Contents / Editorial policy

Top Message

Company profile

Sustainability Strategy

Resource Circulation Business

Used-cars-related Business

Other Businesses

Environment

SocietyBusiness foundation / Growth foundation

Business foundation / Growth foundation

Global Resource Circulation BusinessCorporate Governance■ Board of Directors
The Board of Directors of ENVIPRO HOLDINGS Inc. is composed of
11 directors, six of whom are outside directors (three of whom aremembers of the Audit and Supervisory Committee) and, in principle,
meets once a month. The Board of Directors makes decisions onmatters important to the execution of the Company's business andoversees the execution of directors ' duties. In fiscal 2019, the Board ofDirectors met 13 times, and all directors attended all meetings.
At the meetings of the Board of Directors, the President andRepresentative Director acts as a chair, respects all other directors andencourages them to express opinions, not from the viewpoint of shortterm benefits, but rather to discuss even seemingly irrelevant policies
or measures and other matters from the perspective of medium- tolong-term business growth.
■ Outside directors of ENVIPRO HOLDINGS Inc.

We believe that corporate governance is an important business foundation as well as a precondition to strongly promoting goal achievements.
To promptly respond to changes in the economic environment, we strive to implement both prompt decision-making along with efficient andtransparent management, and to continuously improve our corporate value. To this end, we will keep evolving to verify and operate themanagement and internal control systems, and enhance their effectiveness.
Corporate governance system
General meeting of shareholders
Election / Dismissal

Election / Dismissal
Audit / Supervision

Board of Directors
Question

ProposeAppointment / Supervision / Dismissal

Audit corporation

Collaboration

Reporting
ReportingAppointment and Remuneration
Committee

Internal Audit Department

Representative Director

Collaboration

Instruction

Management Committee

Instruction

ReportingAccounting Audit

Instruction

Reporting

Departments / Group Companies

Internal Audit

Hwang Kyu Chang (Independent Director)
Elected as an Outside Director because Professor Hwang can offer valuable advice to thebusiness strategy development of the Group, based on his academic knowledge as a scholarof economics.
Mr. Keiji Miyaki (Independent Director)
Elected as an Outside Director because Mr. Miyaki can offer valuable advice to thebusiness strategy development of the Group, based on his broad global knowledge andexperiences on business management gained, among others, by his service as therepresentative of an international consulting firm.
Mr. Shoji Ide (Independent Director, Chair of Audit and Supervisory Committee)
Elected as an Outside Director because Mr. Ide can offer valuable advice to the businessstrategy development of the Group, based on his experiences as a former top managementof a publicly listed company.
Mr. Naoyoshi Komuro (Independent Director, Member of the Audit and Supervisory Committee)
Elected as an Outside Director because Mr. Komuro can offer valuable advice to thebusiness strategy development of the Group, based on his experiences as a former citymayor.

Consultation

Internal Control Committee· Environment and Safety Promotion
Committee· IT Promotion Committee· Human Resources and Labor Reform
Committee· Business Operations Reform Committee

Audit and Supervisory Committee

Election / Dismissal
Collaboration

Mr. Yoshiharu Murakami (Independent Director)
Elected as an Outside Director because Mr. Murakami can offer valuable advice to thebusiness strategy development of the Group, based on his experiences as a top managementof a publicly listed company.

Mr. Takashi Wada (Independent Director, Member of the Audit and Supervisory Committee)
Elected as an Outside Director because Mr. Wada can offer valuable advice to the businessstrategy development of the Group, based on his experiences as a former top managementof a major subsidiary of a publicly listed company.

Sustainability Report 202032

Contents / Editorial policy

Top Message

Company profile

Sustainability Strategy

Resource Circulation Business

Used-cars-related Business

Other Businesses

Environment

SocietyBusiness foundation / Growth foundation

Global Resource Circulation BusinessBusiness foundation / Growth foundation | Corporate Governance■Audit and Supervisory Committee
The Audit and Supervisory Committee consists of three Outside
Directors. In addition to attending the General Meetings ofShareholders and Meetings of the Board of Directors, the directors
who are members of the Audit and Supervisory Committee actively
participate in various meetings of the Company to better understandthe situation of the Company, including the management system andthe execution of businesses. Furthermore, the Audit and Supervisory
Committee meets regularly with the President, Representative
Director to exchange views and maintain close communication on
issues that the Company must address, the situation of theenvironment for auditing by the Audit and Supervisory Committee,
and other important matters pertaining to audit.
In order to maintain close collaboration with the Internal Audit
Department and the Accounting Auditor, the Audit and Supervisory
Committee holds liaison meeting regularly with them and otherwise
exchanges information actively to enhance the auditing functions.
The Committee conducts adequate audit by collecting informationfrom internal control departments, in addition to the one from Internal
Audit Department.
■Appointment and Remuneration Committee
The Appointment and Remuneration Committee is composed of six
members comprising one Representative Director, one full-time
Director, and four Outside Directors who are independent directors.
As an advisory body to the Board of Directors, the Committee holds
preliminary deliberations on the nomination of candidates fordirectors (excluding those who serve as members of the Audit andSupervisory Committee) and their remunerations.
■Management Committee
The Management Committee is composed of the full-time directors
and the Chair of the Audit and Supervisory Committee, and may bejoined by some executive officers, department managers, as well assome members of the Board of Directors of the Group companies, asrequired depending on the matters to be deliberated. In principle, theCommittee meets at least once a month. The Management
Committee makes decisions on matters important to the execution of
the Company's business and on their timely disclosure ofinformation.

■Sustainability Committee
In fiscal 2018, we newly looked deeply into the relationship between
the Envipro Group's business activities and social issues, andformulated a “Sustainability Strategy” to achieve harmonious
sustainable development of both society and our Group. The
Sustainability Committee is engaged in flexible and vibrantdiscussions and examination of the progress and future direction ofthe strategy from a long-term perspective.
The Sustainability Committee consists of the full-time directors andsome executive officers, and meets every month. The matters
discussed and examined include the feasibility of a new business inlight of the Strategy, establishment of the business and growth
foundations, and synergy effects among the Group companies. Whenfirmed up, the directions and specific measures are submitted to theBoard of Director, etc.
Interview:■ Internal Control Committee
The Group has established an "Internal Control Committee," chairedby the President of the Company. The Internal Control Committee
has four sub-committees: the Environmental Safety Promotion
Committee, the IT Promotion Committee, the Human Resources andLabor Reform Committee, and the Business Operations ReformCommittee. The Internal Control Committee identifies risks,
formulates countermeasures, and constructs and operates internal
controls across the Group, including awareness-raising activities.
The Internal Control Committee is convened on a quarterly basis, inprinciple, to hear reports from the presidents of Group companies
and members of the subcommittees with respect to importantcompliance matters, litigation and other legal risk matters, and othermatters that may have a major impact on the management, before it
sets policy and makes decisions.

Director Ide, Chair of Audit and Supervisory Committee● Could you tell us about your business career?
I joined an IT company affiliated with a manufacturing company. But I
spun off in 1973 to set up an independent company with the owner andabout a dozen employees. Thirty years after its establishment, thecompany made an IPO to the second section of the Tokyo StockExchange. Helped by the good market sentiment at the time, we weresuccessful in moving up to the first section in less than a year. Although
the company was family-owned, I served as its president for six years
from 2003. Because of that experience, I came to be acquainted withENVIPRO and was asked to lend a hand to this family-owned company
aiming to go public. ENVIPRO made an IPO to the second section of theTokyo Stock Exchange in 2013 and succeeded in changing thedesignation to the first section in 2018. During that time, I served for sixyears as an outside director, and the next three years as an outside
director and a member of the Audit and Supervisory Committee. This is
my tenth year with ENVIPRO.
● What are the major features of our corporate governance?
Of the 11 ENVIPRO directors, three are outside directors and anotherthree are outside directors and members of the Audit and Supervisory
Committee. This high ratio of outside directors in a family-owned
company is something I have never heard of elsewhere. It is great that
ENVIPRO, based on the personality of the President, has earned thetrust of people outside the company. Another important feature is thatthe history and experiences of the IPO and the designation change to theTSE first section have made ENVIPRO a highly transparent group ofcompanies, satisfying most provisions of corporate governance codes.
● We see you attending some company meetings besides the board

meetings and the Management Committee meetings. From whatstandpoint are you taking part in those meetings?
Any member of the Audit and Supervisory Committee is entitled toparticipate in any meeting of the Group as an observer when it is deemed
important. I participate voluntarily because I want to learn more about
the front line, out of my belief that what takes place at the front line does
count. Among the four sub-committees of the Internal Control
Committee, I think theEnvironmental Safety Promotion
Committee is particularly
important, because it deals with
our lifeline theme that cuts acrossthe entire Group. I am very
interested in what measures aretaken. Also, I think it’s importantfor me to attend such meetings
because I can get to know themiddle management people better.
Director Ide

Sustainability Report 202033

Contents / Editorial policy

Top Message

Company profile

Sustainability Strategy

Resource Circulation Business

Used-cars-related Business

Other Businesses

Environment

SocietyBusiness foundation / Growth foundation

Business foundation / Growth foundation

Global Resource Circulation Business

Human resources development and realizing diverse working styles■ Recruiting of new graduates introduced
The ENVIPRO Group began recruiting new graduates, with theview that securing diverse human resources is important forcorporate value enhancement over the medium to long term
and that the company needs to reinforce its business foundation
by fostering future leaders on its own. The recruiting activity iseffective not only for securing the human resources for the future of
the Group, but also is helpful for the Group’s businesses to bebetter understood by a wider spectrum of audience. In fiscal
2019, we were able to issue preliminary job offers to three
students for formal joining in April 2021. In the course of therecruiting activity, many students showed a strong interest in
keywords such as "environment,""sustainability," "SDGs," and "social contribution." The statedmission of our Group, "Contribute to create a sustainable society,"
was received with strong support and empathy.
While making necessary improvements in the recruitment activity,
we plan to recruit new graduates again for joining in April 2022.

■ Holding Business Schools
We have been running the in-house business school which is aimed at
improving the skills and expertise that employees need to carry out
their work, and is operated as a series of training lessons andseminars. In fiscal 2019, we introduced a new format with a theme
set for every lesson so that we can widely invite employees toattend the lesson of their interest. The idea was to attain better training
outcomes by encouraging voluntary participation and to pinpoint andenhance the skills required of the individual employees.
We will continue to work on building effective training programs,
including the introduction of web-based training courses, in order todevelop human resources in a systematic manner.
●Examples of fiscal 2019 themes
・Problem solving through logical thinking

・Management theory and coaching for human resource development
・Understanding the regulatory regime on appropriate treatment ofwaste and responsibility of corporations
・Building an IoT-based Smart Factory and important tips for it■ Building personnel evaluation system
We operate a personnel evaluation system for employees. We
consider it has an impact on employees' motivation and is also
very important from an aspect of human resource development.
We will continue to work toward optimization of the system.

● Characteristics of the Group's personnel evaluation system
・Transition from behavioral assessment to a system thatemphasizes the performance of the employee

・ Makes it easier for the assessed to know "what evaluation can beobtained by doing what"
・Makes it easier for assessors to know "what performance leads towhat evaluation," and clearly tells their roles, including aspects
such as objective planning and process management■ COVID-19 countermeasures and realizing diverse work styles
In response to the expansion the COVID-19 infection, wereevaluated the conventional working style and schemes with theaim of reducing the risk of infection and realizing
opportunities such as enhancing our resilience. In fiscal 2019 we
took measures such as introducing telecommuting, making a trial of
flextime system with eventual formal launch in mind, switching frompersonal seals to electronic stamp for the internal application
procedures and replacing the contracts both for internal and withoutside parties by Cloudsign.
Even after the pandemic is over, we will continue to work on
constructing new schemes with the aim of achieving higher
operational efficiency, improving the working environment, andoffering more diverse working styles.

Sustainability Report 202034

Contents / Editorial policy

Top Message

Company profile

Sustainability Strategy

Resource Circulation Business

Used-cars-related Business

Other Businesses

Environment

SocietyBusiness foundation / Growth foundation

Challenge to contribute to creation of a sustainable society■ Fostering corporate culture

We believe that establishing the business objectives and values as acorporate culture and matching them with the daily businessactivities is the best governance and is an essential step toward thesustainable enhancement of corporate value. In order to foster
corporate culture, we distribute books of a copy of the management
plan to our employees, setting forth clearly our corporate
philosophy, values, and code of conduct. We aim to build afoundation for long-term, sustainable growth by utilizing themanagement plan in our business activities, instilling our corporate
philosophy throughout the organization, and fostering our corporate
culture.

■ Response to COVID-19 disaster

The COVID-19 disaster has caused a considerable slowdown insocio-economic activities and even changed our working
environment. Although the business environment is in a difficult
situation, we are taking steps toward change, because we see thiscircumstance as an opportunity to make a significant transformation.

■An example of new business area
● Research on chemical recycling of waste plastics
We are conducting research on the recycling business of dirty wasteplastics, which would realize chemical recycling by oiling waste
plastics and recovering them to crude oil, which is the raw material ofplastics.

● Basic policy to counter the COVID-19 crisis

Cash is king (short-term perspective approach)

We will conduct thorough cash management in all sales,
administrative, and production divisions

・Tighten control over personnel expenses and expenses forbusiness operations
・Review unprofitable businesses and business formats
・Strengthen the occupational safety system to prevent cash
outflow due to accidents or occupational injuries

Outline of the contemplated business model

Restructuring of work (medium-term perspective approach)Take the COVID-19 disaster as a good opportunity to conduct a
fundamental review of the way we work and make the company“transformation” dramatically・Implement remote work, web meetings, and flextime systems
・Conduct research on remote management of facilities possibilities
using IoT and robots
・Change from a membership-based approach to a job-based
approach and explore better evaluation system

Generated Exhaustgas
gas oilWaste
plastic, etc.

Waste plastics
Procurement
to TransportPre-treatment

Steam

Reaffirming the purpose (fundamental and long-term perspective approach)・Help realize a circular economy as a manufacturer of recycled
raw materials
・Improve the efficiency of resource collection by strengthening theplatformer role through combination of resource circulation withdigitalization
・Achieve 100% recycling by establishing recycling systems bymaking full use of chemical technologies■ Enhance corporate value by expanding businesses■ Growth investment ■ Actual corporate value

While sustainably "deepening" the competitiveness and profitabilityof existing businesses, we will implement growth investments as we"explore" new business domains and technical know-how

Newsasticte plWasWaste

esnessbusition ash

incinera

Lithium-ionbatteries

Existing Businesses: Resource Circulation, Global Resource Circulation,
Used-car-related, Environmental Management
Consulting, Welfare Service for Persons with Disabilities

2020

Fluidized bed
incinerator

Oiling(oil substitutionmaterials)

Oil refinery
facilities

Air

Pyrolysis gasification/oiling system(Lab testing has begun in December 2020)

To become a company that is strongly needed by the world to createa sustainable society

Synergy between group companiesThe ENVIPRO Group developed a “Sustainability Strategy” in fiscal
2018, as a growth strategy to realize the sustainable development ofsociety and our group concurrently, and we have been promoting ourbusinesses.
Until we were listed on the Second Section of the Tokyo Stock
Exchange in September 2013, we prioritized the establishment of ourbusiness foundations, and after being listed, we planted a variety ofseeds for future growth with the objective of promoting thediversification of our businesses. Later, we reviewed the businessareas we had expanded, and decided to concentrate our investment
and management resources mainly on our resource circulation
business. Based on this decision, we will further promote the newbusinesses that we have already launched and accelerate investments
in new growth fields, and we will engage ourselves in thedevelopment of a sustainable society as a company which is relied
upon by our stakeholders.

Corporate value

Business foundation / Growth foundation

Global Resource Circulation Business

Joint project■Profit distribution

To realize the above-mentioned policies,
we will principally distribute profits
according to the following proportions:
30% for investment in growth fields, 10%
for research and development, 20-30% fordividends to return to shareholders,
30-40% for internal reserves.

Profit distribution
Investment in growth fields

30%

Research and development

10%

Return to shareholders

20-30%

Internal reserves30-40%

2030

Until a business is stabilized, the increase in corporate value will slow down because it cannot matchthe initial investment. The brown areas indicate a negative balance caused by this condition.

Sustainability Report 202035