevelopment

 alent management approach for strategic humanTresource positioning
Appropriate compensation in reflection of growth

Organizational management

High employee
motivation

Major KPIs and Targets of MediumTerm Management Plan 2027
• Ratio of mid-career hires: Maintain or
improve ratio• Investments in human resource recruitment and development: More than ¥800
million by fiscal 2027

Allocation of human resources to growth areas

Allocation and positioningof human resources evelopment of frameworks not bound by the conD
ventional confines of organizations in focus areas

Improvement of well-being

Greater satisfaction with
Tokyo Century

 ultivation of human resources capable of creatC
ing new businesses

Development of safe andsecure workplaceenvironments

Ongoing growth

Increased loyalty

 rovision of opportunities for learning to allowP
employees to tackle new challenges

 ostering of corporate culture founded on respectF
for human rights
 evelopment of workplaces in which diverse indiD
viduals can exercise their unique skills

 dvancement of internal branding activities targetA
ing employees nhancement of brand image to aid in humanEresource recruitment• Ratio of employees receiving specifichealth guidance: More than 80%• Rate of employees undergoing regular
health check-ups: 100%
• Rate of employees undergoing stresschecks: 100%

 ormulation of diversity plan (fiscal 2023)
FEstablishment of Tokyo Century Group
Human Rights Policy (fiscal 2021)
Major KPIs and Targets of Medium-Term
Management Plan 2027

• Ratio of women among new-graduate
hires: Maintain or improve ratio (fiscal
2022: 42.1%)
Other KPIs and Targets• Ratio of female managers: 30% or moreby 2030• Ratio of employees with disabilities:
Maintain ratio above legally mandatedlevel

CH AP TE R 7Tokyo Century believes that cultivating an awareness of well-being among officers and employees is imperative to the advancement of its
human resource and organizational strategies.
For this purpose, we aim to create a virtuous
cycle built on trust between the Company and its
employees and on strong employee engagement
in order to enhance well-being. We are convincedthat this process will contribute to the ongoinggrowth of Tokyo Century.

Introduction of human resource systems for utilizing highly specialized individuals

ESG Strategies

Improvement of Employee Well-Being

Human Resource Strategies

Ambition: A force propelling one forward based on a robust sense of curiosity and drive

Acceleration of humanresource recruitment anddevelopment initiatives

 igital transformation training
DCareer development support
Dispatches to business schools
Human resource development programs

89TOKYO CENTURY CORPORATION90

INTEGRATED REPORT 2023

Human Resource and Organizational Strategies

Human Resource Development Initiatives
Creating value requires employees to enhance their expertise inrelation to their specific areas of business while also heightening
their ability to transform themselves. Tokyo Century is formulating and implementing a variety of training programs for the purpose of endowing employees with these skills.

Case Study

2

Cultivation of human resources capable of creating new businesses
Support for autonomous career development of all employees

Career Development Support
Case Study

1

Provision of opportunities for learning to allow employees and officers totackle new challenges
 eskilling and educational programs for employees so they can adapt to rapidly changing
R
operating environment

Digital Transformation Literacy Improvement Programs
In fiscal 2023, Tokyo Century introduced a new three-level program aimed at cultivating employees with proficiency in relation to digitaltransformation. The basic-level course (DX-Standard) launched in the first year of the program is open to all employees and officers and isintentioned to foster understanding and build a shared consensus with regard to what digital transformation entails for Tokyo Century.

Overview of Digital Transformation
Training Programs

ExpertDX-Professional

Practical

Individuals with the ability to act and exercise responsibility as business
innovators
Individuals with the capability of communicating as self-driven businesstechnology experts

Career Design Training
Tokyo Century offers career design training to provide opportunities for employees to reflect
on their career and assess their strengths, weaknesses, and values. Moreover, these training
programs allow employees to use trait analysis tools to gain an objective understanding of
their personalities and the skills they should build upon to be used when considering their
future careers. After training sessions, meetings are held with participants to discuss what
actions they should take to achieve their individual career goals. In fiscal 2023, we beganenhancing the types of career support offered to veteran employees.

Number of participants in fiscal 2022

100
Targets: Employees in third and 10th year
in workforce, employees aged 40 and 50
for age-based programs, and employees
aged 55 for life design training

Career Design Consultations
Career design consultations are offered to provide employees with a venue for receiving consultation on a wide range of career-related topics to help them objectively evaluate these concepts to shape their career plans, feel empowered and exercise their individuality at work, anddetermine how best to approach their goals.

Individuals with knowledge regarding IT and use methods and practical

Programs conducted in fiscal 2022

Consultations by career staff
with nationally recognizedcareer consultant qualifications
or by external consultants

TC Career Seminars

Basic
DX-Standard

Individuals with the basic mindset, stance, and knowledge required forall members of Tokyo Century to participate in digital transformation
and use the results to better work and private lives

Tokyo Century began arranging TC Career Seminars in fiscal 2021 to help employees learn
about the types of thinking and actions required to chart their own career paths. In fiscal
2023, we plan to organize new seminars for fostering the necessary career understanding
among various employee groups, including supervisors and female employees.

Number of participants in fiscal 2022

442
Targets:
Junior, mid-rank, and veteran employees
for age-based programs

CH AP TE R 7

Targets:
All employees (when desired)skills for utilizing this knowledge

ESG Strategies

DX-LeaderType of Individuals Fostered through Programs

Tokyo Century established the Career Design Office in fiscal 2019 to offer support for career development to aid employees in acting of
their own volition to become the architects of their own careers.

91

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2023

Career at Tokyo Century

Chika Kato
Deputy General Manager
Diversity Promotion Office
Personnel Division

Keisuke Yoshida
Deputy General Manager
Real Estate Finance Division II

Kyoko Asami
Deputy General Manager
Environmental Infrastructure
Strategic Planning DivisionTokyo Century aspires to craft a diverse and flat organizational culture. We arranged a roundtable discussion
on the subject of Tokyo Century’s evolution in which frank opinions were shared regarding the thoughts andcareers of the participants, specifically two individuals who had previously taken childcare leave and the
deputy general manager of the Diversity Promotion Office.

M r. Yoshida, could you please tell us
what led you to take childcare leave?
Yoshida: My wife wanted to keep working even after
we got married. When we talked about it, we agreed
that we would need to share the household duties if
we were both going to work. Tokyo Century introduced
some work–life balance support systems around2008, which prompted me to take childcare leave.
While there was no precedent of a male
employee taking childcare leave at Tokyo Century,M s. Asami, what do you value when trying
to balance your career with your family
responsibilities?
Asami: When I was pregnant with my first child,
I remember having to go on sales calls a lot, which
was quite physically demanding. However, the factthat I faced no restrictions in my work allowed me
to completely devote myself to both my job and mychild. Raising a child means limiting the amount oftime one can work. It is also not unusual for a childto come down with a fever or other ailment, and thiscreated cases in which I was unable to complete
my work by myself. Although I did my best to finish
my work by myself at such times, I made sure tokeep my group up-to-date or have another person
assigned to my projects so as to ensure that someone else could step in and help when I could not get
it all done on my own. In this manner, I went about
my work with the understanding of my coworkers.
Being a manager entails an increased burden interms of work volume and responsibility, while
being a parent involves participating in the various
life events of your child. Striking a balance between
parental and professional responsibilities requires
the understanding of both my family and my colleagues. It is not all about getting help for myself;
I also think it is important to actively try and offer
support and help to those around me. My husband
is able to work remotely, and I was therefore able totrust him with a majority of the housework andchild-rearing responsibilities when I was struggling
to get used to my position in a new division. As thisshows, my husband is also working with the understanding of his colleagues.

CH AP TE R 7―Evolution Driven by a Diverse and Flat Organizational Culture

Corporate Culture Supporting Changes
in Life Events and Workstyles

I thought I had no choice but to do so if I was goingto share the household responsibilities with mywife. I therefore had no hangups about my decision.
Taking childcare leave did not impede my work at
all, but it did really change how I thought about
working. My wife and I have defined a clear divisionof responsibility for household duties such as dropping off and picking up our children, and I generally
leave the office on time twice a week. In the past,
I would work overtime almost every day, but theneed to avoid working late forced me to rethink how
I work, making me even more conscious of theimportance of working efficiently.
However, as we do have busy periods at Tokyo
Century, it is important that I maintain the understanding and cooperation of my colleagues. I amvery grateful for how accommodating my subordinates and other coworkers are toward my chosen
workstyle.

ESG Strategies

Roundtable Discussion on Diversity

Yoshida: After joining the Company in 2004, I spent
two years in a sales position for leasing operationsin the Equipment Leasing segment. I was thentransferred to the International Business segment,
where I was charged with supporting subsidiaries in
China and other parts of Asia, which even included
a four-year appointment in Thailand. I was later
moved to the Ship Finance Division of the Specialty
Financing segment before taking up my current
position in Real Estate Finance Division II. When I
was stationed in Thailand, my first child was born,which led to my returning to Japan to take threemonths of childcare leave.
Asami: I joined in 2005, at which time I was positioned in what would later become the Structured
Finance Division. There, I gained experience in awide range of areas, including securitization ofnotes and receivables, private finance initiatives,and inventory financing. It was in this position that
I took maternity and childcare leave for my firstchild. I would then go on to do the same after thebirth of my second child when working in theSpecialty Finance Strategic Planning Division. In
April 2023, I was transferred to the Environmental
Infrastructure Strategic Planning Division of the
newly established Environmental Infrastructure segment. In this position, I am responsible for planningand promoting strategies through tasks such as formulating sales targets and evaluation systems andmonitoring our numerical data during set periods.
Kato: It was in 2006 when I joined, after which I
spent around eight years in leasing sales targeting
hospitals and clinics in the Medical & Healthcare
Division. I was then transferred to a division thatwould later become part of the Environmental
Infrastructure segment, where I assumed project
finance duties. In April 2023, I was assigned to theDiversity Promotion Office in the Personnel Division.
Here, I am trying to foster an organizational culturethat empowers employees while allowing them tobalance their work and private lives.

92

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TOKYO CENTURY CORPORATION94

INTEGRATED REPORT 2023

Roundtable Discussion on Diversity

Yoshida: All of the career-track employees whojoined the Company around the same time as me
were men, and there were almost no female managers or non-Japanese employees at that time. Today,
however, around half of new-graduate hires in any
given year are women, and we have seen a rise in
the number of female managers and non-Japanesecolleagues. This is indicative of a massive change inthe environment at Tokyo Century. Being able toexpose myself to various ways of thinking thanks tothis environment is really amazing.
Asami: The number of women is on the risethroughout the Company, thereby also increasing

Importance of Diversity toTokyo Century’s Growth
Yoshida: As implied by Ms. Kato, the ability to be
exposed to and be receptive toward ideas that differ
from what you are used to will
likely be critical to the future
growth of Tokyo Century. I
think it would be a good idea
for Tokyo Century to continue
to bolster its staff of people
recruited from different industries and other individuals withdifferent backgrounds. At thesame time, as changing one’s
company has now becomecommonplace in Japan, we are
faced with a situation in whichpeople may choose to leave
the moment they feel the work
they do at the Company is nolonger fulfilling. It would be awaste if we lost talented individuals for this reason. It is therefore crucial forTokyo Century to inspire employees to remain at theCompany for as long as possible by making its
vision resonate with employees and having managers clarify the roles and missions of each memberof their team. Once this is done, we should focus on
the development and operation of organizations
that align everyone along the same vector so that
we are a unified company.
Kato: If we want employees to stay with us longer, it
is definitely important that our vision resonates withthem. In addition, feeling that one’s work is contributing to society is another way that people develop
a sense of attachment toward their company.
Conversely, if there is a lack of communication in
the workplace, it is possible that even a small concern might prompt a quick decision to change jobs,
as one will feel that they have no one to talk toabout their concerns. This is why, in addition tocareer training, the Personnel Division arranges
forums for exchanges between employees. Having
someone to talk to can help prevent people fromleaving, and I hope that we can continue to improve
our workplace environment to ensure such openness.
Asami: I suspect that, when someone is looking tochange company mid-career, they are more likely toapply for a position at a company that is promoting
diversity and which is more accepting toward
diverse values, because they will probably perceive
such companies as being more conducive to allowing people to exercise their unique individual skills.
The reverse is also likely true; companies that areless diverse will see fewer applicants.
Yoshida: Last year, my department welcomed a
mid-career individual who was recruited from thereal estate industry. I have learned a lot from thisperson as they have been proposing ideas from acompletely different perspective than my department while also making use of their connections

within the real estate industry.
However, even if something
seems new to us, it might be justa matter of course for someone
from a different industry, andthese differences in perspectives
make talking with people fromother industries incredibly engaging.
Kato: We have seen highly specialized individuals transfer to theSpecialty Financing segment, theEnvironmental Infrastructure
segment, and other parts of theCompany. These employees
have completely different expertise and connections than those
who started their career at Tokyo
Century. Accordingly, the presence of such individuals is sure to be a great sourceof strength for the Tokyo Century Group as well as adriver of innovation.
Another benefit of a diverse workplace is theopportunity to talk to people who have experienced
diverse careers and life events. This can help us
notice any unconscious biases we might have, andthis awareness will make it easier for us to understand and communicate with other people.
Moreover, hearing about a field that you have notexperienced or have no knowledge of can heighten
your creativity, which is an important skill for business. As a member of the Personnel Division,
I intend to continue to proactively promote diversity
at the Tokyo Century Group so that we can takeadvantage of these benefits.

The Tokyo Century Group’s Basic Diversity Policy and Initiatives

Utilize the diverse ideas and actions of unique employees with broad-ranging skills to
supply high-value-added services that cater to customers’ needs

Promoting the Active
Participation of Diverse
Human Resources

Nurturing Our
Corporate Culture

Diversity Promotion System
Personnel Division

Supporting Careerand Ability Development

Enhancing Support for
Balancing Workand Private Life

Major Initiatives
Advancement of action plan for empowering female
employees
Promotion of employment of people with disabilities
Organization of diversity training

Diversity Promotion OfficeProvision of work–life balance support systems for
employees giving birth, raising children, or providing
care to family members

CH AP TE R 7

Evolution of Diversity at Tokyo Century

the number of employees who have experienced
childbirth or child-rearing as well as the number ofpeople who have taken up management positions
after returning from childcare leave. These changes
are a benefit of Tokyo Century’s giving employees
the ability to work from home. This ability meansthat pregnant women can avoid the physical burdenof commuting to and from the office, while people
who need to be at home for their children do notnecessarily need to take a full day off. Moreover,people working from home do not have to be shutout from what is going on in the office, which isimportant to the development of their careers.
Kato: I too have noticed the change in terms of thediversification of workstyles that Ms. Asami speaks
of. Another big change has been the increase in
mid-career hires. The resulting opportunities tointeract with people who have diverse backgrounds
not limited to finance has a positive influence bygiving us exposure to different sets of values. This
understanding of diverse values comes along naturally, which in turn helps us transition from a mindset of expecting things to be a certain way to one ofrealizing that there is no single answer to any given
question. I truly feel that Tokyo Century as a whole
has become more accepting to such diverse waysof thinking.

ESG StrategiesM s. Kato, what do you focus on when trying to support the diverse workstyles and life
events of employees as a member of the
Personnel Division?
Kato: Rather than thinking about things in terms ofdifferences in age or gender, I try to remember thateveryone’s situation is different. It is always best, tothe extent possible, to offer people the support theyneed and when they need it based on their own individual circumstances. Common questions people
ask me about concern, as you would guess, childbirth and other life events. We
thus arrange opportunities tomeet with employees and explain
Tokyo Century’s systems at junctures such as before they takechildcare leave or when they arepreparing to return. I attend suchmeetings, which makes me privy
to the wide range of requests andopinions that employees canhave. I therefore hope to refine
our systems to make it easier
to gather feedback directlyfrom employees.
Tokyo Century has a 100%rate of male employees taking
childcare leave, but I understandthat some people feel hesitant to
go on extended periods of leave that span multiple
months. There are a lot of reasons people mightfeel such hesitation, whether it be concern for the
future of their career, issues with turning their projects over to another person, or a lack of staff intheir division. This is why it is so important for us toraise understanding among all employees withregard to system use, workstyles, and diversity. We
do so by offering training and e-learning programs
to employees at various levels of the hierarchy,
including system users as well as management.

95

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2023

96

Evolution of Tokyo Century’s Corporate Governance System
Tokyo Century’s History of Strengthening Its Corporate Governance System
to Improve Corporate Value
Tokyo Century has proceeded to implement various diversity-minded measures to separate the executive function from the oversight function and otherwise strengthen its corporate governance system.
Board of Directors
Year

Overall

External directors

Committees
Female directors

Nomination Committee

OthersCompensation Committee

Appointment of one ­external
director

2011

General Management

ESG

Policies of Medium-Term Management Plan 2027
Profit target formulation and progress management
Discussions on stock acquisitions and sales andinvestments exceeding predefined amounts
Reports on results of investment management
framework monitoring

2012
2013
Number of external ­directors
increased to two

2015

2016

Details of meetings of the Nomination Committee
and the Compensation Committee
Progress and results of medium- to long-term sustainability
management initiatives (Sustainability Road Map)

Other Matters

Compliance withJapan’s Corporate
Governance CodeEstablishment of the Nomination andCompensation Committee

Evaluation of Board of Directors’ effectivenessand report on evaluation

Carbon-neutrality policy

Investor relations activity reports

2014Compliance initiative plans and progress reports

Holding of Board
Effectiveness Review
Council meeting

Audit plans and implementation reports
Risk management reports

Number of external ­directors
increased to three

2017

Number of external ­directors
increased to four

Establishment of thestandalone Nomination
Committee

2018

Appointment of external
director as chairperson

Number of external ­directors
increased to five
(External directors ­represent
at least one-third of
all directors.)

2019

Establishment of
the standalone
Compensation
Committee

Appointment of external
director as chairperson

Evaluation of the Effectiveness of the Board of Directors and Issues
Tokyo Century has established the Board Effectiveness Review Council as an advisory body to the Board of Directors. The council
conducts an analysis and review of the effectiveness of the Board of Directors once a year, in principle, on aspects such as theeffectiveness of its supervisory functions, status of deliberations, systems, and meeting proceedings, taking into account the selfevaluations submitted by each director.

Important Themes and Evaluation in Fiscal 2022

2020
2021

Major Items Raised at Meetings of the Board of Directors in Fiscal 2022

Appointment of
one female
director

Reduction of
number ofd­ irectors(from 15 to 13)

Number of female
directors increased
to two2022

Increase in the ratio of
external directors on thecommittee
71%)
(63%

Increase in the ratio of
external directors on thecommittee
(63%
71%)

Medium- to Long-Term
Discussions Looking toward 10
to 15 Years in the Future

Lively discussions are taking place on the Tokyo Century Group’s medium- to long-term vision andmanagement strategies based on the circumstances surrounding the Group and its operating
environment.
Discussions were held as part of the process of formulating Medium-Term Management Plan 2027,
which began in fiscal 2023, at meetings of the Board of Directors as well as at free discussion forums
arranged as a facet of officer training sessions and on other occasions.

Internal Directors

8External Directors

External Directors

538% (5)

Ratio of Female Directors

15% (2)The Investment Management Committee is engaging in brisk discussions while identifying issues,
thereby advancing the implementation of investment management frameworks.
Business expansion and significant losses are creating a need for more rigorous Groupwide management of geopolitical and other risks.

Important Themes for Fiscal 2023
Men

Men

Woman

Woman

Overall Business Portfolio Structure and Vision
Discussions will be advanced from a medium- to long-term perspective at free discussion and other forums on the overall structureof the Company’s business portfolio and our vision for this portfolio with consideration paid to factors such as allocations of management resources and capital efficiency.

CH AP TE R 7

Risk Management and Group
governance

Composition of the Board of Directors (As of June 26, 2023)

ESG Strategies

Improvements with regard to risk management and internal control systems are being seen with eachpassing year, and discussions are taking place at meetings of the Board of Directors based on appropriate reporting.

2023

97

TOKYO CENTURY CORPORATION98

INTEGRATED REPORT 2023

Management Team*1 “Outside Director” as stipulated by Article 2-15 of the Companies Act of Japan*2 “Outside Company Auditor” as stipulated by Article 2-16 of the Companies Act of Japan*3 Designated independent director or auditor as stipulated by the Tokyo Stock Exchange(As of June 26, 2023)

Directors

Representative
Directors

Masataka Yukiya

Koichi Baba

Akihiko Okada

Hiroshi Sato

Toshio Kitamura

Chairman & Co-CEO,Representative Director

President & CEO,
Representative Director

Deputy President,
Director and Executive Officer

Deputy President, Director andExecutive Officer

Director and Senior Managing
Executive Officer

Masao Yoshida

Akio Nakamura

Toshio Asano

Mahoko Hara

Tatsuya Hirasaki

Shunichi Asada

External Director

External Director

External Director

Director and Senior Managing
Executive Officer

Director and Managing
Executive Officer

Director

External
Directors*¹ *³

Corporate
Auditors

Miho Tanaka

Tsuyoshi Numagami

External Director

External Director

Futoshi Okada*²

Katsuya Amamoto

Yoshio Nomura

Masao Fujieda*² *³Standing Corporate Auditor

Standing Corporate Auditor

Standing Corporate Auditor

Corporate Auditor

External Corporate Auditor

External Corporate Auditor

Directors (As of June 26, 2023)
Areas of expertise and expected contributions

Position

Name

Age

Reason for appointment

Approx. numberof shares of theCompany’s
stock held

Chairman & Co-CEO,Representative Director

Masataka
Yukiya67

Masataka Yukiya has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate value. He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and wide-ranging
knowledge gained in corporate management at a general trading company and in operational execution in fields including sales and finance.

8,000

N

C

ALM

IT

KoichiBaba

62

Koichi Baba has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate value.
He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and wide-ranging knowledge
gained in operational execution in fields including international business and sales at financial institutions as well as corporate planning at the Company.

6,000

N

C

ALM

IT

Masao
Yoshida74

Masao Yoshida has abundant experience and wide-ranging knowledge gained in corporate management over his many years as the manager of
Furukawa Electric Co., Ltd. He has been appointed as an external director to utilize this expertise in the management of the Company and because hehas been judged to be capable of contributing to ongoing growth and to the improvement of corporate value by providing oversight of operational execution from his independent perspective.

4,000

N

C

Akio
Nakamura

67

Akio Nakamura has a wealth of insight regarding government finance and taxation gained through his experience as director-general of the Financial
Bureau of the Ministry of Finance of Japan. He has been appointed as an external director because he has been judged to be capable of contributing toongoing growth and to the improvement of corporate value by providing oversight of operational execution from his independent perspective and byoffering advice with regard to the Company’s overall management from an objective standpoint based on his insight.

2,000

N

C

ToshioAsano

70Toshio Asano has abundant experience and broad knowledge of corporate management gained through his involvement in corporate management at
Asahi Kasei Corporation. He has been appointed as an external director to utilize this expertise in the management of the Company and because he has
been judged to be capable of contributing to ongoing growth and to the improvement of corporate value by providing oversight of operational execution
from his independent perspective.

1,000

N

C

Miho
Tanaka48

Miho Tanaka has abundant knowledge and experience in corporate affairs and M&A as an attorney-at-law. She has been appointed as an external director
to utilize her exceptional insight and abundant experience in the management of the Company and because she has been judged to be capable of contributing to ongoing growth and to the improvement of corporate value by providing oversight of operational execution from her independent perspective.

0

N

C

TsuyoshiNumagami

63

Tsuyoshi Numagami has deep academic knowledge as a corporate management researcher, particularly with regard to corporate strategy and organizations, gained through his experience as a professor of the Graduate School of Business Administration of Hitotsubashi University. He has been
appointed as an external director to utilize his exceptional insight and knowledge in the management of the Company and because he has been judged
to be capable of contributing to ongoing growth and to the improvement of corporate value by providing oversight of operational execution from his
independent perspective.

0

N

C

AkihikoOkada

63

Akihiko Okada has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate
value. He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and wide-ranging knowledge gained in corporate management at a general trading company and operational execution in fields including international business and sales.

4,000

ALM

IC

CR

HiroshiSato

63

Hiroshi Sato has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate
value. He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and wide-ranging knowledge gained in corporate management at a general trading company and operational execution in fields including international business and sales.

0

ALM

ToshioKitamura

60

Toshio Kitamura has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate
value. He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and extensive insight fromhis involvement in overseas and sales operations at financial institutions and in the execution of sales, overseas, and other operations at the Company.

3,000

MahokoHara

58

Mahoko Hara has been appointed as a director after her being deemed capable of contributing to ongoing growth and to the improvement of corporate
value. She is able to do so by appropriately managing the Company and providing oversight based on her abundant experience and extensive insight inplanning and product development at financial institutions as well as in the execution of overseas, sales, and other operations at the Company.

2,000

Director and Managing
Executive Officer

TatsuyaHirasaki

55

Tatsuya Hirasaki has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate value. He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and wide-ranging
knowledge gained in operational execution in fields including accounting and corporate planning at the Company.

3,000

ALM

IC

CR

S

IM

Director

Shunichi
Asada

74

Shunichi Asada has been appointed as a director after his being deemed capable of contributing to ongoing growth and to the improvement of corporate
value. He is able to do so by appropriately managing the Company and providing oversight based on his abundant experience and wide-ranging knowledge gained in corporate management at financial institutions and operational execution in fields including sales, markets, and international business.

29,000President & CEO,
Representative Director

External Director

Finance / Risk
Management

Legal Affairs /Accounting /Taxation

Sustainability

Committee appointments

IT / Digital
Transformation

CRM

Committee membership legend:  N : Nomination Committee
C : Compensation Committee ALM : Asset Liability Management Committee
IC : Internal Control Committee
CR : Comprehensive Risk Management Committee CRM : Credit Risk Management Committee
IT : IT and Administration Strategy Management Committee
S : Sustainability Committee
IM : Investment Management Committee: Chairperson

IT

CH AP TE R 7

Director and Senior
Managing Executive
Officer

GlobalOperations

ESG Strategies

Deputy President,
Director and Executive
Officer

Corporate
Management

99TOKYO CENTURY CORPORATION100

INTEGRATED REPORT 2023

Evolution of Tokyo Century’s Corporate Governance System
Meetings Held in Fiscal 2022
Nomination Committee

Management Structure Comprising Ideal Committees

Board of Directors

General Meeting

15

The Board of Directors deliberates on and makes decisions
about the policies, strategies, business plans, and other key management issues of the Company and Group companies as wellas matters specified by prevailing laws and regulations, theArticles of Incorporation, and rules governing the Board. It alsosupervises the execution of operations by directors and executive officers.

Appointment / Dismissal

Appointment / Dismissal

Coordination

Auditors(Board of Corporate Auditors)
Chairperson: Koichi Baba
President & CEO, representative director
Number of Members: 13 (5 of whom are external directors)

Coordination

Auditingof Shareholders
Appointment / Dismissal

Company Counsel

ReportingBoard ofDirectors

Nomination Committee

Compensation Committee

Compensation Committee
Coordination

Auditing

Risk Management Division

Coordination

Board of Corporate Auditors

8

The Board of Corporate Auditors meets regularly and executes
independent and fair audits of the compliance and appropriateness of corporate activities, including the performance of duties
by directors and executive officers.

Chairperson: Futoshi Okada
Standing corporate auditor(External corporate auditor)
Number of Members: 4 (2 of whom are external
corporate auditors)

Independent Auditor

Appointment / Dismissal/ Supervision

Audit Unit

Appointment

President & CEO
ReportingDirection /SupervisionInternal Audit
Evaluation ofInternal Control

Management
Meeting

Business Headquarters /Operation Headquarters
Group Companies

Chief Compliance Officer

4

The Internal Control Committee discusses general internal
control matters, including the evaluation of the effectivenessof the financial reporting system and the scope of evaluation,in order to ensure the internal control system functions effectively, and reports to the Management Meeting.

ReportingInternal Control Committee

Transaction
Evaluation Meeting
Executive Officers

Auditing

5

As an advisory body to the Board of Directors primarily consisting of external directors, the Compensation Committee
discusses matters such as director compensation systems
and policies and reports to the Board of Directors.

Internal Control Committee

Auditing

4

As an advisory body to the Board of Directors primarily consisting of external directors, the Nomination Committee deliberates on the nomination of candidates for director andcorporate auditor positions and reports to the Board of
Directors.

Comprehensive Risk Management Committee
Credit Risk Management Committee
Appointment /Dismissal / Supervision

Asset Liability Management Committee
IT and Administration Strategy Management Committee

Comprehensive Risk Management Committee
4

The Comprehensive Risk Management Committee discusses
matters such as the construction of the risk management
system and approaches to measuring risk while periodicallyassessing the Company’s risk exposure and reporting to theManagement Meeting.

Sustainability Committee
Investment Management Committee

Credit Risk Management Committee
2

The Credit Risk Management Committee discusses matters
including the Tokyo Century Group’s credit portfolio as awhole and credit risk management and reports to theManagement Meeting.

Transaction Evaluation Meeting Once a week, in principle
Chairperson: Ko Nakagawa
Managing executive officer
Number of Members: 8

Chairperson: Koichi Baba
President & CEO, representative director
Number of Members: 8

15

Investment Management Committee

The Investment Management Committee facilitates appropriate
investment management by deliberating on matters related tothe development and implementation of investment management structures and the assessment of large-scale investment
projects and reports to the Management Meeting.

Sustainability Committee

Asset Liability Management Committee
4

The Asset Liability Management Committee discusses matters relevant to managing market, liquidity, and other risks—inorder to identify and minimize the exposure of assets and liabilities to risks, including fluctuations in interest and foreign
currency exchange rates—and reports to the Management
Meeting.

3

The Sustainability Committee reports, plans, promotes, and oversees the Tokyo Century Group’s sustainability activities; discusses important issues related to sustainability; and reports to
the Management Meeting.

IT and Administration Strategy Management
Committee
3
The IT and Administration Strategy Management Committee
discusses matters including the IT strategies, IT investment
plans, and administrative system plans of Tokyo Century andGroup companies and reports to the Management Meeting.

CH AP TE R 7

The Management Meeting deliberates on particularly importantmatters concerning the execution of operations and makes decisions for the Tokyo Century Group.

Management Meeting Once a week, in principle

ESG Strategies

The Transaction Evaluation Meeting discusses andmakes decisions about major business transactions
being considered by Tokyo Century and Group companies as well as transactions that warrant complex risk
analysis.

101TOKYO CENTURY CORPORATION102

INTEGRATED REPORT 2023

Evolution of Tokyo Century’s Corporate Governance System

Discussions by the Compensation Committee
Overview of the Compensation Committee

Officer Compensation

Tokyo Century has established the Compensation Committee as an advisory body to the Board of Directors in order to ensure the independenceof its functions. This committee comprises a majority of external directors designated as independent directors and is chaired by an external
director designated as an independent director. The Compensation Committee discusses matters such as compensation amounts, systems,
and policies and reports to the Board of Directors on these matters. In fiscal 2022, the committee met five times.

Officer Compensation Policies
Director compensation policies call for the provision of healthy incentives to contribute to the ongoing growth of the Company and frameworks for linking compensation to the medium- to long-term development of its businesses. Systems for director compensation are
designed to raise directors’ awareness regarding the enhancement of shareholder value by aligning the interests of directors with those ofshareholders. Moreover, director compensation systems aim to attract outstanding talent in order to allow the Company to recruit and cultivate individuals who can drive the improvement of the Company’s corporate value.

Major Topics of Discussions

Overview of Officer Compensation

Topics of Reports Submitted in Fiscal 2022

In addition to basic compensation, which is fixed compensation, the Company provides performance-based compensation in the form of
bonuses and stock options to contribute to the improvement of overall corporate value and to the maximization of shareholder interests.

The Compensation Committee engages in ongoing discussions on topics such as indicators for evaluating medium- to long-term performance, the introduction of ESG-related indicators, and ideal frameworks for allocating stock-based compensation. Through this process,the committee works to ensure that the Company offers healthy incentives to contribute to the ongoing growth of the Company and frameworks for linking compensation to the medium- to long-term development of its businesses.

In fiscal 2022, the Compensation Committee submitted reports to the Board of Directors on its reviews of basic compensation amounts fordifferent ranks.

Payment of Officer Compensation Amounts
Compensation and Eligible Officers in Fiscal 2022

Officer Compensation Systems

Basic Compensation

Fixed / variable
compensation

Ratios of­compensation(approximate)

Fixed Compensation

Performance-Based Compensation

Determined based on comprehensive consideration of duties, roles, and responsibilities

1.0

Stock Options as­Stock-Based
Compensation

Bonuses

Determined according to achievements and performance

Request for compensation proposal from the Compensation Committee by the Board of Directors

Determination
process

Report submitted by the Compensation Committee based on input from external experts
and research data on compensation levels by third-party institutions
Decision by president based on authority delegated by the Board of Directors with respect
paid to proposal by the Compensation Committee

Directors (excluding external directors)
Corporate auditors (excluding external corporate auditors)
External directors and corporate auditors

Total Compensation by Type (Millions of Yen)

Total
Compensation(Millions of Yen)

Fixed
Compensation

Performance-Based
Compensation

Non-Monetary
Compensation

Number of
Eligible
Officers

498
41
132

267
41
132

79
—
—

151
—
—

11
3
8

Notes: 1.	Stock options provided as stock-based compensation are accounted for under “Non-monetary compensation,” although they constitute performance-based compensation.
		Accordingly, amounts of stock options provided as stock-based compensation are not included under “Performance-based compensation.”
2.	Although the total number of directors and the total number of corporate auditors as of March 31, 2023, were 13 and 4, respectively, the above compensation amounts also
include payments to four directors and one corporate auditor who retired on June 27, 2022.

Cross-Shareholdings

1.0–2.5:

Officer Category

Resolution by the Boardof Directors with respect
paid to proposal by theCompensation Committee

The Company holds investment securities for purposes other than pure investment. These securities are the shares of the stock issued byimportant stakeholders of the Group, including business partners, shareholders, and borrowers, and are held based on their necessity to themedium- to long-term business activities of the Group.

Process for Reviewing Holdings
Regular tracking of associated transactions, earnings, etc.

(Number of holdings reduced and sales amounts)

Fiscal 20209 holdings¥2,871 million

Holding rationale verified

Holding determined to lack rationale

Fiscal 2021

4 holdings¥451 million

Continuation

Divestiture

Fiscal 2022

15 holdings¥5,574 million* Includes salaries paid to directors who serve concurrently as executive officers; ¥100 million for external directors

Amounts ofannualcompensation

Upper limit of amount equivalent to 1% of net income attributable toowners of parent
1.0 (approximation)

1.0–2.5 (approximation)

Approx. 50%

Date of resolution atGeneral Meeting of
Shareholders

Approx. 50%
Upper limit of fair valueof ¥400 million

June 24, 2016

Notes:
1. The compensation of external directors consists entirely of basic compensation based on their roles.
2. The compensation of corporate auditors consists entirely of basic compensation based on their roles and is set within a limit determined by the corporate auditors.
The ­maximum compensation for corporate auditors, as resolved at the Extraordinary General Meeting of Shareholders held on February 25, 2009, is ¥150 million per year.

Protection of Minority Shareholders
ITOCHU Corporation holds 30% of the voting rights in Tokyo Century, and the Company is thus an equity-method affiliate of ITOCHU. No
officers of ITOCHU hold concurrent positions as officers of the Company. However, ITOCHU has seconded 12 individuals to the Company
who have immediately applicable skills necessary for supplementing the Company’s operational execution capabilities (as of April 1, 2023).
The Company engages in business transactions with ITOCHU and ITOCHU Group companies. Negotiations regarding said transactions
are conducted with these companies on an individual basis, as would be done with a standard transaction counterparty, and the Company’s
own decision criteria are applied to these transactions. Accordingly, ITOCHU does not impose any restrictions on the business activities of
the Company, and the Company maintains a certain degree of independence from ITOCHU. We are determined to ensure that this relationship does not threaten the interests of minority shareholders.

CH AP TE R 7

Verification of whether meaningfulness and benefits of holdings surpass cost of capital

ESG Strategies

Upper limit of ¥1 billion*

Divestitures

103

TOKYO CENTURY CORPORATIONINTEGRATED REPORT 2023

104

Evolution of Tokyo Century’s Corporate Governance System

Audit System

Point

Message from an External Director

I aim to use my unique insight

Objective and Independent Audit System

The Audit Unit has been established as an independent organization under the direct control of the president and is tasked with performing internal audits of Tokyo Century and Group companies. Internal audits are aimed at assuring the appropriateness of theCompany’s systems, organizations, and rules; whether all business activities comply with relevant laws and regulations and internal
rules; and whether operating processes and the risk management system work appropriately and rationally. Based on these audits,
improvements are proposed and advice is provided as necessary. As the Group expands its areas of business, risk profiles are
becoming more diversified and complex. Accordingly, Tokyo Century aims to conduct internal audits that are effective as part of arisk-based approach. Timely and appropriate audits are also conducted of companies newly consolidated through investment or
acquisition. Through such auditing activities, we strive to enhance the risk management capabilities and improve the corporate valueof the Company and Group companies. Annual internal audit plans are reported to the Board of Directors after approval by the president (Management Meeting), and the results of the audits are reported to the president (Management Meeting) and to the Board of
Directors.

Audit System for Major Group Companies
Major domestic Group companies as well as major overseas Group companies Aviation Capital Group LLC and CSI
Leasing, Inc., have in place independent audit units that perform audits at their respective companies. Audit plans andresults are reported to the Audit Unit of the Company, which
provides instruction and support as necessary.
The Audit Unit directly audits subsidiaries that do nothave their own auditing functions.

The Tokyo Century Group’s Audit System
Tokyo Century (Board of Directors, Management Meeting)Consultation / Report

Audit Unit of Tokyo Century
Report of
Audit
Results

Instruction /AdviceCompanies with Audit Units(ACG, etc.)

Basic Audit Policies

Instruction / Advice

Reliable Third Line of Defense Supporting Quest

Auditing
Improvement
Proposals /AdviceReport /Consultation

Companies without Audit Units(Domestic and Overseas Group
Companies)

for Growth Furnished by Audit Unit
1. Identification of latent risks to provide proposals and advice for improving operations and preventing misconduct
2. Enhancement of risk identification, analysis, and verification capabilities through ongoing skills improvement by Audit Unit staff
3. Support for and coordination among Group companies to strengthen the Groupwide audit system

Akihiko Okada
Deputy President, Director and Executive Officer
President, Audit Unit

its limitless potential.
Tsuyoshi Numagami
External Director

As an external director, I took part in the discussions that led up to the formulation of MediumTerm Management Plan 2027. This plan is basedon the theme of four types of transformation, of
which I feel that portfolio transformation is themost important. Accomplishing the plan’s management targets for ROA and ROE will entail thereplacement of unprofitable assets and the reinvestment of the funds created through this process in growth businesses. Whether divesting fromexisting businesses or investing in new businesses, it is crucial to make management decisions based on a long-term perspective. For
example, there are cases in which an investment
might initially only generate limited returns but willgrow into a highly profitable business over the longterm. For this reason, introducing frameworks forassessing performance from both short-term andlong-term perspectives is an effective way to optimize portfolios.
The Board of Directors is in the position ofviewing the Company from an overarching standpoint, and it is therefore critical that we make decisions on important matters based on
considerations such as capital allocation, the creation of synergies with existing businesses, andthe need to maintain the soundness of corporate
management. With regard to capital allocation,
specifically, there is a need for frameworks thatallow the Board of Directors to monitor overall
operations and operating segments and to support

decision-making in order to ensure that the executive team can make effective decisions.
Other important considerations for advancing
management strategies are human resource development and organizational management.
In an organization with a lot of employees, there isa tendency for people to focus primarily on the performance of their particular team. However,I think it is worth considering the possibility of fostering an organization in which everyone at theCompany goes about their job while on the same
page, since such organizations tend to have substantial potential to grow over the medium to longterm. This is why I intend to offer advice from myunique perspective on how Tokyo Century canshare an understanding of the vision of its new
medium-term management plan of bringing aboutchange with all employees while developing anorganization that motivates employees to think
and act autonomously.
I specialize in corporate and organizational
strategies. I therefore think I have an important roleto play in supporting the healthy growth of Tokyo
Century from the perspectives of human resource
development and organizational management. In
the past, I was involved in various research projects and executive programs. As an external director, I aim to use the insight and experience gained
through this involvement to support the rapid
growth of the Tokyo Century Group with its limitless potential.

CH AP TE R 7Tokyo Century kicked off Medium-Term Management Plan 2027 in fiscal 2023. This plan calls on us
to go beyond simply responding to changes to transform ourselves and become a corporate groupthat brings about creative change. Robust governance and strong risk management are imperative
to accomplishing this objective. I view the Audit Unit as our third line of defense, the last bulwark forgovernance and risk management. The unit thus has a cornerstone role in supporting the ambitionsof the Company. I am therefore committed to offering constructive and accurate improvement proposals and advice to ensure effective risk management.

the Tokyo Century Group withESG Strategies

Message from the President of the Audit Unit

to support the rapid growth of