G

Governance
The METAWATER Group is strengthening the entire group’s risk management structure including information security. In addition, weare committed to promoting Business Continuation Management (BCM) as an entire group to continue business operations even in theevent of various unforeseen situations.

Corporate governanceCorporate governance organization
METAWATER Group opts for an arrangement of a Board of Auditors as an organization design based on the Companies Act. The Board of Directors makes

Basic concept of corporate governanceimportant decisions related to management and supervises business execution. At the same time, auditors and the Board of Auditors independent from the Boardof Directors audit the status of directors' execution of their duties and the like. For the purpose of strengthening independence, objectivity, and accountability

So that we can grow sustainably with society, we are committed to improving our internal control based on our corporate mission. We

for the function of the Board of Directors related to the nomination of candidates for directors and auditors, determining renumeration for executive officers

are aiming to be a group trusted by society through our continuous contribution to it while meeting the expectations of our stakeholders

and directors, etc., a Nomination and Renumeration Advisory Committee has been established under the Board of Directors. Furthermore, METAWATER Group

including customers, local communities, shareholders and investors. To realize this aim, we are engaged in improving the following

has introduced the Executive Officers System to accelerate management-related decision-making, reinforce functions to monitor business execution, and clarify

aspects of corporate governance.

responsibility. Additionally, a CSR Committee has been arranged as an organization to determine the important activities, systems, organizations, and the like of
the Group to ensure compliance with regulatory requirements and corporate ethics. The position and role of each function are mentioned below.

General meeting of shareholders Meeting

3. We disclose information in a fair, objective and appropriate manner and at an appropriate timing. Further, we communicate proactively with our
stakeholders.
As a basic policy of the METAWATER Group based on the rules of the "Corporate Governance Code" (hereinafter "CG Code") stipulated by the Tokyo Stock Exchange on June 1, 2015, the Group established the "Basic
Policy on Corporate Governance" (hereinafter "CG Basic Policy") on November 27, 2016 (updated November 29, 2018), and disclosed the policy on the corporate website.
https://www.metawater.co.jp/csr/responsibility/pdf/governance.pdf

Appointment/
Dismissal/Approval

Report/Submission

2. Promotion of compliance and reinforcement of internal control functions are realized to establish an organization that can sustainably enhance
corporate value.

Board of Directors Meeting
Advice/Proposals

Consultation

Nomination and
Renumeration
Advisory Committee

Report/Submission

Appointment/
Dismissal/Approval

Appointment/
Dismissal

Board of Auditors Meeting

Audit
Supervision/Appointment/
Removal/Approval

President and Representative Director
Report/Proposal

Report/submission

Accounting Auditor
Cooperation

ReportAuditing Office

ApprovalManagement Meeting

METAWATER’S ESG

1. The Board of Directors and the Board of Auditors are arranged and independent directors are designated to reinforce the organization forsupervising our business with the purpose of creating corporate management with excellent reliability and transparency.

Internal audit

ReportApproaches to improve corporate governance
1

CSR Committee

Framework of directors

Report/Proposal

Approval

Business divisions/Group companies

The majority of the Board of Directors members are outside directors now(5 out of 9 directors are outside directors)
We have five outside directors of nine directors to ensure management transparency andsoundness.
●

One-third of the Board of Directors are independent directors (outside directors)(3 out of 9 directors are independent directors)
The METAWATER Group stipulates criteria for the independence of outside directors in
the Basic Policy on Corporate Governance. The number of outside directors satisfying thecriteria is three, and these directors were designated as independent directors together
with two outside auditors in the report to the Tokyo Stock Exchange.

Board of Directors Meeting
The Board of Directors meetings, held on a monthly basis and also as needed,
function to supervise management and decision-making. The Board of
Directors is comprised of nine members including five outside directors. The
status of business execution by directors, including the representative director,
is monitored by auditors, where, as a basic rule, three auditors attend theBoard of Directors meeting and express their opinions whenever necessary.

●

2

Response to Corporate Governance CodeMETAWATER was listed on the First Section of the Tokyo
Stock Exchange Market in December 2014. As the CG Codewas established in June 1, 2015, the group implemented
the measures stated on the right. We are committed tomoving forward with corporate governance also in future.

November 2015

June 2016●

Established “Basic Policy on Corporate Governance”●

Added one independent director (outside director)●

Disclosed evaluation on effectiveness of the Board of Directors*in compliance with CG Code (Rule 4-8)
*in compliance with CG Code (Rule 4-11-3)●*Only (Supplementary Rule 4-2-1) is the Explain Item in the “Report on
Corporate Governance” (hereafter “CG report”) submitted on June 26, 2018.
The reason for non-implementation (Supplementary Rule 4-2-1) (from CG Report)
The current remuneration for standing directors is comprised of fixed
remuneration based on their post and a bonus linked with the company’s
performance in the applicable business year. We will continue reviewing
the percentage of remuneration linked with mid-term or long-term
performance and the appropriate setting of percentage for cash and thecompany’s own stock as remuneration.

53

46th ordinary general meeting of shareholders

METAWATER REPORT 2019

June 2017●

One independent director (outside director) was added
Held a meeting by independent outside director*in compliance with CG Code (Supplementary Rules 4-8-1 and 4-8-2)

November 2018
November 2018●●

Revised the CG Basic Policy in accordance with partially revised
securities and listing regulations
Established Nomination and Renumeration Advisory Committee

Board of Auditors Meeting
The Board of Auditors meetings are held on a monthly basis and function
to monitor management. The Board of Auditors is comprised of threemembers including two outside auditors. Auditors are selected from thosewith expertise and experience regarding our business as well as in legal
and financial affairs. The Board of Auditors determines the audit policies
and scope of work for each auditor, as well as specific action plans andschedules, and monitors the status of business execution by directors.
Nomination and Renumeration Advisory Committee Meeting
The Nomination and Renumeration Advisory Committee was establishedunder the Board of Directors as a voluntary advisory body that functions
as both a nomination committee and renumeration committee. Thesemeetings are held as necessary, deliberating on matters related tothe appointment and dismissal of directors, auditors, and executive
officers, as well as renumeration for directors, executive officers, etc., in
consultation with the Board of Directors, and also providing advice andproposals to the Board of Directors. The committee is comprised of six
members total, including the Director and President, three independent

outside directors, and two independent outside auditors, with anindependent outside director selected as the chairperson.
Executive Officers System
The Executive Officers System has been introduced to acceleratemanagement-related decision-making, reinforce functions to monitor
business execution, and clarify responsibility. The executive officers arecomprised of fifteen members including four directors and executive officers.
Their term of office is one year and their appointment, reappointment, anddismissal are determined at Board of Directors meetings.
Management Meeting
The Management meetings consist of fifteen executive officers and, asa general rule, are held twice a month. In these meetings, reports are
given and discussions are held regarding important management-related
matters stipulated in our official competence rules. Standing auditors
attend the meeting and express opinions as necessary, monitoring thestatus of business execution by the President & Chief Executive Officer aswell as those executive officers below him.
CSR Committee Meeting
CSR Committee meetings are held twice a year, with a function ofpromoting compliance and reinforcing internal control. The CSR Committee
has seven subordinate working groups under it. The committee is comprisedof fifteen members, including the chairperson and fourteen committee
members. Details of the CSR Committee's activities are reported to theManagement Meeting and Board of Directors Meeting as needed.

METAWATER REPORT 201954

G

GovernanceCorporate governanceInterview with Outside Director
Outside Director’s roles
1 ‌Provide advice to promote the Company’s sustainable growth and improve medium- and long-term corporate value based on own knowledge
and insights, and supervise the execution of business by the Company
2 ‌As a position that is independent from the management, receive opinions from stakeholders including minority shareholders, and appropriatelyreflect those opinions at Board of Directors Meetings
3 ‌Appropriately manage risks including conflicts of interest arising from the execution of business by leveraging internal and external knowledge
and insights, as well as experience

Reasons for selection by individual
Reasons for selection

SusumuSakabeOutside Director

Mr. Sakabe held important positions at NGK INSULATORS, LTD. and has a wealth of management experience as well as a depth ofexpertise in the areas of finance and accounting. Considering that he has the required skill set to supervise the execution of the businessof the Company by leveraging his management experience and expertise, we appointed him as an Outside Director of the Company.

Motofumi
MatsumuraOutside Director

Outside Director

Keiichiro Sue

Kaoru
AizawaFumikoKosao

Kimihiko
UemuraKazuo
Takimoto

55

Independent
Director

Outside Director
Independent
Director

Outside Director
Independent
Director

Outside Auditor
Independent
Director

Outside Auditor
Independent
Director

METAWATER REPORT 2019

Mr. Matsumura held important positions at Fuji Electric Co., Ltd. and has a wealth of management experience as well as a depth ofknowledge in a broad range of business areas. Considering that he has the required skill set to supervise the execution of the businessof the Company by leveraging his management experience and expertise, we appointed him as an Outside Director of the Company.
Mr. Sue is a lawyer and is well versed in international legal affairs including international commercial relations. He
also held the position as an outside director of another company and has balanced and broad perspectives of industries
related to the Company. Although he has no direct management experience in a company except as an outside director,
we consider him to have the required skill set to supervise the execution of the business of the Company by leveraging
his experience and expertise, and accordingly appointed him as an Outside Director of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and also fulfills
the requirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider him to have nopotential conflicts of interest with general shareholders, and have designated him as an Independent Director.
Mr. Aizawa held important positions, including Representative Director of Nitto Denko Corporation. He also hasa wealth of management experience gained through his position as an outside director of another company andpossesses balanced and broad perspectives of industries related to the Company. We consider that he has the required
skill set to supervise the execution of the business of the Company by leveraging his experience and extensive
knowledge. Accordingly, we appointed him as an Outside Director of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and also fulfills
the requirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider him to have nopotential conflicts of interest with general shareholders, and have designated him as an Independent Director.
Ms. Kosao is well versed in corporate accounting with expertise in the area of taxation and has broad perspectives gained
through her position as an outside director of another company. Although she has no direct management experience in a company,
except as an outside director, we consider that she has the required skill set to supervise the execution of the business of theCompany by leveraging her experience and expertise. Accordingly, we appointed her as an Outside Director of the Company.
Because she meets the standards set by the Company for Criteria for Independency of Outside Directors and fulfills therequirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider that she does not have potential
conflicts of interest with general shareholders, and have designated her as an Independent Director.
Mr. Uemura is a lawyer and is well versed in corporate legal affairs including the Companies Act. With a wealth of experience
gained through his position as an outside director of another corporation, he has balanced and broad perspectives of industries
related to the Company. We consider him to have the required skill set to supervise the execution of the business of the Company
by leveraging his experience and high level of independence, and accordingly appointed him as an Outside Auditor of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and also fulfills therequirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider him to have no potential conflicts ofinterest with general shareholders, and have designated him as an Independent Director.
Mr. Takimoto is well versed in corporate taxation as a certified public accountant and tax accountant. With a wealthof experience gained through his position as an outside director of another company, he has balanced and broad
perspectives of industries related to the Company. We consider him to have the required skill set to supervise theexecution of the business of the Company by leveraging his extensive experience of finance and accounting, as well as
high level of independence, and accordingly appointed him as an Outside Auditor of the Company.
Because he meets the standards set by the Company for Criteria for Independency of Outside Directors and also fulfills
the requirements of an Independent Director stipulated by the Tokyo Stock Exchange, we consider him to have nopotential conflicts of interest with general shareholders, and have designated him as an Independent Director.

Outside Director

Kaoru Aizawa—— I t h a s b e e n t h r e e y e a r s s i n c e y o u w e r e—— What is necessary for sustainable improvement

appointed as an Outside Director. What are yourof corporate value?

overall impressions regarding the management of theI think the METAWATER Group has a unique feature that

Board of Directors, state of discussions, etc.?

is not shared by other companies: a fusion of electrical-,Lively opinions are always being given, and the board

machinery-, ICT-, and maintenance-based know-how.

operates in a good atmosphere. Moreover, I think it is

Another important strength is how they maintain highwonderful that the board members are diverse and that

quality in each field. However, as things continue to shift

they exchange opinions as experts of their various fields.

from the public to the private sector, and also taking into

With this last year in particular, our 10th anniversary, I feel

consideration the importance of water demand overseas,

like the company is changing dramatically. It's great thatthe value of not just hardware such as equipment, but

lively opinions are exchanged while also being aware ofservices using networks, etc., should increase. I believe

where to change, what to change, and what not to change.

that people hold the key to the quality of a company, and—— Please tell us about your role as an Outside
Director.

METAWATER’S ESG

Corporate title

The METAWATER Group will drastically change toachieve its long-term vision.
In order to change and respond to these changes,
I try to give advice and opinions from the perspective ofan Outside Director.

so I would like to see ongoing development of humanresources who can play an active part in the world being
promoted by the METAWATER Group.

I was previously involved in training and education for
management personnel of the METAWATER Group. It was—— What are your expectations with regard to social

during this time that I started to experience the culture andissues (SDGs, etc.)?

warmth of the people of the METAWATER Group, which

It is important to address social issues such as the SDGs.

led me to take on the role of an Outside Director. In thisI recognize that the METAWATER Group exists to solve arole, I hope that I can use my experience and knowledge

major one of those issues, water and resources. All overto help expand the Company. However, it is important to

the world, there are millions of people who become sick or

watch over the Company as well. Being part of the samedie because they don't have access to clean water. I hopeculture, you may miss, overlook, or simply not care about

the METAWATER Group can make full use of the powercertain things. An important role of Outside Directors is tothey have available so that safety and security can begive advice to be aware of these points from a third-party

spread far and wide.

perspective.
—— What are your thoughts on the governance of—— What are your future aspirations as an Outside
Director?

the METAWATER Group?

I want to give opinions and advice from a different

I think that the governance system and strengthening ofperspective than those inside the Company so that eachthat system are being addressed sincerely and thoroughly

and every employee of the METAWATER Group can work

as a whole. However, when you think that something is

comfortably and continue to contribute to sustainable

good enough, that is when many things start to breakcorporate development and society. I would like todown and deteriorate. Therefore, I will try to move forward

participate from a standpoint outside of the Company withwhile asking myself, "Is this really good?" endeavoring toa grasp of the overall picture.

give advice to increase the transparency and objectivity of
governance.

METAWATER REPORT 2019

56

G

GovernanceManagement organization(As of end of June 2019)

METAWATER’S ESG

❻

❽

❿
⓬
❹

❺

❷

❼ ❾
❶

⓫
❸

Directors
1 President and Representative Director

Yasushi Nakamura

Auditors
5 Outside Director

Susumu Sakabe

Executive Officers

10 Audit and Supervisory Board Member

Shigeru Hatsumata

Director of NGK INSULATORS, LTD. Senior Executive Officer

2 Director

Akira Kato

3 Director

Noboru Okuda

4 Director

Kenji Yamaguchi

6 Outside Director

11 Outside Auditor

Motofumi Matsumura

Kimihiko Uemura

Advisor of Fuji Electric Co., Ltd.
Director of Fuji Furukawa Engineering & Construction Co., Ltd.

Partner of Midosuji Legal Profession Corporation

7 Outside Director

President & Chief Executive Officer

Vice President and Executive Officer

Senior Executive Officer

Senior Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Operation execution control

Assistance to the Chief Executive Officer
Executive General Manager,
Corporate Strategy Planning Division
Responsible for Corporate Administration Department,
Affiliates Coordination Department, and Legal Department,
Corporate Strategy Planning Division
Executive General Manager, Export Control Officeand Affiliates Coordination Department, Corporate
Strategy Planning Division
Executive General Manager, Export Control Office

Executive General
Manager, Plant
Engineering Division
Responsible for ProductCenterResponsible for Quality
Assurance Office

Executive General Manager,
Service Solution Division
President andRepresentative Director,
METAWATER TECH Co., Ltd.

Executive General
Manager, Public Private
Partnership Division

President andRepresentative Director,
METAWATER SERVICE
Co., Ltd.

Executive General
Manager, Business
Strategy Division
Responsible for WBC
Center

Deputy Executive General
Manager, Corporate Strategy
Planning Division
Executive General Manager,
HR & General Affairs Planning
Office, Corporate Strategy
Planning Division
Responsible for CSR Promotion
Office, Corporate Strategy
Planning Division
Responsible for Risk Management

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive Officer

Executive General
Manager, Sales andMarketing Division

Executive General Manager, Financial
Planning Office, Corporate Strategy
Planning Division

Deputy Executive General Manager,
International Business Division
Director and Deputy President,
METAWATER USA, INC.
Chairman of the Board, AquaAerobic Systems, Inc.

Executive General Manager,
Plant Construction Center

Deputy Executive General
Manager, Sales &Marketing Division

Executive General Manager,
Procurement Center
Responsible for Safety and
Health Management Office

Executive General
Manager, International
Business Division
Director and President,
METAWATER USA, INC.

Yasushi Nakamura Akira Kato

12 Outside Auditor

Keiichiro Sue

Kazuo Takimoto

Partner of Blakemore & Mitsuki Law Firm
Outside Audit & Supervisory Member of NHK Spring Co., Ltd.

CPA and Tax Accountant ofTokyo Kudan Accounting OfficeNoboru Okuda

Makoto Shimizu Masashi Sakai

Eiji Nakamura

Kenji Yamaguchi

Michio Fujii

8 Outside Director

Kaoru Aizawa
Independent Director of Nicca Chemical Co, Ltd.

9 Outside Director

Fumiko Kosao
Licensed tax accountant, Kosao Fumiko Accountant OfficeOutside Auditor of Tobishima Corporation
Outside Director of CTI Engineering Co., Ltd.

Masahiro Takagi Masayuki Nakagawa Yoshito Ezure

Responsible for Information
Technology Planning Department,
Corporate Strategy Planning Division

57

METAWATER REPORT 2019

Tsugio Kusano

Susumu Kadowaki Koichi Yamaguchi Ken Akikawa

METAWATER REPORT 201958

G

GovernanceRisk Management

Initiatives for strengthening information security

With the “METAWATER Group Risk Management Rules” in place, the METAWATER Group has a systematic awareness of various risks
that can affect the Group’s operations, evaluates and manages those risks appropriately, and thereby seeks to prevent their occurrenceor to reduce losses associated with them, while striving to improve and expand the corporate value of the Group.
Furthermore, the Risk Management Working Group has been established within the CSR Committee in an effort to improve andreinforce the corporate framework so that the Group can appropriately address individual risks in order to meet stakeholders’expectations.

Board of Directors Meeting

Supervision

Management Meeting

ReportInstruction
Supervision

Reportefficiency and convenience, etc. However, the development of an information society is increasing, and with it information security risks are
increasing as well, such as leakage of confidential or personal information, cyber-attacks, etc. As such, the METAWATER Group is making various
efforts to combat information security risks.

Upgrading security countermeasures at construction andplant operation sites
In addition to strengthening information security in offices, the METAWATER Group is also
taking measures to strengthen information security at construction sites and operation andmaintenance sites for water and sewage treatment plants. At the same time, we conduct ITinternal audits to identify issues and implement countermeasures. Opportunities for minor
improvements were identified in FY2018 audits, and all of those issues were corrected, with
continuous improvements being made.
Information security is imperative at construction sites

ReportRisk Management Sub-Committee
Instruction

Auditing Office

Audit

ReportDivisions/Group companies

Information security training for all employees
Collective education and e-learning training is being carried out for all employees to improvetheir information security knowledge. For new employees in particular, all group companies
are holding individual workshops. Easy-to-understand examples are used to raise awarenessand strengthen information security.

Besides, to further address individual risks, we have stipulated “Group Emergency Procedures,” “Compliance Rules,” “Information

METAWATER’S ESGCSR Committee

The utilization of Information and Communications Technology (ICT) is indispensable for promoting work style reforms, improving operational

Information security seminar for new graduates

Security Policies,” rules and standards to address accidents and environment/safety and hygiene issues, manuals, and so forth. As aresult, we have established a system that enables prompt and appropriate responses to be taken in the event of various contingencies.

Compliance
We believe that ensuring proper compliance and being widely trusted by society leads to sustainable growth of the METAWATER Group, as

BCM activities

well as fosters a healthy corporate culture. Based on this understanding, we have established Compliance Rules that serve as guidelines for the
Corporate Charter of Conduct, the Employees' Code of Conduct, and the compliance issues that the Group could implement and realize. In orderWith a commitment to strengthening Business Continuation Management (BCM),

to link these to specific action, various internal regulations have been established, ensuring thorough compliance with laws and internal rules.

the METAWATER Group has developed the Business Continuation Plan (BCP),
which is suitable for its business characteristics.
Furthermore, the Group regularly holds BCM Promotion Working Group meetingsin order to improve the effectiveness of the formulated BCP.
In FY2018, we held company-wide emergency response headquarters trainingthat included the participation of all directors as well as the President. For
this training, we assumed that a large-scale earthquake occurred and worked
primarily on the initial response to be taken immediately following the disaster.

BCM Promotion Working GroupWe also held a safety confirmation system briefing for executives, as well as
skill training for the Self-defense Fire-fighting Team organized by employees atCompliance Working Group

Compliance Education

As a specialized working group under the CSR Committee, we haveestablished the Compliance Working Group, which is comprised of fivechief department managers and the Legal Division as the secretariat.
They are engaged in activities that include checking on and improving
implementation of compliance programs, studying and developing
company-wide compliance education and measures, and offering
consultation on issues received from the compliance helpline. In responseto these matters, we hold emergency and temporary meetings in addition
to regular quarterly meetings.

The METAWATER Group provides lecture-based courses, including
company-wide education provided at main bases throughout the country,
company-wide e-learning, executive education, and education by rank.
From FY2018 to FY2019, we have been holding company-wide education
based on the themes of protecting personal information, information
security, and harassment prevention.
In FY2018, 31 meetings were held at eight bases, with 1,652 employees
participating in the courses.

■ FY2018 - FY2019 actual and planned
implementation of company-wide education

the head office and Hino office. They acquired various technical skills related tomaking emergency reports, performing cardiopulmonary resuscitation, using fire
extinguishers, etc.
Initial response at the office in the event of an emergency will also improve theeffectiveness of the BCP, and the Self-defense Fire-fighting Team training will berolled out nationwide.

59

METAWATER REPORT 2019

Company-wide emergency response headquarters training

FY2018(Actual)Head office (14 times), Hino (4), Sapporo (2), Sendai (3),Nagoya (3), Osaka (3), Chiba (1), Omiya (1)FY2019(Planned)

Head office (5 times), Hino (4), Fukuoka (2),Nagoya (3), Osaka (3)METAWATER REPORT 201960