ESG Report 2023

2023.12

Socionext ESG Report 2023

This report is a consolidated report of ESG-related information of the Socionext Group.
This report has been revised in “design and other aspects” from the one published in December 2023, andthere are no changes to the content.
Date of publication:
Publisher:

December 2023
Socionext Inc. ESG Promotion Office

Period covered:

FY ended March 31, 2023 (April 1, 2022 to March 31, 2023)(Some important information outside of the above period is also reported)

Scope:

Socionext Inc. and its subsidiaries (referred to as “Socionext,” “Socionext Group,” or “Ourcompany.”) However, some of the information pertains to Socionext Inc. on a nonconsolidated basis (referred to as “Company”)

Cautionary Notes on Forecast Statements

Forecast statements in this report are based on information currently available to the Company. Actual
results may differ from these statements due to various factors.

′

Contents
Basic Philosophy ·········································································································································································································································· 06
Mission ································································································································································································································································ 06
Value ······································································································································································································································································ 06
Action Guidelines ········································································································································································································································ 07
Corporate Social Responsibility Policy ······················································································································································································ 07
Management Policy ··································································································································································································································· 08

Sustainability Philosophy and Policy ·········································································································································································· 09
Basic Philosophy ········································································································································································································································· 09
Action on Sustainability ························································································································································································································· 10

Top Message ······················································································································································································································································ 11
Brand Promise ·············································································································································································································································· 11
Top Commitment ········································································································································································································································ 11

Business Model ·············································································································································································································································· 12
Environment Activities ······················································································································································································································· 16
Environment Policy ···································································································································································································································· 16
Environmentally Friendly Products ······························································································································································································ 16

Climate Change ·············································································································································································································································· 17
Governance ····················································································································································································································································· 17
Strategy ······························································································································································································································································ 18
Risk Management ······································································································································································································································· 20
Indicators and Targets ··························································································································································································································· 21
Reduction in Energy Use ······················································································································································································································ 21
Reduce Waste ··············································································································································································································································· 21
ISO14001 Certification ·························································································································································································································· 22

Society ·········································································································································································································································································· 23
Human Rights ················································································································································································································································ 23
Human Resource Development ······································································································································································································ 24
Diversity and Inclusion ··························································································································································································································· 26

Fair Trading Practices ····························································································································································································································· 32
Rigorous Procurement Compliance ···························································································································································································· 32

Quality and Reliability ·························································································································································································································· 33
Quality Policy ·················································································································································································································································· 33
Honing from the Source (Design Review) ·············································································································································································· 33
Supplier Management ····························································································································································································································· 34
Customer Quality Support ·················································································································································································································· 35
ISO9001 Certification ····························································································································································································································· 35

Corporate Governance ······················································································································································································································ 36
Basic views on Corporate Governance ····················································································································································································· 36
Reasons for Adoption of Current Corporate Governance System ··················································································································· 36
The Company’s Business Execution and Monitoring System ································································································································ 37
Evaluation of the Effectiveness of the Board of Directors as a Whole ········································································································· 39
Views on Diversity of the Board of Directors ····································································································································································· 40
Skill matrix of Directors ························································································································································································································· 40
Policy on Determining compensation for Directors ······················································································································································· 40
Support System for Outside Directors ····················································································································································································· 41
Policy on Election and Dismissal of Directors ····································································································································································· 42
The succession plan for the CEO and Other top executives ································································································································· 43
Training Policies for Directors ·········································································································································································································· 43
Independence Standards ····················································································································································································································· 43
Cross-shareholdings ································································································································································································································ 44
Activities of the Board of Directors, Nomination and Compensation Committee,
and Audit and Supervisory Committee ···················································································································································································· 44
Policy for Constructive Dialogue with Shareholders ····················································································································································· 46
Measures to Realize management with Capital cost and Stock price in mind ························································································ 47
Implementation of Dialogue with Shareholders ································································································································································· 47

Internal Control ·············································································································································································································································· 48
Internal Control Policy ···························································································································································································································· 48
Operational status of Internal controls ····················································································································································································· 51

Risk Management ······································································································································································································································ 54
Compliance ··························································································································································································································································· 55

Safety and Health ······································································································································································································································· 27

Core Philosophy on Compliance ···································································································································································································· 55

Procurement Management ········································································································································································································· 29

Main Actions on Compliance ············································································································································································································ 56

Management Structure ························································································································································································································· 29
CSR Procurement Guidelines ··········································································································································································································· 29
Supply Chain Management ················································································································································································································ 29
Responsible Minerals Procurement ····························································································································································································· 30
Green Procurement ·································································································································································································································· 31
BCM/BCP ·························································································································································································································································· 32

Compliance Administration ················································································································································································································ 55

ESG Data ··································································································································································································································································· 59
E: Environment ·············································································································································································································································· 59
S: Social ······························································································································································································································································ 61
G: Governance ··············································································································································································································································· 62

Action Guidelines∙ Each individual takes ownership of his or her work, responds to changes in the environment, and thinks and acts
independently from a market-oriented customer perspective.
∙ To maintain access to growing markets and companies, we address customerʼs problems with effective solutions
backed by the latest technologies and knowledge.
∙ Each individualʼs willingness to take on challenges to persevere toward his or her goals and the desire to becomea professional will lead to personal and company growth.

Socionext Group defines the following common group basic philosophy for its mission and value.
Based upon this basic philosophy, we will contribute to realize a prosperous society by delivering new value to ourcustomers and to people around the world beyond them, as a valued partner of customers seeking to develop uniqueand cutting-edge SoCs to differentiate their services and products, as well as a partner of our suppliers providing thelatest technologies in the evolving semiconductor ecosystem, including foundries, OSATs and providers of IP, EDA andsoftware.

∙ We make speedy decisions on an individual and organizational basis, always looking ahead and creating value forcustomers.
∙ As a member of the global society, we will fulfill our corporate social responsibilities and contribute to therealization of a sustainable and prosperous society.

ESG Report 2023

ESG Report 2023

Basic Philosophy

Corporate Social Responsibility Policy
Mission“Together with our global partners, we bring innovation to everyone everywhere.”●Compliance with laws, regulations, and social standards
We fully comply with laws, regulations, and social standards, thus earning the trust of society.

●Respect for human rights
Value“Change”
We adapt ourselves to the disruptive discontinuous changes in business, technology, mind, operations, and otherenvironments.

“Technology”
By pursuing cutting-edge technology, we aim to become a company that supports global innovation throughdevelopment of competitive technology.

“Growth”
Our growth helps to deliver benefits to all stakeholders, including shareholders, customers, partners, andemployees.

“Speed”
We respond quickly to dynamic and rapidly changing markets and customers.

“Sustainability”
We ensure a sustainable future by creating a cohesive society with customers and partners.

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Socionext ESG Report 2023

We respect each individualʼs rights, and do not discriminate or tolerate human rights violations.

●Establishing an improved work environment
We want our employees to be happy. We respect their individuality, treat them fairly and aim to create a healthy
and comfortable work environment.

●Environmental considerations
We conduct our business with consideration for the global environment.

●Promoting fair trade
Our relationships with our customers and suppliers are built on trust, in accordance with the principles of fairtrade.

●Information management
We carefully manage and ensure the confidentiality company information, third party information from ourcustomers and suppliers, and personal information.

●Respect for intellectual property
We value and protect intellectual property, which is the primary corporate asset.

07

Sustainability Philosophy and Policy

In order to realize our basic management philosophy, the Socionext Group is developing a “Solution SoC” businessfor customers who want to develop their own advanced SoCs, using a unique business model to realize thefunctions that customers want by combining the most appropriate technologies.
Along with the automotive, networking & data center, and smart device fields that represent our leading growth
sectors, we are also seeking to combine regional balance with the winning of more business from global
customers in the industrial field and in IoT & radar sensing.
Along with winning the trust of customers and supporting their growth by becoming the SoC supplier of choice tomajor global and growth companies, our business activities also serve as a means for us to leverage ourtechnologies to help overcome the challenges facing society, in areas like low power consumption, for example.
Moreover, through the development work we undertake in partnership with customers, we seek to create avirtuous circle of growth for both engineers and the company, enhancing corporate value through this growth andthereby generating returns for our shareholders.

Basic Philosophy“Together with our global partners, we bring innovation to everyone everywhere.” Based on this mission, Socionext
recognizes sustainability as a serious management challenge and we want to contribute to bringing about asustainable and prosperous society. Our goal is to expand the possibilities of society by delivering new value toour customers and, through them, to people everywhere, working with customers seeking to differentiate newservices and products by developing their own leading-edge SoCs, and partnering with suppliers able to provide
the latest technologies in an increasingly sophisticated semiconductor ecosystem, extending from foundry and
OSAT*1 services through to IP*2, EDA tools*3, and software.

ESG Report 2023

ESG Report 2023

Management Policy

The environment in which companies operate is undergoing major change amid rising global concern about social
problems, such as diversity and respect for human rights, as well as attention to environmental problems that
include global warming and climate change. We are working to fully understand the risks posed by the diverse
issues facing the world and intend to pursue initiatives that will lead to their resolution.
In pursuing these activities, we are striving to understand the issues involved while also building relationships oftrust, engaging in dialogue and collaborative activity with our many stakeholders, who include customers,
suppliers, employees, local communities, and shareholders, with our goal being to create a sustainable society.
*1: OSAT is an abbreviation of “outsourced semiconductor assembly and testing” and refers to contract manufacturing services that
perform these functions.
*2: IP is an abbreviation of “intellectual property” and in the context of semiconductors refers to modular circuit designs that perform
specific functions in an integrated circuit. IP can be divided into outsourced IP that is licensed from another vendor and in-house IP
developed internally.
*3: EDA is an abbreviation of “electronic design automation” and refers to software tools for automating semiconductor design work.

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Socionext ESG Report 2023

09Socionext is taking action on sustainability in ways that are integrated with its business. In terms of environmental,social, and governance (ESG) issues, this has included the establishment in April 2022 of an ESG office to facilitate
ongoing management-level discussion of medium-to-long-term challenges. This ESG office serves as a hub forestablishing systems and practices that bring the relevant internal departments together to work on thesechallenges, formulating policies and action plans for addressing key sustainability issues and monitoring theirprogress based around a management structure in which the Board of Directors plays a central role inunderpinning this work.
In addressing global societal challenges, we are working through our business activities to create a sustainable
society based on our recognition that, as a global corporation, fulfilling our social responsibilities requires that we
address these issues diligently. This includes taking action on human rights and environmental problems,
especially climate change, at all steps along our supply chain as well as work on promoting professional
development and diversity and on improving quality and service.

●Management structure for action on sustainability
General Meetingof Shareholders

Brand Promise[Supervision]
Board of Directors*Roles of Board of Directors:
Formulation and execution of ESG action plans, and Monitoring,supervision and advice on management risks and opportunities[Execution]

Director responsible for ESG

Management Committee

Sales Group

Business/
Development GroupESG Promotion Oﬃce
*Roles of ESG Promotion Oﬃce:
Extraction of medium to long term issues in theEnvironment, Social and Governance, planning ofcountermeasures, and reporting to management.

Risk Compliance Committee

Quality/Technology/SCM/
Procurement GroupWe are building on our expertise in various sectors as we work to create new value and contribute to a better society.
To that end, we are providing new products and services globally, and we will go beyond the bounds of our establishedbusinesses to create the value our customers truly want. We believe that, in this way, we will contribute to a “Better
Quality of Experience” and help make people's lives more convenient, enjoyable, and prosperous. We will update you on
our progress as we meet new challenges.

ESG Report 2023

ESG Report 2023

Top Message

Action on Sustainability

Corporate GroupRegional Companies

Socionext’s brand promise, “for better quality of experience,” expresses not only our determination to improve theperformance and functionality of our products and service, but also the reflection of our goal to provide newvalue to people throughout the world, thus contribution to a prosperous society.

Top Commitment“Together with our global partners, we bring innovation to everyone everywhere.” This is our mission at Socionext
As an SoC partner and a company that proves its worth through innovation, our goal is to contribute to thecreation of a prosperous society by delivering new value to our customers and, through them, to people
everywhere. To achieve this, we work with customers seeking to differentiate themselves by means of their own
SoCs and tap into a semiconductor ecosystem that provides the latest technologies for everything from IP, EDA
tools, and software to process, assembly, and testing. Based on this mission, we work with our global partners todeliver sustainable products and solutions that feature high quality and low power consumption.
One of the values we hold to be most important is “to build a sustainable future through collaboration with ourcustomers, partners, and society.”
This is an expression of our desire to contribute to achieving the SDGs through our business activities. We
recognize that we have a duty as a global corporation to fulfil our social responsibilities, not just through the
pursuit of technological innovation and leadership, but also by working diligently to improve quality and service
and by taking on societal challenges. These latter include human rights issues and environmental problems,
especially climate change, at all steps along our supply chain as well as work on promoting professional
development and diversity.
In partnership with all of our stakeholders, including customers, suppliers, employees, local communities, andshareholders, Socionext is working to enhancing corporate value and to help bring about a sustainable andprosperous society.

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11

In the past, the Group had been developing its business mainly with conventional ASICs*3 that were responsible only forphysical design based on the specifications of SoCs received from customers, and general-purpose ASSPs*4 thatspecialized in functions and purposes by limiting the fields and applications. We are developing our business with a focus
on custom SoCs based on this “Solution SoC” business model, shifting to a business model that provides the optimal
SoC for the customer by formulating specifications and logic design together with the customer, combining advanced
technologies.
There are three main business models for custom SoCs. First of all, in conventional ASICs, the customer performs the
upstream design of the SoC design, such as architecture design, planning/specification design, and logic design, and therest of the process is handled by an external custom SoC vendor. As a result, traditional ASICs are limited to customers
who have the ability to perform their own upstream design. On the other hand, in the Group's “Solution SoC” businessmodel, the Group performs these upstream designs together with customers, so it is possible to provide products tocustomers who do not have the ability to perform upstream design. In addition, in the case of models that provide
customized ASICs based on ASSP, the range of customization is limited because it is customized based on the vendor's
own ASSP, and customers are wary of vendor lock-in*5. In contrast, the “Solution SoC” business model also leverages
cutting-edge technologies provided by external vendors to provide the best SoC for customers while avoiding vendor
lock-in.

Downstream design

SoC design

The Group is a fabless semiconductor vendor that develops and provides custom SoCs to customers under a new andunique business model called “Solution SoCs” in the logic semiconductor market. SoC is an abbreviation for System onchip, which implements the functions necessary for the operation of a device or system on a single chip (semiconductor).
Among these SoCs, the Group focuses on custom SoCs that are designed specifically for specific customers. As apartner for customers who require unique advanced SoCs to differentiate new services and products, and bycollaborating with suppliers who provide the latest technologies ranging from IP*1, EDA*2 tools, and software to processes,
assemblies, and tests, we aim to provide new value to our customers and those around the world beyond and realize aprosperous society.

End-productapplication design
Architecture

conventional ASIC

Solution SoC

ASIC customized
based on ASSPThe area thatthe customer is
responsible.
for.

The area thatthe customer is
responsible.
for.

The area thatthe customer is
responsible.
for.

.
ive ssat ce
or pro
b
a
ll nt
co e
A opm
l
e
ev

Planning anddesign speciﬁcation
logical design

Physical designdQuality
management

The area thatthe custom
SoC vendor side is
responsible for.

The area thatthe custom
SoC vendor side is
responsible for.

The area thatthe custom
SoC vendor side is
responsible for.

Manufacture andassembly ofdesigned SoCs

Foundry/OSATFoundry/OSATFoundry/OSAT

ESG Report 2023

[Diﬀerences in custom SoC design ﬂows for diﬀerent business models.]

Upstream design

ESG Report 2023

Business Model

In recent years, advances in semiconductor manufacturing technology and the spread and fusion of various innovativetechnologies such as networks, cloud computing, and AI that use this technology have led to the emergence of newservices and products that have never existed before, such as autonomous driving and AR/VR. Companies developing
these services and products need their own high-performance, scalable SoCs that leverage advanced technologies todifferentiate their services/products.
On the other hand, in the semiconductor industry, companies that specialize in process technology*6, packaging
technology*7, test technology, as well as IP, EDA tools, and software are emerging, and the latest innovative technologies
are constantly being created, and the industry is evolving into an ecosystem in which anyone can obtain the latest
technologies from the market. On the other hand, the difficulty of selecting and combining these various technologies todesign and develop the optimal SoC for customers is increasing.
As a result, many companies that need their own SoCs are looking for partners who have knowledge of the SoC
architecture, a deep understanding of the end products and services in which the SoC will be installed, and who can
propose the best solution by combining technologies ranging from advanced hardware to software to differentiatethemselves.
Amid these changes in the market, the Group has the strength of having design and development capabilities including
software, a group of engineers who can solve technical issues in collaboration with customers through appropriate
selections, and comprehensive capabilities that can provide total support from mass production, quality assurance, andSCM. As a result, we have established a “Solution SoC” business model that can provide a more optimal custom SoC forcustomers who are not satisfied with conventional ASICs, ASSPs, and ASICs customized based on ASSPs through a joint
development process in which SoC specifications are determined together with the customer. In addition, in order toaccumulate experience and know-how in these new cutting-edge markets, and at the same time to further strengthen
our competitiveness, we will actively invest in the combination and demonstration of cutting-edge technologies andvarious technologies for differentiation, and at the same time, we will eliminate barriers between business divisions andconsolidate them by development function. From there, we shifted to a flat R&D system that allocates the necessary
resources for each project. As a result, advanced process nodes of 7 nm or less (an index that represents the generationof semiconductor manufacturing technology (semiconductor process). 1 nm is 1/1,000,000 of a millimeter, and thesmaller the number of nm, the more advanced the technology. The ratio of NRE sales*8 increased from 1% in the fiscal
year ended March 2018 to 59% in the fiscal year ended March 2023.
In addition to the shift in business model, we have also made a significant shift in our focus business domains, from thepreviously focused fields for consumers such as TVs to cutting-edge growth fields such as automotive, data centers/
networks, and smart devices. As a result, the share of NRE sales in these cutting-edge areas increased from 50% in thefiscal year ended March 2018 to 76% in the fiscal year ended March 2023.

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13

It generally takes a long time for semiconductor products to be adopted by customers and to be mass-produced. It
usually takes more than two years from the completion of design development and customer evaluation after winning abusiness negotiation to the start of mass production, and it takes a considerable period of time to complete mass
production. For this reason, as a company responsible for the development and supply of customers' core components
over a long period of time, we are conducting our business with a strong financial base (capital adequacy ratio of 56.6%
and cash and deposits of 45.1 billion yen as of the end of the fiscal year ending March 2023).
At the design and development stage, the Group receives most of the costs required for design and development from
customers in NRE sales in stages, and at the mass production stage, it receives product sales, which account for the
majority of the Group's total sales. In addition, in order to maximize the advantages of the semiconductor industry, where
the horizontal division of labor is progressing, the Group has adopted a fabless business format that does not have afactory. The manufacture of the product is TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED(Hereinafter referred to as “TSMC”). We outsource to specialized manufacturers such as foundries and OSATs*9.
Customers' cutting-edge products and services are constantly required to create new SoCs, and customers and markets
seeking such advanced SoCs will continue to change. In order to grasp this change as soon as possible, the Group willcontinue to invest in advanced development and strengthen its development capabilities, aiming for sustainable growthat all times in the future.

The business system diagram is as follows.
Customer(US, Asia, Europe, Japan)

Products, Design management
Consolidated subsidiaries
Products,
Designmanagement

Socionext America Inc.
Socionext Europe GmbH
Socionext Technology Paciﬁc Asia Ltd.
Socionext Technology (Shanghai) Co., Ltd.
Socionext Taiwan Inc.
Socionext Korea Ltd.

Some design anddevelopment

Products, Design management
Some patent controls.

Socionext Inc.

Aﬃliates accounted
for by the equity method.
Trinity Semiconductor
Research GK

ESG Report 2023

ESG Report 2023

Currently, the Group has won business negotiations in cutting-edge growth fields such as AD (Autonomous Driving) and
ADAS (Advanced Driver Assistance Systems) and in-vehicle sensing in the Automotive segment, mobile base stations
and AI accelerators in the Data Centers and Networks, and AR/VR in Smart Devices, and has already started mass
production of some of the products. In addition to these focus areas, the Group is also expanding its business in the“industrial” field, such as factory automation (FA) and testers, which currently record stable earnings, and in the “IoT &radar sensing” field, such as radio wave ranging sensors, which are expected to grow in the future due to their unique
technologies.

Manufacturing consignment
Manufacturing contractor(Foundry/OSAT)*1: IP is an abbreviation for Intellectual Property, and in the semiconductor industry, it refers to circuit information that is summarized in partial
functional units for making up semiconductors. It is divided into procurement IP purchased from outside and in-house IP developed in-house.
*2: E DA is an abbreviation for Electronic Design Automation, which is a software or tool that automates semiconductor design work.
*3: ASIC is an abbreviation for Application Specific Integrated Circuit, which is a generic term for integrated circuits that combine multiple
functions into one circuit for a specific customer.
*4: ASSP is an abbreviation for Application Specific Standard Product, which refers to large-scale integrated circuits that are specialized in a
specific field or application and have specialized functions and purposes. ASSP is a general-purpose part that is not customized for a specificcustomer and does not limit the customer, so it is offered to multiple customers.
*5: V endor lock-in means that once a customer has adopted a product or service provided by a particular vendor, it becomes difficult to switch toa better product or service provided by another vendor in the future, limiting the customer's choices.
*6: P rocess technology refers to the technology in the semiconductor manufacturing process, which is called the front-end process, up to theformation of a circuit on a silicon wafer.
*7: P ackaging technology is a technology in the semiconductor manufacturing process that protects semiconductor chips with parts that protect
them from the outside and connects them electrically.
*8: N RE sales is an abbreviation for Non-Recurring Engineering sales, which refers to the sales received from customers during the development
phase of a product prior to mass production. NRE revenue covers design and development costs incurred during the development phase,such as labor costs, IP, design tools, reticles (photomasks used in the exposure process of semiconductor manufacturing to transfer designed
circuits to silicon wafers), prototype manufacturing, etc., and are usually recorded multiple times as development milestones progress.
*9: O
 SAT is an abbreviation for Out-sourced Semiconductor Assembly and Test in the post-process of semiconductor manufacturing.

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15

Socionext seeks to be a company that contributes to a sustainable low-carbon society in harmony with local communities.
Our commitment to addressing global environmental issues together with our customers and society starts with theenvironmental awareness of each of our employees. We are taking action to reduce GHG emission and we disclose
information in accordance with the TCFD framework to help achieve decarbonization. Through the development anddistribution of energy-saving and space-saving eco-friendly devices and solutions, we help to reduce the environmental
impact of our customers’ products.

Environment Policy
Socionext contributes to the protection of a rich global environment with customer through the design,development, and sale of SoC with superior environmental performance through advanced technology and thesolutions business or services centered on these SoC.Socionext makes efforts to reduce the environmental impact
and environmental pollution based on the following action policy through the entire life cycle from development toprocurement, production, sale, use, and disposal.
(1) Active contribution to reducing the environmental impact, such as reducing CO2 emissions and waste matter,by actively promoting the development of products that consider the environment, electric power conservation,light-weight products, and the suitable management of items containing chemical substances.
(2) Compliance with each country’s and each region’s environment laws and regulations, and agreements withcustomers.
(3) A iming for improved awareness of the environment for all Socionext personnel, and promotion ofenvironmental contributions to regional communities.

Climate Change

Our disclosure of sustainability information is done in accordance with the TCFD*1 declaration and the sustainability
disclosure standards being developed by the ISSB*2 and addresses the four topics of governance, strategy, risk
management, and indicators and targets.
*1: TCFD is the abbreviation for Task Force on Climate-related Financial Disclosures*2: ISSB is the abbreviation for International Sustainability Standards Board

GovernanceThrough our business activities, the Socionext Group is working to create a sustainable society. Recognizing that
we have a duty as a global corporation to fulfill our social responsibilities, we are responding to global-scalesocietal challenges by addressing human rights issues and environmental problems, especially climate change, at
all steps along our supply chain. We take serious action on these challenges through measures that include humanresource development, workforce diversity, and quality and service improvement.
The Socionext Group is putting measures in place for acting on sustainability in ways that are coordinated across
our organization, including the establishment in April 2022 of an ESG Office to facilitate ongoing managementlevel discussion of medium-to-long-term challenges. This organizational structure provides a framework for action
under the direction of the Management Committee. The Board of Directors, meanwhile, debates and approves
policies and action plans for important sustainability challenges while also acting in a supervisory role, including bymonitoring progress.
https://www.socionext.com/en/sustainability/(4) Continuous improvement of environmental management system to effectively implement these environmental
activities.

*1: T he regulations in the EU with the purpose of registering, evaluating, authorizing, and restricting chemicals (Registration, Evaluation,
Authorization and Restriction of Chemicals)*2: T he directive that prohibits the use of specific hazardous substances in electronic and electrical equipment sold in the EU (Restrictionof Hazardous Substances)*3: The directive that prohibits the use of specific hazardous substances in electronic and electrical equipment sold in the People’s
Republic of China (Regulatory ordinance preventing pollution from the production of electronic and information products)

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Socionext ESG Report 2023

Supervision

Board of Directors

Environmentally Friendly Products
Socionext is pursuing the design and development of products that are environmentally friendly while strictly
complying with legal regulations. By developing low-power consumption products and providing products that
correspond to the legal and regulatory environment of various countries, we are delivering peace of mind to ourcustomers.
The products of Socionext and the packing and packaging materials comply with the EU REACH regulations*1, EU
RoHS directive*2, China RoHS directive*3 and other laws and regulations (excluding exceptions for applying usage
prohibition measures).

ESG Report 2023

ESG Report 2023

Environment Activities

(1)

(2)

(3)

(4)

Management Committee
Formulation of plans andinstructions for execution

BusinessGroup

Development
Group

Execution

ESG Promotion
Oﬃce

Executing Group
Sales Group(1) Submit Action Plan
(2) Approval Action Plan
(3) Regular progress reporting(4) Monitoring

Production
Group

Corporate
Group

Regional
Companies

17

●Specific Risk and Opportunity Initiatives

The board has responsibility for making decisions on sustainability activities. It debates and approves theassociated policies, strategies, and actions and also regularly monitors the progress of these actions.

Socionext group is making the following efforts to contribute to reducing the environmental impact of customers'
products through the development and provision of environment-friendly devices and solutions with low power
consumption and space saving.

●Management Committee
The committee drafts sustainability policies, strategies, actions, and other plans for subsequent consideration by
the board. It is also responsible for ensuring that actions are carried out, issuing instructions for doing so to theoperational divisions with the board’s approval.
To implement these actions, the ESG Office provides support for drafting policies, strategies, actions, and otherplans and for putting these into practice. It also tracks the progress of this work and reports back to theManagement Committee.

(1) Efforts to reduce LSI power consumption.
The demand for reducing the power consumption of LSIs has been getting stronger in recent years、Our groupis working to reduce power consumption by pursuing the evolution of process nodes (miniaturization and lower
voltage).
Comparing the power consumption of advanced and existing processes, the state-of-the-art 5 nm/7 nm
process reduces the power consumption with transistors to approximately 1/20 compared to the 90 nm
process.
[Power consumption comparison]

Strategy
1.0

CS101
CS201

Total Power ratio*

The Socionext Group believes that it can facilitate the transition to a sustainable society by using the SoCs we
supply to help our customers achieve ongoing reductions in their GHG emissions. By collaborating on developmentwith key customers who are leaders in their global markets, our goal is to reduce the power consumption ofcustomer products while delivering higher levels of miniaturization and integration, achieving this through thedevelopment of high-performance custom SoCs that leverage our proprietary multicore design techniques and AI
engines and accelerators with low power consumption. In the fiscal year ended March 31, 2023, we identified thefollowing climate change risks and opportunities in our group business activities. In the future, we intend to use
scenario analysis to calculate the financial and business impacts of these risks and opportunities and devise andimplement more effective measures for addressing them.

CS251
CS302
CS405
CS407
0.1

CS602

●Main climate change risks and Opportunities
Category

Transition risk

Impact of climate change on Socionext
Increased costs due to action on improving
Government energy efficiency and reducing GHG emissions.
policy and(Higher energy costs due to carbon pricing,regulation
higher costs due to adoption of energy-efficientequipment, etc.)

Timely identification of global trends andregulatory changes along with systematicinvestigation, implementation, and evaluationof actions. Also, determine GHG emissions inthe supply chain and continue working with
suppliers to reduce them.

Technology

Higher R&D spending to maintain and improve
competitiveness in the market
Higher production costs to maintain and improve
competitiveness in the market.

Develop and distribute energy-saving andspace-saving eco-friendly devices andsolutions in partnership with customers andsuppliers.

MarketDevelop and distribute products and services
Falling sales due to changes in customer demandthat help overcome environmental challenges
Regulation-driven increases in cost of materials,
Review choice of parts and materials.
electricity, and other inputs.
Investigate adoption of renewable energy.

Acute

Disruptions to outsourced production due to
growing severity of abnormal weather (including
in-house. development and logistics)

Risks

Physical risks
Chronic
Efficientresourceuse
Opportunities

Socionext ESG Report 2023

Regular revision of business continuity plansallowing for shutdowns or other disruptions
at contract manufacturing suppliers.
Disruptions to outsourced production due toStudy of potential cost savings through morewater shortages
efficient use of electric power at workplaces
Higher air conditioning costs at data centers and and data centers.
other facilities due to rising air temperatures.
Lower costs through more efficient use ofresources (energy and water) at data centersand other workplaces

Higher demand, especially for products with low
Products
power consumption that help customers reduceand services
GHG emissions and use energy more efficiently
Market18

CS661
Action by Socionext

Higher revenue by leveraging low-powerconsumption technologies to expand into new
businesses

Lower costs through more efficient SoC
development (use of proprietary multicore
design techniques and AI engines andaccelerators with low power consumption)
Development and distribution of energysaving and space-saving eco-friendly devices
and solutions
Leverage low power consumption andminiaturization to expand into new
businesses, especially SoCs for ADAS/AD
and data centers。

ESG Report 2023

ESG Report 2023

●Board of Directors

0.05
90nm

65nm

55nm

40nm

28nm

16nm

12nm

CS801
7nm

CS901
5nm

Technology node*: The vertical axis shows the relative ratio of each technology using the total power (sum of the dynamic component and leakage component)of CS101 (90nm)

Our group's SoC designs take a variety of steps to meet customers' demands for lower power consumption.
In order to achieve low power consumption LSIs, it is effective to combine various kinds of technologies as wellas using individual technologies. Socionext's design environment “Reference Design Flow” supports various low
power consumption technologies and enables the power consumption of LSIs to be reduced during both
operation and standby. In particular by controlling the power supply we develop methodologies for
systematically achieving low power consumption. Also, by fully adopting UPF/CPF*, we make low power
consumption design easy for customers while minimizing changes to their design assets.
https://www.socionext.com/en/products/customsoc/design/low-power.html*: UPF (Unified Power Format) is a standard specification that defines the Low power design guidelines standardized as IEEE Std.
1801
CPF (Common Power Format) is a standard specification that defines the Low power design guidelines standardized as Si2

As described above, our group is contributing to the reduction of power consumption at its customers bydeveloping and providing advanced technology products and products equipped with various low-power
technologies products.
In terms of sales by process node, both product sales and NRE sales are shifting to advanced technology
products (5nm/7nm). NRE sales (First half of FY ended March 31, 2024), a leading indicator of future productsales, represent 62% of advanced technology.

19

Net Sales

NRE Revenue■5-7nm ■10-16nm ■20-28nm ■40nm&above/Others
100％

100％

80％
64%

55%

45%

43%

42%

60％

0％

29%

22%

40％

20％

■5-7nm ■10-16nm ■20-28nm ■40nm&above/Others

37%
31%

36%

5%

9%

FY18/3

FY19/328%

3%FY20/3

16%

25%

23%

21%

80％
23%

16%

14%
18%

33%

60％

10%

20%
FY21/3

16%

33%

39%

13%
FY22/3

FY23/3 FY24/3 1H

10%
12%
19%

30%
28%

46%

17%

14%
11%
13%

*1: Direct greenhouse gas (GHG) emissions by the organization*2: Indirect GHG emissions associated with consumption of electric power, heat, or steam supplied by other companies

30%

40％
34%

9%
15%

29%

22%

20％

0％

44%
28%

43%

FY21/3

FY22/362%

FY19/3

FY20/3

FY23/3 FY24/3 1H(2) Initiatives for miniaturization and space saving
By reducing the number of used parts (Mineral resources and fossil resources) associated with theminiaturization of LSI, we are contributing to the reduction of energy in manufacturing processes from raw
materials to products.
In addition, the miniaturization of LSI lead to the miniaturization and space-saving of customers' final products,
and it also affect the ease of heat generation countermeasures during equipment operation. This will lead tothe realization of a sustainable society not only by reducing the number of materials used by customers andenergy reduction in the manufacturing process, but also by reducing energy reduction at the stage of use of
the final product (For example, improving the range of electric vehicles and reducing the load on air
conditioners in data centers.).
In addition to the above, we contribute to global environmental conservation activities such as prevention of
global warming and effective utilization of resources by switching materials used to recycled products andactively adopting low-GHG emission materials. Our company continues to work to resolve these issues.
(3) Efforts to Reduce Power Consumption in Data Centers
As the number of developed products increases due to the expansion of business opportunities, electricity
consumption in data centers accounts for approximately half of our company's GHG emissions (Total Scope1
and Scope2), and further increases in electricity consumption are expected in line with future expansion of thebusiness scale.
In order to reduce power consumption in data centers, our group is gradually introducing and replacing lowpower devices, mainly CPUs and servers. In addition, we are working to reduce CPU/server operation time andreduce power consumption by improving business efficiency through improvements in development processes
and methods.
In addition, we are reducing power consumption by consolidating data centers and shifting installed equipment
to water-cooling.

Risk Management
To mitigate and reduce management and business risks, the Socionext Group conducts a bi-annual company-widerisk management review. Sustainability risks such as climate change, human resources, and diversity are treatedas important elements in this framework, which involves risk assessment, the formulation and implementation ofactions, and the assessment of outcomes on a regular basis.

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Socionext ESG Report 2023

[GHG Emissions][GHG Emissions per Unit of Sales Revenue]
FY ended
March 31, 2022
(t-CO2)

FY ended
March 31, 2023
(t-CO2)

Scope1

318

235

Scope2

6,971

8,299

Total

7,289

8,534

15%

1%
FY18/359%
40%

GHG emissions (Scope1*1 and Scope2*2) by the Socionext Group for the fiscal year ended March 31, 2023 year
were approximately 8,534t-CO2. Although emissions rose year-on-year due to business growth, emissions per unitof sales revenue fell. We have set a goal for the group of becoming carbon neutral by 2050 in terms of both
Scope1 and Scope2 emissions, and we are continuing to investigate and implement reduction measures that will
help us achieve this goal.

FY ended
March 31, 2022
(t-CO2)

FY ended
March 31, 2023
(t-CO2)

6.23

4.43

Scope1,2

ESG Report 2023

ESG Report 2023

Indicators and Targets[Breakdown by Process Node]

Reduction in Energy Use
Socionext has set a target of a 1% reduction in the five-year average of energy use in its operations (stretch
target as defined in the Energy Efficiency Act*1). Major energy reduction measures include the use of lighting LEDs
and the efficiency computer centers, etc.
FY ended
March 31,2019

FY ended
March 31,2020

FY ended
March 31,2021

FY ended
March 31,2022

FY ended
March 31,2023

Amount of energy use [KL/year]*2

3,569

3,665

3,817

3,356

2,761

Usage rate [KL/No. of employees]

1.593

1.661

1.721

1.529

1.260

-

4.3

-0.1

1.8

5.7

Change year-on-year [%]*1: The Act on Rationalizing Energy Use and Shifting to Non-fossil Energy (Energy Efficiency Act)
*2: Energy use is the total energy used by facilities in Japan covered by the Energy Efficiency Act

Reduce Waste
Socionext complies with environmental policies and environmental laws and regulations in each region and strives
to reduce waste.
Waste generated from business activities and offices (Unnecessary products and components, reticle, personal
computers, peripheral electronic devices, etc.) is recycled as much as possible and then outsourced to specialized
processors for recycling.
In addition, in promoting recycling, we thoroughly separate waste and select more appropriate recycling methods
and treatment companies. We will continue to reduce waste and work with our manufacturing vendor andspecialized treatment companies to further reduce the environmental impact of waste disposal.

21

Society

ISO14001 is an international standard for environmental management system (EMS), outlined with the aim of
improving environmental performance of an organization.
Our company is continuing its activities to reduce impacts to the environment based on the requirements of
ISO14001.

As a member of the global community, the Socionext Group is striving to fulfilling our corporate social responsibilities bycreating a sustainable and prosperous society through human resource development and by fostering a corporate
culture that recognizes people’s individuality and their different attitudes and values, engaging with our many
stakeholders (including customers, suppliers, employees, and local communities) on a basis of mutual respect.
On the other hand, it is important for diverse employees and organizations to work together to enhance each other. wethink that it will serve as the foundation for our cutting-edge technological capabilities, global developmentcompetitiveness, and sustainable growth, leading to the realization of our Mission of “Together with our global partners,
we bring innovation to everyone everywhere.”
We believe that human resources are the source of corporate value, and we actively work to create an environment
where diverse human resources can maximize their capabilities and support growth.
We have declared in our CSR Policy that “Aiming for employee happiness, respecting individuality, and achieving fairtreatment, as well as creating a healthy and comfortable working environment” and are taking various measures as
described below.

ESG Report 2023

ESG Report 2023

ISO14001 Certification

Human Rights●Basic Philosophy Regarding Human Rights
In the CSR policies that constitute our group basic philosophy, the Socionext Group recognizes that it has animportant duty to respect human rights and to maintain a good working environment.
Respect for humanrights

We will respect the human rights of each and every employee and have no tolerance
for discrimination or other such violations of human rights.

Maintain a good working
environment

To foster the wellbeing of employees, we will create a healthy and pleasant working
environment that respects individuality and treats people fairly.

Socionext Group, we respect the human rights of all stakeholders involved in the conduct of our business(including customers, suppliers, employees, and local communities) and will not treat people in ways that are
discriminatory or violate their human rights, whether it be with regard to gender, age, nationality, ethnicity, beliefs,
religion, social status, employment type, marital status, pregnancy, ancestry, sexual orientation or gender
identification, physical features, health, disability, or other such attributes.
We respect the human rights of everyone who works at the Socionext group or in our supply chain. Along witheliminating harassment and providing a healthy and empowering workplace, we comply with all labor laws covering
matters such as working hours and minimum wage and never engage in forced labor, child labor, or slavery. wealso support freedom of association, the right to collective bargaining, and the right to privacy.

●Prohibition on Discriminatory Treatment of Employees
The Socionext Group has established clear rules prohibiting the discriminatory treatment of existing or candidate
employees on the basis of factors such as nationality, beliefs, gender, or social status.

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Socionext ESG Report 2023

23

Socionext group has established a human rights whistle-blowing system that employees can contact on mattersrelating to harassment, discriminatory treatment, or other violations of human rights.
The system provides for both internal reporting (to the Socionext Risk Compliance Committee Secretariat) andexternal reporting (to the Socionext Reporting Contact at TMI Associates). By providing these reporting channels,
the system helps to prevent such human rights violations from happening, or, if they do occur, enables them to be
detected early and dealt with appropriately.

●Human Rights Education
The Socionext Group conducts human rights education to raise employee awareness and understanding of theseissues. More extensive such education is planned for the future.
∙ Providing human rights education in a group format, mainly for new employees∙ Conducted human rights education (including harassment prevention and LGBTQ+ understanding) throughe-learning for all employees (100% participation rate)

Human Resource Development●Basic Philosophy on Human Resource Development
With our leading-edge SoC solution business, the Socionext group seeks to live up to the many expectations of
our stakeholders (including customers, suppliers, employees, and local communities) by striving to achievesustainable growth as a company that supports global innovation through the pursuit of advanced technology
while also adapting to discontinuous change. To achieve this, we undertake human resource development
initiatives to ensure that we can continue to foster more talented professionals who take ownership of their workand are willing to take up challenges as enthusiastic self-starters.

●Recruitment
In order to attract as many talented engineers as possible, the Socionext group is strengthening its efforts torecruit new graduates and those with experience. In Japan, we expect to hire approximately 40 experienced
employees by FY ended March 31, 2024 and 37 new graduates by April 2004. We will continue to utilize a varietyof recruitment methods to attract more talented employees.

●Personnel System
In particular, we have been working to reform our personnel system since FY ended March 31, 2023 in order toproactively treat talented people. We have a different personnel system for hiring engineers and non-engineers.
We conduct periodic ES surveys. Based on the results of the survey, we work to improve employee engagement
by developing systems and creating an environment in which individual employees can work actively.
(1) Engineer System
In order to create an environment in which engineers can work actively, we have created an environment inwhich engineers can concentrate on development while organizing projects flexibly by flattening theengineering organization.
In addition, with regard to the remuneration system and evaluation system for engineers, we have introduced asystem that clarifies the image of an engineer that we require, and provides appropriate treatment according
to roles, responsibilities, and achievements regardless of age or experience.

who can act autonomously and globally.

●Main Actions on Human Resource Development(1) Employee Upskilling
We encourage motivation and skills development as we work to create an environment in which employees cantake action on their own initiative from an early stage. Based on a personalized human resource development
plan, employees build up their workplace skills and experience through OJT under the supervision of moresenior colleagues.
(2) Training for Management
At the time of appointment of managers, our company provides opportunities to learn the knowledge and skills
necessary for management, communication, accounting, etc., through exchange of opinions with executives,group training, correspondence courses, etc.
(3) General Education
We provide e-learning on topics relevant to all employees, including compliance, information security, insider
trading, preventing harassment, the environment, procurement, and the law on security-related export controls.
All employees take these courses.

ESG Report 2023

ESG Report 2023

●Establishment of Whistle-blowing System(4) Education for Engineers
To train engineers who can work globally, we encourage autonomous career development, offering a dual-track
career path structure targeted at technical engineers and project managers, respectively. All engineers are
given the opportunity to demonstrate the required experience and skills as well as having monthly one-on-one
meetings with their supervisors. It also provides opportunities for engineers to gain experience and skills to
become more professional, including technical courses, educational materials, OJT, and development processtraining.
(5) Language Education
In order to enhance our employees' ability to communicate globally, our company provides various language
training programs and subsidies for educational expenses. In particular, about 30 leader-class engineers are
selected annually, and through global communication training, we promote the development of engineers who
can play an active role globally by enhancing their global communication skills and cross-cultural
understanding.

●Human Resources Development Activities
We undertook the following human resources development (employee education and training) activities in FY
ended march 31, 2023.
Item

Training Summary

Training Time per
Employee

Job-level-specifictraining

Training for new recruits and for newly appointed senior management, etc.

1.3 hours

General training[All employees attend an annual e-learning course] Topics include compliance,
information security, insider trading, preventing harassment, the environment,
procurement, and the law on security-related export controls

4.6 hours

Targeted training

Technical training for engineers, language studies, etc.

5.5 hours

Total

11.4 hours(2) Professional System (personnel system for personnel other than engineers)
For non-engineers, we have introduced a professional system that treats talented people according to theirroles, responsibilities, and achievements, regardless of age or experience, and will actively treat professionals

24

Socionext ESG Report 2023

25

●Basic Philosophy on Diversity
Socionext group strives to foster a corporate culture that is welcoming of people with different personalities,
attitudes, and values and in which they can fulfil their potential. To achieve this, we recruit and appoint staff
regardless of factors such as nationality, gender, or age, and are working to create an environment in which adiverse range of people can thrive in their work.

Support system∙ Childcare leave system/Childcare time work system, Babysitting cost subsidy∙ Leave of absence system (Child plans, nursing care, etc.)∙ Accumulated Leave system (Nursing, childcare, etc.)

Ensuring Diversity∙R eview of reemployment system after retirement age, Continuous recruitment of persons withdisabilities and improvement of environment∙O peration of massage rooms by the visually impaired∙ Internal business agency system for persons with mental illness∙R ecruiting and supporting global talent (Joined new graduates in October, subsidized language
training, etc.)

Creating a workable environment
Diversity of working styles∙ Non-core flextime work system, homework system for nursing and nursing care
∙ Flexible operation of telecommuting, suppress long overtime∙ Personnel system for engineers, creating an environment where engineers can focus ondevelopment∙ All employees receive human rights education (including harassment prevention and LGBTQ+
understanding)(1) Creating an environment in which Women can thrive
We have taken steps to create an environment in which women can successfully combine work and family
commitments, with systems in place that allow for shorter working hours, various types of leave of absence orvacation, and subsidies for the cost of childcare. We are also striving to create a workplace that is healthy andpleasant for a diverse workforce that includes women. To this end, we have prioritized measures for preventing
excessive overtime and are pursuing greater diversity in working practices by offering options such as workfrom-home and flexible working arrangements with no core component. We also intend to improve workplace
attitudes and culture through extensive training for young and female employees while also facilitating greater
involvement by female leaders and encouraging participation by male employees in childcare. As of the end of
March 2023, women accounted for 9.8% of our workforce and filled 2.3% of management roles. Further actionis planned to help improve these numbers. The results of the ratio of female managers, the gender wage gap,
and the percentage of male taking parental leave are as follows. we will strive to achieve a higher ratio than thecurrent ratio through these initiatives.
[Ratio of female managers, gender pay gap, and percentage of male taking childcare leave]
FY ended March 31, 2021

FY ended March 31, 2022

FY ended March 31, 2023

Ratio of female managers

2.4%

2.4%

2.3%

Gender pay gap

69.0%

70.2%

72.6%

Male taking childcare leave

25.0%

25.9%

16.7%

(2) Creating the Right environment
We are working to create an environment in which older employees to play an active role within the company,
making the most of their experience, knowledge, and skills.
(3) Action on Hiring disabled employees
Socionext is hiring more disabled employees and is working to create an environment in which people withmany different types of disability can thrive. To expand opportunities for disabled employees, Socionext has
also set up its Health keeper Program run by five staff with visual impairment that provides massages toSocionext ESG Report 2023

(4) International Recruitment
Socionext group operates group companies in several different countries and regions, including Asia, Europe,and North America, recruiting or appointing talented employees from these places and encouraging their
participation. Likewise, approximately 50 employees in Japan are of overseas nationality, with the selection ofboth new recruits and mid-career year round hires being done without regard for nationality.
(5) Promoting understanding of LGBTQ+The Socionext group aims to create an environment in which employees can perform their full potential
regardless of their sexual orientation or gender identity.
As part of these efforts, we believe it is important for each and every employee to properly understand about
LGBTQ+ . We are working on the following initiatives and will continue to improve the system.
∙ We will improve understanding of LGBTQ+ people through human rights education (e-learning) for all
Socionext employees.
∙ Establishment of an in-house counseling center for LGBTQ+∙ Employees and development of a multi-purpose toilet environment.

Safety and Health●Main Actions on Diversity

26

employees and the Challenge Staff Program in which six staff with mental or developmental disabilities take on
routine in-housework.
As a result of these initiatives, the ratio of people with disabilities to all employees reached the statutory
employment rate of 2.3% as of June 2023. The company intends to hire more disabled employees in the future
and to provide them with steady and ongoing employment.

ESG Report 2023

ESG Report 2023

Diversity and Inclusion●Basic Philosophy on Safety and HealthIn order to maintain its ongoing growth, we place top priority on the health and safety of both its employees andany other people involved in the operation of its business, ensuring that all employees can work in a safe andhealthy manner and are able to make the most of their skills. As well as taking steps to prevent accidents andensure a safe working environment so as to maintain a safe workplace with zero injuries, Socionext also has avariety of measures in place for maintaining and improving employee health.

●Safety and Health Promotion
We have established a team dedicated to supervising health initiatives and undertakes a variety of measures inwhich industrial doctors and nursing staff are employed to improve and manage employee health. The company
also holds monthly committee meetings on health, safety, and disaster prevention at each workplace that are
attended by industrial doctors, health and safety managers, regular employees, and labor union delegates. These
committee meetings report on and debate issues and activities that relate to these matters, drawing on input
from industrial doctors and health and safety managers. Topics include the conducting of health and stresschecks and workplace inspections, measures for preventing infectious diseases such as COVID-19 or influenza,
the prevalence of long working hours, and disaster prevention or mitigation measures.

●Main Actions on Safety and Health(1) Prevention of Workplace injury
The committees described above work to prevent injuries by reporting on monthly workplace inspections andincidents and by discussing how to prevent incidents from reoccurring. Only one (minor) workplace injury
occurred in Japan during fiscal FY ended March 31, 2023.
(2) Safety and Health education
All employees receive safety and health education through e-learning (100% participation rate), and we areworking to improve employee awareness and understanding of safety and health rules and systems. We willcontinue to further enhance education.

27

(4) Measures to Reduce smoking and Prevent passive smoking
Measures for cutting the smoking rate at company includes providing support to quit smoking. To encourage
employee self-restraint on smoking during working hours, we also abolished indoor smoking rooms during
fiscal FY ended March 31, 2022 in response to an employee opinion survey. This has achieved a gradualreduction in the percentage of smokers in our Japanese workforce to 13.8% in fiscal FY ended March 31,
2023 (△ 3.3% improvement on fiscal FY ended March 31, 2019), with ongoing efforts planned to further
reduce smoking.
(5) Prevention of COVID-19
With regard to the novel coronavirus, we promoted efforts to prevent the spread of the disease by thoroughly
enforcing the standards of conduct for controlling the spread of the disease, establishing a work-from-homeenvironment, and implementing workplace vaccinations. In the event of a new pandemic, we will put the healthand safety of our employees and their families first, and work to ensure that business continuity and recovery
activities are carried out promptly and appropriately

Procurement Management“Together with our global partners, we bring innovation to everyone everywhere.” This is the mission that the Socionext
Group has set itself.
To realize this vision and fulfill our social responsibilities as a global company, we have established rules for procurement
whereby the goods and services we require are purchased from the global market at appropriate quality, price, anddelivery terms in a way that is in keeping with the laws of each country and is based on fair and reasonable trading
relationships.
We are also taking steps to reinforce sustainable supply chain arrangements by reducing the risks associated withsocietal challenges throughout our supply chain, including at our customers and suppliers. Along with labor, humanrights, ethics, environmental, and business continuity considerations, this also includes responsible minerals procurement.

ESG Report 2023

ESG Report 2023

(3) Health and Stress checks
Medical examinations, women’s health checks, and stress checks are conducted on a routine basis to monitor
employee health, including the prevention and early detection of lifestyle diseases and other illness. The target
for medical examinations in particular is to achieve 100% coverage, with almost all employees receiving suchchecks during the FY ended March 31, 2023. The results of stress checks are also being used for team-level
analysis, combining this with advice and consultation from industrial doctors in an effort to reduce employee
stress.

Management Structure
To adopt sustainability management policies and ensure the rigorous implementation of company-wide targets
and the use of sustainable procurement practices throughout the group, the Socionext Group works to optimize
how it goes about procurement through collaboration between the departments responsible for operations anddevelopment, quality and production engineering, and corporate administration, especially in the areas ofmanufacturing and procurement.

CSR Procurement Guidelines
The Socionext Group understands how important it is to enhance sustainability across our entire supply chain.
Recognizing the need to support sustainable procurement by gaining buy-in not only within the group but also
from suppliers, we have formulated the Socionext Group CSR Procurement Guidelines as a way to reinforce CSR
in the supply chain.
We are engaging with suppliers and taking action throughout our supply chain by focusing on the labor,
occupational safety, environment, ethics and product quality and safety, information security, business continuity
planning, and management system provisions laid out in these guidelines.

Supply Chain Management
The Socionext Group engages in CSR procurement activities with the aim of growing in partnership with our
suppliers, recognizing that they are critical business partners in our efforts to pursue sustainable procurement.
As well as making our commitments explicit in the Socionext CSR Procurement Guidelines, we also require our
suppliers to take action on CSR.to assess the progress of these supplier activities, we conduct regular reviews
that cover all aspects of CSR as well as environmental activities, information security, and business continuity. The

28

Socionext ESG Report 2023

29

responsible for conducting investigations with training on responsible minerals procurement.
Details of investigation outcomes are managed and archived in accordance with company rules.
*: 3TG refers to Tungsten, Tantalum, Tin and Gold

Responsible Minerals Procurement
The Socionext Group does not tolerate any human rights abuses or environmental destruction in its supply chain.
Recognizing that responsible minerals procurement is a societal issue that cannot be ignored, we have formulated
a corresponding policy, put management structures in place, and modified our procurement practices accordingly
to ensure that the way we go about procurement complies with global norms, including the Responsible Minerals
Initiative (RMI*1) of the Responsible Business Alliance (RBA*2).
*1: R
 MI (Responsible Minerals Initiative)
International standards for responsible mineral procurement in supply chains.
*2: R
 BA (Responsible Business Alliance)
International standards for CSR required of companies, including the working environment, human rights, environmental impact, etc.

●Procurement Policy
The Socionext Group does not use materials in its products that derive from conflict minerals illegally mined in the
Democratic Republic of Congo or neighboring nations.
We have established management systems in accordance with the Organization for Economic Co-operation andDevelopment (OECD) Due Diligence* Guidance for Responsible Supply Chains of Minerals from Conflict-Affected
and High-Risk Areas (CAHRAs) and have measures in place to prevent purchases from suppliers subject to suchrisks as human rights violations, environmental destruction, or conflict.
Should we discover that conflict minerals used to fund armed groups are being used in our products, we will
notify customers promptly and take corrective action.
We also ask our suppliers to respect Socionext Group policy on this matter and to take action to ensure it isfollowed.

(2) Identification and Assessment of Supply chain risks
Each year, Socionext Group identifies which of the purchased parts and materials used in our products require
investigation and we then conduct investigations of our suppliers using the CMRT and EMRT templates
provided by the RMI for this purpose.
We collect and collate the data provided by suppliers to identify the supply chain down to the level of individual
processing facilities. When conducting the investigation, we also strive to identify all countries of origin byasking suppliers to identify the nations in which the minerals were mined.
Our due diligence of processing facilities includes checking for participation in and successful completion ofcurrent RMAP or other third-party audits.
(3) Development and Implementation of Strategies for dealing with Identified risks
For ongoing risk minimization, we develop plans for responsible minerals procurement on an annual basis, keep
up to date with the latest information, and conduct due diligence when necessary.
If processing facilities have not completed RMAP or other third-party audits, we work with suppliers to requestthat they do so.
When customers raise concerns about specific processing facilities, we assess the allegations, inform suppliersof the risk, and work with them to take appropriate action.

ESG Report 2023

ESG Report 2023

results of these reviews are then utilized to help us construct an optimal supply chain. They also provide a basis
for constructive feedback to suppliers where necessary.

●Annual reporting of Supply chain due diligence
Socionext group annually publishes details of our responsible mineral’s procurement initiatives on our website.
[Outcomes of investigations conducted during fiscal FY ended March 31, 2023]∙ No. of suppliers investigated: 19∙ No. of suppliers that replied to inquiries: 19 (100% response rate)∙ No. of identified smelters and refiners: ‌233 across all minerals (of which 219 traders had obtained RMAP
certification from RMI)*: OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas
3TG
FY ended March 31, 2023 (19 companies)●Practical Measures
Our production management group plays a central role in ensuring responsible minerals procurement inaccordance with the Socionext Group CSR Procurement Guidelines. We conduct annual due diligence based on
the results of CMRT and EMRT* surveys to identify and rectify any risks.
*: CMRT: Conflict Minerals Reporting Template
EMRT: Extended Minerals Reporting Template●Responsible Minerals Procurement Review (Process)(1) Development of Management system
In accordance with company practice, we have worked with the relevant departments in Japan and elsewhereto establish systems for procurement and for conducting risk surveys for the 3TG*, cobalt, and mica used in
our products.
As well as calling on suppliers to consent to our responsible mineral’s procurement practices, we also ask themto submit written agreements.
We require our suppliers to deal only with smelters and other processing smelters and refiners that are RMI
certified.
We promulgate our responsible minerals procurement practices both internally and externally, throughsustainability training resources as well as our website.
To build knowledge, deepen understanding, and boost motivation, we provide our procurement staff

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Socionext ESG Report 2023

Total

Gold

Tantalum

Tin

TungstenNo. of smelters or other processing facilities

233

99

36

60

38

No. of RMAP-certified (conflict-free) smelters or otherprocessing facilities

219

93

34

56

36

No. of RMAP Active facilities

1

-

-

1

-

No. of other RMI-certified facilities

13

6

2

3

2

Percentage of RMAP-certified facilities

94%

94%

94%

93%

95%

Inquiry response rate

100%

-

-

-

-

Green Procurement
In accordance with our CSR Policy, we conduct our business in a way that respects the global environment, and,with the help of our suppliers, we are adopting green procurement practices that prioritize the purchase ofmaterials, parts, and other products that put a low load on the environment.

31

Quality and Reliability

Acknowledging that we ourselves are part of the wider supply chain, ensuring the continuity of product supply isa core policy at the Socionext Group. This means putting measures in place for business continuity and rapid
recovery and acting beforehand to improve responsiveness and resilience. When an emergency does happen, we
strive to fulfill our responsibilities to the community and to society and maintain continuity in the delivery of
products and services to customers.

Fair Trading Practices●Declaration of Partnership Building
The Socionext Group supports and participates in the goals of the Declaration of Partnership Building promotedby the Cabinet Office, Ministry of Economy, Trade and Industry, and others. Along with following good-faith trading
practices with all partners, this includes commitments to co-existence and co-prosperity throughout the supply
chain together with new forms of collaboration that transcend differences in company size and existing keiretsu
relationships. Our goal as a group is to add value throughout the supply chain by building relationships of trust
through fair and transparent trading with all our suppliers.

●Procurement Whistle-Blowing System
The Socionext Group reports any procurement activities that are, or are suspected of being, compliance violations
and cooperates with investigations. We also respond promptly once the facts behind a report have been
established and investigated. In accordance with the law and company policy on this issue, measures are in place
to ensure that the persons making and receiving reports are not identified so as to prevent them from being
subject to any unfavorable treatment.

Rigorous Procurement Compliance
Recognizing that we have a duty to fulfill our social responsibilities as a global corporation by complying with theSocionext Group's CSR Policy and CSR Procurement Guidelines, we conduct regular compliance training for all
executives and staff, not just those who work in procurement.

Quality Policy“Leading Quality for Customer Success”
Providing Optimum Quality to Customers throughComprehensive Management Systems.
The products of Socionext are utilized in various fields andare playing very important roles in our customers’
products. We build quality products that meet the varying
QCD (Quality, Cost, and Delivery) needs of our customers.
Additionally, through comprehensive management systems
for the planning and design stages, we as a fablesscompany choose perfect partner companies (contract
manufacturers) in Japan and overseas according to thecharacteristics, functionality, and quality of products to be
manufactured. Moreover, by leveraging our high-quality
and reliable technology that has been developed in the
global market and through strong cooperation with ourpartner companies (contract manufacturers), we provide
optimum quality to our customers in a timely manner.

Product
qualiﬁcation

DeliveryPrice

QualityandReliability

Qualityauthentication

Audit
compliance

Complaint
handling

Screening

Continuous
improvements

Subcontractor
management

Each step at the development process, such as market, research, product planning and development planning iscompleted with design review before starting mass production. In our quality assurance program, design review
consists of six steps: product planning validity review (PR), product development plan review (DR0), productdesign validity review (DR1), mass production transition validity review (DR2), mass production start review (DR3),
and pre-shipment audit (PA). We place particular emphasis on the product planning validity review (PR) andproduct development plan review (DR0). By identifying problems at an earlier stage, we are able to resolve issues
to hone quality from the source. Also, we optimize our review contents to ensure that nothing is left out.

PR

Socionext ESG Report 2023

Designmanagement

Honing from the Source (Design Review)

Planning

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BCM/BCP

Design/Prototyping

DR0

DR1

Mass production transition/shipping

DR2
DR3

PA

33

Role

Description

PR

Product planningvalidity review

We consider the target quality and target reliability to be used for the new product and conﬁrm
product development with the agreement of all related oﬃces.

DR0

Product development
plan review

We clarify the resources and work required to develop the new product and establish a plan that
accounts for everything.

DR1

Product design
validity review

Completing the planned design work, we check that the basic design matches the customer's
requirements.

DR2

Mass production
transition validity review

We conﬁrm the necessary speciﬁcations for mass production prototyping, based on results
obtained from prototype evaluation.

DR3

Mass production start
review

We use the mass production prototype to evaluate the characteristics of the product andconﬁrm the necessary speciﬁcations and facilities for mass production.

PA

Pre-shipment review

We conduct feedback based on initial ﬂow management results and in-process fault information.

Customer Quality Support
Socionext group provides detailed support in order to supply our customers stably with products in which they
can feel satisfied. Specifically, we thoroughly analyze products with defects found by the customer, identify thecause, take counter measures to prevent recurrence of the defect, and report on the status and countermeasures. We always put great effort into our analysis data for products with defects found by the customer, as it
directly guides our quality improvement.
Customer

Sales

PR: Planning Review, DR: Design Review, PA: Product Assurance

hotlineDesignQuality Assurance

Supplier Management
Technology,
Package engineering,
Test engineering

To assure optimal quality for fabless company, Socionext group builds close relationships of cooperation withdomestic and overseas foundries and partner companies that have the optimal technology. Through this, weachieve quality management equivalent to in-house fabs.

◇Quality Control and Improvement ITEMS● Supplier Audit
Quality Meeting
Supplier Performance Review● Continual Improvement● Corrective and Preventive Action● Yield Improvement●

Subcontractors

Options to enhance quality●

Communication/data monitoring

Supplier(WP, Test)

Business units:
QualityEngineering
Production control
Purchasing

Business units:
QualityEngineering
Production control
Sales

Communication/data monitoring

Supplier(Assy, Test, etc.)
Business units:
QualityEngineering
Production control
Sales

Information shared data monitoring, speedy response (Investigation, Failure analysis), from data acquisition to prompt
feedback in the communication. Supplier's production faults
and process changes managed through change management.

Potential supplierselection

Business Unit/
Engineering/
Purchasing

Prototype technicalevaluation

Business Unit/
Engineering/

Supplier proﬁleevaluation

Purchasing

Quality & Reliability
evaluation

QA

Subcontractor management

SCM◇Control ITEMS● Quality Performance result● Inspection results● Reliability data
● Production Performance result

Customer

Customer support,
Customer complaints

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Name

Options to optimize quality●

Enhanced inspection●

Optimized inspection●

Enhanced testing●

Relaxed testing●In-car support●

Reduced processes

Etc.

We hone quality to match your needs.

Etc.

ISO9001 Certification
ISO9001 is an international standard for quality management systems with the aim of improving product quality
assurance systems and increasing customer satisfaction. We acquired ISO9001 certification. Furthermore, wehave set up a system that can expand globally using the production lines of partner companies that have the
IATF16949 certification, which is standard in the automotive industry.

Business Unit/
Engineering/
QA/
Purchasing

Supplier technology
evaluation

Business Unit/
Engineering/
Purchasing

Purchase speciﬁcation
contract

Potential supplierdecision

Business Unit/
Engineering/
Purchasing

Qualiﬁcation
review

QA

Supplier
qualiﬁcation

QA*QA agreement concluded

Mass production
management

QA

Regular report, Quality meeting, audit etc.

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Socionext ESG Report 2023

35

Corporate Governance●Corporate Governance Structure
Our company's corporate governance structure is as follows.
General Meeting of Shareholders

Basic views on Corporate Governance[Supervision]

Recognizing the importance of management as a company having social responsibilities, the Company has
positioned the development of organizational structures and mechanisms to ensure transparency and fairness indecision-making and the building of a trust relationship with all stakeholders, including shareholders, as one of its
most important management issues. Accordingly, we aim to increase our corporate value and achieve sustainablegrowth through the implementation and continuous improvement of the Corporate Governance Code below.

ReportNomination andCompensation Committee
Outside Board of
Directors meeting

InquireRespondDirectors

As of December 2023

Coordinate

Accounting Auditor

Board Directors (Audit & Supervisory Committee members)

Report&discuss

Executive Oﬃcers
In charge

Instruct

InstructInternal Audit
Department

ReportRisk and Compliance
Committee

InstructManagement
Committee

Executive Oﬃcers
ReportCoordinate

ReportSelect, dismiss, supervise

ReportReportInternal
auditing

Implement

Business units and group companies

Number of Directors Stipulated in Articles ofIncorporation

Up to 10 (No more than 3 directors shall be Audit and Supervisory Committee
Members.)

Directors’ Term of Office Stipulated in Articles ofIncorporation

Director (Excluding directors who are Audit and Supervisory Committee
Members.): 1 year.
Director who is an Audit and Supervisory Committee Member: 2 years

Chairperson of the Board

Chairperson and President

Number of Directors

10 (Of these, 3 directors are Audit and Supervisory Committee Members.)

Number of Outside Directors

5

The Company’s business execution and monitoring systems are as follows:

Number of Outside Directors Designated as
Independent Officers

4

Lead Independent Outside Director

1(1) Board of Directors
The Board of Directors makes decisions on important management matters and matters stipulated by laws
and regulations and the Articles of Incorporation, and continuously supervises the status of businessexecution. In addition, the Company employs multiple independent outside directors who are experts in diverse
fields to strengthen the supervisory function of business execution and develop an effective system throughappropriate advice. In principle, the Board of Directors meets once a month on a regular basis, andextraordinary meetings are held as necessary.
In addition, the Board of Directors delegates part of the authority to execute management to the Management
Committee, which is chaired by the CEO and is composed of executive officers who supervise each division, in
accordance with the Group Approval Authority and Related Company Management Rules.
The Board of Directors consists of 10 members, including 5 internal directors and 5 external directors.

(1) Strengthening Supervisory Functions
The Board of Directors, which includes Independent Outside Directors, and the Audit & Supervisory
Committee, the majority of whose members are independent outside directors, will strengthen the supervisory
function over business execution.
(2) Ensuring Management Transparency
The Company ensures management transparency by appointing more than one-third of its directors as
independent outside directors and by having the Nomination and Compensation Committee, a majority ofwhose members are independent outside directors, report to the Board of Directors on the nomination andcompensation of officers.

36

Audit & Supervisory
Committee

Representative Director, Chairman, President, CEO

To increase corporate value over the medium to long term, the Company has established a corporate governancesystem based on a company with an audit and supervisory committee. Lead Independent Outside Director●Directors

Board of Directors

Audit

Appoint, dismiss, supervise

Reasons for Adoption of Current Corporate Governance System

Appoint and dismiss

Appoint and dismiss

Appoint and dismiss

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(3) Acceleration of Decision-making
The Board of Directors focuses on guiding the course of action for management, making important decisions
and overseeing the execution of business operations. By delegating its executive authority to the CEO andexecutive officers, we aim to promote business operations and increase corporate value through accelerated
decision-making.

The Company’s Business Execution and Monitoring System(2) Audit & Supervisory Committee
The Audit & Supervisory Committee conducts audits on the legality and appropriateness of the execution ofduties by directors, ensures the soundness of the Company, and acts in the common interest of shareholders

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(3) Nomination and Compensation Committee
The Nomination and Compensation Committee, which is composed of members elected from among thedirectors by resolution of the Board of Directors, is established as a voluntary advisory body to the Board of
Directors with the aim of improving transparency regarding election and compensation of directors who are
not Audit and Supervisory Committee Members and executive officers, and election of directors who are Audit
and Supervisory Committee Members. The Nomination and Compensation Committee is consulted by the
Board of Directors and makes recommendations on the election and compensation of directors who are not
Audit and Supervisory Committee Members and executive officers, and the election of Directors who are Audit
and Supervisory Committee Members. The Committee formulates election criteria and policies for the
personnel of directors and executive officers, and policies for the compensation of directors who are not Audit
and Supervisory Committee Members and executive officers and deliberates compensation levels. To adopt
independent perspectives, an Outside Director chairs the Committee and two-thirds of the Committee
members are Outside Directors.
(4) Outside Directors Meeting
The Outside Board of Directors’ group meeting is held every month to gather and share information necessary
for Outside Directors’ management decision-making and to exchange opinions including their ideas andnecessity of discussion for the Board of Directors. The meeting is chaired by a Lead Independent Outside
Directors. The Outside Directors’ Meeting is composed of all outside directors, and the representative director
participates as necessary.
(5) Lead Independent Outside Director
Our company selects the Lead Independent Outside Director from among the Independent Outside Directors.
The role of the Lead Independent Outside Director is to act as a liaison between the management and theIndependent Outside Directors and to facilitate dialogue between them.
In addition, the Outside Directors Meeting is convened to determine the agenda of the meeting whennecessary, and serves as the chairman of the meeting, and the results of the deliberations are communicatedto the management or the Board of Directors to encourage discussion.
(6) Management Committee
The Management Committee deliberates and makes decisions on important matters relating to the executionof the Group’s business and on important matters to be submitted to the Board of Directors, as determined by
the Board of Directors regarding the transfer of authority. In principle, the Management Committee meetsonce a week. The Committee consists of the Representative Director, Chairman, President and CEO, executive
officers, and organizational heads appointed by the CEO.
(7) Risk and Compliance Committee
The Risk and Compliance Committee discusses to identify, analyze and take measures for risks including
information security, compliance and disasters. Business risks, such as those relating to the businessenvironment, strategy, finance, labor management and supply chain, are deliberated by the Management
Committee. The Risk and Compliance Committee meets quarterly.
The Committee consists of the chairperson (Representative Director, Chairman, President and CEO), committee
members (executive officers) and organizational heads appointed by the CEO.
(8) Internal Audit Department
The Internal Audit Department, which is established directly under the CEO, conducts internal audits on theoverall development of internal controls over management activities and the status of execution of business in
the Group. The Internal Audit Department’s audit plan is approved by the CEO and the Audit & Supervisory
Committee, and the results of the Internal Audit Department’s audit are reported to the CEO and the Audit &Supervisory Committee. In addition, the Audit & Supervisory Committee can direct the Internal Audit

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Socionext ESG Report 2023

Department as necessary.

Evaluation of the Effectiveness of the Board of Directors as a Whole●The Company’s approach to the Evaluation of effectiveness
The Board of Directors of the Company is to analyze and evaluate the effectiveness of the Board of Directors
every year to further ensure its effectiveness and improve its functions.
With the support of a third-party organization, the Company began evaluating the effectiveness of the Board of
Directors in the fiscal year ended March 2023 and will continue to carry out the exercise once a year.
A summary of the methodology and results of the evaluation of the effectiveness of the Company’s Board of
Directors for the fiscal year ended March 2023 is provided below.

●Method of Evaluation
In December 2022, an external third-party questionnaire survey with approximately 40 questions (both multiplechoice and descriptive) was conducted with all ten directors, and the results were discussed at a meeting of theBoard of Directors to evaluate the effectiveness of the Board of Directors.

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with a view to sustainable enhancement of corporate value. One full-time Audit & Supervisory Committee
Member is elected to enhance the effectiveness of the audit and supervisory functions by attending important
meetings and strengthening cooperation with the Accounting Auditor and Internal Audit Department. In
principle, the Audit & Supervisory Committee meets once a month, and extraordinary meetings are held asnecessary.
The Audit & Supervisory Committee consists of three Directors, of which three are outside directors.

●Summary of Evaluation results
Overall, we judged that the effectiveness of the Board of Directors of the Company was adequately ensured.
The main issues identified as evaluation results of the effectiveness of the Board of Directors are as follows:(1) Efforts to provide information to outside officers∙E nsuring advance distribution of materials and considering operation of advance briefing∙ Promoting a thorough understanding of the semiconductor business and the Company’s business model
among outside directors∙C onsidering strengthening the support structure (to reinforce the secretariat, including its resources)(2) Securing time for deliberations on strategically important topics by reviewing a standard for determining
matters to be submitted to the Board of Directors∙S etting the annual agenda∙S orting out the roles and functions of the Board of Directors as a precondition (to share awareness)(3) Encouraging two-way discussions between outside and inside the Company by establishing communication
opportunities for both parties(4) Enhancing opportunities for internal officers to speak out from a company-wide perspective (to change
mindset)(5) Considering the ideal structure of the Board of Directors with an awareness of diversity (by utilizing skill
matrix, etc.)●Initiatives based on Evaluation results
The Company will continue to promote improvement activities for issues identified based on the above evaluation
results and will work to further improve effectiveness by regularly incorporating third-party involvement in theevaluation process.

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The Company discloses a skill matrix that lists each director’s knowledge, experience, and abilities, as well as a
combination of the director’s skills etc. in a manner appropriate to the business environment and businesscharacteristics, along with policies and procedures for the election of directors.
Candidates for Directors who are not Audit & Supervisory Committee Members are determined by the Board of
Directors based on a report by the Nomination and Compensation Committee, the majority of whose members
are Independent Outside Directors.
Candidates for Directors who are Audit & Supervisory Committee Members are determined by the Board of
Directors, with the consent of the Audit & Supervisory Committee, based on a report by the Nomination andCompensation Committee, the majority of whose members are Independent Outside Directors.

Skill matrix of Directors
The skills matrix for the directors is as follows:

Name

GenderOutsideDirector

Independent
Officer

As of December 2023

Audit &
Supervisory
Committee
Member

1

2

3

4

5

Management
experience

Semiconductorbusiness

International(Overseas
experience)

Finance andAccounting

Legal andCompliance

✓

✓

✓

✓

✓

Masahiro Koezuka

Male

Koichi Otsuki

Male

✓

Noriaki Kubo

Male

✓

Yutaka Yoneyama

Male

✓

Hisato Yoshida

Male

✓

Masatoshi Suzuki

Male

✓

✓

Sachiko Kasano

Female✓✓Yasuyoshi Ichikawa

Male

✓

✓

Morimasa Ikemoto

Male

✓

Noriko Yoneda

Female

✓

✓

✓

✓

✓

✓
✓

✓

✓

✓

✓

✓

✓

(2) Compensation level
In light of the business environment surrounding the Company, we will objectively compare compensationlevels with those of other companies in the same industry or other companies of the same size, based on thedata from research firms, and establish appropriate levels relevant for the positions.
(3) Process for Determining compensation∙ T he Company has established a voluntary Nomination and Compensation Committee to ensure theappropriateness of compensation levels and amounts and the transparency of the decision-making process.
The chairperson and the majority of committee members are Independent Outside Directors. The Board of
Directors consults with the Nomination and Compensation Committee on basic policies and decision
procedures. The recommendations of the Nomination and Compensation Committee are deliberated by the
Board of Directors, and the Board of Directors decides the basic policy and decision procedures and makes aresolution on the agenda for the General Meeting of Shareholders in the event that the upper limit of totalcompensation is reviewed.
∙ The specific amount of basic compensation and incentive compensation (cash and stock) for each individual
is determined within the total amount of compensation approved by the General Meeting of Shareholders,
based on the report made by the Nomination and Compensation Committee to the Board of Directors, andsubject to approval by the Nomination and Compensation Committee, and is determined at the discretion of
the Representative Director, Chairman and President, based on a resolution of the Board of Directors.

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requirements in realizing the corporate vision

Views on Diversity of the Board of Directors●Compensation structure(1) Executive Directora Basic compensation: Based on the scope of responsibility and role (position) in the Company, a fixedamount is paid as basic compensationb Cash incentive compensation: Payment by cash (bonus) as performance-based compensation based on theevaluation of performance results in the target yearc Stock incentive compensation: Payment by stock as performance-based restricted-stock compensation
based on the evaluation of performance results in the target year
∙ If the performance target is 100% achieved, the percentage of the above proportion is a. 60%, b. 20% and c.
20%.
∙ As evaluation items and indicators for the performance-based portion (cash and stock), we consider four
items of “net sales,” “operating profit,” and “design win amount,” and “business transformation, growthstrategy, ESG measures, etc.” with a weighting of 25% for each. In addition, we evaluate all of these items
based on comprehensive judgment by the Nomination and Compensation Committee. The results of theevaluation are reported to and deliberated on by the Board of Directors.
(2) Independent Outside Directors (non-executive directors)∙ In view of the role of supervising the execution of business, only fixed basic compensation is paid.

Policy on Determining compensation for Directors
Policy on determining compensation, etc. for Directors (excluding Directors who are Audit & Supervisory
Committee Members) (overview)●Details of the Directors’ Compensation System(1) Basic Views∙ Highly linked to the company’s performance and highly transparent and objective∙ Enhancement of corporate value and compensation should be linked in order to share a sense of interest
with shareholders∙ C ontribute to securing and retaining a global management team that meets competent capability

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Support System for Outside Directors
The Representative Director, Chairman and President or the Board of Directors Secretariat provides the necessary
support to outside directors, including providing supplementary explanations on the business overview andproposals to be submitted to the Board of Directors. Furthermore, for Outside Directors who are Audit &Supervisory Committee Members, the Audit & Supervisory Committee Secretariat provides support for theiractivities.

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The Company sets forth the following policies, standards and procedures for the election and dismissal of
directors of the Company.

The succession plan for the CEO and Other top executives
The succession plan for the CEO and other top executives is implemented through deliberations in the Nomination
and Compensation Committee, the majority of whose members are Independent Outside Directors (2 out of
3 members), which is chaired by an Independent Outside Director.

●Policies for Election(1) In electing director candidates, consideration shall be given to the composition of the Board of Directors sothat the Board of Directors can fully exercise its functions and contribute to the sustainable development of
the Group, while ensuring diversity by balancing the experience, knowledge and abilities of each director.
(2) The Board of Directors shall consist of not more than ten members, and at least one-third of them shall meetthe independence standards for outside directors set by the Company.
(3) The Audit & Supervisory Committee shall, in principle, have at least one legal specialist and one financial
accounting specialist.

●Election criteria for Director candidates(1) Requirements common to All directors∙ A person must have the personality, knowledge, insight and experience required of a director, as well as ahigh level of awareness in legal compliance and ethics.
∙ A person must understand the Group’s management philosophy and have the integrity to earn the trust ofvarious stakeholders.
(2) Requirements for Internal Directors∙ Have a high level of knowledge of the Group’s business areas and a wealth of experience and track record inspecialized areas.
∙ Can promote appropriate organizational management and business execution by making quick and accurate
management decisions while overviewing management from a company-wide and medium- to long-term
perspective(3) Requirements for Outside Directors∙ Can perform supervisory functions from a fair and broad perspective based on extensive experience andknowledge in management and areas of expertise.
∙ Can discuss and offer opinions in a frank and constructive manner toward sustainable development of theGroup.

●Procedures to Elect director candidates
The Board of Directors decides the candidates for directors to be proposed to the General Meeting of
Shareholders, based on the recommendations of the Nomination and Compensation, in which the majority ofmembers and the chairperson are Independent Outside Directors. Election of candidates for Directors who are
Audit & Supervisory Committee Members shall be subject to the prior consent of the Audit & Supervisory
Committee.

●Standards and Procedures for Dismissing directors
When a director no longer meets the requirements set forth in “●Election criteria for director candidates” or isdeemed to lack eligibility as a director, the Board of Directors shall take appropriate measures, such asprocedures for dismissal under laws and regulations, based on the report of the Nomination and Compensation
Committee.

Training Policies for Directors
For newly appointed internal directors and executive officers, the Socionext group has a policy to improve theirskills by utilizing outside seminars for them to acquire the necessary knowledge regarding legal compliance,
corporate governance, finance and other matters.
For newly appointed outside directors, the Company explains industry trends and the business situation of theCompany, and also has a system in place whereby the new outside directors, after their appointment, can directly
request directors and executive officers in charge of business to provide an explanation to deepen theirunderstanding of the Company’s business.
In order to revitalize the deliberations of the Board of Directors, the costs of training sessions and socializing
opportunities, etc. in which each director voluntarily participates as necessary are to be borne by the Company.

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Policy on Election and Dismissal of Directors

Independence Standards●Independence Standards and Qualifications for Independent Outside Directors
In the Company, the appointment of independent outside directors, including Audit & Supervisory Committee
Members, is subject to deliberation by the Nomination and Compensation Committee on the conformity withindependence standards and policies, and the results are reported to the Board of Directors, which deliberates
and resolves the matter.
The independence standards adopted and established by the Company are based on the requirements for outside
directors stipulated in the Companies Act and the requirements for independent officers stipulated by the Tokyo
Stock Exchange.
4 of the 5 outside directors who qualify as independent directors are designated as independent directors.
The company has established the following criteria for determining the independence of Outside Directors.
[Independence Standards for Outside Directors]
The Company considers Outside Directors or candidates for such directors to be independent if it determinesthat none of the following (1) to (9) apply:
However, even if a person falls under any of the following (1) to (9), he or she may be appointed as Independent
Outside Director of the Company if the Company believes that he or she has sufficient independence, provided
that the reasons for such independence are publicly disclosed.
(1) A person whose major client or supplier is a Socionext Group Company*1*2 or a business executive person
thereof*3(2) Major client of*4 or major lender*5 to Socionext Group Companies or a business executive person thereof(3) An outside expert who receives a substantial amount of compensation from Socionext Group Companies in
addition to officer’s compensation*6, or a person who belongs to the organization if the outside expert is anorganization such as a corporation(4) A member or employee of the Accounting Auditor of the Company

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Socionext ESG Report 2023

43

(6) A business executive person of a corporation or other organization that accepts directors or other officers
from a Socionext Group Company

reports on the status of business execution from directors and executive officers.
The attendance of individual directors for the FY ended March 31, 2023 under review is as follows.
Position

Name

Attendance Status

Representative Director

Masahiro Koezuka

14 times/14 times(100%)

Director

Koichi Otsuki

13times/14 times(93%)

Director

Noriaki Kubo

14 times/14 times(100%)(9) A close relative of one of the following*9:∙ Persons listed in the above (1) through (8)∙ A business executive person of a Socionext Group Company∙ A business executive person who has been an executive person of a Socionext Group Company in the past
three years

Director

Yutaka Yoneyama

14 times/14 times(100%)

Director

Shinichi Ando

14 times/14 times(100%)

Outside Director

Masatoshi Suzuki

14 times/14 times(100%)

Outside Director

Katsushi Kitajo

14 times/14 times(100%)*1: S
 ocionext Group Companies” means Socionext Inc. and its subsidiaries.
*2: A person whose major client or supplier is a Socionext Group Company” means a party whose sales to Socionext Group Companies
account for 2% or more of its annual consolidated total sales in the most recent fiscal year.
*3: A business executive person is defined in Article 2, Paragraph 3, Item 6 of the Regulations for Enforcement of the Companies Act.
*4: “Major client of or supplier to a Socionext Group Company” means a party to which 2% or more of Socionext Group Companies’
annual consolidated total sales in the most recent fiscal year are recorded.
*5: M ajor lender is a major lender stated in the Company’s most recent Business Report.
*6: A substantial amount of compensation means that an individual is paid at least 10 million yen per year in the most recent businessyear of a Socionext Group Company, and an organization such as a corporation is paid at least 2% of the total annual consolidated
sales in the most recent business year of the organization.
*7: A large donation means a donation of at least 10 million yen per year in the most recent fiscal year of a Socionext Group Company.
*8: A major shareholder is a person who holds 10% or more of the voting rights.
*9: A
 close relative is a spouse, a relative within the second degree of kinship or a relative living together.

Outside Director

Morimasa Ikemoto*1

3 times/3 times(100%)

Outside Director

Yoshiyuki Miyabe

3 times/3 times(100%)(7) A person who has fallen under any of the above items (1) through (6) in the past three years(8) A major shareholder of the Company or a business executive person thereof*8*1Outside Director(Audit and Supervisory Committee Member)

Sachiko Kasano

14 times/14 times(100%)

Director(Audit and Supervisory Committee Member)

Tuyoshi Sakuma

14 times/14 times(100%)

Outside Director(Audit and Supervisory Committee Member)

Yasuyoshi Ichikawa

14 times/14 times(100%)

Outside Director(Audit and Supervisory Committee Member)

Kenji Hanawa

3 times/3 times(100%)*2

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(5) A person who receives a large donation from a Socionext Group Company*7, or a person who belongs to theorganization if the recipient of such a donation is an organization such as a corporation*1: Mr. Morimasa Ikemoto and Mr. Yoshiyuki Miyabe describe the circumstances up to their retirement due to their resignation as Outside Directors as of the time when it
was deemed that the resolutions of the Extraordinary General Meeting of Shareholders and the General Meeting of Class Shareholders of Common Shareholders on
July 27, 2022 had been passed.
*2: Mr. Kenji Hanawa describes the circumstances up to his retirement due to his resignation as an Outside Director (Audit and Supervisory Committee Member) as of the

Cross-shareholdings
As a general rule, the Company does not hold any cross-shareholdings and does not currently hold any listed
shares as cross-shareholdings.
If it becomes necessary to acquire cross-shareholdings in the future from the perspective of management
strategy, etc., the acquisition will be limited to cases that contribute to the sustainable growth of the Company
and the enhancement of corporate value over the medium to long term. In addition, the Board of Directors will
confirm the significance of acquiring each stock in advance, and after the acquisition, the appropriateness of theholding will be confirmed and reviewed annually. The exercise of voting rights in connection with crossshareholdings is judged on the basis of whether it contributes to the corporate value of the Company.

Activities of the Board of Directors, Nomination and Compensation Committee,
and Audit and Supervisory Committee●Board of Directors
In principle, the Board of Directors holds regular meetings once a month and holds extraordinary meetings of theBoard of Directors as necessary.
The Board of Directors deliberated and made necessary decisions on the development of various policies,
regulations, and internal systems for filing a new listing application, the preparation of related documents,
business strategies and management issues, the formulation and progress of business plans, the draft of theGeneral Meeting of Shareholders, ESG-related matters, the strengthening of development systems, the conclusionof important contracts, the formulation of policies for determining the remuneration of directors (excluding
directors who are Audit and Supervisory Committee Members) and the determination of individual remuneration,risk and compliance-related matters, the construction and operation of internal control systems, and received

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Socionext ESG Report 2023

time when it was deemed that resolutions had been made at the Extraordinary General Meeting of Shareholders and the General Meeting of Class Shareholders held bycommon shareholders on July 27, 2022.

●Nomination and Remuneration Committee
The Nomination and Remuneration Committee meets at least 2 times in each fiscal year, and 14 times in the FY
ended March 31, 2023
The Nomination and Remuneration Committee deliberated on the composition of the Board of Directors, policies
for the appointment and dismissal of directors and executive officers, criteria for determining the independenceof outside directors, matters concerning the remuneration of directors (Excluding directors who are Audit andSupervisory Committee Members.) and executive officers (Basic Policy, Policy on Decisions on the Contents ofRemuneration, etc. by Individuals, Contents of Remuneration, etc. by Individuals, etc.), proposals concerning
remuneration to be proposed to the General Meeting of Shareholders, succession plans, etc., and made necessary
reports to the Board of Directors.
The attendance of individual committee members in FY ended March 31, 2023 is as follows.
Position

Name

Attendance Status

Chairperson(Outside Director)

Masatoshi Suzuki

14 times/14 times(100%)

Committee Member(Outside Director)

Katsushi Kitajo

13 times/14 times(93%)

Committee Member(Representative Director and CEO)

Masahiro Koezuka

14 times/14 times(100%)●Audit and Supervisory Committee
Mr. Yasuyoshi Ichikawa, Chairperson of the Audit and Supervisory Committee, is a certified public accountant andhas extensive experience and insight in finance and accounting. Mr. Morimasa Ikemoto, a full-time Audit andSupervisory Committee Member, has served as a full-time company auditor and a director who is an Audit andSupervisory Committee Member at a listed company, and has considerable knowledge of finance, accounting,internal control and auditing. Ms. Noriko Yoneda is a licensed attorney with extensive experience and insight in45

Position

Name

Attendance Status

Outside Director(Audit and Supervisory Committee Member)

Sachiko Kasano

17 times/17 times(100%)

Outside Director(Audit and Supervisory Committee Member)

Ikuyoshi Ichikawa

17 times/17 times(100%)

Outside Director(Audit and Supervisory Committee Member)

Kenji Hanawa*1

6 times/6 times(100%)

Tuyoshi Sakuma

17 times/17 times(100%)

Director(Full-time Audit and Supervisory Committee Member)*1: Mr. Kenji Hanawa describes the circumstances up to his retirement due to his resignation as an Outside Director (Audit and Supervisory Committee Member) as of thetime when it was deemed that resolutions had been made at the Extraordinary General Meeting of Shareholders and the General Meeting of Class Shareholders held bycommon shareholders on July 27, 2022.

Policy for Constructive Dialogue with Shareholders
The following is the Company’s policy regarding the development of systems and initiatives to promote
constructive dialogue with shareholders and investors.

●Policy for Initiatives to Promote dialogue∙ Disclose information in a timely and appropriate manner in accordance with laws and regulations, such as the
Financial Instruments and Exchange Act, and the Timely Disclosure Rules of the Tokyo Stock Exchange.
∙ E fforts will be made to engage in two-way communication with shareholders to explain the Company’s
management situation and operating policies in an easy-to-understand and accurate manner and report the
feedback of shareholders’ opinions and requests to the Board of Directors as part of IR status reports, which will
be reflected in formulating management strategies, improving business operations and determining information
disclosure.
∙ This will lead to sustainable growth of the Company and medium- to long-term enhancement of its corporate
value.

∙ Departments committed to Investor Relations (Public Relations & Investor Relations Office, Corporate Planning
Office, Corporate Affairs & Human Resources Division, Finance and Corporate Finance Division, etc.) will fully
cooperate in preparing disclosure materials to promote dialogue with shareholders.

●Report to the Board of Directors∙ The person in charge of Investor Relations regularly reports information and opinions from shareholders andinvestors to the Board of Directors.

●Initiatives to Promote dialogue∙ Information that falls under the Timely Disclosure Rules shall be disclosed via TDnet (Timely Disclosure network).
∙ Disclose necessary information on the Investor Relations section of the Company’s website.
∙ Set up opportunities for dialogue, such as individual meetings, group meetings and company briefings, andactively disclose information.
∙ The Company will hold financial results briefings and disclose materials on the Investor Relations section of its
website.

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ESG Report 2023

corporate legal affairs and compliance.
Based on the annual audit plan formulated by the Audit and Supervisory Committee, Audit and Supervisory
Committee Members audit and supervise the status of the execution of duties by the executive directors byattending regular meetings of the Board of Directors and other important meetings and by inspecting important
documents.
The Audit and Supervisory Committee reviews the progress of management and business through interviews withdirectors and executive officers and makes judgments on the legality and appropriateness of management
execution. All members of the Audit and Supervisory Committee attend meetings of the Board of Directors andconduct audits and supervision of the status of deliberations of the Board of Directors, important decision-making
processes in management strategies and corporate governance, etc. In addition, the Audit and Supervisory
Committee exchanges information and opinions with the accounting auditors to promote mutual understandingon the status of audit implementation, such as holding regular meetings every quarter and additional meetings asnecessary. In addition, the Audit and Supervisory Committee reviews the election, etc. and remuneration, etc. of
directors who are not Audit and Supervisory Committee Members and decides the opinions of the Audit andSupervisory Committee.
Full-time Audit and Supervisory Committee member attends important meetings of the Management Committee,etc., conducts hearings with our company's directors, executive officers, and presidents of our company
subsidiaries, inspects important contract documents and approval documents, etc., and reports the results to the
Audit and Supervisory Committee.
The status of activities for FY ended March 31, 2023 under review is as follows.

Measures to Realize management with Capital cost and Stock price in mind
In promoting the “Solution SoC” business, the Group is implementing management with capital profitability in mind.
Specifically, we set up multiple checkpoints for each business project, focusing on profitability and cash flow,
during the period from the beginning of the project to the acquisition of the project, and during the period fromthe acquisition to the start of mass production.
Once a year, we calculate the cost of capital for the fiscal year ended and reports the results compared to thereturn on capital (ROE, ROIC) to the Board of Directors.
In the fiscal year ended March 2023, we confirmed that our Group’s profitability exceeded the cost of capital
because the Group's ROE and ROIC exceeded the cost of capital according to our calculation.
Specific measures to further improve ROE and ROIC are as follows.
∙ Thorough Securing of Proper Profits on a per project basis∙ P ursuing development efficiency by strengthening development systems in line with the “Solution SoC”
businessBy promoting these measures, we aim to increase our corporate value and improve our market
valuation.

Implementation of Dialogue with Shareholders∙ We provide shareholders and investors with an interactive environment by disclosing the Group's latest businessresults and business strategies on the shareholder and investor pages of our website, and by posting a contact
point for IR inquiries.
∙ We hold quarterly financial results briefings and individual interviews with institutional investors and analysts.
∙ Dialogues with shareholders, investors, and analysts are reported to the Board of Directors and other meetings
to provide feedback to management.

●Internal Structure∙ The person in charge of Investor Relations shall be the executive officer in charge of corporate planning, and thedepartment in charge of Investor Relations shall be the Public Relations & Investor Relations Office.

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47

(9) Management of the Company shall take a firm stand against antisocial forces, have no relationship with them,and deal with them systematically in coordination with external professional organizations.

●Systems under which Information regarding execution of duties by Directors shallbe retained and Managed(1) The Company’s Management shall properly store and manage documents involved in the execution of theirduties (including electromagnetic records) and other important information, in accordance with the Important
Document Management Regulations, after appointing a person in charge of retention.

Internal Control Policy
At the meeting of the Board of Directors held on March 30, 2022, the Company resolved a basic policy regarding
the development of systems (internal control systems) provided for in the Companies Act and the Regulations for
Enforcement of the Companies Act.
The policy provides for the systems necessary to ensure the appropriateness of business and operations asprovided for in Article 399-13, Paragraph 1, Item 1, (b) and (c) of the Companies Act and in Article 110-4 of theRegulations for Enforcement of the Companies Act, and establishes the basic policy for the development ofinternal control system for the Socionext (hereafter collectively referred to as the “Socionext” including the below“Group company”) comprised of the Company and the Company’s consolidated subsidiaries (hereafter referred toas the “the Group Company”). An outline of the policy is as follows.

●S ystems to ensure that The execution of the duties by Socionext Personnel
complies with laws and Regulations and the Articles of Incorporation(1) Directors and executive officers involved in the execution of their duties at the Company (hereafter referred toas “Management”) shall take the lead in complying with the “CSR Policy” established for compliance, including
compliance with laws and regulations and the Articles of Incorporation, and shall also actively work to promotecompliance based on the ethics of the Company’s Management.
(2) The management of the Company shall ensure that all Socionext Personnel comply with the “CSR Policy,” andshall promote compliance throughout the Socionext through continuous education and other measures.
(3) The management of the Company shall clarify laws and regulations pertaining to business activities, develop
the necessary internal rules, education and monitoring systems to ensure compliance, and promote compliancethroughout the Socionext.
(4) If an officer or employee of the Company becomes aware of any facts that may constitute a material breach ofcompliance in connection with the conduct of business activities, he or she shall immediately notify the Boardof Directors of the Company and Audit & Supervisory Committee of the Company of such fact through thenormal line of business.
(5) Management of the Company shall establish and operate a Whistle-Blowing System that secures a protection
system for whistle-blowers, etc., in order to enable early detection of compliance issues and appropriate
responses to them through a communication channel that is independent of normal business lines.
(6) The Board of Directors of the Company shall receive regular reports on the execution of duties from theperson performing the duties and shall confirm that there is no non-compliance in the execution of duties.
(7) Management of the Company shall strengthen the development of an internal control through the evaluation
and audit of internal control over financial reporting to ensure the appropriateness of financial reporting.
(8) Management of the Company shall conduct an internal audit in order to confirm the status of business48

Socionext ESG Report 2023

(2) Directors of the Company shall have access at all times to documents to confirm the status of the executionof their duties, and the person in charge of retention of each document shall ensure that the directors of theCompany shall have access at all times.
(3) With regard to information security, a system of responsibility shall be clarified relating to information security
and specific measures shall be implemented and ensured in accordance with the provisions on information
security.

ESG Report 2023

ESG Report 2023

Internal Control

execution, ensure compliance with laws and regulations and the Articles of Incorporation, etc. and make
improvements in operational efficiency.

●Regulations and Other systems for The risk management of loss(1) Management of the Company shall aim to achieve business continuity, enhancement of corporate value andsustainable development of corporate activities of the Socionext, and shall develop appropriate risk
management systems to deal with risks that may impede this.
(2) Management of the Company constantly assesses and verifies risks that could cause losses to the Socionext
and reports important matters to the Company’s Board of Directors.
(3) Management of the Company shall conduct risk control, including preventive measures, with respect to therisks recognized in the preceding paragraph and other risks assumed in the course of conducting business,and shall take actions to minimize losses. In addition, in order to minimize losses arising from the occurrenceof risks, the Risk Compliance Committee, etc. shall be established in the Company and necessary measures
shall be implemented, and risks that occur shall be regularly analyzed and reported to the Board of Directors,
etc. of the Company to take actions to prevent the recurrence of similar risks.
(4) In order to collect risk information that cannot be grasped by the provisions in the preceding three items,
Management of the Company shall set up a Whistle-Blowing System in the Company and operate it while
ensuring a system to protect whistle-blowers.

●Systems to Ensure efficient execution of duties by Directors(1) The Company shall separate the supervisory and executive functions of management, and the Board of
Directors of the Company shall determine basic management policies and important business execution andsupervise executive functions. The Company also introduces an executive officer system, and among theexecutive decision-making bodies, the Management Committee discusses basic management policies andstrategies and makes decisions on important matters related to management execution. Of the matters
discussed by the Management Committee, important matters shall be reported to or decided by the Board of
Directors.
(2) The Board of Directors of the Company shall clarify the duties of the management and other executive
organizations of the Company and shall have them perform their duties in accordance with their respective
duties.
(3) Management of the Company shall make decisions on execution of duties in accordance with appropriate
decision-making procedures established by the Board of Directors, the Management Committee and the49(4) Management of the Company shall ensure that all employees are fully aware of management policies, etc., andshall set and realize specific goals to achieve management goals.
(5) Management of the Company shall promote the continuous development of internal control systems and thereform of business processes in order to pursue the efficiency of the business.
(6) The Company’s Board of Directors shall monitor and supervise the achievement of management objectives by
having the Company’s management and other executive bodies conduct monthly financial reporting, businessexecution reporting, etc.

●Systems to ensure the appropriateness of operations of the Corporate Group
composed of the Company and its subsidiaries(1) With the aim of sustainably enhancing the corporate value of the Socionext, the Company shall establish andenact the systems and provisions above based on the “CSR Policy,” and shall establish a system to receive
reports on matters related to execution of duties from the Management, executive officers, employees
executing business, persons handling operations and other equivalent persons of the Group Company. In
addition, they shall provide guidance, support and supervision on the development of a system for efficient,legitimate and appropriate business execution as a corporate group.
(2) The Company shall establish common rules regarding the delegation of authority from the representative
director of the Company (If there is more than one person, it should be the person in the highest position; thesame shall apply hereafter) to the Group Company, including the authority and process for determining
important matters of the Group Company.
(3) The representative director of the Company shall designate the division in charge of the Group Company, andthe officer in charge of the business execution of such division shall confirm the implementation andcompliance of the preceding two items through presidents of the Group Company, etc.
(4) Management of the Company and the Group Company shall confirm the management policy of the Socionext
and issues for achieving the management goals through regular liaison meetings, etc.
(5) Directors of the Company shall evaluate internal control over financial reporting of the Group Company inaccordance with domestic and foreign laws and regulations, and carry out improvement activities based on the
results.
(6) The Company’s internal audit organization shall conduct an internal audit of the entire Socionext.

●Matters relating to Socionext Personnel assisting with the duties of Audit &Supervisory Committee and matters relating to the independence, etc. of such
Socionext Personnel from Directors (excluding Audit & Supervisory Committee
Members).
(1) The Company shall have Socionext Personnel to assist with the duties of the Audit & Supervisory Committeeof the Company and shall assign appropriate personnel with the abilities and knowledge required by the Audit& Supervisory Committee of the Company.
(2) In order to ensure the independence of the Socionext Personnel referred to in the preceding item and theeffectiveness of directions given to such Socionext Personnel by Audit & Supervisory Committee of theCompany, Management of the Company shall obtain the consent of the Audit & Supervisory Committee of theCompany with respect to matters relating to personnel, such as appointment, transfer and compensation ofsuch Socionext Personnel.
(3) In principle, Management of the Company shall not allow the Socionext Personnel described in 1) above toserve concurrently with any other organizations. However, when it becomes necessary to have the Socionext

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Socionext ESG Report 2023

Personnel with special expertise concurrently serve at the request of the Audit & Supervisory Committee of
the Company, consideration shall be given to ensuring the independence set forth in the preceding paragraph.

●System for Reporting to the Audit & Supervisory Committee(1) Management of the Company and the Group Company shall provide Audit & Supervisory Committee Membersof the Company with an opportunity to attend important meetings.
(2) Management, accounting advisors, auditors, executive officers, employees executing business, persons
handling operations, other equivalent persons and employees of the Company and the Group Company shallimmediately report to the Audit & Supervisory Committee of the Company when a risk affecting their
management or performance occurs or when they become aware of a fact that constitutes a material breachof compliance with respect to the conduct of their business activities.
(3) M anagement and employees of the Company and the Group Company shall periodically report theperformance of their duties to the Audit & Supervisory Committee of the Company.
(4) No Management, accounting advisors, auditors, executive officers, employees executing business, persons
handling operations and other equivalent persons of the Company and the Group Company shall treat any
managers or employees unfavorably for the reason of making a report under the preceding two items.

ESG Report 2023

ESG Report 2023

internal approval system, etc. of the Company.

●System for Ensuring Effectiveness of Audit by Audit & Supervisory Committee(1) Management of the Company and the Group Company shall regularly exchange information with Audit &Supervisory Committee Members of the Company.
(2) The Company’s internal audit organization shall periodically report its audit findings to the Audit & Supervisory
Committee of the Company.
(3) The Audit & Supervisory Committee of the Company shall, from time to time, have the Accounting Auditor of
the Company explain and report on the results of the audit and other matters and shall regularly exchange
information with the Accounting Auditor of the Company.
(4) Expenses incurred in the performance of the duties of the Audit & Supervisory Committee of the Company
shall be in accordance with Article 399-2, Paragraph 4 of the Companies Act, and management of theCompany shall establish procedures for the requests in the same paragraph.

Operational status of Internal controls
An outline of the implementation status of the system to ensure the appropriateness of business operations
during the fiscal year under review is as follows.

●S ystems to ensure that the execution of the duties by Socionext personnel
complies with laws and regulations and the Articles of Incorporation(1) We strive to comply with laws and regulations by ensuring that all Socionext Personnel are fully aware of ourmanagement philosophy, management vision, Action Policy, the CSR Policy and compliance codes.
(2) Specifically, we are strengthening our compliance system by appointing a Risk Compliance Officer for eachdivision under the Risk Compliance Committee.
(3) In order to prevent transactions with anti-social forces and inappropriate transactions with related parties, wecheck the appropriateness of transactions as an essential response in our business processes.
(4) Our financial reporting system is audited by the Accounting Auditor in accordance with the Companies Act

51

(5) We use e-learning to provide all Socionext Personnel with various types of compliance education, including
matters related to prevention of insider trading, information security, harassment and procurementtransactions.

●Systems under which information regarding execution of duties by Directors shallbe retained and managed(1) In accordance with the Important Document Management Regulations, minutes of general meetings ofshareholders, minutes of meetings of the Board of Directors, minutes of meetings of Management Committee
and the approval documents, etc. as the documents related to management’s execution of duties are properly
stored and managed with a person responsible for the storage and the method of storage specified.
(2) The Company has established a system in which Directors and Audit & Supervisory Committee Members canview documents to confirm the status of execution of duties at all times.
(3) In accordance with the Information Security Code, we have clarified our systems and responsibilities tomaintain and manage information security. We are continuously working to strengthen information security by
establishing telecommuting information management guidelines to ensure information security as
telecommuting becomes more widespread, and entrusting IT Management Partners Co., Ltd . to handle
operations in the IT management Division as needed.

●Regulations and Other systems for the Risk management of loss(1) In addition to the Board of Directors Regulations and the Management Committee Regulations, the Company
has established the Risk Management Code and has developed a risk management system not only in Japanbut also overseas.
(2) We have established a risk management process and regularly conduct a company-wide risk review by theManagement Committee. Through this process, we grasp the latest risk status, develop measures andcountermeasures against risks, check the progress and report to the Board of Directors.
(3) As part of the BCM/BCP initiative, we develop basic policies and rules, action plans and manuals, and conduct
training to continuously improve our response and recovery capabilities during normal times.
(4) In addition to the above, we are developing and expanding our global Whistle-Blowing System and make therules for the usage known. During the fiscal year under review, there were no serious violations of laws or
regulations, and there were no whistle-blower incidents.

●Systems to Ensure efficient execution of duties by Directors(1) In addition to clarifying the business model and the business areas of “Solution SoC” and promoting a business
transformation and shift of resources to growth areas, which we have implemented to date, we are focusing
on large-scale global business opportunities and development for business expansion and growth.
(2) In order to enable efficient and timely allocation of development resources, we are continuously strengthening
our management structure.

measures, in order to establish a structure for execution of duties as a listed company. In addition, in order tostrengthen governance and increase corporate value, the ESG Promotion Office was newly established topromote the construction, execution and disclosure of ESG-related business processes required internally andexternally.

●Systems to Ensure the appropriateness of operations of the Corporate Group
composed of the Company and its subsidiaries(1) In accordance with the Management Committee Regulations, the Socionext Approval Authority and theAffiliates Management Regulations, important matters relating to the business activities of the Group Company
are set forth and administered by the Management Committee as matters to be approved and reported. In
addition, presidents of the Group Company make monthly business reports to the Management Committee
members, etc.
(2) In the Group Company, the Company officers and employees are assigned to serve as officers of the Group
Company to strengthen guidance, support and supervision on the development of operational systems. In
addition, with the aim of establishing a system of internal regulations with an awareness of the global
management system, we have established the codes applicable to the entire Group Company to strengthen
the management system of the Group Company.

ESG Report 2023

ESG Report 2023

and the Financial Instruments and Exchange Act. We regularly exchange opinions and share information with
the Accounting Auditor.

(3) With the aim of realizing a speedy decision-making process for the Company in the global market, we arestrengthening cooperation between the Group Company and the business and corporate divisions.

●Matters relating to Socionext Personnel assisting with the duties of Audit &Supervisory Committee and Matters relating to the independence, etc. of such
Socionext Personnel from Directors
As an organization to support the duties of Audit & Supervisory Committee Members, the Company has
strengthened its system for reporting and providing information to Audit & Supervisory Committee Members andhas established a system for the effective execution of audits by the Audit & Supervisory Committee, including
the establishment of a dedicated Audit & Supervisory Committee Secretariat.

●System for Reporting to the Audit & Supervisory Committee
Audit & Supervisory Committee Members attend important meetings such as the Board of Directors, theManagement Committee, and meetings for performance reporting, and conduct investigations and interviews witheach division and exchange opinions with Directors of the Company.

●System for Ensuring Effectiveness of Audit by Audit & Supervisory Committee(1) In terms of relationship with the Accounting Auditor, we exchange information and opinions while monitoring
the independence and appropriateness of their audit, and we also discuss the selection of the Accounting
Auditor.
(2) W e work closely with the Internal Audit Department, which is the internal audit division, to improve
effectiveness and efficiency of audits by exchanging information and opinions with each other on a regularbasis and when necessary.

(3) W e are working to establish multi-year management, achieve quarterly management targets, promotecomprehensive cost and gross margin improvements, upgrade our market strategy and make up-front
development investments in design wins and lead generation , globalize and improve the efficiency of SCM,
globalize and improve the efficiency of corporate operations, strengthen management and build IT
infrastructure.
(4) In line with our listing on the Prime Market of the Tokyo Stock Exchange, we have strengthened our public
relations and investor relations functions and newly established institutional legal functions, among other52

Socionext ESG Report 2023

53

ComplianceAs our group expands its business activities globally, it is important to quickly grasp all risks arising from changes in thecomplex and diverse business environment and take appropriate countermeasures. We believe that this is essential toachieving our goal.
Under the following structure, our group systematically and continuously extracts and evaluates risks, appoints amanaging officer for each extracted risk item, and formulates and implements measures. Furthermore, we haveestablished a system to regularly report to the Board of Directors regarding these initiatives, confirm thecomprehensiveness of assumed risks, the effectiveness of various countermeasures, and the progress status. We areworking to strengthen risk management to reduce the scale of losses.
The table below shows an overall view of Group material risks based on the risk analysis conducted FY ended March 31,
2023.

●Risk Management Structure[Supervision]

Board of Directors[Execution]

Business Process
Re-engineering Oﬃce

Management CommitteeCore Philosophy on Compliance
The Socionext Group recognizes “compliance with legal and societal expectations” and “fair trading practices” asimportant duties, both of which are included in the CSR policies that represent the group’s guiding principles.
Compliance with legal andsocietal expectations

We will justify the trust placed in us by society through the strict observance oflegal requirements and societal expectations.

Fair trading practices

We will follow fair trading practices to build relationships of trust with ourcustomers and suppliers.
The Socionext Group has also laid out compliance criteria that are based onthese CSR policies. We take care to ensure that all company employees maintainhigh ethical standards and act in ways that are cognizant of compliancerequirements so that we remain a company that is trusted by all of its
stakeholders.

ESG Report 2023

ESG Report 2023

Risk Management

Compliance Administration

Risk Compliance Committee

Corporate Vice
President

Sales Group

Corporate Vice
President

Business/
Development Group

Corporate Vice
President

Quality/Technology/SCM/
Procurement Group

Corporate Vice
President

Corporate Group

Corporate Vice
President

Regional Companies●Overall view of Critical risks[Business Risks]∙ Stable supply products	∙ IT systems & information security∙ Geopolitical risks	∙ Sustainability issues (climate change/human rights)∙ Sophistication of design and development	∙ Global compliance (antitrust, bribery, etc.)∙ Changes in the market environment	∙ Intellectual property∙ Human resources/labor affairs	∙ Accounting/taxation∙ Quality	∙ M&A/investment∙ Business continuity

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Socionext ESG Report 2023

●Risk and Compliance Committee
The Socionext Group has a Risk and Compliance Committee made up of executives and others and led by theCEO. The committee meets once a quarter to assess, analyze, and formulate actions on issues such ascompliance, information security, and disaster risks.

●Internal Reporting System
The Socionext Group has established an internal reporting (Whistle-Blowing) system for the early detection andresponse to unauthorized activities that is intended to reinforce fair business practices that are in accord with thelaw. The system provides for both internal reporting (to the Socionext Risk Compliance Committee Secretariat)
and external reporting (to the Socionext Reporting Contact at TMI Associates). The diagram below shows aflowchart of how this works.
In accordance with the law and company policy on this issue, measures are in place to ensure that the persons
making and receiving reports are not identified so as to prevent them from being subject to any unfavorable
treatment. To date, the company has not received any reports of serious breaches of the law, CSR policies, orcompany rules.

55

handling of material information and the pre-approval and post-fact reporting of company shares. We also ensurethat these rules are clearly communicated to employees. To ensure that insider trading does not occur, the rules
have also been accompanied by an e-learning course for all employees to raise their awareness and understandingof the topic.

Whistle-blowers (Japan or overseas)●●●

Current or former employees or executives of Socionext and subsidiaries
Current or former temporary workers or trainees at Socionext

Suppliers, or their employees or executives, from whom Socionext has directly procured goods, software, or services[1] Report

Internal reporting[5] Respond
Coordinate(Risk and Compliance Committee Secretariat)[2] Inquiry or improvement
instruction[3] Improvement or
results report

External reporting(Socionext Reporting Contact at TMI Associates)[4] Inquiry report (summary report)

Relevant department

Board of Directors

Main Actions on Compliance●Compliance education and Training
The Socionext Group conducts education and training to raise employee awareness and understanding ofcompliance.
The main instances of compliance education and training in the FY ended March 31, 2023 were as follows.

Education and training∙ Basic compliance education for all employees provided by e-learning (100% participation)∙ e-learning programs for all employees on the following topics (100% participation)<Thema>Laws on subcontractor payments and security-related export controls, harassment prevention,
information security, and insider trading.
∙ Group classes for new recruits on compliance, information security, and human rights●Ensuring exclusion of Antisocial forces (organized crime)
The Socionext Group stipulates the exclusion of antisocial forces in its CSR policies and compliance criteria,
explicitly declaring its intention to be resolute in its attitudes and response to all forms of antisocial activity and to
avoiding such relationships, with this stance being clearly communicated to employees. The company has also
formulated rules on dealing with antisocial forces and laid out specific measures for their exclusion.
[Key measures]∙ To ensure the exclusion of antisocial forces, provisions to this end are either included in supplier and othercontracts or are contained in separate agreements reached with such parties.
∙ Socionext cooperates with the Police and has put measures in place to collect information about antisocial
forces. It has appointed a person to be responsible for preventing extortion and has joined an association ofcompanies in Kanagawa for defending against such forces.
∙ External agencies or similar are used to review all parties with which the company has contractual arrangements
to determine whether they have connections with antisocial forces or are suspected of doing so, both at the timeof entering into the contract and at regular intervals thereafter.

●Action on Preventing Insider trading.
Socionext group has formulated rules for preventing insider trading, with stipulations that include the appropriate

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Socionext ESG Report 2023

[Management of insider information]∙ In accordance with laws, regulations, and internal regulations, we will appropriately manage insider information.
∙ In order to prevent the leakage of financial information and ensure fairness, the period from the day after theend of the fiscal year (quarterly settlement) to the date of the announcement of financial results is designated asa “quiet period,” and during this period, in principle, we refrain from answering comments or questions related tofinancial results. However, even during this period, timely disclosure may be made in accordance with the Timely
Disclosure Rules.

●Promotion of Fair business transactions
In order to promote fair business transactions and anti-corruption measures, the Socionext Group has establishedthe following Group Policy and is working on measures to ensure thorough dissemination. Since its inception,
Socionext group has not violated any national competition, antitrust or anti-corruption laws.

ESG Report 2023

ESG Report 2023

[Internal reporting ﬂowchart](1) We conduct business transactions by fair means based on the principle of free competition and in compliancewith national competition laws.
(2) We do not participate in agreements with competitors that may violate national antitrust laws and do not
engage in practices that raise such suspicions.
(3) We comply with national anti-bribery and anti-corruption laws and do not engage in acts that invite suchsuspicion.
[Main measures]∙ We are working to prevent corruption by thoroughly disseminating rules prohibiting entertaining and giving gifts
to public and foreign officials, applying in advance for entertaining and giving gifts, and conducting regularsurveys on entertaining and receiving gifts.
∙ All employees receive e-learning education, which includes explanations of relevant laws and regulations(Antimonopoly Law, Unfair Competition Law, etc.) and examples of violations, to continuously raise employee
awareness.
∙ Related Party Transaction Management Rules. The Company examines the reasonableness of transactions andthe appropriateness of terms and conditions and eliminates inappropriate transactions such as conflicts ofinterest.

●Security Export Control
The Socionext has established a system for security export control and is implementing appropriate operations.
In addition to establishing relevant internal regulations at each our group company, we have established a
specialized division within the company, the Security Export Control Office, and are working under the following
basic policies.
∙ W ith regard to the export of regulated goods, brokered trade transactions, and technology brokeredtransactions, no acts contrary to the Foreign Exchange Law and Foreign Law shall be conducted.
∙ In order to comply with foreign exchange and foreign laws and to implement appropriate export control, a person
responsible for security export control shall be appointed and an export control system shall be established andenhanced.
We also provide education on security export control through e-learning for all our company employees.
*1: The “Foreign Exchange Act” refers to the “Foreign Exchange and Foreign Trade Act” and Cabinet Orders, ordinances and circulars
based on it.
*2: “Foreign law” means foreign law that regulates the export of goods and the provision of technology with a view to maintaining
international peace and security, as determined by the Security Export Control Office of our company.

57

Socionext, which operates in the “Solution SoC” business, is actively working on information security as one ofkey management issues, as it may keep important confidential customer information in its development
operations.
We ensure information security throughout the Group by establishing basic measures and systems to ensure
information security, and by managing information confidentiality, integrity, and availability in a balanced manner,
thereby ensuring appropriate handling of information assets of our group, customers, and business partners.
We compline to the relevant laws and regulations in each country and manages and protects all personal
information, including customers, business partners and employees. our group handles personal information
carefully in accordance with the relevant laws and regulations of each country and collects, stores, modifies,
transfers, shares and otherwise processes personal information to the extent necessary to achieve its identified
purposes of use.
We also provide education on information security and personal information protection through e-learning for all
our company employees.

ESG Data
E: Environment●Greenhouse Gas Emission (GHG)
Item 1

Item 2GlobalFY ended
March 31,2022

FY ended
March 31,
2023

7,289

8,534

t-CO2

318

235

t-CO2

6,971

8,299

Unit
CO2
emission

Total (S1＋S2)
Scope1
Scope2Market BaseScope3 Excluding Scope1 and 2
C1

Purchased goods and services

t-CO2

216,169

517,294

C2

Capital goods

t-CO2

27,71532,053C3

Fuel- and energy-related activities not included in
Scope1 and 2

t-CO2

1,269

1,416

C4

Upstream transportation and distribution

t-CO2

895

1,150

C5

Waste generated in operations

t-CO2

50

26

C6

Business travel

t-CO2

200

953

C7

Employee commuting

t-CO2

467

510

C8

Upstream leased assets

t-CO2

Not applicableNot applicable

C9

Downstream transportation and distribution

t-CO2

Not applicablefor calculationin category 4.

Not applicablefor calculationin category 4.

C10

Processing of sold products

t-CO2

Not applicableNot applicableC11

Use of sold products

t-CO2

Not applicableNot applicable

C12

Disposal of sold products

t-CO2

Not applicableNot applicable

C13

Downstream leased assets

t-CO2

Not applicableNot applicable

C14

Franchises

t-CO2

Not applicableNot applicable

C15

Investments

t-CO2

Not applicableNot applicable

ESG Report 2023

ESG Report 2023

●Information Security/Protection of Personal Information●Energy management in Business activities
Unit

FY ended March 31,
2022

FY ended March 31,
2023

Total energy consumption

GJ

176,530

197,892

Percentage of power from the grid electricity

%

95.3

96.4

Percentage of renewable energy

%

0

0

Item

58

Socionext ESG Report 2023

59

●Product Life Cycle Management: Percentage of sales generated from Products
containing IEC62474 Declared substances.

Japan
Item

Unit

FY ended March 31, 2023

[KL/year]

3,356

2,761

[KL/employees]

1.53

1.26

Energy consumption

Usage rate

FY ended March 31, 2022

●Reduction of Waste (Japan)

The percentage of sales generated from products containing substances subject to IEC62474 declaration is 0%.
Our products do not use substances that exceed the thresholds for IEC62474 declarations, are used for purposesthat require reporting, and do not use any substances that are required to be reported.

S: Social
Japan

Item
Amount of waste discharged

Unit

FY ended March 31, 2022

FY ended March 31, 2023

(ton)

81

14

●Human Resource Development●Water Consumptio
GlobalItem
Water usage

Unit

FY ended March 31, 2022

FY ended March 31, 2023

(ton)

3,440 *

4,798

Training Timeper Employee

2.9 hours

1.3 hours

4.6 hours

Training for new recruits and for newly appointed senior
management, etc.

General training<All employees attend an annual e-learning course>∙ Topics include compliance, information security, insider
trading, preventing harassment, the environment,
procurement, and the law on security-related export controls

3.9 hours

Targeted training

Technical training for engineers, language studies, etc.

2.9 hours

5.5 hours

9.7 hours

11.4 hours●Female and Male ratio

Japan
Item

Unit

FY ended March 31, 2022

FY ended March 31, 2023

Persons(Participation rate)

2,331(100%)

2,331(100%)

Female/Male ratio (Japan)

Female/Male ratio (Global)●ISO14001 Certification
Area

Unit

FY ended March 31, 2022

FY ended March 31, 2023

Female% (person)

9.5% (208)

9.8% (213)Male% (person)

90.5% (1,983)

90.2% (1,954)

Female% (person)

11.9% (306)

12.4% (312)Male% (person)

88.1% (2,265)

87.6% (2,214)

FY ended March 31, 2022

FY ended March 31, 2023

2.4%

2.3%

FY ended March 31, 2022

FY ended March 31, 2023

70.2%

72.6%

●Female Management Position ratio (Japan)

Shin-Yokohama Headquarters
Kyoto Office
Japan

FY ended
March 31,
2023

Total

●Results of Environmental Education (Japan)

Participants

FY ended
March 31,2022

Job-level-specifictraining*the fiscal year ending March 2022 results is only Japan.

Environmental education

Unit

Training Summary*In the fiscal year ending March 2022, the amount of waste discharged increased due to the relocation of the Kyoto office.

ESG Report 2023

ESG Report 2023

●Reduction in Energy Use (Japan)

Kawasaki (Mizonokuchi) OfficeFemale management position ratio (Japan)

Sendai Office
Kozoji Office●Gender Wage Gap (Japan)●Environmental Risk Management
Item
Violation of environmental regulations

Gender Wage Gap
Unit

FY ended March 31, 2022

FY ended March 31, 2023

(case)

00●Greenhouse Gas Emissions: Total Emissions from Perfluorinated Compounds
Total emissions from perfluorinated compounds is 0 t-CO2eq.

●Percentage of Male taking Childcare leave (Japan)
Percentage of male taking childcare leave

FY ended March 31, 2022

FY ended March 31, 2023

25.9%

16.7%

Our company products do not contain the substance60

Socionext ESG Report 2023

61

ESG Report 2023

●Employees with Disabilities (Japan)
Unit

June 2022

June 2023

Persons

51

53

Employment ratio

%

2.2

2.3

Employment target

%

2.3

2.3

Number of employees●Conflict Minerals
3TG
FY ended March 31, 2023 (19 companies)
Total

Gold

Tantalum

Tin

TungstenNo. of smelters or other processing facilities

233

99

36

60

38

No. of RMAP-certified (conflict-free) smelters or otherprocessing facilities

219

93

34

56

36

No. of RMAP Active facilities

1

-

-

1

-

No. of other RMI-certified facilities

13

6

2

3

2

Percentage of RMAP-certified facilities

94%

94%

94%

93%

95%

Inquiry response rate

100%

-

-

-

-

G: Governance●Ratio of Directors
UnitInternal Directors

Outside Directors

Total

AS of March 2023

As of December 2023

FemalePersons (%)

0 (0％)

0 (0％)

Male

Persons (%)

6 (60％)

5 (50％)

Total

Persons (%)

6 (60％)

5 (50％)

FemalePersons (%)

1 (10％)

2 (20％)

Male

Persons (%)

3 (30％)

3 (30％)

Total

Persons (%)

4 (40％)

5 (50％)

FemalePersons (%)

1 (10％)

2 (20％)

Male

Persons (%)

9 (90％)

8 (80％)

Total

Persons (%)

10 (100％)

10 (100％)●Number of Meeting of the board of directors and Other committees (FY ended
March 31, 2023)

Meeting Held62

Socionext ESG Report 2023

Board of Directors

Appointments andRemuneration Committee

Audit and Supervisory
Committee

14

14

17

Copyright 2023 Socionex t Inc.
AD00-00006-1E December 2023