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Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Materiality Issues and Sustainability Management Promotion Strategy
Materiality Issues

E

S

G

Shared ValueContributing to prosperous
home living by providing
products and services thatoffers the unexpected

Product safety and security
through comprehensive quality
control

Value creation forproviding enriched
lifestyles to customers

Simultaneous expansionof economic value andenvironmental and social
value

Fair and honest trade andrespect for human rights in the
supply chain

Creation of a rewarding work
environment and promotion ofdiversity

Effective corporate governance

Sustainability Management Issues(1) Pursue affordability, appropriate quality (functionality),
and coordination(2) Resolve customers’ frustrations and inconveniences(3) Offer new value that further enriche lifestyles (products
and services that can lead to solutions toenvironmental and social issues)

Promoting environmentally friendly
manufacturing/initiatives
P45 - 46(1) Quality control and product safety measures as amanufacturer(2) Share with suppliers ideas and initiatives to build aculture of product safety

Promotion of environmentallyfriendly businessContribution to local communities

NITORI Group’s Approach(1) Carry out all tasks more efficiently throughout theentire supply chain(2) Make effective use of all raw materials(3) Make effective use of recycled materials throughinnovation(4) Disclose and reduce greenhouse gas emissions frombusiness activities(1) Supplier contracts based on strict standards andon-site investigations(2) Establish true partnerships with suppliers
Fair and honest trade, respect for human rights, work
environment creation, etc.

Creation of social value
through store openings
and support in terms ofhuman resources, theenvironment, and culture s a company that offers lifestyle infrastructure, expand the(1) Astore network and create stores supported by customers(2) Expand into global business (open stores and create
employment)(3) Disaster assistance and social action programs infields other than the main lines of business

Simultaneously achieve
employees’ jobsatisfaction andenhancement ofcorporate value(1) Education system that allows employees to realize
self-growth(2) Transfer to a variety of job category in a wide range ofbusiness fields(3) Create a comfortable environment where everyone
can work in good health with peace of mind

Ensuring transparency andsoundness ofmanagement
Speedy decision-making
and business execution(1) Build a foundation that supports medium- to long-term
corporate growth
Create decision-making systems and a basis for active
discussions(2) Ensure compliance(3) Build a robust risk management system

Expand waste reduction
and recycling
P47 - 48

Objective

By 2030,(1) Reduce waste emissions (general and industrial waste) by 30% (Per 100 million yen ofdomestic sales, compared to FY2018) *(2) Achieve at least 95% recycling rate of industrial waste *(3) Promote “resource recycling” as an initiative to eliminate waste in the first place
Expand product development with an eye toward recycling at the planning and designingstages (circular economy)
Promote recycling (collection and recycling) of products and packaging materials*(1) and (2) are for domestic operations.

Response Climate Change Issues
P49 - 50

Greenhouse Gas Emissions Reduction Targets (Global, Scope 1.2)
FY2030: 50% reduction compared with FY2013 (emissions per 100 million yen of net sales)
FY2050: Become carbon neutral. (net zero emissions)Sustainable Procurement
P48

First, establish a traceability system together with suppliers to achieve “sustainable timber
procurement.”

Promoting Diversity
P53

Increase the percentage of women in management positions to around 40% in the 2030s.
Increase the percentage of non-Japanese employees in management positions by promoting
assignment of non-Japanese employees to management positions
Increase the percentage of mid-career hires in management positions by continuing
recruitment of specialists

Promote human resource development and organizational
development

P51 - 52

Creating a healthy and safe work environment

P54 - 55

Promotion of initiatives to address environmental andsocial issues at overseas sites and own factories

P56

Build true partnerships with suppliers

P57 - 58

Promotion of CSR activities

P59 - 60

Strengthen corporate governance structure

P61 - 66

Ensuring the Effectiveness of the Board of Directors

P67 - 68

NITORI Group’s Sustainability | Sustainability | NITORI Holdings Co., Ltd. (nitorihd.co.jp)
4344

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

NITORI Group’s Environmentally
Friendly Manufacturing and Initiatives

Under the slogan of “Good for the future. Good for everyone,” NITORI Group is promoting
environmentally friendly initiatives in each process of manufacturing, transportation and use,
positioning them as “Nitori’s ecology.”
Furthermore, we consider “after use” and aim to develop products with a view to effective utilizationof resources at the planning and design stages, and to expand the number of products that can becollected and recycled.
Compressed packaged products

Rugs and carpets madefrom recycled raw
materials

Recycled raw materials
procured from crushed
and chipped plastic
bottles, etc.

Pigments are dissolved and coloredby mixing directly with chips.
No water is used therefor no waste
water is produced.

Processed into
wadding and spun intofine yarns

Storage series using recycled raw materials

Processed into rugs andcarpets, and delivered
to customers.

Responding to customer requests forcolor variations, we have developed ablack color that contains
approximately 20% or more recycled
raw materials.
This series is a storage series thattakes advantage of the negatively
regarded characteristic of recycled
raw materials that “it is impossible toproduce pure white products when
they are used.”

NITORI Group’s unique compression technology has reduced the package sizeof bed mattresses to a quarter of the original size, and in recent years, we havebeen promoting downsizing further more, mainly bedding products such as
pillows and futon-mattresses. Downsize packaging improves loading efficiency
of containers and trucks, leading to reduction of CO2 emissions duringtransportation, while at the same time providing convenience to customers bymaking it easier for them to take their products home.

The company’s own factory in Thailand,
SIAM NITORI, manufactures carpets andrugs from recycled raw materials such as
plastic bottles.
In the coloring process, a waterlesscoloring method is used.

“Manufacturing”
×Conserve
Resources

Related Page: P26 NITORI Group’s unique approach“Transportation”
×
Reduce CO2

Functional lace curtains“after use”
×Conserve
Resources

Easy to disassemble for disposal:“Easy to Sort” pocket coil mattress
The expansion of products that can be easily disassembled andsorted after use will lead to the promotion of effective use ofresources. NITORI Group has developed an “Easy to Sort” pocket
coil mattress, which significantly reduces disassembly time fromapproximately 55 minutes to approximately 6 minutes compared toour previous products (according to our own research, with two
people working). In addition to reducing the disposal burden on
disposal companies and local governments, the mattresses can
now be disassembled by customers themselves.

45

“Use”
×
Save Energy

The ECONATURE™ series, which uses a
new material called “heat-blocking yarn,” is alace curtain with excellent functionalities in
cutting outdoor heat and cold and letting injust the right amount of light. It improves theheating and cooling efficiency of your home
without the need for extensive remodelingand contributes to reduced energy
consumption.

Collecting products forrecycling
Focusing on items that customers
often remark that they have trouble
disposing of (curtains, down feather
quilts, carpets, mattresses, etc.), weare promoting initiatives to turnthese items into resources bycollecting them free of charge at ourstores, regardless of their sellers orconditions.

N Cool/N Warm
In response to the need for bedding that allows people to sleep comfortably without
using air conditioning, we have developed the “N Cool” series of contact-coolingmaterials and the “N Warm” series of moisture-absorbing and heat-generating
materials, which have been well received by many customers and contribute to
reducing energy consumption by reducing the use of air conditioning when sleeping.

P47 Collecting products for recycling46

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Reduce waste and expand recycling
Reviewing plastic-based packaging materials

PolicyNITORI Group recognizes the finite nature of resources and strives to reduce the amounts of resources used and the amounts ofwaste discharged by making effective use of resources and promoting resource circulation, not only within the Group but also
throughout the entire supply chain, including suppliers. Specifically, aiming to be an enterprise that reduces waste, ideally generating nowaste and recycles waste as resources, we strive to reduce the amounts of waste discharged while at the same time reducing theamount of waste that is not recycled but discharged by means of landfill or simple incineration. We will promote activities both before
and after discharge of waste.

TargetsBy FY2030,

30(1)  % reduction* in the amount of waste discharged (general waste and industrial waste) compared with FY2018 (per 100 million
yen of net sales in Japan)(2) At least

95%* recycling of industrial waste(3) Promote “conversion of waste into resources” as an initiative to eliminate waste in the first place.
Expand development of products with an eye toward recycling from the planning and design stages (circular economy)
Promotion of collecting products for recycling (collecting products and packaging materials)

Plastic packaging materials (cushioning materials, packages, etc.), which have a high environmental impact, are being reviewed interms of both “reducing plastic waste” and “deciding which materials not to use.
In terms of “reducing plastic waste,” we are working to “eliminate,” “reduce,” or “replace (with alternative materials that are easily
recyclable)” plastic-based packaging materials. In addition, we are labeling the materials with their material names to make it easierfor them to be used as resources rather than waste.
As for “deciding which materials not to use,” our policy is to not use polyvinyl chloride (PVC), Styrofoam, or multilayer composite
sheets made of different materials, etc. We began our efforts in 2015,
starting with large furniture for delivery and installation and havecompleted 100% of the switchover from Styrofoam to alternative
materials. However, we will continue to switch to alternative materials
for some of our take-out assembled furniture and mirrors, which are
not yet compliant with this policy.
Conventional Styrofoam
cushioning material* (1) and (2) are for domestic operations.

Recyclable cushioning
material

Promotion of sorting at disposal

Become a company that considers “after use”
NITORI Group has established the system consisting of three recycling mechanisms (“reprocessing,” “materialization” and “resource
recycling”) as part of its resource recycling efforts. We will continue to utilize this system to expand the number of products that can becollected and recycled.
Collecting products for recycling
Product
Product

Material

Alternative
Resources

Down feather quilts

Curtain

Carpets and futon-mattresses

Collect

Collect

NITORI Group hopes to promote sorting at the disposal stage to reduce the amount of waste and disposal costs by turning them into
resources instead of waste, as well as to make effective use of limited resources. We are currently conducting various verifications at
our stores and distribution centers to convert waste into resources.
For example, at some distribution centers, large furniture and bed mattresses
that are difficult to dispose of are dismantled by hand and sorted into metaland scrap materials. These materials are collected by a processor andrecycled as resources or solid fuel. In addition, stretch film (packaging wrap)
used at distribution centers is collected and recycled by a processor after
sorting, and is converted into garbage bags for use as in-house supplies. This
contributes to resource recycling within the Group. NITORI Group will continue
to strive to establish a disposal flow that makes the most of its unique,integrated business model.
Dismantle discarded bed mattresses and sort
metal parts → recycle as resources(1) Collecting
process

Collect

cementCustomers

Recycling downfeather quilts

Reuse

RecycleIn October 2022, we began selling“recycled down feather quilts” made ofapproximately 30% recycled down atpart of our stores and on the NITORInet. In fiscal 2022, stores collecting
down quilts expanded nationwide.

Reuse as thermal energy
and raw materials
Incineration

Reuse inproducts

47

pulverization

Wash(2) Intermediate
treatment process(3) Recycling
Process

In fiscal 2022, we expanded stores
collecting curtains nationwide andreused them as products and fabricmaterials, as well as recycled them asheat insulators for automobiles. In June
2023, we began collecting curtains ona regular basis, establishing a system
to reuse and recycle curtains at any
time.

We have experimented andestablished a new mechanism throughcollaboration among the threecompanies to collect carpets andfuton-mattresses at some of our storesand utilize them as heat energy andcement material. We aim to implement
this initiative nationwide in the future,
as we have done with the collection of
curtains and down feather quilts.

Sustainable Procurement
NITORI Group promotes “sustainable procurement” throughout its supply chain, with the aim of procuring products withconsideration for environmental and social issues. In particular, in the area of sustainable timber procurement, we aim to build asupply chain that is free from deforestation, illegal logging and human rights abuses.
We are also working with our suppliers to create a traceability system that also takes biodiversity into consideration. With thecooperation of our suppliers, we have completed a trial program for traceability of timber procurement, and plan to perform full-scale
operation in fiscal 2023. In order to ensure objectivity, we utilized the “Responsible Purchasing Checklist for Forest Products“published by WWF Japan, a global environmental NGO, to confirm and evaluate “traceability to the origin” and “appropriateness offorest management” in consideration of the environment and society.
In order to ensure that the entire supply chain is working in the same direction, we communicate and share the necessity of“sustainable timber procurement” at the annual management policy briefing for overseas suppliers.

48

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Response to Climate Change Issues

Significant Changes
and Alterations

Principal Risks

Main Initiatives

4°C scenario
Impact of“physical risk”

Intensification of
extreme weather suchas typhoons and floods(acute risk)
Increase in averagetemperature (chronicrisk) roduction suspension and increased
P
restoration costs due to plant damage
Disruption of the supply chain of products
and raw materials
Decrease in the value of seasonal products
due to the unusual seasonal changes ofweather
Business continuity risk and rising insurance
premiums and operating costs
Opportunity losses due to store closurescaused by the disasterThreats to employee safety ourcing from multiple suppliersS
Diversification of production areas, global
merchandisingOptimize timing of products sales and improvedigestion rate
Review of Business Continuity Plan (BCP)Review safety confirmation system, conductperiodic drills, secure disaster supplies

2°C scenario
Impact of“transition risk”

Decarbonization
Policies
Tightening of
regulations
Technologicalinnovations

 ising energy costsRIncreased capital investments for renewableenergy and energy conservation
Increased operating costs due to theintroduction of a “carbon tax” and “carbon
pricing”
Soaring raw material prices
Loss of market valuation and reputation

 xpand utilization of renewable energyEsourcesMore efficient energy use, use of low emission
technologies
Promote green logistics (joint transport, modal
shift)
Decarbonization of raw materials
Utilization of recycled raw materials

Risk

PolicyNITORI Group recognizes a range of risks caused by the impact of climate change, and by taking advantage of our unique businessmodel, we pursue total optimization of all stages of our supply chain to improve efﬁciency, thereby reducing greenhouse gas emissions
and mitigating the impact of climate change. In order to further effectively address climate change, which is an important management
issue, NITORI Group has endorsed the recommendations of the TCFD (Task Force on Climate-related Financial Disclosure) and isparticipating in the TCFD Consortium, a forum for discussion among companies and financial institutions that support the TCFD. We
also recognize the finite nature of energy essential to our business activities, and by leveraging our unique business model, we will work
to reduce our use of energy through more efficient energy use throughout our supply chain.

GovernanceOur approach to addressing climate change is part of our“Promotion of environmentally friendly business” activities,
which is one of our materiality Issues.
The Sustainability Management Promotion Council sets
specific targets for sustainability and compiles
countermeasures. The Sustainability Management Promotion
Committee discusses overall sustainability matters for theentire group. Based on these discussions, the Board of
Directors provides advice on the progress of the initiatives anddetermines the direction and measures to be taken by the
NITORI Group.
The progress of NITORI Group’s sustainability initiatives,
including those related to climate change, are reported to theBoard of Directors at least once a year.

Opportunity

Significant Changes
and Alterations

Key Opportunities

Main Initiatives

4°C scenario
Impact of“physical risk”

Intensification of
extreme weather suchas typhoons and floods(acute risk)
Increase in averagetemperature (chronicrisk) nsure resilience of products supply systemEEstablishment of BCP to have a resilient
operating system for stores in the event of adisaster iversification of production areas, globalDmerchandisingEstablishment of supply chain management
Review of Business Continuity Plan (BCP)

2°C scenario
Impact of“transition risk”

Decarbonization
Policies
Tightening of
regulations
Technologicalinnovations

 esponding to new and growing customerRneeds such as changing values (ethicalconsumption, energy and resource
conservation needs, etc.)
Improvement and differentiation of production
capacity and asset value
Use of public support (tax breaks, etc.)
Improve market valuation and reputation

 romote the creation of environmentallyP
friendly functional products
Promotion of recycling-oriented products(circular economy)
Unique business model and expansion ofbusiness areas (fields)
Commercialization of knowledge for solvingsocial issues

Board of Directors
Sustainability Management
Promotion Committee
Chairperson

Representative Director& President

Director responsible for
Sustainability Management
Promotion

Director

Sustainability Management Promotion Council(Constituents: Division heads of operatingcompanies)

Secretariat

Sustainable
Development
Goals Promotion
OfficeSustainability Management
Promotion Subcommittees

Business domain: NITORI Group’s main sectors (manufacturing, logistics, retail) including overseas bases *Time frame: 2050 *Analysis of impact on existing business portfolio

Indicators and targets
Risk Management
NITORI Group collects and analyzes information on a wide range of risk factors, including climate change-related regulations andtheir effects and consequences on our business. Significant opportunities and risks that require attention are evaluated and identified
by the Sustainability Management Promotion Council, which is attended by the division heads of each business unit.
The evaluated and identified risks and opportunities are supervised and monitored under the Sustainability Management Promotion
System, and issues are shared with the Risk Compliance Committee to integrate the organization’s comprehensive risk management.

We aim to reduce Scope 1+2 greenhouse gas emissions (including overseas sites) as follows.
Fiscal 2030:

50% reduction compared with fiscal 2013 (emissions per 100 million yen of net sales)

Fiscal 2050: Become carbon neutral (net zero emissions)

We will promote the development of products with environmentally friendly functions, including reduction of greenhouse gas
emissions at the stage of product use by customers, and initiatives for waste reduction and recycling. We will also consider disclosing
information on reductions of Scope 3 greenhouse gas emissions.

Strategies (risk and opportunity analysis)

MeasuresAmong various possible climate change scenarios, depending on the state of global warming prevention, NITORI Group examined
the 4°C scenario and the 2°C scenario, which are considered representative, under the Sustainability Management Promotion
System. In the 4°C scenario, we focused on the impact of physical risks, since extreme heat and severe storms may occur with noadequate countermeasures. In the 2°C scenario, the study focused on the impact of transition risks, because society is expected tochange as technological innovation progress and regulations are strengthened to curb global warming.

To achieve the above targets, we are pursuing several measures, including the utilization of renewable energy, the introduction ofenergy-efficient electric and gas facilities, and adoption of thermal barrier construction methods and use of materials with thermal
insulation properties for our facilities. In addition, to promote these capital investments, we aim to introduce “Internal Carbon Pricing(ICP: internal carbon tax)” by the end of FY2023 and will make investment decisions based on future carbon costs (carbon tax,
emissions trading, etc.). Regarding the utilization of renewable energy, we plan to start and expand solar power generation on therooftop of our facilities. Furthermore, by the end of 2024, NITORI Group plans to install EV charging infrastructure that is virtually
100% powered by renewable energy at approximately 300 NITORI Group stores.
Details: Press Releases > Expansion of EV Charging Infrastructure at Domestic Stores (as of July 2023, Japanese Only)

49

50

Top Message

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Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Promote development of human resources and organization
Education system

PolicyNITORI Group aims to realize an organization with wealth of elites through human resource development based on transfer-based
education, which allows employees to experience a variety of occupations every two to three years in a wide range of business fields and byproviding a variety of training programs at NITORI University that is tailored to the individual. In order to achieve this goal, we will continue
to create an organization and corporate culture that values and nurtures people who continue to take on new challenges.

In order to nurture true specialists who can contribute to the society, we have an education system that allows each employee to
explore his or her own potential through various educational opportunities, and to move forward with an eye on your “ideal sef”.
Number ofyears ofemployment

50’s

Administration

GlobalCoordinate

Policy Seminar/
JRC Dispatch

Numerical Table Utilization
Seminar for Quantitative Analysis

Overseas
Training for
new employees

Chain I
Mid-careerdevelopment seminar
Chain training for
new employees

Digital Literacy
Training I

Store Comparison
Training

Coordination Training

Overseas Overseas
In-store
operations Chain I

U.S. seminar(Introductory Course)

Personal Growth

Chain II
Seminar about in-store
operations

Digital Literacy
Training II

Chain III
Basic seminar on thesales floor and products

IT

Digital Literacy
Training III

Chain IV
Seminar on how tostrengthen products

Coordinate MateCreative Line
Training
ProgramLine Staff
Training
Program

ASEAN Seminar

NITORI Coordination Training Programs (NCS) Basic Course /Advisor Course / Planning Course / Specialized Course

U.S. seminar(Trainee Course)

Overseas
VisionaryTraining I

1st yearTraining for 1st to 3rd year employees

Small-group selective
training programs

2nd year

Chain store theory

Overseas
Basics of thesales floor
and products

3rd year

GlobalTraining I

Visionary Leader Development Training I

Core competency

Innovative organization
training

OverseasJapan
Training I

Visionary Leader Development Training II

GlobalTraining II

Visionary Leader Development Training III

Overseas

Overseas
VisionaryTraining II

Visionary Leader Development Training IV

GlobalTraining III

4th-6thyear

Fresh NWC

Transfer-based education

Work experience in a variety ofdepartments, with a focus on
storesDefining anddeepening one’s
expertise

TheoryVisionary Leader Development Training V

From
11th year
onward6th-10thyear

Transferring through a wide
range of departments andbuilding expertise in thoseareas.

Career support

Japan

Career planning, Open recruitment and Self-development

Acquisition ofcomprehensive
skills required for
management-level
positions

Achievement
orientation

Global Training IV

Management Specialist
Talent Specialist

Competitive
Leadership /Communication
growth capabilities
HR development

Seminars by Chairperson, President, and Other Executives (Mission / Vision)

40’s

30’s

Control • Manage

Analyticalthinking skills

General / matching Nitori World Circle (NWC)

20’s

Operation

Overseas

Data Analysis
Human Resource
Development

Related Page: P13-19 Human Capital of NITORI Group Trilogy: Human Resource Development, the Key to Realizing NITORIGroup’s Mission

Base
Competency

Related Page: P74 Sustainability Data book (Human Resource Development)
store

PICK UP

Training
programs

51

Mass education

Specialized
education

Mass
education

Specialized education

Career support to realize your “ideal self”

For Global and IT Human Resource Development

At NITORI Group, all employees have the opportunity twice ayear to think about your “ideal self” in the next 30 years andsubmit it to the company in the form of a “30-year career
design sheet”. The responses, learning status, counselinghistory and all other information are stored in the talentmanagement system and by identifying individual interests,
skills and aptitude, we design job assignments in line withbusiness plans.
Furthermore, from FY2022, we have introduced companywide 1-on-1 meetings at least once a month. By deepening therelationship between managers and their subordinates andextracting learning from day-to-day work, we encourage
proactive employee behaviors and improve productivity for theentire organization.

To develop global human resources, we have an internal
open recruitment system for overseas assignments anddispatch task forces to overseas, and actively promote
employees who voluntarily raise their hands in their desired
careers. In addition, we provide specialized IT training toenable employees who do not have IT backgrounds to become
IT personnel, including
basic education, cloudtechnology and data
science.

U.S. seminar (Introductory Course)

The U.S. seminar is one of the NITORI Group’s unique educational curriculums. All employees in their third year of
employment participate in the introductory course, where they experience the “joy of shopping” and the “enriched life” in the
United States, the starting point of NITORI Group’s mission. In order to maximize the learning experience, we haveestablished an education system whereby employees are exposed to chain store theory through various training programsfrom their first year, and after gaining knowledge, they participate in the U.S. seminar in which they establish a structure where
they continue to learn even after returning from the U.S. seminar.
Chain training for new
employees

Learn about the fundamentals of chain store
theoryChain I Mid-careerdevelopment seminar

Understand the principles (ideal vision) of thechain store and reaffirm NITORI’s mission
and vision.

Store Comparison Training

Understanding NITORI’s strengths andweaknesses based on research of domestic
competitors.

U.S. seminar(Introductory Course)

Based on what was learned, experiencing the“enriched life” in the U.S. with all five senses.


RelatedPage: P14 Global Human Resource
Development, IT Human Resource Development
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Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Diversity

Creating a healthy and safe work environment

PolicyPolicyNITORI Group promotes diversity & inclusion, considering that fostering a corporate culture where employees in different
circumstances and with different backgrounds, in terms of childbirth, childcare, nursing care, nationality etc., acknowledge and respect
each other creates an empowered work environment and leads to the company’s growth.

Promotion of work-life balance
We are creating an environment in which employees can build their careers while balancing work and childbirth, childcare, nursing
care and injury or illness.
My Area System

NITORI Group strives to ensure workplace safety and aims to create a comfortable work environment where all our employees workin good health.

At NITORI Group, convinced that creating a comfortable work environment andensuring the physical and mental health of our employees are essential for corporate
growth, we are promoting health and productivity management. The company, labor
union, and health insurance society work together to support the health of employees
and their families by proactively promoting theimprovement of the work environment, diversity, andemployees’ health.
Mitsuru Ohki, Managing Executive Officer, President, NITORI Health Insurance Society

In March 2023, we introduced “My Area System” which allows employees to commute to work without having to relocate,
limiting the area in which they work in. There are no restrictions on the period of use of this system, and employees who use
this system will not receive a reduction in compensation. We are also implementing measures to increase incentives forrelocation, such as expanding benefits for employees who relocate, so that each employee can make choices that match theircareer path and life stage.
Key points ofthe system reas covered: Tokyo metropolitan area and Kansai areaA
*expansion planned in the future
Term of use: Unlimited (can be applied for or cancelled at any time)

Compensation: No reduction
Position: Unlimited

Health Management Promotion System
The Health Management Promotion Committee, which is a
joint effort between the company and the NITORI Health
Insurance Society, actively plans, proposes and implements
collaborative health projects and makes repeated improvements
every year. We are striving to improve the health literacy of theorganization and its employees.

Other support systems for balancing life and work
We are working to develop a culture that allows both men andwomen to take childcare leave. The number of male employees
who have taken childcare leave has increased significantly overthe past three years. In addition, the special paid leave for
personal injury or illness, which allows employees to accumulate
expired annual paid leave, can be used not only for injury orillness, pregnancy, childcare or nursing care, but also for the
purpose of infertility treatment from 2020. The range of coverage
is being expanded to meet the needs of employees.
(Other major systems)
Maternity and childcare support leave / Shorter working hours /Childcare expense subsidy system on Sundays and holidays /Teleworking system / Spouse maternity leave

(%)

45.3

40
30
20
10

19.1
11.7

0

2020

2021

2022

*NITORI Holdings, NITORI, Home Logistics, Home Cargo, NITORI Facility,
and N+ 6 company figures

Building the Alumni Network
We have introduced the Alumni Network, which provides regular opportunities for interactive information exchange and events tobuild lasting amicable relationships between alumni (retirees) who are active in new fields, as well as between alumni and current
employees. We expect that continued connection with alumni will not only lead to the activation of the use of the re-employment
system (job return system), but also to the creation of ideas and opportunities to provide new added value to our customers.

53

NITORI Group promotes health support for employees andtheir families, offering free health checkups and gynecologicalexaminations for employees and their dependents.
In addition, NITORI Group is a member of the Association for
Health and Management, a general incorporated association,and is involved in discussions and deliberations on healthmanagement issues in cooperation with other companies,
seeking better health management methods and specificmeasures.

For the seventh consecutive year, NITORI Grouphas been recognized by the Ministry of Economy,
Trade and Industry (METI) and the Japan HealthCouncil as one of the “2023 Excellent
Corporations for Health Management (Large
Corporations)”.

NITORI Group Rate of Male Employees
Taking Childcare Leave50

 mployee Family Health Support andECommunity Involvement

Health Education

Raising health awareness through events

To improve health literacy and health awareness among
employees, we provide health education through original
booklets and e-learning programs. NITORI Group creates anddistributes the “Women’s Health Support” booklet, which
focuses on health issues such as lifestyle, menopause, andcancer specific to women, and the “NITORI Heart Supplement”
booklet, which introduces self-care
to improve mental and physicalconditions and enhance
performance.

As part of the collaborative health program between the
NITORI Group and the NITORI Health Insurance Society,various health events are held annually within the Group. One
example is the “Health Checkup Challenge,” an event in which
employees are challenged to improve from the results of lastyear’s health checkup, the “Walking Campaign,” in which
employees aim to walk 8,000 steps a day while having fun
together in a team competition format and the “Anti-smoking
Campaign” to support employees who want to quit smoking
right now. We will continue to strive to plan events in which
employees canactively participate
and which will
provide an
opportunity tochange theirmindsets.

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Data Center

Sustainability

Measures to prevent harassment
To ensure proper understanding and prevention of any kind of harassment, NITORIGroup is promoting the creation of workplaces where harassment is neither tolerated
nor allowed to occur, through such measures as the establishment of a month tostrengthen the understanding of harassment and the implementation of practicaltraining programs in communications and dialogue for managers*. In addition, we haveestablished an internal reporting environment by setting up a harassment consultation
desk and making it known through internal newsletters and posters.
*During company-wide compliance training programs for all employees, including managers, a video on “Harassment Prevention”
is distributed and a confirmation test is administered. Individuals can also learn through an original video “Is this or could this bean abuse of authority?”, with specific examples and careful explanations to help individuals correctly understand harassment andpreventative measures.

Ensuring appropriate working hours
NITORI Group promotes work-life balance and has created a system to prevent employees fromworking long hours. For example, we aim to ensure employee health, enhance work-life balance andimprove productivity through time-conscious work by introducing a work interval system between work
hours and turning off all lights at the head office and headquarters simultaneously. In recognition ofthese efforts, we have been certified as a “White Company” since 2018, and have been awarded thehighest level, Platinum, since 2021.

Promoting initiatives to address environmental and social issues
at overseas locations and NITORI’s own factories
Local Employees overseas
NITORI Group has stores, offices and its own factories overseas, where 12,869 local employees work (*as of March 31, 2023).
Many of these local employees not only support the stable supply of products as NITORI Group’s overseas bases, but also contributeto the enrichment of local homes. The presence of stores and our own factories, etc. in those areas also creates local employment
and contributes to the development of local communities.
Total number of
local employees:

12,869Mainland
China

1,755

U.S.

17

Taiwan917

Southeastern
Asia

Recruitment

10,180Initiatives of our own factories overseas to address environmental and social issues

New graduate recruitment
Based on our recruiting philosophy of “Your dream creates who you are,” NITORIGroup provides support from the standpoint of each student. Based on thisphilosophy, our recruiters provide support from the student’s perspective by working
closely with each student so that the student can make a decision to join ourcompany after carefully considering his or her own career objectives and dreams.
N
 ITORI was ranked No. 1 overall in the humanities in the “My Navi/Nikkei Ranking of
the Most Popular Companies for University Students Graduating in 2024 (liberal arts).”

VietnamNITORIFURNITURE
Hanoi Factory,
Ba Ria-Vung Tau
Factory

Recruitment from overseas
In order to further accelerate our overseas business development, we are actively
recruiting global human resources. In addition to recruiting by participating in the
Boston Career Forum, a job hunting event for Japanese students studying abroad, inrecent years we have been strengthening our efforts to recruit overseas students inJapan, thereby promoting the globalization of our company.

Thailand
SIAM NITORI

Initiatives to address environmental issues

Initiatives to address social issues“ Easy to Sort” pocket coil mattresses will be made eveneasier to disassemble in the future by reviewing the way
the components are joined together.
Review of painting methods to eliminate wasteful use ofpaintRecycling waste paint and reusing it as cleaning
detergent for equipment and parts
Effective use of scrap (lumber, urethane, fabric)

 actory cafeterias (free meals are served)
FDormitory (free of charge, to support employees who otherwise
need to commute long distances)
Creation of a safe and secure work environment*Monitoring of safety management (for prevention of accidents,etc.), attendance management (securing of breaks), etc.
Widely recruiting and actively hiring Vietnamese who used to workin Japan (including those who can speak Japanese and technicalintern trainees) arpet and rug manufacturing using recycled raw
Cmaterials such as plastic bottles* and waterless coloring
methods
Use of plastic bags made of recycled materials (forpacking products)
Reduction of exhaust emissions by switching toelectronic forklifts
Construction of a new factory with an energy-saving
structure with high heat shielding effectRenovatedcafeteria and newly equipped in-house kitchen (freemeals are served)
Review of labor environment and education system (initiatives toreduce overtime)(comfortable workplace / benefits)*The equivalent of approximately 66 million plastic bottles* are recycled annually.
* Calculated based on the amount of PET bottles collected, etc. published by the Council for PET Bottle Recycling Promotion. Number of PET bottles converted as one 500ml PET bottle (23g).

Internship
The NITORI Group’s internship program aims for “zero stranded job-hunting
students” and supports students to think about their own “purpose of work” and makea positive start in their job-hunting activities. In FY2022, approximately 24,000
students participated in our internship program. In the newly launched program for firstand second-year university students, in which more than 500 students participated,participants thought and discussed about what it is to “work” with the recruiters.
N ITORI was ranked No. 1 in the overall category in the “Rakuten Minshu
Internship Ranking of the Most Popular Companies” for fourth consecutive years.
Waste paint recycling facility

55

Cafeteria inside the factory

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Data Center

Sustainability

Developing True Partnerships with Suppliers

Supplier Interview
This overseas supplier is responsible for the manufacture of many of
NITORI’s products, especially “N Polda”, NITORI’s suspension wallstorage, and has been a supplier to us for more than 10 years. The
company is highly conscious of quality and has been participating in
NITORI Group’s NWC activities since 2015, with “zero defect rate” as its
ultimate target. They are a company that is always actively improving andevolving in quality control and environmental considerations.

PolicyNITORI Group calls upon our suppliers to not only comply with laws and regulations, but also to build what NITORI Group calls “truepartnerships” with suppliers, with the aim of realizing sustainable growth throughout the entire supply chain.

True partnership(1) A relationship where both sides aspire to learn about the most advanced topics, including those relevant tocorporate management, share the knowledge and work hard together.
(2) A fair, honest, highly transparent and open relationship where both sides can engage in active exchange of opinions.
(3) A relationship where both sides share not only ideas and management methods for the creation of a culture of
product safety but also the importance of fulﬁlling social responsibilities, such as being environmentallyconscious*1, respecting human rights*2, and maintaining an appropriate work environment*3 and grow together toachieve the mission.

*1 Being environmentally conscious in accordance with NITORI Group’s Environmental Policy*2 Prohibition of forced labor, child labor and discrimination, etc.
*3 Preventing overwork, ensuring more leave than statutory requirements, paying the statutory minimum wage, ensuring workplace safety, maintaining a comfortable workplace environment where
employees work in good health, etc.

Audit of potential new suppliers

Endorsement and Signature to
the Supplier Code of Conduct

In order to deliver safe and secure products tocustomers, NITORI Group audits potential new suppliers
to check eligibility requirements. We conclude contracts
only with suppliers that have passed a rigorous on-site
investigation covering a total of 244 items, including
quality assurance items and responses to environmental
and social issues.

In order to fulfill our social responsibility with our
suppliers, we have established a Supplier Code of
Conduct. This Code of Conduct is clearly stated to all
suppliers and has been endorsed and signed by them.
In the event that a violation of this Code of Conduct is
identified, we encourage our suppliers to improve theirperformance and, if necessary, provide them withguidance to remedy the situation.

 elated Page: P74 Sustainability Data Book “Status
R
of Performance of Audits of New Overseas
Suppliers”

Communication and dialogue with suppliers

Supplier Evaluation

We shared the current situation and future challenges
as well as the direction of product development thattakes into account environmental and social issues* at
the Management Policy Briefing for Overseas Suppliersfor FY2022.

We conduct Audits of existing suppliers twice a year tounderstand the actual status of existing suppliers and to
identify risks. The audit items are reviewed on a caseby-case basis and are mainly in the five categories of“development,” “quality,” “logistics and trade,” “corporate
stance” and “sustainability (items addressing
environmental and social issues)” (46 items in total).
431 suppliers were audited in the second half of
FY2022.

RelatedPage: P74 Sustainability Data Book “Statusof Performance of Audits of New Overseas
Suppliers”

57

NITORI has high awareness of quality and a strong desire for development, and through our partnership, we have also been able tofurther enhance our awareness and level of quality control and improve our production technology. In particular, our main product,
NITORI’s “N Polda” series, has given us opportunities to propose peripheral products, improve quality, research and upgrade
manufacturing facilities and improve production efficiency, which led to enhanced competitiveness by embodying our management
philosophy of “Quality + Delivery Date = Trust, Trust + Innovation = Development” which led to improvement of our competitiveness.
What do you emphasize in manufacturing?
In product development, we strive to address environmental and social issues as well as safety. In our efforts to reduce
environmental impact, we strive to reduce waste in the manufacturing process, convert to natural gas which leads to CO2 reduction,and utilize recycled raw materials. In addition, to ensure that our employees can work with peace of mind, we pay attention to thestability of their lives and strive to create a safe work environment. As a result, our retention rate has improved, with more than 80% of
our employees having been with us for more than 10 years, and 30% of them for more than 20 years. We believe that it is an
important social responsibility to maintain a high level of engagement and cohesion, and to be a company where the company and its
employees can mutually strive and grow.
What prompted you to participate in NWC?
We have been in business for more than 30 years, and we joined NWC in 2015 because we thought we should always be exposed
to new ideas and example cases for further growth in the future. I learned the importance of continuing these steps.
Please tell us about the changes you have made through your participation in NWC.

Initiatives for Building True Partnerships

 evelop products that can be* Dsorted after use and recycled.
Promotion of compression
packagingPromotion of environmental
certification etc.

Please tell us how your company has grown through the relationship with NITORI Group.

The first is a change in employee awareness. Management has taken the initiative in visiting manufacturing sites to discuss andverify improvement measures with on-site employees, thereby raising each employee’s awareness and sense of responsibility for
quality. Second, analytical skills were improved. By conducting daily analysis, summarizing it weekly, checking it monthly andconstantly repeating the PDCA cycle, on-site employees improved their accuracy in identifying issues and considering solutions in the
manufacturing process. As a result, both production efficiency and sales improved significantly, and the company won the Gold Awardat the NWC in 2022. Employees are now more confident in their quality improvement activities, leading to a revitalization of theworksite. Currently, we are taking on the challenge of further improvement of quality control by spreading the learning from the NWC
to all of our suppliers.

Nitori World Circle (NWC) activities
NITORI Group members of both Japan and overseas, form groups of like-minded
individuals to identify problems in day-to-day operations and promote improvements andreforms which can be directly delivered to the management. In fiscal year 2022, a total of 371
teams participated, 33 of which were from overseas suppliers and many cases of supplierled improvement and reform activities were presented.

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Promotion of CSR activities
Zero Carbon Challenge Cup

PolicyAiming to become a company that people will feel in need of, we implement a wide variety of local contribution activities, with particularfocus on “support for human resources,” “environmental support” and “cultural support,” to give back to all of the countries, local
communities and society members that nurture and support NITORI Group.

Development of “Future IT Human Resources”
We have signed a partnership agreement with Hokkaido, Sapporo City and Hokkaido University, and are working to develop “Future
IT Human Resources” who can use the power of digital technology and data to solve problems in local communities and create thesociety of the future. We will continue our efforts with the aim of producing many future leaders from Hokkaido, the place of our
founding, who will play an active role in the local community, thereby creating vitality for the entire town and furthermore, becoming abridge to the world.
Examples of initiatives
IT human resources development for each level of education, including
elementary, junior high school, high school, university and graduate school
students
Hokkaido University “NITORI Future Society Design Course”
Cutting-edge research making use of actual stores
Research outcomes are published in journals. Patent applications are filed
for certain research outcomes.
Invitation of public applications for research using data and assignments
provided by NITORIResearch activities by high school students (Hokkaido Board of Education’s
project)
NITORI offers insights into practical IT utilization through classes, etc.

LEARN with NITORIThe Research Center for Advanced Science and Technology of the University of Tokyo and NITORI Group jointly launched LEARN
with NITORI, a new education support project, in 2021. LEARN, a program giving children the opportunity to discover the joy oflearning while demonstrating their individuality through various activities and experiences, is run by Senior Research Fellow Kenryu
Nakamura of the Research on Individually Optimal Learning as part of Corporate Sponsored Research Programs. Making use of
NITORI Group facilities as well as other facilities, NITORI Group provides a “learning” program that only the Group can offer. During
the year of 2022, the program was held 14 times in 11 cities across Japan, with 339 children and 343 parents participating. The
Chairman himself actively participated in the programs, sharing his own experiences and deepening exchanges with children and theirparents during lectures and question-and-answer sessions. In recognition of these activities, the Chairman received the “University ofTokyo Shokumon Award” in 2022.
Examples of initiatives
Hunting at the Museum: You Seize the Evidence of History
Otaru Art Village Western Art Museum (Hokkaido)
Find the best cherries in the orchard
NITORI Kanko Orchard, Hokkaido, Japan
Insects in the mountains of Oita Prefecture
Yufuin Recreation Center (Oita Prefecture)
The secret of bamboo shoots
Atami Ginzan Silver Mine (Shizuoka Prefecture)What is a part-time job? ~Let’s try it first before feeling uneasy about it~
NITORI store (Miyagi Prefecture)Find the secrets of the mansion! ~Learn Japanese Culture~
Shikousou (Tokyo, Japan)
59

NITORI Group has been supporting the Zero Carbon Challenge Cup since2015. In the main event, finalists from diverse organizations (schools,
companies, local governments, NPOs, etc.) and of all ages from around Japan
present their activities that are leading to the creation of a zero carbon society.
The Zero Carbon Challenge Cup is a venue for sharing and disseminatingknowledge and information on initiatives and for facilitating further collaborationand motivation, all with the ultimate aim of achieving a zero carbon society thatdelivers a prosperous future for everyone. From among some 30 finalists,
NITORI Group selects a winner of the NITORI Best Dream for the FutureAward. This award reflects our desire to join with others in building a bright
future, filled with dreams and hopes, through decarbonization initiatives.

Supporting sports
NITORI Group is committed to contributing to local communities and society by encouraging healthy and fulfilling lifestyles, both
physically and mentally, through various sports.
 ITORI Ladies Golf TournamentN
We have been organizing a women’s professionalgolf tournament in Hokkaido since 2010 to vitalize
Hokkaido through sports. Moreover, we support female
professional golfers. At present, NITORI has
sponsorship agreements with ten players.
 ITORI JD. LEAGUEN
Under a three-year contract from 2022 to 2024, weare the title partner of the NITORI JD. LEAGUE, theJapanese women’s softball league, to support thepromotion and development of softball in Japan.

 ITORI Women’s Running TeamN
Established in April 2015, the team began its activities with theambition to win medals in the Olympics. Since 2020, the team’s target
has been to come within
the top eight teams in the
All Japan Industrial
Teams Women’s Ekiden(relay race) in addition to
training for marathons.

*As of March 31, 2023

Supporting human resources development / Supporting culture, arts, and tradition
NITORI Group is supporting the following two foundations
NITORI International Scholarship Foundation
The NITORI International Scholarship Foundation, launched in March
2005, is a way of expressing our appreciation to people in Asian
countries for their tremendous support that is contributing so much to
NITORI Group’s accomplishment of its mission. So far, the foundation
has supported a total of 9,254 students in 46 countries and regions inJapan and overseas by offering non-repayable benefit-type scholarships.
In addition, from FY2023, we will begin operating a new “student
dormitory” for scholarship students. In order to contribute to friendshipand human resource development in countries around the world, we will
expand our support to the young generation that bears the future.
NITORI Culture Foundation
The NITORI Culture Foundation was founded in April 2011, to support the development and succession of culture, arts, and tradition
and to be a bridge for the formation of a new culture. Otaru Art Village, a group of museums in Otaru City, Hokkaido, operated by thefoundation, opened its fourth museum, the Museum of Western Art, in 2022. With a total of 400,000 visitors a year, the museum is
attracting attention as a tourist attraction in Otaru.
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Strengthening Corporate Governance Structure
The Aspirations of Newly Appointed Director

PolicyI am very pleased to have recently assumed the position of outside director at NITORI Holdings. I joined
the National Police Agency in 1978 and was involved in police administration for nearly 40 years until I
retired as Commissioner General of the National Police Agency in 2016, working to ensure the safety andsecurity of all citizens. During my tenure as Commissioner General of the National Police Agency, I was incharge of the Japanese police force, dealing with crimes that are becoming more international and IToriented, and directing police forces nationwide to contribute to the realization of the world’s best public
safety. From 2016, as President of the Police Mutual Aid Association, I was responsible for social security for
approximately 1 million police personnel and their families nationwide. Through these experiences, I have
deepened my experience and knowledge not only in criminal justice but also in organizational management
and crisis management in various situations. Although I have no experience in corporate management, I
would like to contribute to the realization of the NITORI Group’s mission and vision as an outside director of
NITORI Holdings based on the experience and knowledge I have acquired so far, and to do my utmost tocontinuously enhance corporate value. I look forward to serving the Nitori Holdings.

NITORI Group places top priority on sustainable growth and the medium- to long- term improvement of corporate value in its
management. The Group believes that enhancing its corporate governance system is necessary for achieving these goals. To enhance
corporate governance, the Group aims to build an organizational structure to respond promptly to any changes in the businessenvironment, practice fair and transparent management as a listed company, and disclose accurate information to all stakeholders in atimely manner. Meanwhile, the Group will develop an internal system to establish its corporate social responsibility and corporate ethics.

Directors and Executive Officers

Masahito
Kanetaka

Directors (As of June 22,2023)

Director* Independent Outside Director

Akio Nitori

Toshiyuki Shirai

Fumihiro Sudo

Representative Director &Chairperson (Chief Executive
Officer)

Representative Director & President(Chief Operating Officer)

Director, Executive Ofﬁcer & Vice
President

Member of the Nominating andCompensation Committee

Member of the Nominating andCompensation Committee

Fumiaki Matsumoto

Masanori Takeda

Hiromi Abiko

Director, Executive Ofﬁcer & Vice
President

Director
General Manager of Global
Merchandising Division
General Manager of Global Sales
Promotion Ofﬁce
In charge of Overseas Sales
Business

Director
General Manager of HR Education
Division

Member of Audit &Supervisory Committee

Skills Matrix
Of the skills, etc. held by each Director, maximum of six main skills are marked with ●.
Knowledge and experience the Company expects of Directors

Takaaki Okano

Takao Kubo

Director

Director

Naoko Yoshizawa

Yoshiyuki Izawa

Director

Director

Director* Independent Outside Director

Member of the Nominating andCompensation Committee

Hisayoshi Ando

Masahito Kanetaka

Director

Director* Independent Outside Director

Member of Audit & Supervisory
Committee
Member of the Nominating andCompensation Committee* Independent Outside Director

Member of the Nominating andCompensation Committee

Executive Vice Presidents

Senior Executive Officers

Executive Officers

Fumihiro Sudo / Fumiaki Matsumoto

Isao Arai / Tsuyoshi Okamura /Hiroki Murabayashi / Yoshihisa Sato /Kenichiro Aoya/ Soichi Oda,
Kazuya Tsukada

Tadashi Kudo, Akio Igarashi, Toshinao Matsushima, Ei Sugiura,
Harumi Sawai, Akihiro Kushida, Toshinori Arai, Masaomi Zenji,
Tetsuya Okuda, Takuya Ono, Tetsuo Yamamoto, Masatoshi Sano,
Yuichi Maruhashi, Hiroyuki Tajiri, Noriaki Hase, Hideki Sasaki,
Ryo Takahashi, Katsunori Kobayashi

Mitsuru Ohki / Naoshi Takei / Manabu
Nakamura / Hiroshi Nagai / Kazuyuki
Hashimoto / Junichi Yoshima
61

Toshiyuki Shirai

Representative Director &President (COO)(3) ProductDevelopment(4) Supply chain
Management(5) IT/DX(6) Global(7) HR
Development(8) Legal Affairs
RiskManagement(9) Finance(10) Sustainability

Masanori Takeda

Director

Hiromi Abiko

Director

Takaaki Okano

Director

Naoko Yoshizawa

Outside Director

Director
Full-time Member of Audit &Supervisory Committee
Outside Director
Yoshiyuki Izawa Member of Audit & Supervisory
Committee (Chairperson)
Outside Director
Hisayoshi Ando Member of Audit & Supervisory
Committee
Outside Director
Masahito Kanetaka Member of Audit & Supervisory
Committee

Takao Kubo

See the table below for a summary of the skills possessed by each director.
Member of Audit & Supervisory
Committee

Executive Officers (As of July 1, 2023)

Managing Executive Officers

Representative Director &Chairperson (CEO)(2) Rejecting
Status Quo

Yoshihiko Miyauchi Outside Director

Yoshihiko Miyauchi

Member of Audit & Supervisory
Committee

Akio Nitori(1) Corporate
Management

Director
Executive Officer & Vice
President
Director
Fumiaki Matsumoto Executive Officer & Vice
President

Outside Directors (As of June 22, 2023)* Independent Outside Director

Title

Fumihiro Sudo

Member of Audit & Supervisory
Committee (Full-time)* Independent Outside Director

Name(1) Corporate Management

Has had experience in managing companies as a business owner.

(2) Rejecting Status Quo

Equipped with a mindset essential for NITORI Group’s management team, which constantly rejects the status quo and repeatedly
observes, analyzes, and judges in order to make improvements and reforms.

(3) Product Development

Skilled in developing attractive products that “offers the unexpected” to achieve total coordination.

(4) Supply chain Management

Skilled in evolving our unique business model that integrates manufacturing, logistics, IT, and retai, and in optimizing the structure fromprocurement to sales.

(5) IT/DX

Skilled in driving company-wide business process improvements through IT utilization and DX.

(6) Global

Skilled in driving overseas business with a macroeconomic perspective and knowledge of global business.

(7) HR Development

Skilled in enhancing human capital, with extensive experience in organizational development and human resource training anddevelopment.

(8) Legal Affairs Risk Management

Skilled in identifying and controlling potential risks to the business, with knowledge of legal affairs, governance, compliance, etc.

(9) Finance

Skills to support corporate management from a financial perspective, with knowledge of accounting, finance, taxation, etc.

(10) Sustainability

Equipped with a sustainability management perspective, which is essential for the sustainable development and growth of a company.

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Discussion by Outside Directors
Ando: In my case, what is expected of me as an outside
director of the Company is to provide “quality meddling”
based on my long experience in public administration

Evaluation of NITORI Holdings

regarding opportunities and risks that may be difficult for

Izawa: We are not a so-called dictatorial company. It is true

people within the Company to recognize, specifically, I

that Chairman leads the group with his charisma and strong

believe that I should communicate to executive directors so

leadership as the founder, but at the same time, he always

that they can have a bird’s eye view and awareness of thelistens to the opinions of others in the company, and themacro environment that will bring about changes in theinternal board members also actively express their own

industrial structure, such as carbon neutrality andopinions. I think this is a different type of company fromdigitalization.

others and can be said to be very unique.

Izawa: Indeed, you explain things from a completely

Ando: I also feel that everyone in the company, including

different angle than the other members and in very easy-to-

the board members, expresses their opinions openly andunderstand language.

without any sense of judgment, and that this culture
permeates down to the very bottom of the organization.

Hisayoshi Ando

Yoshiyuki Izawa

Independent Outside Director(Member of Audit & Supervisory Committee)

Independent Outside Director(Member of Audit & Supervisory Committee)

1983 Joined the Ministry of International Trade and Industry(currently the Ministry of Economy, Trade and Industry)
2009 Secretary to the Prime Minister2010 Director-General, Resources and Fuels Department, Agency
for Natural Resources and Energy, METI2017 Director-General, Small and Medium Enterprise Agency, METI2019 Administrative Vice Minister, METI
2022 Outside Director of the Company (current position).

1970 Joined Mitsui & Co., Ltd.
2008 Representative Director and Executive Vice President (CEO)of Mitsui & Co.
2009 Director and Representative Executive Officer (CEO) of
Japan Post Bank, Ltd.
2015 Representative Director, Chairman and CEO of BlackRock
Japan K.K.
2022 Outside Director of the Company (to date).

Ando: In terms of the effectiveness of the Board of

When I attend internal meetings and see the expressions

Directors, it’s you who always initiates discussions andon the faces of the members, I can clearly see that they are

elicits comments from the members.

not waiting for instructions from the top, but are taking theinitiative.

Izawa: I believe that it is important to go through a quality
debate before making a resolution and I try to encourage a

Izawa: I think the corporate governance is also highly

lively discussion on all agenda items. For example, lasteffective. I think the Board of Directors is highly effective

year’s withdrawal from the U.S. market was the subject ofand most appropriate in the selection of Directors, theheated debate within the Board of Directors, but in the end

operation of the Board of Directors, as well as the selection

everyone agreed on the resolution, and I believe I was ableof the agenda.

to fulfill my function as a Board member. Leading thediscussion in such a direction is one of the roles a director

Ando: Along with the selection of the agenda, I also thinkshould fulfill.

highly of the way in which the Board of Directors decides
when the discussion reaches a point where it is ready for a

Establish a risk management system covering

Ando: Since it is the executive directors who actuallyresolution. At our company, it is not uncommon for

the entire group to realize the vision 2032.

develop practical operations in corporate management,

discussions to be sent back to the board if they are deemedoutside director is required to obtain sufficient

to be inconclusive and insufficient . It can be said that theunderstanding of his or her own opinion from the executive

discussions are firmly grounded.

directors through discussions and to see through to actual
actions afterwards. As a move in line with such a role,

Izawa: Another thing that I think is commendable is financial

during the period under review, as an outside director I

discipline. The accounting approach regarding impairment

my experience at the world’s largest asset management

proposed the need for verification work on supply chain

is very conservative, and I think it is wonderful that evencompany over the past seven years. In particular, withcybersecurity measures, and through careful discussions

with this accounting policy, the company has achieved 36

regard to overseas operations, I would like to makewithin the company, I was able to share my understanding

consecutive years of sales and profit growth.

Izawa: I recognize that my role as an outside director is tosuggestions and provide advice as deemed necessary with

with the executive directors. The project has alreadycontribute to the enhancement of corporate value by

regard to recognizing and responding to risks that thestarted, and we will continue to monitor its progress.

influencing the executive divisions from two perspectives,

Company may face in the future as it accelerates its global

by 2032, I have the impression that, in a positive sense, thethat of an investor and that of a global manager, based on

expansion.

people on the front lines are very firm and disciplined inRole as the Outside Director

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Ando: While pursuing the challenging target of 3 trillion yen

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Data Center

Sustainability

Discussion by Outside Directors

What is required of the outside
directors is to provide “quality
meddling” regarding possibilities
and risks that executive officers
may not be aware of.

their approach. It is difficult to maintain discipline under theJapan. If we can establish products and services for seniors

Izawa: What is needed is to recognize all risks, not only

theme of co-creation with consumers, such as “resourcepressure of achieving the targets, but this perfect balancethat are viable in Japan, there will be room for global

overseas and in Japan, but for the entire group, minimize

recycling with our customers,” in addition to offeringof vision and firmness is one of the strengths of our group,

expansion.

them and determine the extent to which we can respond to

products with built-in 3R (recycle, reuse, and reduce) bythem. I would like to see the Company establish a global

taking advantage of the unique business model that

Izawa: While the expansion of overseas operations will berisk management system as soon as possible, while

integrates manufacturing logistics, logistics, IT and retail.

essential to achieve our vision, overseas is a very difficult

utilizing external organizations as well.

and I feel that the strong awareness of top management is
at work.

Responding to changes in theenvironment (risks andopportunities)

market to conquer because of the numerous individual

Izawa: I think we should continue to strengthenrisks. First, as an urgent task, it is necessary to identify andenvironmental disclosure in this area, not only in terms ofspecify where the risks lie.

Sustainability

Ando: My top priority for our company, including global

Izawa: In terms of sustainability, we are clearly more

Ando: As SDGs and ESG initiatives become indispensable

Izawa: I believe that the first challenge for the future is toexpansion, is to ensure cyber resilience. We have built aadvanced than our competitors in terms of ESG’s E

to enhance corporate value, open disclosure of information

respond to the declining population in Japan. Even the best

unique business model in which the entire function is(Environment), especially in CO2 reduction and recycling.

on environmental initiatives is already part of a company’sbusiness model will eventually become obsolete as theperformed in-house and we have built up a successful track

In CO2 reduction, we have just initiated a plan to installsales strategy. I hope that the Company will continue to bemarket changes. Our company is no exception. To survive

record by maintaining a “risk is all within ourselves” attitude.

solar panels at our stores and distribution warehouses, andmore aggressive in communicating their “Promotion ofin the domestic market, we need to review and restructure

However, continuing this model going forward means thathave established a low-cost system that enables stableenvironmentally friendly business” to their stakeholders.

our business model in response to changes in consumer

the risks we take on as our business expands will be of a

procurement of renewable energy and the novelty of thisvalues and purchasing behavior.

different scale. The most significant of these would be

system has been highly evaluated by investors.

cybersecurity. This is not to say that we should stop doing

In the area of recycling, we are also actively promoting

Ando: With the declining birthrate and aging population, thethings ourselves, but we must examine and determine at an

various initiatives, including the manufacture and sale ofdemand for seniors will expand while the overall population

early stage whether and to what extent we can expand thecarpets made from recycled raw materials such as PET

will decrease, so it is important to take this as an opportunity

scale of our business through in-house production, orbottles.

to respond to new needs through marketing to seniors.

whether we need to consider outsourcing at some point in

In addition, the birthrate is expected to decline and thethe future.

population is aging rapidly in Asian countries as well as in65

I think NITORI Group is a different
type of company from others andcan be said to be very unique.

promotion, but also in TCFD and IR.

Ando: I believe that the company is effectively promoting
the environmental characteristics of its products under the66

Top Message

Highlight

Value Creation of NITORI Group

Sustainability

Data Center

Sustainability

Ensuring the Effectiveness of the Board of Directors
Board of Directors’ effectiveness evaluation(1) Size and composition

3.47

4

(8) One’s own
efforts

3.68

3.5(2) Management
status3.74

3(7) Responsetostakeholders(3) Matters
discussed

3.51

3.47

(6) Riskmanagement
Options

3.50(5) Materials

4. Appropriate
3. Acceptable
2. Insufficient
1. Needs improvement

In analyzing and evaluating the effectiveness offiscal 2022 Board of Directors, we confirmed thestatus of improvements and progress of the issues
identified in the effectiveness evaluation conductedin the previous fiscal year. The Board of Directors
also compiled the evaluations and candid opinionsof each director in the form of a questionnaire, andbased on the results, the Board of Directors
conducted an analysis and discussion on eachissue to improve the functioning of the Board of
Directors.
Evaluation categories of the questionnaire(4) Support
systems

3.49

Executive compensation system

3.64

FY2021
FY2022(1) Size and composition of the Board of Directors(2) Management status of the Board of Directors(3) Matters discussed by the Board of Directors(4) Support systems for the Board of Directors(5) Materials for the Board of Directors meetings(6) Risk management(7) Response to stakeholders(8) One’s own efforts

Performance-based
compensation
31.8%*

Performance-based stockcompensation system(medium- to long-term incentives)
Performance-based
monetary compensation(short-term incentives)

Basiccompensation
68.2%**The ratio is based on a pay structure where
basic compensation accounts for 75% andshort-term incentives 25%, and medium- tolong-term incentives are 10% of acumulative total of compensation for the
relevant two fiscal years.

Basic compensation

Calculated based on the achievement of thetargets for the Company’s performance, suchas consolidated net income, for the target
period of every two fiscal years. Variable
between 0% and 200% of the basic amountof stock granted to each executive director.
Calculated based on the achievement of thetargets for the Company’s performance, suchas consolidated operating income, for eachfiscal year. Variable between 0% and 150%of the standard amount for each executive
director.
Compensation for non-executive directors, inprinciple, consists of fixed basic compensation.
Performance-based compensation as short-term or
medium- to long-term incentive is not provided for
non-executive directors.

Performance-based stock compensation system
Target period of every two fiscal years esults of the assessment of the effectiveness of the Board of Directors in fiscal yearR
2022 and priorities for the Board of Directors in fiscal year 2023
The results of the analysis by the NITORI Group Board of Directors showed that the Board of Directors is composed of a wellbalanced group of directors with diverse knowledge and experience, that all directors, including outside directors, participate in active
and free discussions at the Board of Directors meetings, that the frequency of Board of Directors meetings is appropriate and that theagenda of the Board of Directors meetings is properly managed.
On the other hand, although the current composition of the Board of Directors is not necessarily a major issue, the percentage ofoutside directors has decreased compared to the previous year, and it can be said that the discussion on the expansion of diversity
and the appropriateness of the composition should be further deepened. There is still room for improvement in such areas as“enhancement of discussions on risk management” and “enhancement of provision of important information to outside directors,”
which were issues in the previous year’s effectiveness evaluation, and further promotion of “deepening discussions on NITORIGroup’s growth strategy” is strongly required through the resolution of these issues.
Based on the issues identified through the evaluation of the effectiveness of the Board of Directors and the opinions of the directors,
the Board of Directors has decided that the most important issue is to “deepen discussions on the NITORI Group’s growth strategy”
and will work on each issue to achieve further improvement. (Figure below)

Enhance discussion on NITORI Group’s growth strategy[Top Priority Issues]
Enrichment of information
provision to the outside directors[Ongoing issue since
the previous fiscal year]

67

Ensure appropriate deliberation
time for important agenda items[New issue]

Consideration of the appropriate
size and composition of
the Board of Directors[New issue]

Strive to achieve the targets

Continue to hold the stock for three more years

Achieved
Up to 200%

Met targets
100%★

Not achieved
Down to 0%

Encourage further efforts toincrease stock price (corporate value)(1) Set numerical targets(2) Grant common shares

Performance Share Unit

Restrictions on transfer
after delivery

To strengthen the link between thecompensation structure and medium- tolong-term increase in corporate value,
the Company has adopted aperformance-based compensation
system (Performance Share Unit) inwhich compensation is provided inaccordance with the achievement ofconsolidated performance targets forevery two fiscal years.

To promote medium- to long-term proﬁtsharing with shareholders, theCompany’s shareholding guidelines set
forth that a three-year restriction shall be
imposed on the transfer of stock granted
as performance-based stockcompensation.

Clawback provisions
The Company’s shareholding guidelines
set forth that the Company may request
an eligible director to return the
incentives (clawback) if misconduct orillegal conduct causes a material breachregarding ﬁnancial reports.

68