February 7, 2022

Excellent Integrated Reports and Most-improved Integrated Reports
Selected by GPIF’s Asset Managers Entrusted with Domestic Equity Investment
Government Pension Investment Fund (GPIF) requested its external asset managers entrustedwith domestic equity investment (hereinafter, “external asset managers”) to nominate “excellent
integrated reports” and “most-improved integrated reports.”
This year, GPIF requested external asset managers to each nominate up to 10 companies, and theresults of the survey were compiled into two lists, comprised of 77 (77 in the previous survey) and100 (94 in the previous survey) companies selected for creating excellent integrated reports and mostimproved integrated reports, respectively, as shown on page 2 herein.
The following companies were nominated by many respondents as publishers of excellent
integrated reports. In terms of most-improved integrated reports, a wide range of companies were
nominated, but there was no company nominated by more than two external asset managers asshown in the chart, “Distribution of Nominated Companies based on the Number of Nominations byExternal Asset Managers.”
In this survey, we also requested the external asset managers to point out up to three items which
they consider particularly important or for which they expect further detailed descriptions in the
integrated report. This request was made so that the answers will be of assistance to companies
creating or considering to start publishing an integrated report. The results are shown on page 5
onward.

【Companies nominated by four or more external asset managers for their
excellent integrated reports】 (number of external asset managers)

Hitachi, Ltd. (5)Tokio Marine Holdings, Inc. (5)

RICOH COMPANY, LTD. (5)

OMRON Corporation (4)Mitsubishi UFJ Financial Group, Inc. (5)

ITOCHU Corporation (4)【Companies nominated by four or more external asset managers for their mostimproved integrated reports】 (number of external asset managers)Not applicable.
Note: As the definition of an integrated report depends on the individual external asset managers, a report that is not
specified as an integrated report may be also nominated if it is considered by an external asset manager that
information disclosure has been conducted based on “integrated thinking.” The names of the companies are listed
in order of their securities code in cases where the number of nominating external asset managers is the same.

Distribution of Nominated Companies based on the Number of Nominations byExternal Asset Managers
90
80
70
60
50
40
30
20
10
0

(Number of companies)

85

Excellent Integrated Reports
Most-improved Integrated Reports

6

0

6

50
15

15

0

4 or more asset managers 3 asset managers

1

2 asset managers

1 asset manager(Number of asset managers)

【Companies selected by GPIF’s external asset managers for excellent
integrated reports】
Number of

Code

Company name

Number of

Code

DAIWA HOUSE INDUSTRY CO., LTD.

2

4612

NIPPON PAINT HOLDINGS CO., LTD.

Sekisui House, Ltd.

1

4751

CyberAgent, Inc.

1

6981

Murata Manufacturing Co., Ltd.

1

6997

NIPPON CHEMI-CON CORPORATION

2181

PERSOL HOLDINGS CO., LTD.

1

4902

1

KONICA MINOLTA, INC.

1

7272

Yamaha Motor Co., Ltd.

2502

Asahi Group Holdings, Ltd.

1

2

4911

Shiseido Company, Limited

1

7752

RICOH COMPANY,LTD.

2503

Kirin Holdings Company, Limited

5

1

4967

KOBAYASHI PHARMACEUTICAL CO.,LTD.

1

7905

DAIKEN CORPORATION

1

2607
2768

FUJI OIL HOLDINGS INC.

2

5201

AGC Inc.

1

7951

YAMAHA CORPORATION

2

Sojitz Corporation

2

5401

NIPPON STEEL CORPORATION

1

8001

ITOCHU Corporation

4

2802

Ajinomoto Co., Inc.

3

5411

JFE Holdings, Inc.

1

8012

NAGASE & CO., LTD.

1

2871

NICHIREI CORPORATION

1

6005

MIURA CO., LTD.

1

8015

TOYOTA TSUSHO CORPORATION

1

3086

J. FRONT RETAILING CO., LTD.

2

6098

Recruit Holdings Co., Ltd.

3

8031

MITSUI & CO., LTD.

1

3407

ASAHI KASEI CORPORATION

2

6268

Nabtesco Corporation

2

8035

Tokyo Electron Limited

1

3880

Daio Paper Corporation

1

6301

KOMATSU LTD.

1

8058

Mitsubishi Corporation

1

4005

SUMITOMO CHEMICAL COMPANY, LIMITED

1

6361

EBARA CORPORATION

3

8113

Unicharm Corporation

1

4021

Nissan Chemical Corporation

1

6367

DAIKIN INDUSTRIES,LTD.

1

8252

MARUI GROUP CO., LTD.

2

4063

Shin-Etsu Chemical Co., Ltd.

1

6457

GLORY LTD.

1

8306

Mitsubishi UFJ Financial Group, Inc.

5

4183

Mitsui Chemicals, Inc.

2

6471

NSK Ltd.

1

8309

Sumitomo Mitsui Trust Holdings, Inc.

1

4188

Mitsubishi Chemical Holdings Corporation

1

6479

MINEBEA MITSUMI Inc.

2

8591

ORIX CORPORATION

2

4204

Sekisui Chemical Co., Ltd.

1

6501

Hitachi, Ltd.

5

8601

Daiwa Securities Group Inc.

1

4307

Nomura Research Institute, Ltd.

3

6645

OMRON Corporation

4

8725

MS&AD Insurance Group Holdings, Inc.

1

Code

Company name

1925
1928

nominations

nominations

Company name

Number of

nominations

1

4452

Kao Corporation

2

6674

GS Yuasa Corporation

1

8766

Tokio Marine Holdings, Inc.

5

4506

Sumitomo Dainippon Pharma Co.,Ltd.

1

6702

FUJITSU LIMITED

1

9020

East Japan Railway Company

1

4507

Shionogi & Co., Ltd.

2

6724

SEIKO EPSON CORPORATION

1

9086

Hitachi Transport System, Ltd.

1

4523

Eisai Co., Ltd.

1

6758

SONY GROUP CORPORATION

3

9101

Nippon Yusen Kabushiki Kaisha

3

4536

SANTEN PHARMACEUTICAL CO., LTD.

1

6762

TDK CORPORATION

1

9433

KDDI CORPORATION

1

9531

TOKYO GAS CO., LTD.

1

4544

H.U. Group Holdings, Inc.

1

6841

Yokogawa Electric Corporation

1

4568

DAIICHI SANKYO COMPANY, LIMITED

1

6902

DENSO CORPORATION

2

Note: The above list is composed of companies whose integrated reports were selected by external asset
managers as “excellent integrated reports” (listed in order of securities code).
The companies highlighted in blue were nominated by two or more external asset managers.

【Companies selected by GPIF’s external asset managers for most-improved
integrated reports】
Number of

Code

1

4901

FUJIFILM Holdings Corporation

DAIWA HOUSE INDUSTRY CO., LTD.

1

4911

1928

Sekisui House, Ltd.

2

1954

Nippon Koei Co., Ltd.

1963

Number of

Number of

Code

1

7381

Hokkoku Financial Holdings, Inc.

Shiseido Company, Limited

1

7518

Net One Systems Co.,Ltd.

1

4927

POLA ORBIS HOLDINGS INC.

1

7701

Shimadzu Corporation

1

1

5019

Idemitsu Kosan Co.,Ltd.

1

7733

OLYMPUS CORPORATION

1JGC HOLDINGS CORPORATION

2

5108

BRIDGESTONE CORPORATION

2

7735

SCREEN Holdings Co., Ltd.

2

2201

Morinaga & Co., Ltd.

1

5201

AGC Inc.

1

7741

HOYA CORPORATION

1

2269

Meiji Holdings Co.,Ltd.

1

5233

TAIHEIYO CEMENT CORPORATION

1

7752

RICOH COMPANY,LTD.

1

2282

NH Foods Ltd.

1

5401

NIPPON STEEL CORPORATION

1

7912

Dai Nippon Printing Co., Ltd.

1

2602

The Nisshin OilliO Group, Ltd.

1

5406

Kobe Steel, Ltd.

1

8031

MITSUI & CO., LTD.

1

2607

FUJI OIL HOLDINGS INC.

2

5411

JFE Holdings, Inc.

2

8056

Nihon Unisys, Ltd.

1

2768

Sojitz Corporation

1

5631

THE JAPAN STEEL WORKS, LTD.

2

8058

Mitsubishi Corporation

1

2811

KAGOME CO., LTD.

1

5741

UACJ Corporation

1

8113

Unicharm Corporation

1

2874

YOKOREI CO.,LTD.

1

5947

RINNAI CORPORATION

1

8242

H2O RETAILING CORPORATION

1

3099

Isetan Mitsukoshi Holdings Ltd.

1

6005

MIURA CO., LTD.

1

8283

PALTAC CORPORATION

1

3116

TOYOTA BOSHOKU CORPORATION

1

6201

TOYOTA INDUSTRIES CORPORATION

1

8306

Mitsubishi UFJ Financial Group, Inc.

2

Code

Company name

1812

KAJIMA CORPORATION

1925

nominations

Company namenominations

Company namenominations

1

3289

Tokyu Fudosan Holdings Corporation

1

6361

EBARA CORPORATION

2

8316

Sumitomo Mitsui Financial Group, Inc.

1

3382

Seven & i Holdings Co., Ltd.

1

6367

DAIKIN INDUSTRIES,LTD.

1

8591

ORIX CORPORATION

1

3626

TIS Inc.

16407

CKD Corporation

1

8601

Daiwa Securities Group Inc.

2

4061

Denka Company Limited

1

6479

MINEBEA MITSUMI Inc.

1

8630

Sompo Holdings, Inc.

1

4091

NIPPON SANSO HOLDINGS CORPORATION

1

6501

Hitachi, Ltd.

1

8830

Sumitomo Realty & Development Co., Ltd．

1

4182

MITSUBISHI GAS CHEMICAL COMPANY,INC.

1

6506

YASKAWA Electric Corporation

1

9005

TOKYU CORPORATION

1

4202

Daicel Corporation

1

6508

MEIDENSHA CORPORATION

1

9024

SEIBU HOLDINGS INC.

1

4204

Sekisui Chemical Co., Ltd.

1

6702

FUJITSU LIMITED

1

9104

Mitsui O.S.K. Lines, Ltd.

1

4206

Aica Kogyo Company, Limited

1

6724

SEIKO EPSON CORPORATION

1

9142

Kyushu Railway Company

1

4324

DENTSU GROUP INC.

1

6758

SONY GROUP CORPORATION

1

9201

Japan Airlines Co., Ltd.

1

4403

NOF CORPORATION

1

6841

Yokogawa Electric Corporation

1

9301

Mitsubishi Logistics Corporation

1

4443

Sansan, Inc.

1

6925

USHIO INC.

2

9432

NIPPON TELEGRAPH AND TELEPHONE CORPORATION

1

4506

Sumitomo Dainippon Pharma Co.,Ltd.

1

6963

ROHM COMPANY LIMITED

2

9501

Tokyo Electric Power Company Holdings, Incorporated

1

4516

Nippon Shinyaku Co.,Ltd.

1

6981

Murata Manufacturing Co., Ltd.

1

9508

Kyushu Electric Power Company, Incorporated

2

4536

SANTEN PHARMACEUTICAL CO., LTD.

1

7004

Hitachi Zosen Corporation

1

9513

Electric Power Development Co., Ltd.

1

4568

DAIICHI SANKYO COMPANY, LIMITED

1

7202

ISUZU MOTORS LIMITED

2

9735

SECOM CO., LTD.

1

4612

NIPPON PAINT HOLDINGS CO., LTD.

2

7259

AISIN CORPORATION

1

9793

Daiseki Co.,Ltd.

1

4689

Z Holdings Corporation

1

7272

Yamaha Motor Co., Ltd.

1

9843

Nitori Holdings Co., Ltd.

1

4849

en Japan Inc.

1

Note: The above list is composed of companies whose integrated reports were selected by external asset
managers as “most-improved integrated reports” (listed in order of securities code).
The companies highlighted in blue were nominated by two or more external asset managers.

2

Copyright © 2022 Government Pension Investment Fund All rights reserved.

【Remarks on the “excellent integrated reports” nominated by four or more external
asset managers】○

Hitachi, Ltd.

・ The integrated report clearly describes the commitment of the top management, explaining thecompany’s policy to step forward with expanding corporate value by broadening the Lumada businessand strengthening their business portfolio. The report also discloses specific items regarding theenvironment and social components of ESG.
・The target ROIC (under the Medium-term Plan) and the actual status are clearly indicated by businesssector. We highly evaluate the page on which the COO described the Lumada business strategy. The
financial and non-financial KPIs are clearly explained, based on which a story of expanding corporate
value is created from both points of view.
・The story of improvement of corporate value is clearly described, and the circulation of input and output
is also represented in an easy-to-understand manner. The clear description about how the Lumada
business—one of the pillars of the company’s strategy—and the initiatives as the base of the strategy
are linked to ESG is also clear enough to understand. Furthermore, the explanation of the relationshipbetween the past medium-term management plans and the Lumada business helps in-depth
understanding.
・The value creation process is clearly described, and at the same time, is associated with each relevantbusiness strategy. The descriptions of factors such as environment, human resources and governanceare also well-balanced. The information on the background of the review of the business portfolio, cash
allocation and financial matters including growth investments has increased.
・The integrated report summarizes the company’s complicated business structure, focusing on social
innovation in an easy-to-understand manner. In the section concerning the promotion of capital costconscious ROIC management, some examples of principal actions taken to improve profitability are
shown for easy understanding.

○

RICOH COMPANY, LTD.

・Starting from the company’s founding principles of the Spirit of Three Loves of “love your neighbor, love
your country and love your work”, the integrated report describes in a consistent form the specific vision
to realize improvement of customers’ productivity and efficiency and support their future creative works
as a digital services company. Also, there is a great deal of quantitative information, which makes thereport convincing.
・The Medium-term Management Plan describes the company’s ideal future specifically and in detail. The
company’s history of efforts and in-depth analyses on sustainability which are deeply rooted in thecompany can be fully understood when the report is read together with the TCFD report.
・ The growth story is described extremely simply and clearly. Furthermore, the integrated reportdemonstrates the company’s proactive attitude toward disclosure as often seen in their in-depth
disclosure of information associated with climate change.
・The value creation process to become a digital services company, the identification of materiality, andthe KPI are clearly explained and easy to understand. The report also provides detailed quantitative
information, such as achievements related to opportunities to act against climate change.
・The business strategy is explained in association with ESG issues for easy understanding of the value
creation process, which also leads to the portfolio management strategy. In addition, all ESG items thatinvestors expect for disclosure are included in the report.

○

Mitsubishi UFJ Financial Group, Inc.

・By clarifying their purpose and disseminating it across the company, the company’s thinking can be felt
through the entire report, particularly in the CEO message. Above all, the CEO message gives us afavorable impression in terms of his attitude toward sharing investors’ viewpoints in detecting issues,
indicating future directions to be taken.
・The closing remark of the CEO message was impressive: “A year from now, we hope to hear people
attest that MUFG has changed.” The structure of the message in which the top management recognizes

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issues in his own words and sincerely explains specific efforts to tackle those issues in the subsequentcontent is superb.
・The message of the top management expresses, without reserve, how the purpose was defined and hisawareness of the issues. Special care is paid to readability, as observed in the section of “A Guide to
Quickly Understanding Where MUFG Is Now,” in which seven key words and their locations of detailed
description for reference are indicated.
・In the CEO message, the awareness of issues for the improvement of ROE stands out and is impressive.
Particularly, based on reflecting how the company failed to achieve the target ROE for two consecutive
years, the direction to improve the ROE using three drivers consisting of profits, expenses and RWA(risk-weighted assets) rather than depending only on growth of profit was described clearly. The TCFDrelated information disclosure was also improved.
・The CEO’s powerful message consistently appears throughout the integrated report, representing thecompany-wide efforts for the improvement of financial and non-financial value. We have high hopes for
the CEO’s message, “A year from now, we hope to hear people attest that MUFG has changed.”○

Tokio Marine Holdings, Inc.

・With the purpose as the starting point, the company’s value creation story and the Medium-termManagement Plan are described in a highly persuasive manner. Full of enthusiasm and confidence, thetext appears to have the power to move stakeholders’ minds.
・It is clearly described that efforts will be focused towards the sustainable expansion of corporate value
and strengthening of global competitiveness through integrated group management by the Global
Management Team and purpose-focused management. We can understand the sophisticated risk
management from the CFO’s message and the Medium-term Management Plan.
・Following the previous year’s version in which significant changes were made to the composition, thefocus is placed on the long-term perspectives. Messages are clear and very convincing. It is highly
legible despite a large volume of information.
・The direction of business management is indicated as mainly in line with the purpose, which has notchanged since the establishment of the company, as well as the strengths and managerial resources
gained through doing business, and based on the business environment surrounding the company andthe recognized issues. The business strategy and policy toward the improvement of corporate value areconvincing.
・The report explains the company’s reasons as a story of purpose, and indicates that value added isgenerated through business models in the value creation approaches. The link between the past,present and future is clearly described in an easy-to-understand manner.

○

OMRON Corporation

・The content of the interviews of the CEO and CFO is intensive and well worth reading, and thecomposition of the story of corporate value creation is also sufficiently clear. The disclosure ofgovernance has been improved together with the company’s concept concerning organizational
structure and systems.
・The concept of linking the initiatives for sustainability to business value is clear enough to understand.
Furthermore, we highly evaluate that such a concept is explained using not only a medium- to long-term
policy but also short-term concrete measures and a story to attain growth.
・The report elaborates the company’s unique efforts for the implementation of the corporate philosophy,
and makes it easy to understand that such efforts contribute to the improvement of corporate value.
Furthermore, the direction of the long-term vision that will start in the next fiscal year is clearly discussed.
・The target for each materiality is superbly consistent with the business strategy of the Medium-termManagement Plan. And the concept of ROIC-based portfolio management is also discussed in detail.

○

ITOCHU Corporation

・The story of value creation is transmitted from a viewpoint different from the conventional one to pursue
greater reader satisfaction. We highly regard that the report was created for anyone to read easily,
assuming a wide range of stakeholders as readers.

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Copyright © 2022 Government Pension Investment Fund All rights reserved.

・We highly evaluate that corporate value is explained using a diagram. This is an ideal integrated reportmentioning not only governance of subsidiaries but also the top management’s powerful messages andcommitment to management.
・Various issues including the business strategy, cash allocation and sustainability are discussed byassociating them with the calculation formula of corporate value. After reading through the report, wefound it highly consistent, having a story and being fully complete. The information has been reorganizedbased on a calculation formula of corporate value. The company’s corporate mission “Sampo-yoshi” hasbeen developed into a viewpoint towards stakeholder-oriented management. Wide-ranging andcomplicated businesses are described in a succinct manner and in an effective at-a-glance form. The
report was elaborated on by the Chairman himself, and the company made practical use of it bydistributing it to the management teams of the company’s investees.
・The description of the long-term vision, value creation process, business models and materiality has astory nature, and the connection with strengths and invested capital is also clear. We highly evaluate thereport as a tool for dialogue with investors, in consideration of its composition, which shows anawareness of improvement of corporate value.

【Remarks on the “most-improved integrated reports” nominated by four or more
external asset managers】
Not applicable.

【Items which external asset managers consider particularly important or for which they
expect further detailed descriptions in the integrated reports】
Item

Specific content and reason
The message should be expressed by the top management’s own words, andconsistent with the content discussed at ordinary briefing meetings. The
concept concerning corporate value and sustainability must be clearly
explained as a message to stakeholders.
Amidst an age of changes, the message from the top management is
expected to further increase in importance.

We ask that the message from the top management include powerful andrealistic comments on the management philosophy and the background ofmanagerial decisions that only the CEO can provide, and not be limited to theintroduction of the initiatives achieved during the current fiscal year.
Message from the Top Content: The company’s direction from long-term perspectives, recognizedissues, management philosophy, purpose, and the President’s enthusiastic
Management
message concerning a long-term vision and sustainable growth strategy, as
well as their powerful will towards the achievement of goals.
Reason: The top management’s message on the company’s vision andmateriality expressed in his/her own words and with enthusiasm directly links
to the company’s actual conditions and motivations. We emphasize this point
in order to judge whether the top management is serious or just making
formal responses.
The importance of each item varies depending on the situation around thecompany. Through the message from the top management, investors canrecognize companies’ potential and issues in order of priority. Therefore, wewant the company to express its uniqueness with this item.
Message from the Top ・Displays the enthusiastic message from the top management aiming toManagement (onimprove medium- to long-term corporate value.
management
・Issues recognized and initiatives for the “ideal future” are indicated, andphilosophy, etc.)“sustainability” and “CSV management” are specifically mentioned.

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Copyright © 2022 Government Pension Investment Fund All rights reserved.

ItemSpecific content and reason

Message from the Top
Management /Remarks from orinterview with Outside
Directors

To confirm the awareness of the top management concerning the company’spresent status and future outlook. To use as a reference for the evaluation ofeffectiveness of governance, such as the leadership of the management teamand effectiveness of the Board of Directors.

Interview
with Outside Directors

Content: Suggestions for the recognition of issues facing the company,
commitment to management, roles played in various committees, andevaluation of effectiveness of the Board of Directors. (I request that thedescription be as clear as expressed by the meaning of the word exactly“effectiveness.” I pay much attention particularly to matters pointed out by
Outside Directors and the action plans to respond to those matters.)
Reason: The remarks of Outside Directors will help evaluate the effectivenessof the Board of Directors in addition to confirming whether or not the relevant
Outside Directors recognize the issue. (In the case of non-disclosure, suchpassive attitudes will be also subject to evaluation.)

Value creation process

Content: Clarify social issues in expectation of megatrends, and explain whatsocial benefits will be created to link to business growth by addressing suchsocial issues.
Reason: The company’s global perspectives and forward-looking strategy canbe confirmed if the report refers to megatrends. We can observe somecompanies beginning to discuss their way of thinking as above concerning
the market in 2050 (or thereafter, if necessary).
A story flow is required to give us answers to the following questions: Whatkind of business model is being built in order to attain the medium- to longterm visions? What kind of resources are being used (input) for such a
purpose? Why is it possible at your company?

Value creation process/Business models

We understand that these items are the key information of an integrated
report. It is important to effectively transmit the company’s way of thinking andmessage concerning these items to investors. We believe it is critical for thecompany to show the long-term process of generating added value from aforward-looking point of view, and to not limit themselves to reporting theirphilosophy and achievements.
These items are important for stakeholders to further their understanding of
the improvement of the company’s sustainable value. We expect that the
purpose, the company’s ideal future, and materiality determined based onthese, KPIs, medium-term plan, and other items will be put into words withconnectivity and the flow of a story.

Presentation of value
creation process(toward theimprovement ofsustainable corporate
value)

・A sustainable and convincing value creation process is clearly indicatedafter presenting an ideal future based on the medium- to long-term market
sense.
・In presenting the value creation process, (management) resources areanalyzed objectively, and materiality is also added.

Value creation process
for realizing
the corporate
philosophy

・We would like to know how the company creates value by organicallyconnecting all capital in order to realize the corporate philosophy.
・To that end, we request that invested capital, business models and theoutcome be described briefly based on the company’s unique characteristics.

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Copyright © 2022 Government Pension Investment Fund All rights reserved.

ItemSpecific content and reason

Management
philosophy, materiality,
value creation process

We value the strengths of the management philosophy (purpose, vision,
mission, etc.) of the company as an organization with a history, theconsistency and integrity of the three items, and whether there is a story thathas the power to move stakeholders, including employees and major
business partners who assume the role of improving corporate value.

Corporate philosophy /Vision / History

Corporate
governance

Financial strategy
discussed by the CFO
Capital cost-conscious
medium- to long-term
financial strategy
Capital policy
Integration of financial
and non-financial
information (nonfinancial informationthat may have financial
value in the future, andits story)

To understand what kind of value the management of the company is based
on, and what successes and failures the company has experienced throughvarious ages, and as a result of that, how the company has ultimately arrived
at the present vision and business portfolio.
The company’s ideal governance and principal discussions conducted by the
Board of Directors in the current fiscal year should be described by the
Chairperson of the Board of Directors, and the impression of the company
should be stated by Outside Directors.
For the purpose of improving sustainable corporate value, we would like thecompany to clearly describe the following: 1) Enhancement of the Board of
Directors’ structure, 2) Selection of skills, 3) Activities of Outside Directors as
representatives of shareholders, 4) Building same-boat systems withshareholders, and 5) Persuasive evaluation of effectiveness.
It is desirable to disclose the details of the company’s governance designs,
including a diagram of the committee system relating to environment (E) andsociety (S), as well as the evaluation of its effectiveness. It is not always
necessary to have those committees, but it is more desirable if we canconfirm that verification was implemented in terms of the company’s ideal
governance system and efforts to attain it and make improvements, etc.
While descriptions concerning the Board of Directors, including newly
appointed outside directors, have been improved, it is desirable to devise a
way to disclose the real aspects of the Board of Directors, such as actual
discussions conducted and issues that exceed the disclosure of external form
standards.
We would like to know if the content is in line with the revised Corporate
Governance Code. We would also like to see a skills matrix of the Board of
Directors, etc.
It is important to discuss financial strategy, including capital costs and capitalefficiency. We believe that it is necessary for the company to give us a clear
message concerning the ideal balance sheets and the generating capabilityof, as well as the policy to utilize, cash flows.
We believe that it is important to decide how funds should be procured andallocated in order to achieve medium- to long-term management goals. We
request that the company explain its financial strategy taking capital costs into
consideration.
Clear capital policy. To understand capital structure, balance between capitalcost, investments and return.
Long-term investors value non-financial information. We expect that thecompany will consider non-financial information as “something that can bringfuture financial value and corporate value,” and show us a story of the
improvement of corporate value by combining it with financial information as
the management results to date.

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Copyright © 2022 Government Pension Investment Fund All rights reserved.

ItemSpecific content and reason

MD&A-type financial
analysis and capitalefficiency

An integrated report is one of the most important tools to comprehensively
judge corporate value. We would like to ask for proactive efforts for further indepth disclosure associated with financial strategy and capital policy
concurrently with the strengthening of ESG.

The company’s
materiality

To identify materiality in consideration of the company’s unique business
operations. To set evaluation indices and target values. Finally, to implementmonitoring of the actual results. It is desirable to disclose the establishment ofsystems, including the functions of monitoring by the Board of Directors.

The company’s
materiality /Medium-termManagement Plan

To confirm the important factors for the company’s sustainable growth. Also,
to confirm the connection between the background of and thinking regarding
why they are important, and specific actions pertaining to those items.

Identification ofmateriality andestablishment of
medium- to long-term
KPI

We particularly value this item because it leads to initiatives for the individual
ESG themes in the engagement with investors. We expect continued
improvement and strengthening of this item.

Medium-termManagement Plan

We give high evaluation if the company sets numerical targets for not only net
sales and profits, but also balance sheets, including the profitability of capital,
dividend plan and cash allocation. This will draw much more attention
considering a possibility of attracting the investment appetite of otherinvestors. From the viewpoint of a one-stop feature, we believe that it ismeaningful that the Medium-term Management Plan is shown again in the
integrated report in addition to its separate announcement. We hope that thecompany will explain its future direction from the medium- to long-term (5- to
10-year) perspectives.
Is the medium-term management plan discussed from both perspectives offinancial and non-financial information?

Management strategy /Medium-termManagement Plan /Description ofbusinesses
Connectivity between
management strategy
and sustainability
activities

Explanation of CSR /ESG management(CSV management)

To check the effectiveness of the items by confirming whether the company
applied the items to specific strategies and measurements, including
numerical targets, to realize the value creation story.
・Earning power and sustainability of value creation are important. We
believe that initiatives for sustainability are important when we consider
sustainable business.
・It would be easy to understand if the company’s materiality was organized
and initiatives associated with the management strategy were described in
the report.
・The report explains the company’s commitment to implementation of
CSR/ESG management (CSV management), its promotion system and checkby the person in charge using a PDCA cycle.
・“Materiality” from a viewpoint of considering the improvement of corporate
value and the order of priority is identified, and is disclosed together with theprocess of identification.

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Item

Initiatives forsustainability

Competitive advantage

Specific content and reason
We believe that it is now an essential initiative for a company in all economic
activities to consider medium- to long-term sustainability that involves ESG
factors. In order to confirm the company’s attitude, we evaluate suchinitiatives to identify risks and capture business opportunities whileconsidering the changes of external environment and the relationships withstakeholders, and by effectively using all available capital.
In the midst of the global movement toward carbon neutrality by 2050 and theheightened interest of the capital markets, we would like the company todisclose as much information as possible on specific plans and goals toward
the reduction of GHG emissions. If possible, we request that the company
disclose at an early stage the current specific values of Scope 1-3 and thetarget values of reduction, respectively. The report should also include themeasurement and the target reduction of GHG emissions, whether thecompany has joined the TCFD, specific carbon reduction measures including
supply chains, etc., and initiatives for raw material traceability based on thecharacteristics of the industry such as rare minerals, palm oil, and cacao, etc.
We would like the company to fully explain its competitive advantage as thesource of income, in the integrated report which is an arbitrary disclosurematerial.

External environmental
analysis /Competitive advantage

We would like the company to explain the output of what competitive edge
arises from the use of resources, including non-financial ones. For instance,
the disclosure should include not only the number of patents owned and thecontent and frequency of employee trainings, but also what kind ofdifferentiation the company has gained, or wishes to gain from them.

Concept of nonfinancial capital andstrengthening of
information disclosureof the details of
initiatives

We strongly recognize that the significance of “non-financial capital” has been
increasing when conducting long-term investments. In particular, we expectthat disclosure will include more information on natural capital and humancapital.

Data-related(Financial and nonfinancial)Engagement with
employees

In the financial aspect, it would be very useful if sales, profits, profitability andcapital efficiency by business segment were shown in an at-a-glance form on
a long-term basis. Particularly, it would be helpful in tracing the company’s
long-term business trends and the causes of changes if the information isshown in a longer span, say, for 10 to 20 years, which is longer than thestandard format of the Securities Report.
In terms of non-financial aspects, we would like numerical information to bedisclosed in terms of the initiatives for KPI and ESG, of which we need tokeep track from the perspectives of the business characteristics.
Concerning employees, one of the most important stakeholders in “S,” wewould like the company to disclose what kind of engagement the company
has conducted, and other information including the results of employees’surveys.

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