Furukawa Electric Group Integrated Report 2023

https://www.furukawa.co.jp/en/

3

FURUKAWA ELECTRIC GROUPINTEGRATED REPORTAbout Furukawa Electric Group

Contents

Management Strategy

Management Foundation

Corporate Information/Data

About the Furukawa Electric Group Integrated Report 2023
Editorial Policy

About Furukawa
Electric GroupManagement
Strategy

About the Furukawa Electric Group Integrated Report 2023

002

Furukawa Electric Group’s Values

004

Innovation History of Furukawa Electric Group006

Changes in the External Environments Surrounding Furukawa
Electric Group/At a Glance008

President’s Message

014

Message from the General Manager of the Strategy Division

018

Message from the General Manager of the Finance &Accounting Division

022

Furukawa Electric Group’s Sustainability

026

Value Creation Process Directed at Achieving Vision 2030

028

Stakeholders and Material issues

030

Medium-term Management Plan 2022-2025034

Business Overview
Communications Solutions
Energy Infrastructure
Automotive Products & Batteries
Electronics Component Materials
Functional Products

046

Material issues of Revenue Opportunities
Creating Businesses that Solve Social Issues
Intellectual Property

054

Furukawa Electric Group’s Digital Transformation (DX)056

Furukawa Electric’s Directors and other officers

059

Massage from Outside Directors

062

Material issues of Risks
Corporate GovernanceGroup Governance/Risk Management

Since fiscal 2012, Furukawa Electric Group has published
its Sustainability Report, containing Environment, Social,
Governance (ESG) and other non-financial information
beside business results, strategies, and other financial
information.
Since fiscal 2020, we have been publishing the Furukawa
Electric Groupʼs integrated report in order to help investors
and other stakeholders better understand our Groupʼsefforts and measures to improve corporate value over the
medium- to long-term.
We sincerely hope that this report will help you
understand our value creation process directed at achieving
Furukawa Electric Group Vision 2030, as well as our efforts
to strengthen the foundation of our ESG management. We
have used the following guidelines for reference.
International Integrated Reporting
Framework (The IFRS Foundation)
SASB Standard (The IFRS Foundation)
The Guidance for Collaborative Value
Creation 2.0 (the Ministry of Economy, Trade andIndustry)
Guidance on Climate-related Financial Disclosure(TCFD) Guidance 2.0 (the Ministry of Economy, Tradeand Industry)

This Integrated Report has concisely stated importantfinancial and non-financial information regarding
Furukawa Electric Group with the aim of promoting
a better understanding of our medium- to longterm initiatives and measures for the improvement of

Publication
Timeframe

Organizations
CoveredDisclaimer
Regarding
Forecasts andProjections

Fiscal 2022, from April 1, 2022, to March
31, 2023(Note) Includes selected information on
past initiatives and activities during fiscal
2023.
Publication date:
October 31, 2023
Planned publication of next edition:
October 2024
This report covers Furukawa Electric Co.,
Ltd. and group companies in Japan andoverseas. Where activities are limited to
specific regions or companies, this fact
has been clearly indicated in the reporting.
This Integrated Report includes
statements concerning the future
strategies and earnings forecasts of
Furukawa Electric Group. These forwardlooking statements are based on
information that is currently available to
the Group. As it is subject to changes inthe business environment surrounding theGroup, the actual strategies and business
may differ from those projected.

corporate value by investors and other shareholders.
Please also refer to Furukawa Electric’s website and otherreports, which post or publish other information notcovered in this report or more detailed information.

Corporate website https://www.furukawa.co.jp/en/
Coverage

Developing Business Activities that Consider Climate Change	Strengthening Human Capital and Organizational
Execution Abilities

CoveredIntegrated Report

Supply Chain Management
Human Rights and Labor Practices

PeriodInformation Disclosure System and Positioning of This Report

SummarizedManagement
Foundation

001

Scope of This Report

IR Information

https://www.furukawa.co.jp/en/ir/

Sustainability

https://furukawaelectric.disclosure.site/en/

Sustainability Book
Management Analysis of Operating Results and Financial
Position

092

Main Financial and Non-Financial Data

096

Consolidated Financial Statements

098

Company Profile and Stock/Dividend Information

100

External Evaluation/Participation in Initiatives

101

Background for the Furukawa Electric Group Integrated
Report 2023

https://furukawaelectric.disclosure.site/en/themes/175

Medium-term Management Plan

https://www.furukawa.co.jp/en/ir/management/feature.html

Detailed

Corporate
Information/
Data

090

Financial Data

https://www.furukawa.co.jp/en/ir/achievements/

Annual Securities Reporthttps://www.furukawa.co.jp/en/ir/library/sr/

Financial Results/FACT BOOK

https://www.furukawa.co.jp/en/ir/library/finalreport/

Financial

Corporate Governance Reporthttps://www.furukawa.co.jp/company/governance.html(Only available in Japanese)

Information Disclosure in line with the TCFD Recommendations

https://furukawaelectric.disclosure.site/en/themes/199

Intellectual Property Reporthttps://www.furukawa.co.jp/en/rd/ip-report/

Furukawa Electric Review

https://www.furukawa.co.jp/en/rd/review/Non-financial
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

001

About Furukawa Electric Group

ValuesFurukawa Electric Group’s Values

Management Strategy

Corporate Information/Data

Overall Concept of Furukawa Electric Group’s Philosophy system
Furukawa ElectricGroup Philosophy

The Founder’s Thoughts
Mr. Ichibei Furukawa, the founder of Furukawa Group, said, based on his wish to “brighten Japan,” that we must

Core Value“value employees,

Furukawa Electric Group Philosophy

Clear statement of what we have aimed to become from the time the ﬁrm was created to the present
and will continue to be the basic to the Group in the future, through Corporate Philosophy andManagement Philosophy

Core Value

The ﬁve values that we wish to particularly emphasize and enhance even more, for the achievement of
the sustainable growth of the Group based on the Group Philosophy

value customers,

Vision 2030

value new technology, andFurukawa Electric Group
Vision 2030

contribute to society.”
Since its foundation in 1884, Furukawa Electric has inherited these words in its DNA and has grown. We aredetermined to receive and pass on these three valuable things and contribute to the realization of a sustainable
society as members of society who forge the future.

Visionary outlook of the Group, with the time frame set to 2030,
based on our conception of broad aspects of the future society
and the Group’s Corporate Philosophy

2025 Mid-term
Plan

Medium-term Management Plan

Milestone forachieving Vision
2030

Business Activity

Furukawa Electric Group Philosophy

CSR Code of Conduct

The Furukawa Electric GroupCSR Code of Conduct

Drawing on more than a century of expertise in the development and fabrication ofadvanced materials, we will contribute to the realization of a sustainable society throughcontinuous technological innovation.

Corporate
Philosophy

Management Foundation

Fundamental rules of behavior that Furukawa Electric Group executives andemployees should follow from the perspective of corporate social
responsibility, in conducting corporate activities based on the Furukawa
Electric Group Philosophy and Core Value

2020

2025

2030

With an eye to the future, the Furukawa Electric Group management team pledges to:Live up to the expectations and trust invested in us by society, with fairness and integrity.
Apply the sum total of our expertise to satisfy our customers and grow with them.

Management
Philosophy

	Continuously strive to achieve world-class technological innovation, and transform ourselvesin every area of endeavor.

	Nurture human resources at every level, so that we can become a more diverse andcreative organization.

Furukawa Electric Group
Vision 2030

Core Value

In order to build a sustainable world and makepeople’s life safe, peaceful and rewarding,
Furukawa Electric Group will create solutions
for the new generation of global infrastructure
combining information, energy and mobility.

For details, please see the “The Furukawa Electric Group CSR
Code of Conduct” on Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/123

002

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

The Furukawa Electric GroupCSR Code of Conduct(items only) (Revised April, 2019)1

Human rights

2

Labor practices

3

Environment

4

Products and services

5

International businesses andtransactions

6

Fair competition

7

Relations with customers,
partners, and society

8Management and preservation ofCompany assets

9Disclosure of information

10

Duties and obligations of senior
management and employees

TOPICS

Efforts to Establish Our Purpose

In recent years, it has become increasingly importantfor companies to clarify their raison dʼêtre. We believedthat our Groupʼs purpose was included in our corporate
philosophy. At the same time, in addition to quick
decision-making, in todayʼs age of VUCA it is even more
important to increase the unifying power and employee
engagement of an organization. And to do this, wehave come to believe that it is necessary for each andevery employee to understand, empathize, and takepride in working for our Group, and that we must havea purpose that forms the basis of our organizationʼsdecisions.

Given this, in FY2022, our Group established a
Purpose Establishment Project Team, with a focus
on young employees, and began examining how toestablish a purpose. Discussions were held a total of 30
times with more than 100 employees, not only in Japanbut also at overseas affiliates (USA, Europe, SouthAmerica, China, Southeast Asia).
Based on these discussions, we have established ourGroupʼs purpose and plan to disclose it to the public inor after FY2024.

Discussions with employees at overseas affiliates

Discussions within the Project TeamFURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

003

About Furukawa Electric Group

Innovation History

Management Strategy

Management Foundation

Innovation History of Furukawa Electric Group
Drawing on more than a century of expertise in the development and fabrication of advanced
materials, Furukawa Electric Group has contributed to the realization of a sustainable society throughcontinuous technological innovation since its foundation in 1884.
Furukawa Electric Group has supported the establishment of Japan’s social infrastructure andcontributed to the global sustainable development for 139 years.

Acquired SuperPower
Inc., a high-temperature
superconducting materials
manufacturer in the US

2011

Trends in the net sales
Non-Consolidated

Laid the world’s first nonloaded
carrier submarine
cable in the Tsushima Strait

1937

Consolidated

Establishedcompany in Brazil
manufacturing andselling aluminum
power cables

1974

Manufactured Japan’s firstsubmarine electric cable（Billions of yen）
1,500

2003

Launching sales of the “BRACETM”
Blue-IR hybrid laser
2019 2022
2018

1,000

2017

World’s first successfulcommercialization of an
optical fiber composite Oil
Filled (OF) cable

1983

2011

2020
2016

2019
Award of contract for developmentof high voltage dynamic export
submarine cable for floating
offshore wind power plants

2001

Started manufacturing
electric copper wires

1897

Installed a communications
network in Bangkok,
Thailand

1971

Provided green LP gas from biogas,
which was used as part of the fuel for thetorch at the “Ichigo Ichie Tochigi NationalSports Festival and National Sports
Festival for People with an Impairment”

2020

Acquired Lucent
Technologies’opticalfiber division (US)World’s first successful fieldtrial of optical fiber cable

1974

2022

Received the Golden HadronAward from CERN for
superconducting wire materials

2001
1915

Examples of the recent
development of technology forsolving the social issues

Newly established an
open lab “Fun Lab®”
within Yokohama Works

2016

Corporate Information/Data

2003

1983

Started Japan’s firstelectrodeposit copper trial
operations

1889

1971

Developed a fully automatic
high-precision six-highrolling mill

1964

500

1974

Opened Honjo Copper
Smeltery and Yamada
Cable Works

1884

1884

1889

1915

1897

1890

1900

Meiji Period004

Installed an antenna and feedline on Tokyo Tower

1958

1910

1920

1930

1964

2017
1958

1937

1940

Taisho Period

1950

1960

1900-

1960-

Foundation & Dawningof a New Era

Helping to Establish Japan’s Social
Infrastructure

Expanding Overseas

The origins of our company
can be traced back to 1884,
when Ichibei Furukawa firstsmelted copper in Honjo,
Tokyo and Yamada Cable
Works began manufacturing
electrical cables in Takashimacho, Yokohama.

Catering to demand for electricity andcommunications in the then undeveloped Japan,
Furukawa Electric expanded production to include
various rubber and cotton-covered wires, and in1915 manufactured the nation’s first submarine
electric cable. The company continued to support
the establishment of Japan’s s+ocial infrastructurewith its global quality technical capacity, suchas by installing an antenna on Tokyo Tower, thecountry's largest radio tower at the time.

INTEGRATED REPORT 2023

1970

1980

1990

Showa Period

1884 -FURUKAWA ELECTRIC GROUP

2018
Developing thin ultra-high countmulti-core optical fiber cable withthe world’s highest core density

From this period, Furukawa Electric
launched its full-scale efforts to enter
the global market with the hope of
spreading its technical strength aroundthe world. While building up a trackrecord in the Middle East, Southeast
Asia, and elsewhere, it establishedmanufacturing plants from Southeast
Asia all the way to Brazil, laying thefoundations for todayʼs globalization.

2000

2010

Heisei Period

In 1987, additionally, a
new R&D laboratory wasestablished at Yokohama,
which is one of the funding
places of Furukawa Electric.
Since then, Yokohama R&D
laboratory has createdvarious new technologies
and new products that leadthe world.

2022 （FY）

0

Sampling of narrow linewidth &high output power micro ITLA for
beyond-100Gbps optical digital
coherent transmission

Reiwa Period

2000-

2016-

Continuing to support people
and society by our Group’s
versatile technologies

Strengthening the development of newtechnologies and new services thatsolve the social issues

For the advancement of technology andthe global environment changes suchas climate change, Furukawa ElectricGroup have continued to support
people and society by our Group’s
versatile technologies centered on four
core technologies — metals, polymers,
photonics, and high-frequency.

Toward solving various social issues, based on Furukawa
Electric Group Vision 2030, “In order to build asustainable world and make people’s life safe, peacefuland rewarding, Furukawa Electric Group will create
solutions for the new generation of global infrastructure
combining information, energy and mobility.”, Furukawa
Electric Group have carried out research and development
through collaboration with various partners.
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023005

About Furukawa Electric Group

Changes in the External Environments Surrounding Furukawa Electric Group/At a GlanceManagement Strategy

Management Foundation

Corporate Information/Data

At a Glance, Furukawa Electric Group▶ Consolidated net sales

1066.3▶ Greenhouse gas emissions*1 (Scopes 1&2)

571 10 t-CO e
3billion yen▶ Consolidated operating profit

15.4

Changes in the external environments
concerning sustainability and the social
issues surrounding Furukawa Electric Group▶ Number of Group employees

51,314billion yen▶ Profit attributable to owners ofparent17.9

2

Denmark▶ Number of Group companies*2

127billion yen

Italy

Spain

*1. Combined total amount for Furukawa Electric, 31 domestic and 59 overseas group companies*2. Combined total for Furukawa Electric, 111 consolidated subsidiaries and 15 equity-method affiliates

South America, Europe, and others

91.9 billion yen
15 10 t-CO eGroup employees in total
3,295Group companies in total
20
Net sales

Greenhouse gas emissions

We consider that the business environment surrounding
Furukawa Electric Group, which is a premise of the 2025
Mid-term Plan, will be changing in a discontinuous andirreversible manner. For example, expected changes
include the following: ESG/SDGs will become amanagement challenge which is critical for the survival ofcompanies; in the era of the 100-year life, a new lifestyle
will emerge and become common; the domestic market
will shrink due to a declining and aging population; and wewill see the rapid progress of digital transformation (DX).

In such an environment, there will be growing expectations
for addressing social issues, including the realization of B5G(Beyond 5G)* realization of carbon neutrality; realization of thenext-generation infrastructure enabling free flow of people andgoods in a safe, secure and comfortable manner; an increase inhealthy life span; and the realization of the circular economy.
* B5G (Beyond 5G) is the next generation of mobile communication systems
with such features as scalability (expansion of communication areas to sky, sea,
and space), ultra-low power consumption, and ultra security and reliability, in
addition to the further advancement of 5G’s characteristic features (high speed
and high capacity, low latency, and multiple simultaneous connections). It is also
called 6G (the 6th generation mobile communication system).

The external environment is rapidly changing on many fronts, and although there isincreasing risk that responding incorrectly may be fatal, the range of social issues
Furukawa Electric Group can contribute to is growing

Politics▶ Increased awareness of ESG/
SDGs as a core pillar of corporate
management

Accelerated initiatives for realizing a carbon
neutral society▶ Globally increased political divisions

A growing impact of further confrontation
between nations on global landscapeEach county pursuing industrial policies thatprioritize its own interests

Society▶ New lifestyles

Work style reforms and 100-year life
expectancy▶ More frequent natural disasters andincreased damage
More severe natural disasters, and increased
demand for renewing social capital▶ Changing concept of “mobility”

Changing concept of mobility for people, goods
and information by evolution of digital technology

006

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

EconomyNorth and Central America
U.S.A.

3

2

MexicoColumbia

BrazilChina

104.3 billion yen
104 10 t-CO eGroup employees in total
4,180Group companies in total
19
Net sales

Argentine

Social Issues

Greenhouse gas emissions

Realize a B5G society▶ Rapid and substantial interest hikes
in the U.S.

▶ Rapid advances in DX

Level of engagement in DX will influence thecompetitive position of companies▶ Widespread implementation of 5G,
and advances in CASE based on thatfoundation

Ultra-high speed telecommunications
enabled by 5G, multiple simultaneousconnections and ultra-low latency
Increased demand for electric power, and expansionof operations beyond traditional industry bordersIndia

224.9 billion yen
122 10 t-CO eGroup employees in total
28,200Group companies in total
34

3

2

China
Japan

Net sales

Stubbornly high inflation, high labor market,
and destabilized financial system

Technology

Asia (ex. Japan and China)

Become carbon neutral2

127.8 billion yen
Greenhouse gas emissions
74 10 t-CO eGroup employees in total
5,137Group companies in total
13▶ Growth in emerging markets such as Asia
Emerging countries will continue rapid
growth, and the global south will rise3

Net sales▶ Shrinking markets in Japan

Zero growth and shrinking labor market due
to the aging and declining population

RussiaGermany
Czech
Hungary

U.K.

Greenhouse gas emissions

Realize next generation
infrastructure that enjoys
universal mobility

Realize acirculareconomy3

TaiwanVietnam2

Thailand

Malaysia

Japan
Philippines
Singapore
Indonesia

Realize longer healthy life
expectancy* The number of group companies in Japan includes Furukawa Electric.
* Net sales by region are based on the location of customers and are classified by country
or region.
* Greenhouse gas emissions by region are based on the location of the companies and areclassified and calculated by country or region.

517.4 billion yen
255 10 t-CO eGroup employees in total
10,502
Group companies in total
41
Net sales

Greenhouse gas emissions

3

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

2

007

About Furukawa Electric Group

President's Message

Management Strategy

As President and Representative Director

Meeting our 2025 Mid-term Plan, amilestone for achieving Vision 2030,
we will work to realize an ideal
Furukawa Electric Group.
古河電気工業株式会社
代表取締役社長

Furukawa Electric Group Vision 2030 and
2025 Mid-term Plan

Furukawa Electric Co., Ltd.
President and Representative Director008

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Furukawa Electric Co., Ltd. celebrates 139 years inbusiness this year. And as part of this long history, I havebeen appointed as the 16th president.
At present, our Group is working to achieve the
Furukawa Electric Group Vision 2030 and the 2025
Medium-term Management Plan (hereinafter, 25 MTP),
which started last year. As a member of the management
team involved in the formulation of Vision 2030 and 25
MTP, I believe it is necessary for our Group to promotethese management policies with a sense of continuity.
At the same time, we started to engage in the visionand plan with the intention that if changes in the external
environment or other factors make it necessary to change
the current management policies, we will actively change
them. Looking at the current business environment, I
feel that social issues have become increasingly diverse.
It is also marked by changes in geopolitical risks such as
escalating conflicts between countries, decoupling, anddisputes. In light of these changes in the environment, it
will be necessary to change our strategies going forward.
Our Group has set forth the goals of maximizing profits inexisting businesses and building a foundation for creating
new businesses in our 25 MTP, and as part of Vision 2030,
we aim to become a corporate group that is indispensable
to solving social issues. In order to achieve this, we mustchange our corporate structure to one that is flexible andresponsive to changing and diversifying social issues. To
do so, we will make management decisions quickly andestablish a system that enables each organization tooperate functionally and effectively. I believe it is importantthat each employee recognize what they need to do undersuch an organization and to exercise their potential intheir respective positions so that we can become a strong
corporate group that is more than the individual activities
of individual employees. We will work on organizationalchange under the three concepts of taking action
promptly, functionally, and effectively.

Vision 2030 aims to identify fields in which our Groupcan create value in areas of information, energy, andmobility, areas that combine them and peripheral areas,and contribute to solving social issues that arise there.
Furthermore, the concept of Vision 2030 is to utilize
the various resources of our Group to identify new
areas where we can contribute to solving social issues,
launch them as new businesses, and grow them. At thesame time, we will improve our corporate structure andstrengthen human resource development. The 25 MTP isa milestone for achieving Vision 2030. We started this in
FY2022 with specific financial and sustainability targets.

Management Foundation

Corporate Information/Data

Furukawa Electric Group Vision 2030 and Priority
measures of the 2025 Mid-term Plan

Priority measures

01

02

Building a foundation
for creating new
Maximizing revenues
businesses byin existing businesses
strengthening
through a focus ondevelopment andcapital efficiency
proposal
capabilities

03
Strengthening thefoundation for ESG
management

Looking Back on the First Year of 		2025 Mid-term Plan
In the first year of 25 MTP, we were unable to achieve
our financial targets due to the impact of a tougher
than expected external environment in the automotive
industry and the semiconductor market. However, I feelthat we have started in the right direction by steadily
implementing various initiatives aimed at maximizing
profits in existing businesses, building a foundation
for creating new businesses, and strengthening thefoundation for ESG management ahead of FY2025.
Our Groupʼs business structure is characterized bynumerous examples of large-scale manufacturing
infrastructure. Although this has the advantage of a highbarrier to entry, in recent years the challenge of increasing
investment efficiency has become apparent. In orderto resolve these issues, we are promoting management
focused on capital efficiency in 25 MTP. We haveintroduced Furukawa Value Added (FVA), an indicatorof capital efficiency, as a management indicator. Thisfunctions as a criterion for actively replacing our businessportfolio after assessing the status of each business.
Using FVA over the past year, a change in internal
consciousness has begun to emerge. Discussing from theperspective of what measures and initiatives will lead tothe achievement of FVA targets, we have been able toconstruct a process for formulating and implementing
various measures.
Specifically, by breaking down numerical targets forachieving FVA targets on a per-business basis, we
can now identify actions that can be taken to improveFURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023009

About Furukawa Electric Group

President's Message

Aiming for Sustainable Replacement in Our
Business Portfolio
Regularly replacing our business portfolio by creating
new businesses and downsizing or withdrawing fromexisting businesses that are reaching the end of theirrole has been a long-term challenge for our Group. Our
stakeholders recognize that the Furukawa Electric Groupis engaged in a wide variety of businesses, and our Group
has the ability to take on new challenges and discover
new businesses in new fields, as well as technologicalcompetitiveness in a wide range of fields. Looking backover the past 10 years, however, I believe developing
newly established businesses into core Group businesses
has proven difficult.

Strengthening Our System to Create New
Businesses
In March 2021, we established the Social Design & New
Business Development Dept., in which the R&D andmarketing divisions are responsible for creating new
businesses through co-creation activities. Traditionally,
the R&D division was responsible for the creation of new
businesses at our Group. However, in order to accelerate
the creation of new businesses that meet the needs ofcustomers and wider society, we have decided that it ismore necessary than ever to use the capabilities of themarketing division, which functions as a point of contact
with the outside world.
With the establishment of this function, the R&D
division focuses on the development of new technologies
and the enhancing of our technological foundation, andthe Social Design & New Business Development Dept.
identifies the needs of society where these technologies
can contribute and searches for products and services
that meet the needs of customers. We believe that we

Business portfolio optimization and allocation of management resources
1. Make the current status and positioning visible
2. Decide the allocation of management resources

3. Reorganize the business portfolio

Next generation

Growing

Decide the need to withdraw+ Potential for
future growth8%

Issues exist
Low

Strengthen
earnings

Profit base0%

MediumROIC spread

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

1.2%

High

+ Competitive statusamong competitors+ Carbon efficiency

Create / approve a
restructuring plan
Define the requirements
for withdrawal(Restructuring planis set) Monitor thenumerical
requirements forwithdrawal

Rejected(withdraw)

If the limits arebreached, withdraw,
in principle

If the limits are not breachedContinuethe business

Strategic
restructuring
Low

010

Search for growth opportunities, including M&A

High

Withdrawal isconfirmed

Average sales growth rate

(investment)

can expect great results in the future by adopting a
structure that promotes co-creation activities among
divisions and systematically fosters new ideas for thecreation of new businesses.
And by using IP Landscaping as a tool to link our Group's
intellectual assets with the needs of society, we believe
we can further accelerate the creation of new businesses.
These intellectual property-related activities, in which thetechnical and business results created through corporate
activities are clearly stated and established as rights
in the form of intellectual property rights or industrial
property rights, or they are kept undisclosed and used
as expertise in our own businesses, form an important
foundation for management.
Strengthening/creating businesses throughinvestments in intellectual assets
Evolution and use of IP Landscaping*
Exploration [new businesses]

capital efficiency before the business itself is selected. In
addition, a process is being added where, if the FVA of abusiness that is determined to be in a revenue reaping
phase is not higher than expected, the factors areanalyzed from various angles, the optimal direction forthe business is discussed between the headquarters andbusiness unit, and a decision is made. We will continue
to use FVA to discuss specific investment and withdrawal
decisions and how to conduct individual businesses.

Our Group has a history of development in the fields ofpower infrastructure, communications, and automobiles,
with a focus on materials technologies such as metalmaterials — mainly copper — and plastics, and optical,
electrical, and wireless communications technologies. As
mentioned above, we will continue to maximize profits
in these existing businesses while focusing on improving
capital efficiency. However, in addition to these fields, it
is also necessary to identify areas in which we can utilize
our strengths in response to needs from society andissues that demand solutions, and shift our focus to theseareas. As a result of efforts to create new businesses
by collecting and organizing the opinions of customers
and wider society through concepts such as market
orientation and kotozukuri (creation of an extra-alphaservice), some new businesses are already moving towardpractical use. As we begin to see a sense of direction
for new business, we see the possibility of realizing
sustainable replacement in our business portfolio.

Management Strategy

Towards
ambidexterity

Open & closed
strategies

Metals Polymers

IP LandscapingHighfrequency

Technical information

Photonics

Protection/
evolution of businesses/
core technologies

Technology outlook
Technology roadmap

Creation/accumulationof intellectual assets

Exploitation [existing businesses]
From protection to growth-oriented management ofintellectual properties
Balancing “Risk Minimization” and “Chance Maximization”.
* IP Landscaping: method for analyzing intellectual properties of our company andother companies, and leverage them as a marketing techniqueStable Returns to Shareholders
Our Group has always maintained a basic policy ofproviding stable and ongoing shareholder returns
based on the idea of balancing growth investment withshareholder returns. In addition, the 25 MTP establishes
a new numerical standard with a dividend payout ratioof 30% of consolidated net income. We promise ourshareholders that we will achieve sustainable growth asa corporate group by achieving both stable dividends asalways and a payout ratio linked to business performance.
In FY2022, dividends were 80 yen per share based on
the above policy. Dividends determined on the basis of
the results of a single fiscal year are expected to fluctuate
due to short-term changes in performance. In order torealize growth from a medium- to long-term perspective,
we need to strike a balance between giving priority toshareholder returns in a given fiscal year and investing
in internal growth. We hope to gain understanding bycarefully explaining our dividend policy to shareholders
for each fiscal year.

Management Foundation

Corporate Information/Data

Strengthen the Foundation for ESG
Management
At this yearʼs Annual Shareholders’ Meeting, themajority of questions from shareholders concerned
non-financial information. Going forward, it will be
increasingly important for corporate management todisclose non-financial information that indicates ESG
initiatives and their targets and results. Our Group has
defined key management issues (material issues) for
the implementation of 25 MTP, and we have disclosed
sustainability indicators and targets that indicate
progress both internally and externally. We believe that
achieving our sustainability indicators and targets, as wellas our financial targets, will bring us closer to what wewant to achieve with Vision 2030.

Environment: Initiatives to Achieve Carbon
Neutrality
In 2021, our Group formulated the Furukawa ElectricGroup Environmental Vision 2050. Our aim is to achievecarbon neutrality by 2050. In response to this challengeshared by humanity, our Group reviewed our targets
for reducing greenhouse gas emissions producedby our operations. In July of this year, we obtained
certification for the 1.5°C target of SBTi, an international
environmental initiative.
At the same time, our Groupʼs technologies can help
reduce greenhouse gas emissions produced by society.
We expect that new businesses that apply thesetechnologies in order to contribute to collective carbon
neutrality will be significant profit opportunities. For
example, the development of technology for producing
green LP gas with the Ramune Catalyst is progressing,and the direction in which to take the business is
becoming more clear. In addition, we will appeal tocustomers and society that we use our own hydroelectric
power in the manufacturing process, and encouragethem to actively choose our Group's products. By doing
this, we intend to turn various environmentally friendly
products that help reduce greenhouse gas emissions into
profit opportunities.
In the field of energy infrastructure, the electric cablesystem helps in the construction and strengthening ofelectric power grids that transmit electricity produced
by renewable energy from solar power and offshore
wind power. In the field of mobility, changing conductors
in automotive wiring harnesses from copper to lighter
aluminum reduces the weight of the automobile andhelps improve fuel efficiency. We are contributing to therealization of carbon neutrality through the production
and sale of aluminum wire harnesses, including byusing harnesses made from aluminum produced usinghydroelectric power. In this way, we aim to contribute
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

011

About Furukawa Electric Group

President's Message

Management Strategy

Management Foundation

Corporate Information/Data

Contributing to carbon neutrality throughout our value chain
Hydroelectric power

Utilizes hydroelectric power

Furukawa Nikko Power
Generation Inc.

Furukawa Electric
Nikko Works
Copper strip manufacturing

PowersupplyUtilizes hydroelectric
power
Aluminum ore(Indonesia)Rawmaterial
procurement

TMS(Indonesia)
Aluminum wire rod
manufacturing

Use of solar power
FAS Mie Factory
α-terminal manufacturing

Use of solar power

Use of solar power

FAS
Head office plant &overseas plants
Aluminum wire harnesses
manufacturing

Customers
Reduction in CO2 emissions
through use of lightweight
aluminum wire harnesses
Sale

FAPV (Vietnam)
Aluminum electricalwire manufacturing

to the carbon neutrality of society by actively providing
our customers with elements that contribute to carbon
neutrality, with a view to the entire value chain.

of the state of the organization through regular surveys
on an ongoing basis in order to explore what humanresources and the organization should be.

Social: Initiatives to Strengthening Human
Capital and Organizational Execution Abilities

Sustainability indicator: Employee engagement scores

In order to strengthen human capital and organizational
execution abilities, we need to embrace more diverse
human resources. Furukawa Electric Group has
employees from a wide variety of countries and regions,
including at our global affiliates. We therefore believethat a challenge for management is to create comfortableworking environments that maintain a good balance
between the values that are rooted in the country or
region and held by the diverse human resources andthe values that are shared within the Group. Our goal
is to become a corporate group where each and every
one of our diverse employees can achieve their desired
career move and where their dreams and aspirations are
possible.
Furthermore, in order to achieve growth as acorporate group, we believe it is essential that we be
an organization where every employee feels satisfied,
motivated, and has a sense they are contributing inmeaningful ways to the company. In order to develop an
employment environment that fosters satisfaction, we
will reform and enhance structures and systems — suchas our recruitment process, remuneration, and educationand training — from the perspective of employees.
In FY2022, we launched the Furukawa E-Survey, asurvey for gauging employee engagement scores. The
result of the first year of the 25 MTP is that we havedeveloped a system to visualize the state of our Groupʼshuman resources and organization based on the survey
results, and a system has been established to planand implement necessary improvement measures.
Improvement of organizational structures does notproduce results in the short term. Although the results
are not satisfactory at present, employee engagementscores are one of the sustainability indicators in 25 MTP.
Therefore, we would like to develop an understanding

012

Production

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

FY2022
Results

FY2024
Targets

FY2025
Targets

FY2030Targets

65

70

75

85

Furukawa
Electric

Furukawa
Electric

Furukawa
ElectricGroup

We believe that it is necessary to take measures toimprove the current status of female advancement.
Looking at the ratio of male to female employees at ourcompany, there are some age groups where the ratio ofmale employees is high due to past hiring trends. At thesame time, the proportion of women among new hires
has improved recently, and the proportion of womenamong younger employees has gradually increased.
If we focus on ability when hiring, placing, andpromoting employees, we believe the proportion of men
and women will naturally approach an even level. We will
consciously increase opportunities for women to exercise
their full potential — something that was insufficient in
the past — and expand the opportunities they have toplay active roles. And ultimately, we aim to implement
a human resources strategy in which each individual isevaluated appropriately based on their abilities, where
there is no need to intentionally use classification basedon gender.

Governance: Initiatives for Human Rights andEstablishment of ESG-Linked Remuneration
Our Group began the implementation of human rights
due diligence in FY2022. In order for this initiative totake root, we feel that it is necessary for each and every
employee to specifically recognize what it means to be
conscious of human rights and to share this within theGroup. It is natural to be aware of extreme human rights
issues like harassment. However, it is necessary to havea common understanding that there are numerous othernegative impacts on human rights (human rights risks).
Similarly, as we contribute through our businesses toa society in which people prosper, there should be nosituation in which human rights issues arise at any pointof the supply chain that our Group is involved in. We
cannot continue our business activities knowing such
issues are occurring. There is also a trend globally torefrain from procuring raw materials from suppliers withconsiderable human rights risks. By working with our
suppliers to identify human rights risks, we will conductbusiness activities based on the premise of a supply chain
free of human rights issues.
And by continuing our efforts to address human rights,
we will enhance our human rights due diligence by
accurately understanding the reality of human rights risks
in our Group and proactively addressing any important
issues that are discovered.
In FY2023, we established ESG-linked remuneration
as a mechanism for management to engage in ESG
management with clear responsibilities and contributeto initiatives. With regard to this, we first prioritized
the introduction of the system and incorporated the
reduction of greenhouse gas emissions (Scope 1, 2)
indicator into remuneration. In order to include ourGroupʼs ESG management, we will consider adding
indicators that can more strongly indicate the degree ofcontribution to the promotion of ESG management in the
future. In addition, although there is currently a system
to reflect the performance of indicators in short-term
performance-linked remuneration, ESG is a medium- tolong-term initiative, and we believe that there is room for
improvement in how it is reflected in remuneration. We
will further accelerate ESG initiatives by understanding
ESG-linked remuneration as an important tool andmaking it a more effective system.
Elements of the Company’s remuneration
for Directors, etc. (since July 2023)
Base salary
Short-term performance-linked remuneration (individual)
Short-term performance-linked remuneration (company level)
ESG-linked remuneration
Medium-to-long-term performance-linked remuneration

with our future aspirations and the direction in which
we wish to move. Currently, we have established a
Purpose Establishment Project Team, with a focus on
young employees, and are examining how to establish
a purpose. We are examining ways to organize ourunique qualities and highly persuasive raison dʼêtre bothinternally and externally so that we can announce this as
our purpose.

Future Aspirations
In order to achieve our Vision 2030, our immediate goal
is to first achieve the milestone 25 MTP. Vision 2030
indicates the direction of our Group broadly. It aligns
the steps of the Group as a whole and leads us in a
united direction toward our goal. In addition, as a more
concrete direction to accelerate efforts to achieve Vision
2030, we will further embody our Group's raison dʼêtre,disseminate it internally and externally, and examine theoptimal business and product portfolios in response tothis. At the same time, by working on human resource
development and promoting ESG management, we willsecure and enhance the resources to realize these goals.
Our Groupʼs ultimate goal is to be an indispensable
part of society capable of contributing in a sustainable
manner. In order to achieve this, we need to be financiallysound and generate stable revenues on a continual
basis. During my term as president, I would first like us tosolve our financial issues as quickly as possible, facilitate
the achievement of Vision 2030, and realize an ideal
Furukawa Electric Group.
I look forward to your continued support.

Reviewing of the Establishment of Our Purpose
For our Group, which has a diverse range of businesses,
I personally believe that it is a top priority for us toconcisely indicate our raison dʼêtre in conjunction
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

013

About Furukawa Electric Group

Message from the General Manager of the Strategy Division

All members of the Group aredetermined to take on thechallenge of enacting reforms toachieve the 2025 Mid-term Planand Vision 2030.
Director and Corporate Executive Vice President
General Manager, Strategy Division

Satoshi Miyamoto

Progress and Issues With the 2025 Mid-term Plan
The first year of the Medium-term Management Plan
2022-2025 (hereinafter, 25 MTP) had a difficult startdue to intense external environmental changes. Given
this, in the short term, we believe that our top priority
is to improve the profitability of our key businesses andrecover our financial position. Our company has alreadyintroduced indicators such as return on invested capital(ROIC) and Furukawa Value Added (FVA) as an internalmanagement indicator in order to consciously manage
capital efficiency. At the same time, more important
than the act of introducing these indicators is that they
be fully understood and used internally. For this reason,
we use an FVA tree to break down the elements for eachbusiness division and incorporate them into KPIs thatare linked to daily on-site operations. In the first year of
the Mid-term Plan, we introduced rules and systems forreviewing our business portfolio. Going forward, we will
aim to improve earnings by thoroughly implementing
these.
In the medium- to long-term, it is important toimprove capital efficiency and reduce the cost of capitalthrough sustainability initiatives. There was a time whensustainability was regarded as an external economy forcompanies and positioned as so-called corporate social
responsibility (CSR). Today, however, it is incorporated
into the foundation of corporate value creation, andsustainability forms the very foundation of our companyʼsbusinesses. We believe that companies that do not
focus on sustainability and ESG today and into the014

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

future will not survive. Stakeholders such as employees,
investors, and wider society are also keenly aware of acompanyʼs attitude toward sustainability. We believethat sustainability initiatives will contribute to enhancing
our reputation as well as the satisfaction and pride
employees feel.
Our company has defined important challenges for
management (material issues) to achieve Vision 2030. In
the 25 MTP, we introduced sustainability indicators in linewith material issues so that we can make steady progresson our sustainability initiatives. Therefore, implementing
initiatives to achieve these indicators will help us achieve
Vision 2030 over the medium- to long-term. In FY2022,
the first year of the 25 MTP, we were able to achieve thetarget values for all indicators. In addition to external
disclosure indicators, we have also established internalsustainability indicators to ensure steady implementationand improve effectiveness.
In this way, we aim to achieve the financial targetsof the 25 MTP without changing them from the initial
figures and achieve Vision 2030 in the future by tackling
the financial aspects in the short term and sustainability
in the medium- to long-term.

Business Portfolio Optimization
Looking back on the experience of reviewing our businessportfolio in the 20 MTP, we can point out that thejudgement criteria regarding the positions of businesses,
investment and withdrawal, etc. were unclear, theManagement Strategy

execution system was not always solid, and that thesense of urgency that the portfolio should be reviewed
was lacking.
Based on these points of reflection, the Business
Portfolio Review Committee, which began in FY2022,
has clarified the judgement criteria that are the basis
for reviews of our business portfolio. Due to the natureof the rearrangement of our business portfolio, it isdifficult to say whether progress has been made at thediscussion stage. However, since the start of the 25 MTP,
the systems, including the judgement criteria, have beensteadily adopted and become established.
The committee meets regularly three times a year —in June, November, and February — to determine theposition of each business and assess individual recovery
plans. In addition, meetings with individual departments
are held from time to time when there are other subjects
that need to be discussed. Initially, the Business Portfolio
Review Committee was stumbling in the dark becauseof the highly complex matters it discussed. However,as the committee continued to convene, a common
understanding emerged among the members of thecommittee regarding the matters to be discussed andthe level of consideration. Discussions are now very
active. In addition, I feel that the Business Portfolio
Review Committee is working well, including improved
preparations for committee meetings and follow-up.
The Business Portfolio Review Committee considers not
only financial criteria such as profitability and continuity
but also non-financial evaluation criteria such as carbon
efficiency. ESG factors are also incorporated into the risk
management of FVA, and the committee will continue toconsider our business portfolio from multiple angles.

Progress of Initiatives for “Developing Business
Activities That Consider Climate Change”
Reduction of Greenhouse Gas Emissions (Scopes 1&2)
Achieving carbon neutrality is the most important social
issue that needs to be resolved, both globally and for
our Group. In 2021, our Group formulated the Furukawa
Electric Group Environmental Vision 2050. This setsa challenge target of zero greenhouse gas emissions(Scopes 1&2) in its business activities in 2050. We have
set the Environmental Targets 2030 as a milestone
to achieve this challenge target. Furthermore, in the
25 MTP, we set the reduction rate of greenhouse gas
emissions (Scopes 1&2) as a sustainability indicator andclarified milestones for advancing medium- to long-term
initiatives.
In FY2022, the Environmental Targets 2030 was revised
upward due to progress in reducing greenhouse gas
emissions that exceeded the original plan. In addition, weapplied for the SBT 1.5°C target in line with the revised
targets, and for the TCFD scenario analysis, we beganconsidering a 1.5°C scenario instead of the conventional

Management Foundation

Corporate Information/Data

2°C or lower scenario. These measures have been praised
by investors and analysts as being advanced within theindustry.
Changes in greenhouse gas emissions (Scopes 1&2)
(Unit: Thousands of t-CO2e)
1,000
903
843
800

■ Results ■ Targets

742
648

600

640

712
571

520*
371*

400
200
0

2017 2018 2019 2020 2021 2022 2023
* This is the revised target value.

2025

2030
(FY)

Utilization of Renewable Energy
Due to the nature of our businesses, scope 2 accounts
for a high proportion of our greenhouse gas emissions,and our Group has set the ratio of renewable energy tototal electricity consumption as a sustainability indicator
to reduce such emissions. In FY2022, the FY2025 target
was also raised to 30% due to significant progress inperformance. Since our Group has hydroelectric power
facilities — unusual in the domestic manufacturingindustry — our ratio of renewable energy has always
been relatively high. However, in recent years, wehave been actively promoting the introduction of solar
power facilities and the purchase of electricity derived
from renewable energy sources in order to achieve ourtargets. In FY2022, the Imaichi East Plant of the Copper
Foil Division and a plant in the Philippines switchedto electricity derived from renewable energy. We arepromoting the introduction of renewable energy not
only in Japan but also globally to increase our ratio ofrenewable energy.
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

015

About Furukawa Electric Group

Message from the General Manager of the Strategy Division

Changes in the ratio of renewable energy to total
electricity consumption (Group)(Unit: %)35

Results■ Targets

30*

30
25
20.2

20
15
10

7.9

8.9

11.0

10.9

11.5

10.2

12.0

5
0

2017

2018

2019

2020

2021

2022

2023

* This is the revised target value.

2025
(FY)

Progress of Initiatives to “Strengthen Human
Capital and Organizational Execution Abilities”
Strengthening human capital and organizational
execution abilities is the most important subject
in our Groupʼs material issue. Our Group has been
implementing various measures based on the Furukawa
Electric Group Vision for Our People. In FY2022, wereorganized our human resources strategy based on thefour perspectives of “ individuals,” “organization,” and“awareness/mindset/culture” (intangible) and “actions/systems” (tangible). Based on these perspectives,
we established a framework that incorporates six
elements; “engagement,” “leadership/team mindset,”“organizational culture/communication,” “abilities/skills,”“design of the organization/personnel composition,” and“flow of information, coordination and decision-making
mechanism.”

Individuals

Awareness/mindset/culture

Actions/Systems

Engagement

Abilities/Skills

VisionTargets

Organizations

Leadership/
Team mindset

Design of theorganization/Personnel
composition

Organizational Culture/
Communication

Flow of Information,
coordination, and decisionmaking machanism

Employee Engagement
First, in order to visualize the current situation fromthese perspectives, we launched the Furukawa E-Survey,
a survey to calculate employee engagement scores, in
FY2022. As a result, the employee engagement scores— a result indicator that aggregates various importantelements of human resources strategies — was 65 forour company alone, which falls below the standard
value for Japanese companies. In particular, we foundthat they have a strong awareness of issues regarding
satisfaction with goals and strategies for the future, the016

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

speed of responses to management changes, and humanresources and talent management. In this way, we use the
Furukawa E-Survey to visualize employee perceptions,confirm whether the measures are sufficiently effective
and implement improvement activities, and reconfirm
the effectiveness of the measures in the following
yearʼs survey, repeating this Plan-Do-See (PDS) cycle
every year. By doing so, we will increase employee
engagement. As a sustainability target, we aim to have
employee engagement scores achieve a level (score 75)
exceeding the standard value for Japanese companies in2025. And we aim to achieve a level (score 85) for our
entire Group exceeding the standard value for the global
manufacturing industry in 2030. To reach these targets,
we are moving forward with various measures.
At present, we are working to establish our Groupʼs
purpose by incorporating the opinions of the entire
global Group. We believe that establishing a purposeand having it adopted throughout the Group will help
enhance employee engagement, including the process ofestablishing our purpose. We are reorganizing our Groupʼs
purpose in words that allow all Group employees to feel asense of contribution to society and a sense of satisfaction
and pride in their work as they engage in their daily duties.
Promotion of Diversity and Inclusion
Our company has a large percentage of men and is a highly
homogeneous company in terms of employee nationality
and experience. We believe that highly diverse organizations
are better able to react to intense changes in the external
environment, and our company recognizes that we should
work to further improve diversity and inclusion.
In particular, we must focus on addressing gender issues.
The ratio of female managers in our company is highcompared to other companies in the industry but low
among all industries. Therefore, with the ratio of female
managers a sustainability indicator, we aim to have
women make up 7% of managers in 2025 and 15% in
2030. We are making steady progress with this initiative,
and momentum for womenʼs advancement is growing
within the Group. At the same time, given the Japanese
governmentʼs stated goal of increasing the percentage offemale executives to 30% or more by 2030, we will aim to
exceed the current sustainability target in the future.
In order to increase the number of female managers, wemust first increase the number of women in our talentpipeline. We are therefore strengthening the recruitmentof women through both new graduates and mid-career
hiring. In addition, it is important to develop and promote
employees appropriately after the hiring process, so weare considering staffing and development plans throughconcrete discussions with individual departments.
These initiatives will form the basis for the promotion ofdiversity and inclusion.
In addition, in order to foster a mindset in each
employee that encourages the desire to play an active

Management Strategy

Management Foundation

Corporate Information/Data

Trends in the ratio of female managers (Furukawa Electric)(Unit: %)
16.0
14.0

Results■ Targets

15

12.0
10.0
8.0
6.0
4.0
2.0
0.0

3.3

3.2

3.4

3.4

3.8

4.8
4.5

7
5

2017 2018 2019 2020 2021 2022 2023

2025

2030
(FY)

role in managerial roles, we provide opportunities fortraining and exchanges with outside parties. We arecontinuously working to improve systems and create an
atmosphere so that life events do not negatively impact
evaluations and treatment.

Initiatives Regarding “Human Rights and Labor
Practices” and “Supply Chain Management”
We are not aware of any significant negative impacts
on human rights currently occurring within our Group.
Because of this, however, it may be difficult for many
employees to have a strong awareness of human rights
issues. For this reason, we believe it is important to reevaluate what kind of initiatives and attitudes regarding
human rights issues are necessary. We have reorganized
our human rights policy based on the three requirementsof the United Nationsʼ Guiding Principles on Business andHuman Rights (establishment of a human rights policy,
implementation of human rights due diligence, andestablishment of a remedy mechanism).
As part of our efforts to raise awareness of humanrights issues, we have established the implementation
rate of human rights risk training for managerial positions
as a sustainability target. And by stipulating this level ofunderstanding as an internal management indicator, weare focusing on instilling an awareness of human rights
throughout the Group. In addition, there is a strong needfor corporate responsibility regarding human rights
not only within the Group but also across the supply
chain. We have begun human rights due diligence forour partners.* In specific terms, we aim to achieve a
100% SAQ (self-assessment questionnaire) rate basedon CSR procurement guidelines for our major partners(major suppliers) among domestic and overseas Group
companies by 2025. So far, no significant negative
impacts on human rights have been discovered. However,
if any problematic cases are found in the future, we willtake strict measures immediately.

Finally
Achieving Vision 2030 is a prerequisite for our Groupʼssurvival in the future. By achieving this goal, we must
become an organization where all employees of ourGroup can feel that they are contributing to society andhave a sense of satisfaction.
It is therefore important to maintain a strong sense ofurgency that our group will not survive unless Vision 2030
is achieved, and to carry out reforms without hesitationthat take into account the changing times and futureenvironment. First of all, it is necessary for the Business
Portfolio Review Committee and the Management
Committee to take the lead in pushing forward the review
of our business portfolio. I believe that we must become
a company that undergoes self-driven transformation,that considers daily the review of the natural or obvious,
where before we know it, half of our business has beenreorganized.
Our Group also uses the phrase “One FURUKAWA,”and while we aim to promote business in an integrated
manner as a Group, there is still much room for
improvement. Going forward, we believe that our
corporate value will be further enhanced by further
instilling common principles such as our purpose
and core values throughout the Group, effectively
utilizing people, money, technology, know-how, andother resources across the Group, and advancing acomprehensive business strategy.
The 25 MTP has incorporated various mechanisms,
such as FVA indicators and the Business Portfolio Review
Committee, as the basis for transformation. Goingforward, we aim to make the most of these efforts inorder to produce solid results early on. It is also importantthat we enhance the effectiveness of individual measuresby flexibly reviewing them as necessary. Once we are able
to meet these challenges, we are confident that we willachieve the goals of Vision 2030.

* Our Group calls suppliers who do business with us “partners” who collaborate
with us to create value.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

017

Message from the General Manager of the Finance & Accounting Division

Improving Capital
Efficiency and Cash
Generation Capabilities
of Our Businesses
and Increasing
Corporate Value:
Understanding the Present toCreate the Future

Director and Corporate Senior Vice President
General Manager, Finance & Accounting Division

Akihiro Fukunaga

Review of FY2022 Financial Results
FY2022 was a year marked by the impacts of the global
economic stagnation, although we saw a recovery fromthe impacts of the COVID-19 pandemic in the previous
year. Demand fluctuations and instability caused mainlyby the shortage of semiconductors delayed the recovery
of production volume and improvements in production
efficiency, particularly in our automotive-related
business. And high costs continued, making it difficult
for us to generate profits. Another factor contributing tohigh costs was the rapid increase in energy prices dueto the Russian invasion of Ukraine and global economic
inflation, resulting in a continued surge in raw material
prices. In addition, our businesses’ performance wasaffected by intense environmental changes after the third
quarter, when demand slowed sharply due to inventory
adjustments in the supply chain, mainly in electronics
markets.
Although it was a difficult year with many negativechanges in the business environment, we achieved

018

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

net sales of 1.0663 trillion yen and operating proﬁt of
15.4 billion yen in FY2022, both of which were higher
than the previous fiscal year, thanks to our self-driven
efforts to improve productivity, price optimization,and our product mix. This result was attributable tothe fact that productivity improvements at each of ourglobal sites, including our North American sites in theCommunications Solutions Business, which had been an
issue for several years, produced results, and our Group
as a whole steadily improved. In addition, in response
to rising raw material and energy prices and logistics
costs, we passed on higher costs and promoted priceoptimization by appealing to customers with the added
value of our companyʼs products and services and gaining
customer understanding. Proﬁt attributable to ownersof parent increased to 17.9 billion yen from the previous
fiscal year due to extraordinary income gains from thesale of consolidated subsidiary equity and policy-holding
shares in order to strengthen governance.
Concerning the balance sheet, despite external factors
such as rising copper prices and a significant increase

About Furukawa Electric GroupManagement Strategy

in asset valuation due to the ongoing depreciation of
the yen, total assets remained at the same level as theprevious year at 934.8 billion yen due to a reduction
in investment securities resulting from the sale ofconsolidated subsidiary equity and policy-holding shares
and a reduction in cash and deposits levels due to a
decline in financing risk observed during the COVID-19
pandemic. Inventories have also been maintained at an
appropriate level by thoroughly controlling manageable
assets while securing a certain amount of strategicallynecessary assets that take into account procurement
risks in the supply chain. With regard to fixed assets,
we have reviewed the timing of investments, including
the launch of new businesses, and have controlled theamount of investment based on economic fluctuations.
In terms of cash flow, free cash flow was negative
for two consecutive years through FY2021 due to theimpact of COVID-19. However, in FY2022, the net result
was a positive figure of 14.8 billion yen due to improved
earnings and improved capital efficiency resulting fromthe sale of investment securities. Indicators of our
financial position have improved, and we have been able
to stop the trend of deterioration. This indicates thatthe capital efficiency management using the return on
invested capital (ROIC) and the Furukawa Value Added(FVA*) adopted in the 25 MTP has become an impetus to
improve financial performance.
To summarize the past year, despite an increase in sales
and profit in FY2022 from the previous fiscal year, thesefigures were lower than originally planned due to thechallenging business environment. However, the timingof market growth and expansion for our companyʼs
products and services, which contribute to the realizationof a Beyond 5G (B5G) society and carbon neutrality, will
surely come. From a medium- to long-term perspective
toward achieving the 25 MTP and then Vision 2030, we
believe that it has been a year in which we have beenable to make steady progress in line with milestones formeasures that need to be implemented even in toughenvironments.

Management Foundation

continue investing in advanced technologies as we lookto the future. Doing so, we will ensure that we achieve
the targets of the 25 MTP, a milestone for achieving
Vision 2030.
In FY2023, in order to strengthen the creation of
new businesses, we plan to increase investment by
3.7 billion yen compared to the previous fiscal year to
approximately 27 billion yen, totaling 100 billion yen overthe four years of the 25 MTP. By efficiently and effectively
expanding existing businesses related to B5G, CASE, andcarbon neutrality, and investing in new businesses suchas social infrastructure maintenance and management
and other DX-related businesses, life science businesses,
and space-related businesses, our policy is to ensure that
this will lead to future business profits.
R&D expenses (FY2022 - FY2025)

New businessrelated domain

Infrastructure

R&D expenses
FY22 – FY25
cumulative

100.0

Functional
Products

We believe that R&D investment in the 25 MTP willbe the backbone of the Furukawa Electric Group in
the future. Without substantial R&D investment, newbusinesses that will support the future will not be createdand corporate growth cannot be sustained. Although thecurrent business environment is difficult, we intend to

Communications
Solutions

Service andDevelopments, etc.

* Furukawa Value Added (FVA): Furukawa value added to invested capital. EVA
was customized for our company and introduced as an internal management
indicator in FY2022.

Investment Control for R&D Investment andCapital Investment

Corporate Information/Databillion yen

Electronics
Component Material

Energy Infrastructure

Automotive Products& Batteries

Electronics & Automotive
Systems

Main areas of focus

Communications Solutions: Rollable ribbon (RR) cable, Optical devices, Networking systems
Automotive Products: Wire harnesses, Steering roll connectors (SRC), Peripheral monitoring radar
Functional Products: Data center products
New businesses: [New areas] Life science, social infrastructure DX[Information/energy/mobility]
Photonics-electronics convergence, hybrid lasers, wireless power transmission

Capital expenditures in FY2022 were reduced by 3.2
billion yen to 43.8 billion yen, compared to the initial plan
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

019

About Furukawa Electric Group

Message from the General Manager of the Finance & Accounting Divisionof 47 billion yen. We control the amount of investmentby adjusting the timing of investment in areas that arestrongly affected by market conditions, and by making
design changes in response to soaring material prices. At
the same time, we are continuing to invest as planned inhigh priority areas such as the environment and safety,
including the maintenance and updating of facilities.
In addition, CAPEX over the four years of the 25 MTP
was reduced by 10 billion yen from 190 billion yen to
180 billion yen. This is due to the fact that in FY2022 andFY2023, we revised the timing and scale of investment
and design specifications in line with market trends andreined in spending.
Capital Expenditures (CAPEX) (FY2022 - FY2025)
Breakdown by segment
Service andDevelopments, etc.

Functional
Products

CAPEX

FY22 – FY25
cumulative

180.0

Electronics
Component Materials

Electronics &Automotive Systems

Main areas of focus

Corporate Information/Data

and incorporated them into the business activitiesof each department as KPIs. By incorporating these
indicators in the evaluation of department performance,
we will improve capital efficiency by keeping in mind thecost of capital and implement management that leads toan increase in corporate value.
FVA tree
FVA

NOPAT

OperatingprofitROIC
spreadROIC

Extraordinary
income or loss etc.

Cost ofcapital

Net sales
Cost of sales or

Net sales
Marginal profit

Tax

SG&A

Fixed expense

Invested
capitalWorking
capitalTrade receivables

WACC

Non-current
assetsInventories

Cash & otherinvestments

Trade payables

Infrastructure

Breakdown by purpose

EnergyInfrastructure

Increased
production
21%

Updates,
environmental Expansion
45%
action, etc.
40%
Productivity
improvement
and rationalization
15%

Orders24%

Communications Solutions: Increase production of opticaldevices, Rationalize the optical fiber and cable business
Energy Infrastructure: Longer cable lengths
Automotive Products & Batteries: Increase production of wire harnesses (Including BCP related responses)
Functional Products: Increase production of tape for semiconductor process

Implementation of Business Portfolio
Strategies Using ROIC and FVA
Our Group has identified two major financial issues:
improving capital efficiency and improving our financial
position. To this end, the 25 MTP introduces the conceptof cash allocation, in which a well-defined allocation of
investments is made using cash flows that our Group canearn.
In implementing management that emphasizes
capital efficiency, we have introduced ROIC and FVA as
management indicators to evaluate various businesses
and allocate management resources appropriately andeffectively according to the position of each businessin order to maximize profits in existing businesses
and revitalizing our business portfolio with the aim ofachieving Vision 2030. By using these new indicators
as evaluation criteria to better define our investments,
we will shift our business portfolio decisively, focusing
not only on what to grow but also on what to stop.
In addition, by breaking down the FVA into trees
and deploying them internally, we have clarified theconnection between the activity indicators at thebusiness level and the improvement of corporate value,

020

Management Foundation

Communications
Solutionsbillion yen

Automotive Products& Batteries

Management Strategy

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Generating Cash and Establishing a Sound
Financial Foundation
To improve our financial position, we set and manage
the Net D/E ratio and the equity capital ratio as KPIs,
which indicate our financial position. In FY2022, ourequity capital ratio rose to 32.5% and the Net D/E ratio
improved to 0.9 as a result of the sale of investment
securities, including consolidated subsidiary equity andpolicy-holding shares, in addition to profits generated
from our businesses. We will continue to work toward
the end targets in the 25 MTP of an equity capital ratio of
35% or higher and a net D/E ratio of 0.8 or lower.
In order to generate cash in a stable manner andmaintain a sound financial structure, we place importanceon working capital (= cash conversion cycle (CCC))
when deploying FVA trees in individual businesses. For
example, for inventories, an element of the CCC, we set
targets for each business on where, in what form, andat what level inventory is held. Even if there is a suddenchange in sales that exceeds expectations, the impact on
cash flow will be limited by leveling inventory in a timely
manner. Progress has been made with cash generation
by reviewing and shortening accounts receivable to an
appropriate collection period. Through these efforts, wewill improve our CCC and generate cash even in the faceof difficult business environments.

Shareholder Returns and Cash Allocation Policy
In the 25 MTP, we set a quantitative target of aconsolidated payout ratio of 30%. There will be nochange to our existing policy of maintaining stabledividends while maintaining a balance between“sustainable business growth and increased profits”

and “returns to investors and shareholders,” and wewill continue to deliver returns to shareholders while
improving our financial position. Prior to the period
before the previous mid-term plan, extraordinary losses
sometimes had a significant impact on proﬁt attributableto owners of parent. However, with the 25 MTP, we havedetermined that we are now in a position where we canpay stable dividends based on business profits, and wehave added a target payout ratio.
Generally, we generate cash by improving operating
cash flow with a focus on stable business profits andthe cash conversion cycle (CCC). At the same time, wewill continue to streamline our assets, including policyholding shares and real estate.
With these resources, we plan to allocate cash inconsideration of the balance between future growthinvestments and returns to shareholders and investors,
achieving a consolidated payout ratio of 30% whileproviding stable returns to shareholders. Regarding cash
allocation and financing, we will proceed in accordancewith our basic policy of financial discipline, which is tocontrol cash outflows within the scope of cash generated
from our businesses.

Toward Achieving the 2025 Mid-term PlanAs the General Manager of the Finance & Accounting
Division, an important role is to financially support theresolution of management issues in order to achieve thegoals of the 25 MTP and Vision 2030, and to promotemanagement with an awareness of capital efficiency.
Another is to accurately recognize current businessissues through the advancement of management
accounting, and provide feedback to management toguide implementation.

The concept of Financial Planning & Analysis (FP&A)
is important for the advancement of management
accounting. We say “Understand the present to create
the future” to express the need to communicate anddeepen internal understanding of FP&A. As expressedby this phrase, in an environment of rapid change, itis essential that each and every person in charge ofbusiness promotion, including management, understandthe current situation, formulate a hypothesis for the
future, and take action quickly and repeatedly. If we
get stuck in the same mindset as in the past, there is aconcern that our organization or strategy will not work.
We need to act swiftly to notice, communicate, andtake action through the PDS (Plan, Do, See) cycle andthe OODA (Observe, Orient, Decide, Act) loop. We must
foster a corporate culture that embraces and delivers
change.
FP&A itself is a topic that we have been working on forsome time. But we feel that the direction and awarenesswithin the company have finally come together due tothe drastic changes in the business environment.
We are proceeding simultaneously with two main
themes — the promotion of management with anawareness of capital efficiency, and the advancementof management accounting. The FVA tree for improving
capital efficiency is management accounting itself,
and they have a mutually complementary relationship.
We are working to ensure there is a full and thoroughunderstanding of this relationship within our company.
We will continue to achieve our annual profit targets andensure that we reach the financial targets we have set as
milestones. Doing so, we ensure that our stakeholders
can trust us by implementing the 25 MTP as we look toachieve Vision 2030.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

021

About Furukawa Electric Group

Sustainability

Management Strategy

Management Foundation

Corporate Information/Data

Furukawa Electric Group’s Sustainability
The Group’s Basic Concept of Sustainability

Furukawa Electric Group Basic Policy on Sustainability

The mission of Furukawa Electric Group is to“contribute to the realization of a sustainable
society,” as outlined in its Corporate Philosophy
and we aim to ensure that the environment,
society, and economy continue to sustain over the
medium- to long-term, and that our Group will
make sustainable growth.
In response to the recent rapid changes in thebusiness environment surrounding our Group, we
have established Furukawa Electric Group Basic
Policy on Sustainability, as a basic idea for ourGroup to achieve sustainable growth.

(Established in August 2021)

Board of Directors (since FY2018)

Furukawa Electric Group will:

Sustainability in general● in line with its mission of contributing to the realization of a truly

affluent and sustainable society, tackle important management
issues (material issues) from the perspectives of both revenue
opportunities and risks, while focusing on the future of people andthe planet.

● in order to have sustainable growth and contribute to theachievement of SDGs (sustainable development goals), strengthen
and create businesses that solve social issues, while focusing
on capital efficiency and continuing to transform its businessthrough continuous technological innovation centered on material
technologies and collaboration with various stakeholders.
● contribute to the sustainable development of society by

maintaining and improving sound and positive relationships with all
stakeholders through appropriate information disclosure and active
communication, while complying with laws, regulations, social norms
and ethics in Japan and overseas.

Sustainability Promotion Framework● Formulated the Furukawa Electric Group (FEG) Vision2030● Identified and reviewed material issues● Revised the FEG CSR Code of Conduct● Formulated the FEG Basic Policy on Sustainability● Set and revised sustainability indicators and targets● Disclosed “approach and initiatives toward sustainability”

in Annual Securities Report● Status of efforts to establish our purpose

Climate change● Formulated the FEG Environmental Vision 2050

Human capital●F ormulated the FEG Vision for Our People; medium-term

The “Sustainability Committee” was established toconsolidate discussions on sustainability within Furukawa
Electric Group and further enhance the quality and speedof implementation thereof.
The committee is chaired by the President, vice-chairedby the General Manager of the Strategy Division, andcomposed of members of top management, deliberates
on issues on sustainability within Furukawa Electric Group,
including sustainability-related basic policy, basic matterson material issues related to revenue opportunities andrisks, and disclosure of basic information related tosustainability; checks on progress on such matters;
and submits proposals and reports to the Board of
Directors. The Corporate Sustainability Office serves as
the organizer, and the committee will generally meet
twice a year. Additionally, as matters regarding material
issues of risks are closely related to management
perspective risks of the Group, they are therefore
handled in collaboration with the Risk Management
Committee.

The Sustainability Committee (the 3rd meeting washeld on March 22, 2023 and the 4th on September 12,2023) discussed and reported to the Board of Directors
on the status of sustainability initiatives in terms of risks
and revenue opportunities, the results of sustainability
indicators in FY2022 and the revision of sustainability
targets, and the status of efforts to establish our purpose,
based on the results of the Board of Directors’ evaluationof the effectiveness in FY2022.

measures of HR Management Dept.

● Status and direction of personnel measures in the 2025

Medium-term Management Plan

3rd Sustainability Committee Meeting (held March 22, 2023)● Status of efforts to establish our purpose● Reporting and disclosure of FY2022 results forsustainability indicators● Partial revision of sustainability targets for FY2025● Progress with supply chain management (CSR

procurement)● Feedback from shareholders and institutional investors

4th Sustainability Committee Meeting (held September 12, 2023)● Status of efforts to establish our purpose

Management Committee (since FY2018)
Sustainability in general● Formulated the Furukawa Electric Group (FEG) Vision● Review of material issues● Finalization of FY2022 results for sustainability indicatorsand partial revision of FY2023 and FY2024 targets● Creation and publication of Integrated Report 2023
● Carbon neutral strategy

2030● Identified, reviewed, and disclosed material issues● Revised the FEG CSR Code of Conduct

Board of Directors● Formulated the FEG Basic Policy on Sustainability

Submits proposals and reports

Submits proposals and reports

Sustainability Committee

Risk Management Committee

Chair: President
Vice chair: General Manager,
Strategy Division
Committee members: Top management
Organizer: General Manager, Corporate
Sustainability Office

Chair: President
Vice chair: General Manager,
Risk Management Division
Committee members: Top management
Organizer: General Manager, Risk
Management Department

Collaboration● Signed the United Nations Global Compact● Formulated the FEG Human Rights Policy● Set and revised sustainability indicators and targets● Disclosed “approach and initiatives toward sustainability”

in Annual Securities Report

Climate change● Formulated the FEG Environmental Vision 2050
● Expressed support for the recommendations of TCFD

The sustainability Committee focuses on discussing the following items:● Set and Revised the Environmental Targets 2030
● Applied for an SBT (2°C, WB2°C, and 1.5°C Targets)

initiative certification● sustainability-related basic policy●b asic matters and current progress on material issues

related to revenue opportunities and risks● SDGs activities and community/social activities● other important sustainability issues

Human capital● Formulated the FEG Vision for Our People; medium-term● disclosure of basic information related to sustainability

measures of HR Management Dept.

● Direction of personnel measures based on the concept of

The Group has accelerated its ESG management since
FY2018 and has expanded discussions on sustainability
including climate change and human capital at the
management committee and the sustainability
committee. These committees also submit proposals andshare the progress on sustainability including climate

022

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

change and human capital with the board of directors
every quarter.
The Board of Directors and the Management Committee
have conducted the following discussions since FY2018.

human capital management● Activities to reinforce human capital and organizational

execution abilities; disclosed human capital indicators* Please refer to page 66 for the results of the evaluation of the effectiveness by
the Board of Directors and future initiatives based on the results.

Additionally, in order to strengthen and createbusinesses that solve social issues, we established theBusiness Portfolio Review Committee in FY2022 with theaim of promoting business portfolio transformation with
an emphasis on capital efficiency. The Business Portfolio
Review Committee, with the General Manager of theStrategy Division as chair and the General Manager of the
Finance & Accounting Division as vice chair, deliberates
on important matters related to business portfoliotransformation, such as the positioning of each businessin the Medium-term Management Plan, and makes
proposals and reports to the Management Committee.
The General Manager of the Corporate Planning
Department is in charge of the secretariat, and it is held
three times a year in principle.
In FY2023, we will start examining our desired businessportfolio to achieve Vision 2030, and we will continue towork to materialize Vision 2030.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

023

About Furukawa Electric Group

Sustainability

Furukawa Electric Group’s ESG Management and Material Issues

Process of Identifying Material Issues

In order to achieve Vision 2030, we are promoting ESG
management, which aims sustainable growth of the Groupand medium- to long-term growth of corporate value. We
have defined “material issues”* as important management
issues that the Group should address in order to achieve
Vision 2030, and we defined material issues in terms ofboth revenue opportunities and risks, in accordance withthe process of identifying important management issues
as mentioned below. We aim to achieve Vision 2030
by working on the material issues we have identified,considering that addressing the material issues on revenue
opportunities help improve capital efficiency whereas
addressing the material issues on risks help reduce the costof capital. We will also contribute to the achievement of theSDGs, which are closely related to the material issues.

Identification and review of material issues was
conducted through a process of Step 1 through Step 3.
First, in Step 1, we identified social issues by referring
to “external factors” and “internal factors,” adjusted
duplicate items, and created a list of items (currently
organized into 29 items). In Step 2, the two axesof “importance to shareholders and investors” and“importance to achieving Vision 2030” are evaluated forimportance (high, medium, low) and prioritized. In Step3, high-priority items are identified as material issues.
The identified material issues are categorized by revenue

Improve capital eﬃciency
Material issues
Importantmanagement
issues forachievement of
Furukawa
Electric Group,
Vision 2030

Revenueopportunities

Risks

Reduce cost of capital
2020

Step

* In the Group’s ESG management, “material issues” are defined as importantmanagement issues that the Group must address in order to achieve Vision 2030,
and are used as a term with a meaning different from those used in the financeand accounting context, which are issues that may have an impact on businessperformance, financial position, etc.

others. We will also work on improving capital efficiency,
including the cost of capital.
On the other hand, from a risk perspective, in orderto achieve sustainable growth, it is essential thatcompanies develop business activities that take into
account climate change, and we see this as a material
issue for environment (E) risks. In addition, in order tobecome a company that actively transforms itself, we set
the “strengthening of human capital and organizational
execution abilities” as a material issue for social (S) risks.
As for a material issue of governance (G) risks, we focus
on “building a governance system for strengthening risk
management” including corporate governance, group
governance and supply chain management as submaterial issues. We will strengthen the foundation of ESG
management and reduce the cost of capital.

1Creating businesses thatsolve social issues
infrastructure

Open, Agile, Innovative

3

Building partnerships with various stakeholders

E

Developing business activities thatconsider climate change

S

Strengthening human capital andorganizational execution abilities

G

Building a governance system to strengthenrisk management● Corporate governance● Group governance● Human rights and labor practices

INTEGRATED REPORT 2023

The two axes of “importance toshareholders and investors” and“importance to achieving Vision 2030”
are evaluated for importance (high,medium, low) and prioritized.

External factors

Importance to shareholders and investors

 SDG goals and 169 targets
17FTSE, MSCI and DJSI ESG evaluation
items, etc.
Japan’s Corporate Governance Code, etc.

Dialogue with institutional investorsI mpact on ESG rating assessment, etc.

Internal factors

 iscussions of regular study groupDand workshops for the management
and executive officers
Discussions of the Risk Management
Committee

Importance to achieving Vision 2030

Step

3

Identiﬁcation ofmaterial issues

High-priority items are categorized byrevenue opportunity and risk aspects
and identified as material items.
The identified material items
are categorized and rearranged asimportant issues for achieving Vision
2030, and expressed as the material
issues of three revenue opportunities
and the material issues of the E, S andG risks.

Importance to achieving
Vision 2030
Material issues of risks

Climate change

Revenue opportunities
Risks

Human resource development
and employee engagement
Diversity
Corporate governanceRisk management
Subsidiary governanceSupply Chain (environment/society)
Human rights and labor practices

E. Developing business activities thatconsider climate change
S. Strengthening human capital andorganizational execution abilities

G. B uilding a governance system tostrengthen risk management

Material issues of revenue opportunities

Biodiversity(Land area/marine & river)● Supply chain management

FURUKAWA ELECTRIC GROUP

2

Evaluation using map ofmaterial items

Importance to shareholders and investors

Occupational healthand safety
QualityCompliance
Anti-corruption
Information security
Sustainable resource
management
Pollution prevention and chemical
substance management
Safe water and sanitaryenvironment
Biodiversity

Building sustainable cities
and communities
Sustainable economic growth
Clean energy
Innovation
Utilization of intellectual assets
Partnerships

1. Creating businesses that solve
social issues

2. Open, Aglie, Innovative
3. Building partnerships with various
stakeholders(Land area/marine & river)Low area

2

Step


Importantmeasures of the 2025
Mid-term PlanValues of Furukawa Electric GroupBusiness-related risks, etc.

Material issues of risks● Creating businesses that support next-generation● Creating environment-friendly businesses

opportunity and risk aspects and rearranged as important
issues for achieving Vision 2030, and expressed as thematerial issues in terms of revenue opportunities andthe material issues in terms of the E (Environmental), S(Social) and G (Governance) risks.
In the FY2023 material issues review, "biodiversity(land area/marine and river)" was re-evaluated as a
medium area of “importance to achieving Vision 2030” in
response to the increasing social demands for biodiversity
and natural capital in recent years.

In identifying material issues, we identifiedsocial issues by referring to “external
factors” and “internal factors,” adjusted
duplicate items, and created a list of items.

Medium area

1

Understanding andorganizing social issues

Important issues for fulﬁlling“corporate social responsibility (CSR)” andstrengthening the trust of stakeholders

Material issues of revenue
opportunities

Corporate Information/Data

Regularly reviewing the material issues

High area

From the perspective of revenue opportunities, in orderto help solve various social issues through the businessactivities of the Group, we found it indispensable todevise a transformation from the conventional “ProductOut” approach to “Outside-In” approach and identified
the “creation of businesses that solve social issues”
as a material issue. Examples of these include the“creation of businesses that support the next generation
infrastructure,” which will serve as the foundation of thesociety anticipated in Vision 2030, and the “creation ofenvironment-friendly businesses,” which contribute to
the realization of carbon neutrality and circular economy.
We also accelerate the “creation of social issue-solving
businesses” through the slogan “Open, Agile, Innovative,”
which reflects the desire to become a company that
actively transforms itself, and the “Building partnerships
with various stakeholders,” focusing on co-creation withManagement Foundation

2030

Identifying and Reviewing Material Issues

024Management Strategy

Sustainable tourism
Health & welfare
Poverty
Food problems and food Not directly important issues forsecurity
achievement of Vision 2030
Appropriate education
Deterrence of crime andviolence
Low area

Medium area

* No particular order in the area
High area

Importance to achieving Vision 2030

* With regard to material issues, we distinguish between important issues for achieving Vision 2030 and important issues for fulfilling corporate social responsibility andstrengthening the trust of stakeholders.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

025

About Furukawa Electric Group

Value Creation Process

Value Creation Process Directed at
Achieving Vision 2030
the integrated society of Vision 2030, and the “creationof environment-friendly businesses,” which contributes tothe realization of carbon neutrality and a circular economy.
As for the strengthening of the existing businesses, wewill capture increased demand for optical fibers, etc.,
and strive for increasing sales of such high-value added
products as rollable ribbon cables, for which we haveworked on sales expansion. We will also expand the
networking system business globally, taking advantageof the strength of the business model developed in
Latin America. As for power cable system, we willachieve sales growth by enhancing our production
capacity and construction capacity, and establishing abusiness foundation mainly focusing on submarine andunderground cables for ensuring resilience of power
networks in Japan and for renewable energy. To address
the need for reducing vehicle weight alongside theshift to EV, we will take advantage of the superiorityof aluminum wire harnesses, with which new types ofvehicles are increasingly equipped, thus expanding thebusiness and improving the profitability. Furthermore,since it is expected that demand for semiconductors
will increase in the medium- to longterm, we started
the construction of a new plant to begin commercial
production of tapes for manufacturing semiconductors in
FY2025, and aim at expanding sales by ensuring stablesupply as a result of increased production capability andproviding sophisticated high-quality products.
As for the creation of new businesses, while
communication traffic volume is expected to increase
towards a Beyond 5G society, we will take advantage ofour capability to develop photonics products with high

Furukawa Electric Group Corporate Philosophy
2025

Forward-looking

Today

Revenue Opportunities

Medium-term Management
Plan 2022-2025

Revenue Opportunities

2
3

4 core technologies*1
Development and proposal
capabilities not limited to
specific markets

New business models
Reinforce the strengths*2

Risks
Strengthen the
managementfoundation directed
at reducing capitalcosts

Trusted by customers

E

G

1

Growth through thestrengthening of businesses
that solve the social issues
Stabilize profits in information, energy and mobility
Contribute to realizing a society that combinesthese domains

Build a governance system to strengthen risk management

Corporate governance / Group governance / Supply chain management / Human right and labor practice

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Open, Agile, Innovative/
Building partnerships withvarious stakeholders

Social issues
Realize a B5G*3 society

Information

Strengthening human capitaland organizational execution
abilities

EnergyMobility

Realize next generation
infrastructure that enjoys
universal mobility

S

Strengthen human capital andorganizational execution abilities

Creating businesses thatsolve the social issues

Developing businessactivities that consider the
climate change

Become carbon neutral

Furukawa Electric Group CSR Code of Conduct

026

EnergyInformation

Businesses that support next
generation infrastructure
Environment-friendly businesses

Risks

Developing business activities thatconsider climate change

Risks

Mobility

Risk

Furukawa ElectricGroup’s businessmodel and strengths

2030

Leap forward through thecreation of businesses
designed to solve social issues

Build partnerships with various
stakeholders
Create andstrengthenbusinesses basedon an awareness ofcapital efficiency

Backcasting

In the 2025 Mid-term Plan, we have set sustainability
indicators (KPIs) and sustainability targets for FY2025 torealize our ideal state in FY2025 in each material issue.
We will strive to enhance corporate value in terms ofMaterial issue

New
domainRealize longer healthy life
expectancy

Partnerships with multiple
stakeholders

Realize acirculareconomySustainability indicator

Corporate Information/Databeliefs on human capital at both Group and global
levels, we will strive to strengthen “human capital andorganizational execution abilities.” Specifically, we
conducted a survey on human capital and organizational
execution abilities, including elements related to
employee engagement; and by using it as a monitoring
tool, we will strengthen our efforts of human capitalmanagement, including the promotion of diversity &inclusion, leadership transformation activities, andmeasures for hiring, assigning, and developing people
who contribute to carrying out management/businessstrategies. With respect to human rights management,
we will proceed in accordance with three requirementsin the UN’s Guiding Principles on Business and Human
Rights. As for “human rights due diligence” among thoserequirements, we regard employees and partners* as
primary stakeholders, identify presumed human rights
issues for each of them, and take measures to solve and/or prevent such issues. Furthermore, in order to realize
CSR procurement, including the element of human rights
in the supply chain, we will expand the scope of the SelfAssessment Questionnaire (SAQ) based on the Furukawa
Electric Group CSR Procurement Guidelines from major
supplies of the Company to major suppliers of the Group
companies in Japan and abroad in a phased manner.

both revenue opportunities and risks.
In FY2022, we achieved our FY2022 targets in all
sustainability indicators. We continue our efforts toachieve our targets for FY 2023.
Scope

ResultTarget (Reference value)

FY2022

FY2022

FY2023

FY2025

Sales ratio of environment-friendly products

Group

65.0%

64%

66%

70%

R&D expense growth rate
for new businesses

Group

116%

115%

125%

125%

Group

40%

30%

45%

100%*1-36.8%-17.7%-21.2%(-42%)*2———-18.7%*3

20.2%

11.5%

12.0%

30%*3

65*4

75*4

(compared to FY2021)

Implementation rate of IP landscaping forstrengthening the businesses and themes forcreating new businesses
GHG emissions reduction
rate (Scopes 1&2)

(compared to FY2017)

Group(compared to FY2021)

Ratio of renewable energy total electricity
consumption

Group

Employee engagement scores

Furukawa Electric

65

Start
measuring

Ratio of female managers

Furukawa Electric

4.8%

4.5%

5%

7%

Ratio of mid-career hires in total new hires*5

Furukawa Electric

45.7%

30%*6

30%*6

30%*6

Ratio of follow-up on risk management activities for
all risk domains
Building a governancesystem to strengthen risk
management

Management Foundation* Furukawa Electric Group calls suppliers who do business with us “partners” whocollaborate with us to create value.

Sustainability Indicators and Targets

Furukawa Electric Group Vision 2030

Open, Agile, Innovative
Revenue Opportunities

Safe, peaceful andrewarding life

Financial targets / Sustainability targets*1. 4 core technologies: metals, polymers, photonics, high frequency*2. Enhance utilization of intellectual property*3. B5G: Beyond 5G

Sustainable world

functionality by using the Company’s core technologies,
namely, photonics technology and high-frequency
technology, along with our broad readiness to the opticalcommunication market, thus contributing to realizing the
all-optical network and a society with highly efficient energy.
Furthermore, in order to become carbon neutral in 2050,
we will advance the development and production of green
LP gas which does not rely on fossil resources. We also
develop and produce high-temperature superconducting
materials for nuclear fusion, which is expected to be a nextgeneration energy source, thus contributing to the supply ofenvironment-friendly clean electric power.
In order for Furukawa Electric Group to realize sustainablegrowth and increased corporate value over the mediumto long-term, we will strengthen the managementfoundation directed at reducing capital costs, while
particularly recognizing climate change, human capitaland organizational execution abilities, and building agovernance system as material issues on risks.
In order to conduct business activities taking into
account climate change that is mandatory for thetransformation to a sustainable company, we will
accelerate our efforts to become carbon neutral. In
order to strengthen human capital, based on “Furukawa
Electric Group Vision for Our People” which is shared

Revenue opportunity

The Medium-term Management Plan 2022-2025 (2025Mid-term Plan) is positioned as a milestone toward realizing
the Vision 2030. We will surely execute the 2025 Midterm Plan, which is formulated by the dual approach of
backcasting from the Vision 2030 and forward-looking fromthe present. In the 2025 Mid-term Plan, we defined theideal state in FY2025 for each identified material issues,
formulated measures to realize them, and set sustainability
indicators/targets to measure the progress.
Furukawa Electric Group has developed capabilities fordevelopment and making proposals, without being limited
to specific markets and with its four core technologies— metals, polymers, photonics and high-frequency —centered on capabilities to handle materials. Throughthese capabilities, we have gained the trust of customers.
For achieving the financial and sustainability targets
set for 2025 Mid-term Plan, and for realizing sustainablegrowth of Furukawa Electric Group and medium- to longterm growth of corporate value, we will strengthen andcreate businesses mindful of capital efficiency. In addition,
we will build a new business model by enhancing ourstrengths through open innovation and cocreation with
our partners, as well as utilization of intellectual property.
Toward 2025, we will stabilize earnings in information,energy and mobility sectors, and realize growth throughthe strengthening of businesses that solve the social
issues, whereby contributing to building a society with
infrastructure integrating information, energy and mobility.
Toward 2030, we also realize leap through the creationof businesses that solve the social issues including the“creation of businesses that support the next generation
infrastructure,” which would serve as the foundation ofManagement Strategy

Group

100%

93%

100%

100%

Ratio of SAQ implementation based on the CSR
Procurement Guidelines for major suppliersGroup

Global34%

Global20%

Global40%

Global100%

Implementation rate of human rights training for
managerial positions

Group

Global100%

Start measuring
in JapanGlobal100%*7

Global100%*7*1. This means that all projects have been implemented with respect to the business enhancement and new business creation themes set as of 2022.
*2. Base year was updated to FY2021 upon the revision of Environmental Targets 2030; the reduction target value when applied to the former base year of FY2017 is also
shown for reference.
*3. Target value for FY2025 was updated upon the revision of Environmental Targets 2030.
*4. Target value for FY2025 was newly set in FY2022.
*5. New hires represent new graduates and mid-career hires, covering management, career-track, and clerical positions.
*6. This means that about 30% will be maintained in each fiscal year.
*7. This means that 100% globally for each fiscal year will be continued.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

027

About Furukawa Electric Group

Stakeholders and Material issues

Stakeholders and Material Issues
Furukawa Electric Group aims at sustainable growth and increase in corporate value over the mediumto long-term by solving important management issues (material issues) with collaboration by various
stakeholders, with the goal of achieving the Vision 2030.
The Group will contribute to the sustainable development of society by maintaining and improving soundand positive relationships with all stakeholders through appropriate information disclosure andactive communication.

Management Strategy

Corporate Information/Data

Employees
We endeavor to fulﬁll our social responsibilities, such as respect for human rights, occupational health and safety, and compliance,
and through employee engagement, we endeavor to strengthen human capital and organizational execution abilities that lead toincreased corporate value.
Relevant material issues

Open, Agile, Innovative

Revenue opportunities

Strengthening human capital and organizational execution abilities

Risks

Solving issues through the main businesses

Main methods of communication
Company newsletters, Intranet

Employee engagement
Human capital development and fair evaluation and treatment
Diversity & inclusion

Management brieﬁng by labor and management“Dialogue with the President” at each business site“Furukawa E-Survey” on human capital and organizational execution abilities

Central Government, Local Governments and Local Communities

Customers
We contribute to solving customers’ issues by developing business activities that leverage the strengths of the Group, in addition to

In addition to fulﬁlling our social responsibilities such as compliance with laws and regulations and tax obligations, we contribute tomaintaining and improving the quality of the products, operations and services we provide.

solving issues facing international and local communities by developing business activities that leverage the strengths of the Group.

Relevant material issues
Revenue opportunities

Risks

Creating businesses that solve social issues
Building partnerships with diverse stakeholders

Solving issues through the main businesses
Leveraging the strengths of the Group to solve customers’ issues
Realizing a circular economy

Relevant material issues
Revenue opportunities

Main methods of communication
Dialogue in everyday businessDialogue at technology and other exhibitions
Dissemination of information through the website, the Sustainability
Book, and other means

In addition to building a sound supply chain that complies with laws and regulations, we promote businesses that realize thesustainability of the entire supply chain through co-creation with partners.
Relevant material issues
Revenue opportunities

Risks

Creating businesses that solve social issues
Open, Agile, Innovative
Building partnerships with various stakeholders

Solving issues through the main businesses
Solving issues facing international and local communities by leveraging
the Group’s strengths
Achieving carbon neutrality

Risks

Building partnerships with various stakeholders
Building a governance system to strengthen risk management/supply chain management,
human rights and labor practices

Solving issues through the main businesses

Dialogue through economic and industry organizations

Building a new social infrastructure in community

Cooperation regarding surveys and questionnaires of the government
and local governments
Participating in government-related projects

Realizing a circular economy

Partnership agreements with local governments

Main methods of communication

We are pledged to fulﬁll our social responsibilities such as environmental conservation and compliance with environmental laws
and regulations. We also promote business activities that recognize environmental issues including climate change, as revenue
opportunities, and contribute to a sustainable global environment.
Relevant material issues

Creating businesses that solve social issues/creating environment-friendly businesses

Revenue opportunities

Developing business activities that consider climate change

Risks

Solving issues through the main businesses

Reducing greenhouse gas emissions throughout the supply chain

Dialogue in everyday business

Human rights in the supply chain

Partners Meeting

Mitigating and adapting to climate change

Responsible minerals sourcing

SAQ*2 based on the CSR Procurement Guidelines

Achieving carbon neutrality

Realizing a circular economy

Announcement of the Partnership Building Declaration

Realizing a circular economy*1. Furukawa Electric Group calls suppliers who do business with us “partners” who collaborate with us to create value.
*2. SAQ: Self-Assessment Questionnaire

TOPICS

Shareholders and Investors
We appropriately return proﬁts to shareholders, disclose information to shareholders and investors, seek to achieve sustainablegrowth, and seek to increase corporate value over the medium- to long-term through our business.
Relevant material issues
Revenue opportunities

Main methods of communication

Global Environment

Partners*1

Risks

Building a governance system to strengthen risk management/corporate governance

Solving issues through the main businesses

Main methods of communication
General Meeting of Shareholders

Sustainable growth and improvement of corporate value over the
medium- to long-term

028

Management Foundation

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Investor brieﬁngs
Individual meetings
Dissemination of information through the website, shareholder
correspondence, and integrated report

Main methods of communication
Environmental protection activities and climate change response
throughout the value chain Participation in activities such asenvironmental NGOs, NPOs, and initiatives
Cooperating with ESG activities, including the environment of ourcustomers
Use of renewable energy

Holding ESG Briefings
Our company is committed to enhancing corporate
value through dialogue with shareholders and investors.
In FY2022, the 2nd ESG briefing was held online
for the first time in two years to facilitate a better
understanding of ESG initiatives aimed at achieving
Vision 2030. Many questions and opinions fromshareholders and investors were reported at the
Sustainability Committee, which leads to improvements
in ESG management initiatives.
We will continue to enhance the disclosure of
information to shareholders and investors and improvetransparency.

2nd ESG Briefing (held on March 13, 2023)

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

029

About Furukawa Electric Group

Medium-term Management Plan 2022-2025

Furukawa Electric Group Medium-termManagement Plan 2022-2025 (2025 Mid-term Plan)
Management Plan “Road to Vision 2030 -Transform andChallenge-” (2025 Mid-term Plan) for 4 years ending in
FY2025.
Sustainable world

2025 Mid-term Plan
“Road to Vision 2030 -Transform and Challenge-”

Today

Financial targets/
Sustainability
targets2025

Forward-looking

Furukawa ElectricGroup, Vision 2030

2030

Safe, peaceful andrewarding life

Mobility

Tape for semiconductor
process

Green LP gas

New

030

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

4%

11% or more

Net D/E ratio

1.0

0.9

1.0

0.8 or less

Equity capital ratio

30%

32.5%

33%

35% or more

1,100 billion yen

1,100 billion yen or more

24.0 billion yen

58.0 billion yen or more

Net income attributable to owners of theparent company

14.0 billion yen

17.9 billion yen

13.0 billion yen

37.0 billion yen or more

Average copper price (JPY/Kg)

1,260

1,209

1,180

1,085

Average exchange rate (JPY/USD)

120

135

130

110

Scope

FY2022targets

FY2021
results

FY2023targets

FY2025targets

Group

64%

65.0%

66%

70%

Creating businesses that solve the social issues
Sales ratio of environment-friendly products

Open, Agile, Innovative/Building partnerships with various stakeholders
R&D expense growth rate for new businesses(compared to FY2021)

Group

115%

116%

125%

125%

Implementation rate of IP landscaping for strengthening thebusinesses and themes for creating new businesses

Group

30%

40%

45%

100%*1E Developing business activities that consider climate change

Revised upward

GHG emissions reduction rate
(Scopes 1&2) (compared to FY2017)Group-17.7%-36.8%-21.2%

Ratio of renewable energy use to total electricity consumption

Group

11.5%

20.2%

12%

Compared to FY2021-18.7%30%
Newly set

Employee engagement scores

Furukawa ElectricStartmeasuring

Ratio of female managers

Furukawa Electric

4.5%

4.8%

5.0%

7%

Ratio of mid-career hires in total new hires*4

Furukawa Electric

30%

45.7%

30%

30%*3

93%

100%

100%

GlobalGlobalGlobalStart measuring
in Japan

100%

65

65*2

75

G Building a governance system to strengthen risk management
Bipolar lead storage
batteries

Next generation urban
planning

Numerical Management Targets(Progress in FY2022)
Regarding financial targets, operating income was lower
than expected in FY2022 due to the challenging businessenvironment, but other items were higher than expected.
Although the business environment will continue to bedifficult in FY2023, we have not changed our FY2025 targets
in anticipation of a full-scale recovery beginning in FY2024.

6.1%

15.4 billion yen(3) Building a foundation for creating
new businesses by strengthening
development and proposal capabilities.

Next generation
photonics(2) Strengthening the foundation
for ESG management

In order to strengthen and create businesses with greater
emphasis on capital efficiency, we have introduced
ROIC*1 and FVA*2 as management indicators and set
financial targets for FY2025. In addition, we have set
targets while establishing sustainability indicators toachieve the ideal state in FY2025 for each material

5%Management Numerical Targets (Sustainability Indicators and Targets)

Backcasting

Products
Wire harness

6% or more

ROE

S Strengthening human capital and organizational execution abilities

Thoroughly
enhance

Existing

FY2025 targets

1,066.3 billion yen

Risk

Existing

Electric cable system

3%

22.5 billion yen

Markets

Optical ﬁber and cable

FY2023 forecast

3.7%

1,050 billion yen

Revenue opportunity

New

Enhance under the2025 Mid-term Plan

FY2022 results

3%

Net sales☆：Prepare to address in order to further shine(1) Maximizing revenues in existing businesses
through a focus on capital eﬃciency

FY2022 forecast
ROIC (after tax)

Information

development and proposal capabilities. We are also
working on “Strengthening the foundation for ESG
management” to support the above-mentioned priority
measures. Although the results of the first fiscal year,
FY2022, were more difficult than those at the time of
the announcement of the mid-term plan, we have madesteady progress in all of these efforts ahead of FY2025.

New businesses to berealized by 2030

Corporate Information/Data

Operating income

EnergyIssues to be Addressed (Priority Measures) and Progress
Under the 2025 Mid-term Plan, we place an emphasis onenhancing/creating businesses that solve social issues ineach or combination of Information, Energy, and Mobility
areas; and, as measures to increase revenue, we areworking on “Maximizing revenues in existing businesses
through a focus on capital efficiency” and “Building afoundation for creating new businesses by strengthening

Management Foundation

Management Numerical Targets (Financial Targets)

Basic Concept
Backcasting from the ideal state articulated in Vision
2030, we defined the target state in 2025 as a milestone.
To achieve it, we are promoting our new Medium-termManagement Strategy

issue, and we are implementing initiatives to enhance
corporate value from both a revenue opportunity and risk
perspective.

Ratio of follow-up on risk management activities for all risk
domainsGroup

Ratio of SAQ implementation based on the CSR Procurement
Guidelines for major suppliersGroup

Implementation rate of human rights training for managerial
positions

Group

34%

20%

Global40%

Global100%

100%
Global100%

Global100%*1. Implementation of all projects for the themes established in FY2022 *2. Expanding measurement subjects*3. Maintaining approximately 30% each fiscal year
*4. New hires represent new graduates and mid-career hires, covering management, career-track, and clerical positions.

*1. ROIC: Return on invested capital*2. Furukawa Value Added (FVA): Furukawa value added to invested capital. EVA
was customized for our company and introduced as an internal management
indicator in FY2022.

Business portfolio optimization and allocation of management resources

In terms of sustainability indicators, we achieved ourtarget values for all nine items set as FY2022 targets.
In addition, in light of the revision of the Environmental
Targets 2030, we have revised upward our FY2025 target
values for the two indicators related to “E Developing
business activities that consider climate change.”

We steadily optimize the business portfolio and aim toachieve ROIC of at least 6% by fiscal 2025.
First, we make the current position of each businessvisible toward optimizing the business portfolio. Fromthe viewpoint of growth (Average sales growth rate) andprofitability (ROIC spread), specifically, each business isclearly classified by the business position divided into sixclassification such as next generation, growing, issues exist,

strategic restructuring, strengthen earnings and profit base.
Based on that, we decide the allocation of investment.
Taking into account our current position, our potential
for future growth, our competitive status among
competitors, and our carbon efficiency, we will swiftly
take the necessary actions, such as exploring growth
opportunities (including M&A) and determining whether
or not to withdraw from certain businesses.
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

031

About Furukawa Electric Group

Medium-term Management Plan 2022-2025(Progress in FY2022)
In FY2022, we focused on activities to promote thepenetration and establishment of these evaluation criteria
and decision-making processes. The Business Portfolio
Review Committee, chaired by the General Managerof the Strategy Division, was established and convenes
three times a year to regularly discuss the positioning ofeach business and business revitalization plans based on
the evaluation criteria that form the basis for reviewing
our business portfolio. In addition, when there are more
specific topics to be discussed, meetings between

committee members and individual departments are heldfrom time to time to deepen discussions and develop
common understanding.
Going forward, we will continue to further evolve these
initiatives and transform our business portfolio into
an ideal form, while maintaining an optimal balance
between selection and concentration and the positive
aspects of a multi-portfolio strategy in order to achieve
Vision 2030.

2. Decide the allocation ofmanagement resources-5.0%

Company-wide
Electronics
Component Materials

0%

5%

10%

Functional
Products

15%8%Issuesexist
Low

Strategic
restructuring
Low* Net sales and invested capital for FY2024 and FY2025 have been adjusted based on the
average copper price and average foreign exchange value forecasts made for FY2023* Decrease in ROIC for functional products (compared to May 2022 when the 25 MidTerm Plan was announced) was due to the sale of Totoku Electric Co., Ltd.
* CAGR: Average annual growth rate, ROIC: Return on invested capital (after tax),
NOPAT: Calculated as net income plus interest expenses paid after tax, in accordancewith IFRS.

Management Through ROIC and FVA
In order to promulgate ROIC and FVA at businesssites and lead to specific improvement activities, wehave formulated an FVA/ROIC trees that subdivide
items and numerical targets that will lead to ROIC
and FVA improvements in each business. In this way,
we breakdown FVA, visualize improvement targets inthe form of a tree, and introduce a mechanism that
implements the PDS cycle to make improvements.
(Progress in FY2022)
In addition to continuing to conduct briefings andstudy sessions on ROIC and FVA to deepen internal
understanding, we have started to incorporate KPIs
into progress reports and performance evaluations ofGrowing

Strength- Profit
enbase
earnings

0% Medium 1.2% High+ Potential for
Decide the need to withdraw
future growth+ Competitive
Create / approve a
Rejectedstatus among
restructuring plan(withdraw)
competitors
Define the requirements+ Carbonfor withdrawal
efficiency(Restructuring planis set) Monitor the If the limits
arenumerical
breached,
requirements forwithdraw,
withdrawal
in principle
If the limits are not breached

ROIC spread

FVA

NOPAT

OperatingprofitROIC
spreadROIC

Extraordinary
income or loss, etc.

Cost ofcapital

Net sales
Cost of sales or

Net sales
Marginal profit

Tax

SG&A

Fixed expense

Invested
capitalWorking
capitalTrade receivables

WACC

Non-current
assetsInventories

Cash & otherinvestments

Trade payables

business activities in each department.
We will take necessary actions to improve capitalefficiency, make decisions on investment and withdrawal,
and discuss the nature of each business.

Service andDevelopments, etc.
New businessrelated domain

Infrastructure

FY22 – FY25
cumulative

180.0

100.0

billion yen

Electronics
Component Materials

billion yen

Functional
Products

EnergyInfrastructure

Automotive Products& Batteries

Communications
Solutions

R&D
expensesCAPEX

FY22 – FY25
cumulative

Search for growth opportunities,
including M&A

HighContinuethe business

ROIC (FY2022 → FY2025)

Average sales growth rate

Sales CAGR
(FY2018-2022 → FY2022-2025)

0.0%

Next generation

Functional
Products

Withdrawal isconfirmed(From FY18 - FY22 to FY22 – FY25)

5.0%

Automotive
Products& Batteries

formulating the 2025 Mid-term Plan (from 190 billion yen
to 180 billion yen). At the same time, we will maintain theamount of R&D investment and the strategic investment
limit (planned to be 50 billion yen for the 2025 Mid-term
Plan period) aimed at medium- to long-term growth of
the Group as a whole. We will also prepare for flexible
investment, including M&A investment.

Communications
Solutions
Infrastructure

3. Reorganize the businessportfolio(investment)

Bubble size: Absolute value of NOPAT (FY2022→FY2025)

EnergyCommunications
Infrastructure
Solutions

Corporate Information/Data

Capital Expenditures (CAPEX) and R&D Expenses
Service andDevelopments, etc.

1. Make the current status
and positioning visible(FY2022 results → FY2025 targets)

10.0%(Progress in FY2022)
Capital Expenditures (CAPEX) in FY2022 was 43.8 billion yen
and depreciation expenses were 39.1 billion yen. We reduced
spending by making investments at appropriate times in linewith market trends and by reviewing design specifications.
We will continue to control spending based on current
business conditions. As for the amount of CAPEX, we will
reduce the amount of investment assumed at the time ofManagement Foundation(FY2022–FY2025 Cumulative Total)

Company-Wide and Subsegment-Specific
Mid-Term Plan Targets (ROIC)
15.0%

Management Strategy

Electronics
Component Materials

Electronics &Automotive Systems

Automotive Products& Batteries

Main areas of focus

Energy Infrastructure
Electronics & Automotive
Systems

Main areas of focus

Communications Solutions : Increase production of optical devices,
Rationalize the optical fiber and cable business
Energy Infrastructure :Longer cable lengths
Automotive Products& Batteries :Increase production ofwire harnesses(Including BCP related responses)
Functional Products :Increase production of tape forsemiconductor process

Communications Solutions : Rollable ribbon (RR) cable, Optical devices,
Networking systems
Automotive Products :Wire harnesses, Steering roll connectors(SRC),
Peripheral monitoring radar
Functional Products :Data center products
New businesses:[New areas] Life science, social infrastructure DX[Information/energy/mobility]
Photonics-electronics convergence, hybrid
lasers, wireless power transmission

Capital Policy and Cash Allocation Policy
In the 2025 Mid-term Plan, our basic capital policies
are to implement well-defined investment control,
ensure the soundness of our financial base, and clarify
our shareholder return policy (ensuring a payout ratioof 30%). We aim to increase our corporate value in asustainable manner by investing in growth areas andsecuring a financial base that enables growth. To doso, we will determine cash allocation while balancing
investment in our businesses, shareholder returns, andour financial structure.

Shareholder Return Policy
During the 2025 Mid-term Plan period (fiscal year ending
March 2023–fiscal year ending March 2026), along withworking to increase corporate value through profit growthand focused investments in growth domains, we havedesignated stable and ongoing shareholder returns as abasic policy and will issue a performance linked dividend
based on a payout ratio of about 30% of consolidated
proﬁt attributable to owners of parent.
Annual dividends per share in FY2022 were 80 yen, witha payout ratio of 31.4%.

Annual dividend per share (yen)Management Resource Allocation (CAPEX, R&D Investment, and Strategic Investment)
Based on our policy of investing profits toward future
growth while maintaining financial discipline and ensuring
financial soundness, we will conduct well-defined
investment control by allocating investments based on
the current position of our businesses.
In R&D investment, we will focus on profit generation
during the 2025 Mid-term Plan period and set priority
areas to focus on — mainly communications solutions,

032

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

automotive products, and functional products —focusing on those that will lead to profit expansion in
new businesses that are expected to grow as we look to2030. We will also allocate development investment to
new businesses, including new areas such as life sciences
and social infrastructure DX, and areas that integrate
information, energy, and mobility.

60

Profit attributable toowners of parent
Payout ratio

80

60

FY2021

FY2022

FY2023 (forecast)

FY2025 (forecast)

FY2021

FY2022

FY2023 (forecast)

FY2025 (forecast)

10.1 billion yen

17.9 billion yen

13.0 billion yen

37.0 billion yen or more

41.8%

31.4%

32.5%

30%

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

033

About Furukawa Electric Group

Business Overview

売上高／営業利益
Percentage of total sales
Infrastructure

200
150

0

-0.2
2020

2021

2022 (FY)

100.9

100
75
50

1.4

25
0

2021

2022 (FY)

125
100
75

337.4

300

235.1

200

249.9

0

2020

Electronics & Automotive Systems

300
200

2021

2022 (FY)

250.8

250
198.0

200

4.8

150

6

273.0

5
3.2
25.0
%
3
4

100

2
0.9

50
0

2020

2021

2022 (FY)00■Net sales ■Operating profit(Billion yen)

114.7
100
6.3

130.0

7.6

50

0

126.5

2020

2021

15

11.6%

2022 (FY)

250.8

-5.0

5

4.8

4

2

0.9

2021

2022 (FY)0(Billion yen)

5

0

100

機能製品 6.3

130.0

7.6

50

0

2020

―

―

2021

2022 (FY)

6.1%
エネルギーインフラ

0.8

―

―

2021

2022 (FY)

―

―

2021

2022 (FY)

―

―

2021

2022 (FY)

―

―

2021

2022 (FY)

6.1%

0.6

2017

―

―

―

2021

0.4

2022 (FY)

2017

―

0.8

27.5%
自動車部品・電池

27.5%

0.8

0.6

0.6

0.4

2017

―

―

―

2021

0.4

2022 (FY)

1.2

1.2

1.0

1.0

2017

―

0.8

16.5%
電装エレクトロニクス材料

0.6

16.5%

0.8
0.6

1

(Billion yen)

150

―

6

273.0

3.2

114.7
10

4.2

2022 (FY)■Net sales ■Operating profit(Billion yen)

150

2021

(Billion yen)

2020

1.0

2017

-2.5

100
50

1.0

1.0

25.0% 3150
電装エレクトロニクス材料

10.42022 (FY)

1.0

7.5
5.0

300

200

2021

1.2

249.9

(Billion yen)

198.0

―

1.2

0.6

0

250

―

1.2

0

■Net sales ■Operating profit(Billion yen)

300

―

1.2

-4.6

■Net sales ■Operating profit(Billion yen)

2017

10

0

2020

0.4

0.6

(Billion yen)

5.0

-5.0

0.6

0.8

30.9
%2.5
100
1.5
自動車部品・電池

-2.5

24.7%

0.8

0.4

337.4
235.1

24.7%
情報通信ソリューション

-2

2022 (FY)2021(Billion yen)

5.0

0.8

-1

-1.9

7.5

1.0

2

■ Net sales ■ Operating profit

0
-4.6

4

0

400

1.0

3

2.1

2020

1.2

5

106.3

105.7

50

10

30.9
%
2.5
1.5

5.0

100

(Billion yen)

100.9

-2

(Billion yen)

400

-2.5

1.4 9.7%
エネルギーインフラ
25
1■ Net sales ■ Operating profit(Billion yen)2022 (FY)2021(Billion yen)

-1

-1.9

0

-0.2
2020

1.2

7.5

2.5

0

4

0

2020

10.0

6.5

50

3

2
9.7%
1

2.1

191.3

■ Net sales ■ Operating profit
5

106.3

158.3

-2.5

(Billion yen)

2

(SF6 is excluded.)

12.5

217.6

19.9%5.0
100
3.8
情報通信ソリューション

■ Net sales ■ Operating profit
105.7(Billion yen)

250

7.5

2.5

0

(Billion yen)

10.0

19.95.0%50

Electronics & Automotive Systems

With respect to the Functional Products business, despite theprogress of cost pass-through due to increases in raw material
and fuel prices, both net sales and profit declined, because salesof tapes for semiconductor production, aluminum blank material
for hard disk drives, and electrolytic copper foils were adversely
affected by inventory adjustments in the supply chain associatedwith a decline in global demand for smartphones, personal
computers, and data centers since the second half of the year.

INTEGRATED REPORT 2023

6.5

3.8

125

Functional Products

FURUKAWA ELECTRIC GROUP

100

191.3

217.6

(Billion yen)

Electronics Component Materials business saw an increase in
net sales, because we captured strong demand for products
related to communications infrastructure and products for power
semiconductors, and copper bullion prices increased. However,profit decreased, affected by continued increase in prices ofraw materials and fuel as well as a decline in demand for autocomponents and electronics-related products in the second half ofthe year.

034

158.3

150

InfrastructureWith respect to Automotive Products business, despite continued increase in
prices of raw materials and fuel, and increase in labor costs due to the lockdown
to contain the spread of COVID-19 in China and changes of clients’ productionplans, both net sales and profit increased due to the following factors:
strengthening sales of aluminum wire harness, which is an environment-friendly
product because renewable energy is used in the manufacturing process andits weight-saving contributes to reducing CO2 emissions; progress in costpass-through to cover increased raw material and fuel costs; and reduction in
emergency transportation costs associated with lockdown of some production
sites in Southeast Asia, which incurred in FY2021.

Electronics Component Materials

200

12.5

GHG 排出量比率(compared to FY2017)■Net sales ■Operating profit(Billion yen)250

As for Energy Infrastructure business, although the sales from
Chinese subsidiary declined due to the impact of delay inconstruction for clients because of the spread of COVID-19 in
China, both net sales and profit increased as a result of strong salesof underground cables in Japan, smooth recording of sales fromshipment/installation of cables for the submarine cables/water pipe
project, and progress in cost pass-through to cover increased raw
material and fuel costs.

Automotive Products & Batteries

Corporate Information/Data

売上高／営業利益
CO2in排出量推移
排出量推移
Changescarbon efficiency
PercentageCO2
of CO emissions
Net sales/Operating profit■Net sales ■Operating profit(Billion yen)Communications Solutions business recorded an increase in net sales
due to strong demand for optical fibers, etc. in North America as wellas improved plant productivity, despite certain impact of sales decreasein network-related products in Japan due to reduced production asa result of difficulty in procuring semiconductors, and sales decrease
associated with the Russia-Ukraine situation. Despite continued
increases in raw material and fuel prices, profit also increased due tothe progress in cost pass-through to cover increased costs, improved
product mix, and foreign exchange impacts.

Energy InfrastructureManagement Foundation

セグメント別売上高構成比率
セグメント別売上高構成比率
GHG 排出量比率

Business Overview/Review of Fiscal 2022

Communications Solutions

Management Strategy

126.5

2021

11.6%

2022 (FY)

2017

―

―

―

2021

2022 (FY)

0.4

1.2

1.2

1.0

1.0

2017

―

15

10

4.2

0.4

5

0

0.8

20.2%

20.2%

機能製品

0.8

0.6
0.4

0.6

2017

―

―

―

2021

2022 (FY)

0.4

2017

―

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

035

About Furukawa Electric Group

Business Overview

Communications Solutions
InfrastructureManagement Strategy

Management Foundation

2025 Mid-term Plan Targets (Net sales, Operating income, ROIC)■■ Net sales (left)(Billion yen)

240.0■■ Operating income (right)
220.0

217.6

(Billion yen)

230.0

16.0

11.5

180.0

12.0

Corporate Information/Data* Net sales and invested capital for FY2024
and FY2025 have been adjusted based on
the average copper price and average foreignexchange value forecasts made for FY2023* CAGR: Compound annual growth rate
ROIC: Return on invested capital (after tax)
NOPAT: Calculated as net income plus interest
expenses paid after tax in accordancewith IFRS

（%）
10

5

(FY)

8.0

120.0

Corporate Senior Vice President
and General Manager ofCommunications Solutions Division

8.0

6.5

60.0

Toshihiko Ota

4.00

FY2022
results

FY2023(E)FY2025targetAs of 2023/5/11■■ Net sales (left)(Billion yen)0■■ Operating income (right)(Billion yen)

2022

2023

2025
targetAveragecopperprice(JPY/kg)

1,209

1,180

1,085

Averageexchange
rate(JPY/USD)

135

130

110

0

-5

0

5

15（%）

10

Vertical axis: Sales CAGR (from FY18-22 → FY22-25)
Horizontal axis: ROIC (FY22 → FY25)
Bubble size: Absolute value of NOPAT (FY22 → FY25)（%）
10Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”

160.0

8.0

130.0

The Communications115.0
Solutions Division will further evolve
its long-cultivated communication element technology
5
120.0
6.0
106.3
and create
solutions to contribute to the “creation of a social infrastructure that integrates information, energy, and4.5
mobility,” as set forth in Vision 2030.

Environmental Analysis of the Communications Solutions BusinessBusiness environment

Key revenue
opportunities

Major risks andthreats

80.0

Strengths and challenges

Increase in global communications traﬃc (Highspeed, large capacity, low latency, low power
consumption)
IoT progress, 5G/B5G/6G
Changing workstyles and lifestyles
Russia-Ukraine situation, US-China relations
Global supply chain issues
Soaring labor, energy and raw material costs
due to inﬂation
Global semiconductor shortage

Strengths of theDivision

Challenges of theDivision

Global production bases that extend into thegrowing markets
Diﬀerentiation by utilizing high-performance
products and technologies (optical ﬁber, cable,
digital coherent related, network technologies, etc.)
Provision of optimal solutions to the market
by making the most eﬀective use of our global
production bases while taking into consideration
the business environment shown on the left

4.0

0

2.1
2.0 Achieve the 2025 Mid-term Plan
Main
Strategies
to
40.0
2.0
-5
0

5

15（%）

10

Provide high-value-added productsolutions that contribute to “power saving” of information transmission by00Communications
FY2022
resultsNoncommunications

FY2023(E)FY2025 in the supply chain.
standing
in a key position
targetAs of 2023/5/11

Provide high-value-added products and services that contribute to the generation, transmission, and detectionof information and energy that lead to the improvement of safety and affluence in daily life■■ Net sales (left) ■■ Operating income (right)
Increasesales of high-value-added optical ﬁber and（%）
cable products and accelerate expansion of the networking system business(Billion yen)(Billion yen)

10
Contribute to the realizationof next-generation
400.0
24.0 networks as a partner of the IOWN initiative with semiconductor lasers, optical
375.0

ﬁbers, and network equipment technologies, products and more
337.4

330.0

Contribute to the building of integrated information infrastructure through next-generation PON and virtualized routers

300.0

Business Overview/Products and Services
The Communications Solutions business is made up of the Optical Fiber and Cable products, FITEL products andBroadband Solutions businesses, and it is involved in the manufacture and sale of products fortelecommunications infrastructure and the design, installation and service of telecommunications networks.
Optical Fiber and CableFITEL Products

Broadband Solutions

16.5

18.0

5

0
Priority Measures in the 202512.0
Mid-term
Plan: Maximize Profits in Existing
8.5
Businesses through a Focus on Capital Efficiency Directed at 2025

200.0

100.0

Optical fiber and cable

6.0

-5

0

FY2023

1.5

FY20220

FY2022
FY2023(E)(First year of the2025 Mid-term FY2025
Plan)
As of 2023/5/11
results
target05

optical fibers■CAGR of 5%: Estimate by our company■Continued global expansion of FTTH/5G■Continued infrastructure investment in North America■Improvement of balance in terms of supply and demand● Rapid decline in demand in the■■ Operating income (right)（%）
Americas(Billionyen)
10(Customerin the key markets of the
300.0
10.0 inventory overload,
environment273.0
construction
delays,and curbing
Americas 270.0
260.0
of investments by customers)
5
225.0
7.5
7.0

5G/B5G
Resilient infrastructure
Carbon neutral
Low loss ﬁbers

Main products

Main applications

Main customers

Low bending
loss ﬁbers forbuilding/residential
applications
Special ﬁbers
Telecommunications
Video broadcasts
Data centers

Optical cables ingeneral (including
rollable ribbon cables)
Optical connection
products
Communications
Infrastructure andNetworks
Video broadcasts
Data centers

Telecommunications providers
OTT
Telecom construction companies

Variable wavelength
laser modules (ITLA*)
Laser module for
excitation

Digital coherent Signal
light sources
Excitation lightsources for signal
optical ampliﬁcation
System vendors
Transmission device
manufacturers

Industrial ﬁber lasers

Metal cutting,welding, etc.

Manufacturers ofprocessing machines,
etc.

FTTH system devices(including highdeﬁnition images
and low-latencytransmission systems)
Radio system

Network routers

Telecommunication
and broadcast services
Video broadcasts
Wireless infrastructureHigh speed,high capacity
telecommunications
service
VPN construction

Telecommunications
providers (CATV
providers)
Municipalities

Telecommunication
providers
General companies

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

150.0

● Strong performance
4.0 due to thefull-scale
start of collaboration
3.2
undertaken within the Group
when it comes to networking
system business (NWS)

Efforts● Underlying trend of growthin terms of high value-added■■ Net products
sales (left)(Billion yen)

5.0

126.5

(DX utilization, etc.)● Continued expansion of lineups of high value-added

products● Progress in terms of the global expansion of NWS● Development of a system

2.5

-5

for prompt responses
0 when 5
demand recovers● Optimization of inventory

levels and sale prices(Billion yen)

30.0

125.0

● Continued improvement of productivity

0

（%）
10

165.0
150.0

● Low unemployment rate and rising wages (North America)line with operations■■ Operating income (right)

200.0■Low cost, energy saving■Multi-core・high density■Easy installation and design flexibility■Short turnaround time and improved service● Deployment of personnel in[integration of the promotion● Enhancing the lineup of high0systems, product portfolios, andFY2022
FY2023(E)FY2025 value-added products andbrands] As of 2023/5/11
results
target expanding our customer base0

● Diversifying customer requirements● Reduction of fixed expenses

improved

75.0* ITLA: Integrable Tunable Laser Assembly036● Strong demand continued● Productivity in North America

19.5

22.5

5

Toward FY2025●Medium- to long-term expansion of demand for■■ Net sales (left)(Billionyen)
Business

15（%）

10

10

( full-scale expansion in the U.S., Europe, and Asia with afocus 15
on
Central/South America)（%）

Cable Sales in North America (Volume)

Rollable ribbon cableThree-fold increase by FY2025 (compared to FY2021)

NWS Sales (Amount)

30% increase in sales

Rollable ribbon cable
（%）
22

35

40

2021 2022 2023

50

2025 (FY)2021 2022 2023

2025 (FY)FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

037

120.0Business Overview

60.0

Energy Infrastructure

8.0

6.5

About Furukawa Electric Group0

FY2022
results

FY2023(E)0Management Strategy
4.0-5Management Foundation
0

5

10

0

FY2025targetAs of 2023/5/11
2025 Mid-term Plan
Targets (Net sales, Operating income, ROIC)■■ Net sales (left)■■ Operating income (right)(Billion yen)

Infrastructure(Billion yen)

160.0

8.0

* Net sales and invested capital for FY2024
and FY2025 have been adjusted based on
the average copper price and average foreignexchange value forecasts made for FY2023* CAGR: Compound annual growth rate
ROIC: Return on invested capital (after tax)
NOPAT: Calculated as net income plus interest
expenses paid after tax in accordancewith IFRS

（%）
10

130.0
120.0

115.0

106.3

Corporate Information/Data

15（%）

6.0

5

(FY)

4.5
80.0

Corporate Vice President andGeneral Manager of Energy
Infrastructure Division

4.0
2.1

40.0

Eiichi Nishimura0

FY2022
results

2.0

FY2023(E)As of 2023/5/11■■ Net sales (left)

2.0

0

FY2025target■■ Operating income (right)

2022

2023

2025
targetAveragecopperprice(JPY/kg)

1,209

1,180

1,085

Averageexchange
rate(JPY/USD)

135

130

110

0

-5

0

5

10

15（%）

Vertical axis: Sales CAGR (from FY18-22 → FY22-25)
Horizontal axis: ROIC (FY22 → FY25)
Bubble size: Absolute value of NOPAT (FY22 → FY25)（%）(Billion yen)
10
Basic Policy in375.0
the 2025 Mid-term
24.0 Plan “Road to Vision 2030-Transform and Challenge”(Billion yen)

400.0

Environmental Analysis of the Energy Infrastructure BusinessBusiness environment
Key revenue
opportunities

Major risks andthreats

Strengths and challenges

Rapid expansion in demand, particularly
for renewable energy projects
Increase in demand for products that areeasy to install due to labor shortage
Delay in securing personnel necessary
for business expansion
Change in customers’ timing of
implementation of largescale projects
Supply disruption of major materials

Strengths of theDivision

Challenges of theDivision

An abundant track record of ultra-high-voltage lines andsubmarine cables in Japan and overseas
Technology development centered on the submarine cables
High-value-added power cables utilizing development
technology of polymer and metal materials
Steady order receipt for renewable energy (oﬀshore wind
power) projects, and securing of manufacturing capacity
Proﬁt improvement in the low- to medium-voltage power
cable business
Materialization of plans for the development of DC(submarine cables for wide area interconnection) business

-5

1.5

Energy Infrastructure business consists of Power Cable business and Industrial Cable & Power Cable Accessories
business. These are engaged in the manufacture, sale and installation of ultra-high voltage, high-voltage, mediumvoltage and low-voltage cables and equipment.
Industrial Cable & Power Cable Accessories

0

5

10

FY2022

FY2023(E)FY2025

As of 2023/5/11
results
Strategic investments
for growth intarget
target segments to achieve both business expansion and capital eﬃciency management

Power
Cable
■■ Net sales(left) ■■ Operating income (right)
Ultra-high voltage
underground cables in Japan/Renewable energy in Japan (submarine（%）
Target segments(Billionyen)
andundergroundbusiness
10 cables)/Overseas submarine cables (Asia)(Billion yen)

300.0

273.0

10.0

270.0

260.0
Target segments

Social infrastructure/Renewable energy in Japan/Disaster prevention and mitigation/
Next-generation
5infrastructure
7.5

7.0

150.0

5.0

0

75.0

2.5

-5

Priority Measures
4.0 in the 2025 Mid-term Plan: Maximize Profits in Existing
3.2
Businesses through a Focus on Capital Efficiency Directed at 2025

Power cable systems

FY20220

FY2022
FY2023(E)(First year of the2025 Mid-term Plan)FY2025
As of 2023/5/11
results
target

0

0

5

10

■■ Net sales (left)(Billion yen)

200.0

Renewable energy
Disaster prevention
and mitigation
Next-generation
infrastructure
Main products

Main applications

Main customers

038(Water pipes)

Ultra-high-voltage/high-voltage
underground lines (cables, parts,
installation work)
Development of backbone electric
power networks
Large plants
Renewable energy (onshore wind,solar, oﬀshore wind private cables)
Power (transmission) companys
Renewable energy power
generation SPCs and EPCs

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Submarine cables (cables, parts,
and installation work)
Water pipes (including installationwork)

Industrial wires

Overhead power transmission parts
Power distribution parts
Other functional products

Oﬀshore wind submarine cables
Water pipes for remote islands

Solar power generation systems
Indoor wiring for factories,
buildings, etc.
Wiring of factory equipment/
switchboards/control panels
Wiring of moving machines
Wiring for onboard electricalequipment

Electrical materials fortransmission/distribution lines
Direct and branch cable connections
Insulation and protection for connectors
Heat dissipation for industrial
equipment and information equipment
Welding for automobile bodies,railway tracks, etc.

(Increase in offshore wind projects and Start of wide-area DCinterconnection projects)

Construction contractors
Electronic appliance manufacturers
Railroad companies
Shipbuilding companies

Electric power companies
Railroad companies
Construction contractors

Renewable energy power
generation SPCs and EPCs
Local governments● Progress when it comes to insufficient

submarine and ultra-high voltage■■ Operating incomeunderground(right)cablesin Japan more（%）● Demand for trunk line
(Billion yen)concentrated
within10the second half
renewal steady due to
30.0

construction work capacities in the market(Application of the Labor Standards Act when it comes to theconstruction industry: Start in FY2024)● Continue to secure orders and revenue in target

segments** J apan: Ultra-high pressure underground cables and renewableenergy (submarine/underground cables); Asia: Submarine cables● Continue with the enhancement of

manufacturing facilities and construction work
capacities

7.5● Continue acceptance of profitoriented orders -5
involving low returns
5● Strengtheningof project000● The effects of the shifting2
management(Certain implementation
FY2022
FY2023(E)*FY2025*of rising raw
material1 costs
As of 2023/5/11
results
targetof renewable energy projects)
onto prices
Efforts● C
ontinue reinforcement of*1.
Impact of excluding
TOTOKU ELECTRIC
CO., LTD. fromconsolidation● Enhancementof(snet sales: (12.1)
billion yen, operating
income: (2.3) billion
yen)manufacturing
facilities andmanufacturing
facilities*2. Before excluding TOTOKU ELECTRIC CO., LTD.
construction work capacities withand construction work
the aim of expanding operations
capacities(Installation of large turntables● Enhancement of profitability atfor undersea cables, etc.)
Chinese subsidiary companies

4.2● Eliminationof past4.0projects

Toward FY2025

neutral-related marketsof the year than usual
the strengthening of theBusiness
165.0● Despite the continued
domestic power grid
postponementof customer
environment
150.0
22.5
● Postponing of customer5
19.5
construction due to the slowdown
126.5
125.0
construction
projects dueof the economic recovery in China,
to COVID-19 in China
construction
100.0
15.0 activities picking up
moderately starting0in the second
half of the year
50.0

15（%）

● Accelerated expansion of domestic carbon

FY2023● Projects received in terms of overseas

Social infrastructure

15（%）

Main
Strategies to Achieve the02025 Mid-term Plan0

Industrial Cable & Power
Cable
225.0 Accessories businessBusiness Overview/Products and Services

Power Cable

337.4
Expand businessby contributing330.0
to the construction of secure, safe, and comfortable social infrastructure with unique
5
technologies
and products
300.0
18.0
16.5
❶ Security : Carbon neutrality by 2050
❷ Safety : Disaster prevention and 12.0
mitigation
0 (disaster-resilient community development)
200.0
 uilding8.5❸ Comfort : B
next-generation infrastructure to cope with declining birthrate and aging population(comfortable community6.0
development)
100.0

10

* Double in FY2025 when compared with FY2017
(Increase personnel for directly-managed groups, expand
allianceswith partner companies, and utilize DX)
15（%）

●T
 aking into

consideration
elements such as
demand growth andfuture peaking,consider increasing
capacities beyond
2025

Renewable energy sales revenue(submarine and underground cables)

Steadily secure orders
with the goal of tripling sales

2021 2022 2023

2025 (FY)FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

039

80.0

Business Overview

40.0

Automotive Products & Batteries
Electronics & Automotive Systems

4.0
2.1
About Furukawa
Electric2.0
Group

0

FY2022
results

0

Management Strategy
2.0

FY2023(E)-5Management Foundation
0

5

10

Corporate Information/Data

15（%）

0

FY2025targetAs of 2023/5/11
2025 Mid-term Plan
Targets (Net sales, Operating income, ROIC)■■ Net sales (left)(Billion yen)

400.0■■ Operating income (right)(Billion yen)

24.0

375.0
337.4

* Net sales and invested capital for FY2024
and FY2025 have been adjusted based on
the average copper price and average foreignexchange value forecasts made for FY2023* CAGR: Compound annual growth rate
ROIC: Return on invested capital (after tax)
NOPAT: Calculated as net income plus interest
expenses paid after tax in accordancewith IFRS

（%）
10

330.0

300.0

16.5

200.0

18.0

5

(FY)

12.0

100.0

6.0
1.5

Shigenobu Abe

0

FY2022
results

FY2023(E)As of 2023/5/11■■ Net sales (left)(Billion yen)0

FY2025target■■ Operating income (right)(Billion yen)

2023

2025
targetAveragecopperprice(JPY/kg)

1,209

1,180

1,085

Averageexchange
rate(JPY/USD)

135

130

110

0

8.5

Corporate Senior Vice President
and General Manager of Automotive
Products Division

2022

-5

0

5

10

15（%）

Vertical axis: Sales CAGR (from FY18-22 → FY22-25)
Horizontal axis: ROIC (FY22 → FY25)
Bubble size: Absolute value of NOPAT (FY22 → FY25)（%）
10Basic273.0
Policy in270.0
the 2025260.0
Mid-term Plan “Road to Vision 2030-Transform and Challenge”

300.0

As decarbonization accelerates toward carbon neutrality,
we will evolve existing products and create new businesses
5
225.0
7.5
7.0
in response to demands for global envsironmental consideration and safety, and contribute to power management,
vehicle weight reduction, safety, and electrification.

Environmental Analysis of the Automotive Products BusinessBusiness environment

Key revenue
opportunities

Major risks andthreats

Strengths and challenges

New opportunities to respond to requests for
multifunctionality and modularization of vehicles
for CASE promotion such as xEV and MaaS
Expand products for eco-friendly future wiring
systems for safe vehicles as electriﬁcation
accelerates toward carbon neutrality

Strengths of theDivision

Growing geopolitical risks
Response to the promotion of automation andpersonnel reductions
Challenges of the
Sharp ﬂuctuations in customer production due toDivisionsemiconductor shortage
Rising prices when it comes to raw materials,
energy prices, labor costs, etc.

150.0

Technological capabilities for commercialization
by integrating the Group’s accumulated coretechnologies and in-vehicle technologies
Eco-friendly product capabilities to contributeto vehicle weight reduction with aluminum
harnesses ( α terminals) that utilize green energy
and to power source management, for the
expansion of electriﬁcation for carbon neutrality
Create next-generation products in theconvergence of energy, information, and mobility
through co-creation and development withpartners
Promote automation to strengthen BCM
compliance and ensure stable supply of highquality products

Business Overview/Products and Services
The Automotive Products & Batteries business is comprised of the automotive products business (e.g., the wire
harness, steering roll connectors, lead battery state detection sensors), and the battery business conducted by thelisted subsidiary The Furukawa Battery Co., Ltd.
Automotive Products

5.0

4.0
3.2

Wire harnesses
0

FY2022
SRC
results

BSS

0

200.0

Radar

150.0
High126.5
voltageproducts

Main products

Main applications

Leveraging our strengths
and techniques(processing techniques and material-related prowess), we will
22.5
5
19.5
125.0
respond to the increasing
number of high voltage products emerging due to changes in vehicle systems
resulting from the move to higher voltages, larger amounts of currents, and the move to EVs
15.0

Main customers

040

0

FY2022

Wire harness
results

FY2023(E)*1

As of 2023/5/11

Low/high-voltage
junction box
High-voltage terminal blocks
Connector
Bus bar modules

Low-voltage harness
High-voltage harness

Connecting of circuits
and wires
Control of auxiliary
equipment signals
Distribution of power
to auxiliary equipment
High-voltage circuit
connection for xEV

Supply of power tosliding doors andsignal transmission
Wiring going to narrow
parts such as roofs

Japanese automobile
manufacturers

Automobile
manufacturers

INTEGRATED REPORT 2023

0

FY2025*2
targetToward FY2025

FY2023● Easing the effects of the

COVID-19 and the shortage ofsemiconductors seen amongcustomers● Increasing of production bycustomers and the stabilizationof plans● Increasing of needs for reduced weight products as

the adoptions of EVs accelerate● Increasing demand for BCM for production andsupply systems● Optimization of sales price● Improved cost ratios and reduced logistics costs dueto the stabilization of orders● Promotion of multi-site production

Aluminum wire harnesses
Corrosion-proof
terminal ( α terminal)
High-voltage wire
harness for xEV

FURUKAWA ELECTRIC GROUP

0

50.0
Priority
Measuresin the 20257.5
Mid-term Plan: Maximize Profits in Existing
4.2
4.0
-5
Businesses through a Focus on Capital
Directed
at 2025
0Efficiency
5
10
15（%）

customers due to shortages ofsemiconductors
Business●L ockdowns occurring in China
environment
amid COVID-19● Soaring logistics expenses andraw material and fuel prices

Japanese automobile
manufacturers（%）(Billion yen)
Expansion of high-performance,next-generation products (also addressing cybersecurity) for vehicles and10
entry into new markets,30.0
such as those involving construction equipment, industrial vehicles, andtransportation
infrastructure
165.0● Changes in production plans ofCarbon Light weightneutral Electriﬁcation

15（%）

Improve fuel efficiency and power costs, and secure power supply reliability■■ Operating income (right)

FY2022

Safety10

0
FY2023(E)DevelopmentFY2025
in response to high-speed communication and the evolution of car
As of 2023/5/11
target■■ Net sales (left)(Billion yen)

5

Increase adoption and promote weight reduction due to superiority and reliability of α terminal*1. Impact of excluding TOTOKU ELECTRIC CO., LTD. from consolidation(snet sales: (12.1) billion yen, operating income: (2.3) billion yen)
*2. Before excludingLTD. Plan)(FirstTOTOKU
year ofELECTRIC
the 2025 CO.,Mid-term

Functional Products

0

Main
Strategies to Achieve the
75.0
2.52025-5 Mid-term Plan

100.0

Wiring Systems

10.0

Products using ﬂat
cables

SRC (Steering rollconnector)

Rotating connectors
for air bags
Handlemultifunctionality

Automobile
manufacturers
Tier1

BSS (Lead battery
state detection
sensor)

Vehicle power source
managementxEV power checks

Japanese automobile
manufacturers

Peripheral
monitoring radar

Advanced driverassistance systems(ADAS)

Japanese automobile
manufacturers● Promoting the shifting ofEffortslogistics and raw material andfuel costsl costs onto sales
prices and the recovery ofcosts● Responding to thedeterioration of productivity
due to fluctuations in terms oforders received● Continue optimization of sales

prices● Equalization of production

through the anticipationof information in terms ofcustomer production plan● Holding of strategic inventory
for changes in customer
production and transportation
lead times( Sharing and automation of production lines achieved
through simple, new structural design)● Increase in orders received for models equipped withaluminum wire harnesses

Wire harness sales revenue

Expand from 70 models of 6 manufacturers at the end of
FY2022 to 100 models of 8 manufacturers in 2024
(Moved forward from the 2025 forecast)

Aluminum
40 ％wire
harness ratio

50 ％

2021

2022

60%

Approaching
the customer
High probability
ordersFirm orders

2023

2025 (FY)FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

041

200.0

12.0

0

8.5

Business Overview

100.0Electronics Component Materials
Electronics & Automotive Systems

About Furukawa Electric GroupManagement Strategy
6.0

-5

1.5
0

FY2022
results

FY2023(E)Management Foundation
0

5

10

0

FY2025targetAs of 2023/5/11
2025 Mid-term Plan
Targets (Net sales, Operating income, ROIC)■■ Net sales (left)(Billion yen)

300.0

273.0

■■ Operating income (right)(Billion yen)

10.0

270.0

* Net sales and invested capital for FY2024
and FY2025 have been adjusted based on
the average copper price and average foreignexchange value forecasts made for FY2023* CAGR: Compound annual growth rate
ROIC: Return on invested capital (after tax)
NOPAT: Calculated as net income plus interest
expenses paid after tax in accordancewith IFRS

（%）
10

260.0

225.0

Corporate Information/Data

15（%）

7.5

7.0

5

(FY)

150.0

5.0

4.0

75.0

Takashi Yamamoto

2.5

0FY2022
results

FY2023(E)As of 2023/5/11■■ Net sales (left)(Billion yen)0

FY2025target■■ Operating income (right)(Billion yen)

2023

2025
targetAveragecopperprice(JPY/kg)

1,209

1,180

1,085

Averageexchange
rate(JPY/USD)

135

130

110

0

3.2

Corporate Senior Vice President andGeneral Manager of Electronics Component
Materials Division

2022

-5

0

5

10

15（%）

Vertical axis: Sales CAGR (from FY18-22 → FY22-25)
Horizontal axis: ROIC (FY22 → FY25)
Bubble size: Absolute value of NOPAT (FY22 → FY25)（%）
10Basic Policy in the 2025165.0
Mid-term Plan “Road to Vision 2030-Transform and Challenge”

200.0

Environmental Analysis of the Electronics Component Materials BusinessBusiness environment

Key revenue
opportunities

Major risks andthreats

Needs for alternative materials due to soaring
prices of raw materials
Supply chain disruption due to geopoliticalrisks and natural disasters

Strengths of theDivision

Challenges of theDivision

Material development and proposal
capabilities tailored to customer needs
Provision of high-performance, high-quality,
oxygen-free copper and copper alloy products
Production system for copper strip products
using renewable energy from hydroelectric
power generation
Raise presence in key markets bystrengthening marketing capabilities
Shift to low environmental impact
manufacturing processes and contribute tocarbon neutrality in the value chain

Business Overview/Products and Services
The Electronics Component Materials business handles electric conductors, magnet wires, and copper & highperformance material products and is mainly engaged in the manufacture and sale of wires, automotive parts, andcopper products for electronics device materials.
Electric Conductors

Copper & High Performance Material

Electriﬁcation (CASE)
Carbon neutral
5G/B5G
Healthcare
Main products

Main applications

Main customers

042

Copper wires,
aluminum wires

Various cables
Wire harness

Electronics
component
manufacturesFURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Oxygen-free copper
wires

Magnet wires foralternators
Magnet wires for EV
motorsMagnet wire
manufactures
Motor manufactures

Fine magnet wires

Mobile phoneinductors
Relays (for generaluse, automobiles)

Electronics
component
manufactures

Copper alloy strips
and thin plates

Oxygen-free copper
GOFC

Mobile phone terminals
Anti-corrosion terminals
for automobiles
Semiconductor leadframesShielding strips
Substrates for heatdissipation

Terminal manufactures
Semiconductor
component manufactures

Wewill contribute to solving social issues bydeveloping
150.0
22.5
5 and providing products that meet customer needs in the
19.5
126.5
125.0
automotive and communications/electronics markets while simultaneously engaging in green manufacturing.
100.0
50.0

0

4.2

7.5

4.0

-5

Contributing
to the realization of a sustainable
societythroughtheof highly functional
0
5
10 development
15（%）
0
0
1
materials
and cleanmanufacturing
FY2022
FY2023(E)*FY2025*2
results

As of 2023/5/11

targetContributetoTOTOKU
vehicleelectriﬁcation
byconsolidation
expanding sales of oxygen-free copper and copper alloy products*1. Impact
of excluding
ELECTRIC
CO., LTD. from(snet sales: (12.1) billion yen, operating income: (2.3) billion yen)Contributeto the ELECTRIC
growingCO.,
electronic
component market by increasing production capacity of enamel wires*2. Before
excluding TOTOKULTD.
Increase added value by expanding copper alloys and plating products and improving product mix
Contribute to advanced medical care by increasing production capacity of NT* alloy products and developing new products* NT: Nickel-titanium alloy

Priority Measures in the 2025 Mid-term Plan: Maximize Profits in Existing
Businesses through a Focus on Capital Efficiency Directed at 2025
Copper strip and high-performance materials

FY2022(First year of the 2025 Mid-term Plan)●C ontinued consideration of

Stent guide wires● Improvement of product mix

through the expansion of sales
for high value-added products● Optimization of sales prices

Toward FY2025● Growing demand for materials and devices●C ontinued consideration and●C ontinue to improve our

Ni-Ti alloy (wire andtube)

Medical productmanufacturers

FY2023materials and devices responding
adoption of materials andto vehicle “electrification” anddevices responding to vehicle“automatic driving,” reduced“electrification” and “automatic
production of automobiles owing
driving,” and demand forto shortages of semiconductors,
automotive products recoveringand reduced demand for existing
Business
moderately starting in the
products in terms of electronics
environment
second half of the year●C
 ustomer inventory adjustments●D elays in the recovery of demandalso taking place when it comesfor electronics-related products
to electronics-related products●P rices remaining high when it● Increase in prices when it
comes to power costs, auxiliary
comes to power costs, auxiliarymaterials
materials

Efforts

Electrical cablemanufactures
Power semiconductor
manufacturers

15.0

Main Strategies to Achieve the 2025 Mid-term Plan

Strengths and challenges

Increase in demand that stems from vehicle
electriﬁcation and automatic driving
Increased requirement for non-magnetic andheat dissipation characteristics to satisfy
increased data traﬃcIncreased needs in minimally invasive medical
treatment

30.0

product mix through newdevelopment and the expansionof sales when it comes to highvalue-added products( meaning the expanding sales ofheat-resistant, oxygen-free copper
strips for power semiconductors andheat dissipation products, and thedevelopment of products serving tosupport advanced functionality ofelectronic equipment)● Optimization of sales prices● Development of copper and precious

responding to vehicle “electrification” and“automatic driving”● Shift to highly reliable and functional products byincreasing data traffic●G rowing demand by society when it comes to theenvironment(Reduction of CO2 emissions, recycling of copper andprecious metals, etc.)● Development and stable supply of highly functional

materials featuring characteristics that are tailoredto customer needs■Realization of advanced thermal management■Ensure the curbing of electronic component
malfunctions
GOFC volumes*Progress above the target
Initial plan
Results andforecast● Green manufacturing2021 2022

2025 (FY)■Contribution to a decarbonized society throughhydroelectric power■Move toward the saving of resources through improved
copper and precious metal recycling technologies

metal recycling technologies

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

043

0

4.0
3.2
75.0 About Furukawa Electric Group

Business Overview

Functional Products

0

FY2022
results

2.5 Strategy
Management-5

FY2023(E)52025 Mid-term Plan Targets (Net sales, Operating income, ROIC)■■ Net sales (left)(Billion yen)

* Net sales and invested capital for FY2024
and FY2025 have been adjusted based on
the average copper price and average foreignexchange value forecasts made for FY2023* CAGR: Compound annual growth rate
ROIC: Return on invested capital (after tax)
NOPAT: Calculated as net income plus interest
expenses paid after tax in accordancewith IFRS■■ Operating income (right)(Billion yen)

200.0

30.0

（%）
10

165.0
150.0

126.5

19.5

125.0

100.0

Corporate Information/Data

15（%）

10

0

FY2025targetAs of 2023/5/11

Management Foundation
0

22.5

5

(FY)

15.0
2022

2023

2025
targetAveragecopperprice(JPY/kg)

1,209

1,180

1,085

Averageexchange
rate(JPY/USD)

135

130

110

0
50.0

Corporate Senior Vice President
and General Manager of Functional
Products Division0

Ryoji Ono

4.2

FY2022
results

7.5

4.0

FY2023(E)*1

As of 2023/5/11

FY2025*2
target0*1. Impact of excluding TOTOKU ELECTRIC CO., LTD. from consolidation(snet sales: (12.1) billion yen, operating income: (2.3) billion yen)
*2. Before excluding TOTOKU ELECTRIC CO., LTD.

-5

0

5

15（%）

10

Vertical axis: Sales CAGR (from FY18-22 → FY22-25)
Horizontal axis: ROIC (FY22 → FY25)
Bubble size: Absolute value of NOPAT (FY22 → FY25)

Basic Policy in the 2025 Mid-term Plan “Road to Vision 2030-Transform and Challenge”
Provide solutions through co-creation with customers:
To support the expanding telecommunications and social infrastructure market, based on our strengths in proposing
and developing new products that meet customer needs

Environmental Analysis of the Functional Products BusinessBusiness environment

Strengths and challenges

Key revenue
opportunities

Further increase in demand for communications
and social infrastructure, driven by growth in data Strengths of thetraﬃc and the proliferation of 5G
Division
Solving SDGs, carbon neutrality and other social issues

Diﬀerentiated, advanced technology development
capability and patents
Fast, detailed, integrated services of technology
and sales

Major risks andthreats

Supply chain disruption due to geopolitical risks
and natural disasters
Semiconductor supply uncertainties, raw material
price hikes, etc.

To sustain and improve design and development
capabilities that continue to create technologicaldiﬀerentiation
Further promote advanced BCP throughoptimization of bases, etc., and initiatives to reduce
environmental impact such as carbon neutrality

Challenges of
the Division

Main Strategies to Achieve the 2025 Mid-term Plan
Continue to develop products that respond swiftly to changes in customer needs, and to provide
electronics products with high-functionality or differentiation in the expanding market to support the
telecommunications and social infrastructure markets.
Contribute to the realization of a sustainable society and establish a next-generation profit base with
our products for Society 5.0 for SDGs and differentiating strength to solve social issues to create amechanism for carbon neutrality

Business Overview/Products and Services
The Functional Products business is made up of the AT (Advanced Technology Tape) & Functional Plastics, ThermalManagement Solution & Products, Memory Disk and Copper Foil businesses, and it is involved in the manufacture andsale of functional products made from plastics and nonferrous.
AT* & Functional Plastics

ThermalManagement
Solution & Products

Priority Measures in the 2025 Mid-term Plan: Maximize Profits in Existing
Businesses through a Focus on Capital Efficiency Directed at 2025
Tape for semiconductor process

Memory Disk

Copper Foil

FY2022(First year of the 2025 Mid-term Plan)● Market slump continuing due●G lobal decline in demandBusiness
environment

Renewable energy
Communication
infrastructure
Mobility

Main products

Main applications

Main customers

Tape forsemiconductor
process

Cable protective pipes
Troughs made fromrecycled materials
Insulation materials

Surface protection,
immobilizing, etc.
during semiconductor
wafer processing

Protective pipes forunderground cable
Troughs for holding
cablesInsulation for air
conditioning ducts

Semiconductor
manufacturers
Foundry
manufacturers

General construction
companies andsubcontractors
Railroad companies
Highway public corporations
and road subcontractors
Air conditioning duct
manufacturers

Heat dissipation
products such as
high-performanceheat sinks and heat
pipes, and 3D vapor
chambers
Heat dissipation, such as
for CPUs and GPUs used
for data center servers
Heat dissipation for
power semiconductors
used in railways andfor renewable energy
Data center andtelecommunications
base station operators
Manufacturers ofrailways and power
conditioners
PC and healthcare
device manufacturers

Aluminum blanks for
HDD

Electrolytic copper foil
for circuit boards

Electrolytic copper foil
for batteries

HDD for use in data
centers, desktop
PCs and monitoring
camerasCircuit boards forcommunication andelectronic devices

Negative electrodematerials for lithium
ion batteries used forEVs, mobile phones,
power tools, etc.

HDD substrate
manufacturers

Circuit board material manufacturers
Lithium ion battery manufacturers

for smartphones and otherproducts and rapid customer
inventory adjustments
manifesting during the second
half of the year

to decline in global demand
for smartphones, personal
computers, and other suchproducts● Inventory adjustments, which
rapidly took place due tooverstocking in the supply
chain, beginning to gradually
optimize in the second half ofthe year●P reparations to secure astable supply system byincreasing production capacity(construction of a new building
started in September of 2022)

Efforts

 ew building being built at Mie
NWorks: CAPEX of 7.0 billion yen
between FY2022 and FY2025

Toward FY2025

FY2023● Medium- to long-term growth in terms of demand in

the semiconductor market● Advances taking place in terms of semiconductor

performance and technological innovation● Establishment of a stable supply system aimed atmarket recovery and growth in demand(Mass production to start in April 2025)● Preemptive response to technological issues

and continued provision of highly functional anddifferentiated products● Expansion of features of

specifications for advanced
semiconductor manufacturing
processes and active
development of nextgeneration technologies● Development of a systemfor prompt responses when
demand recovers

Sales revenue for tape for semiconductor process

1.8 times more than in FY2021

2019

2020

2021

2022

2023

2025 (FY)*AT: Advanced Technology Tape044

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

045

About Furukawa Electric Group

Material issues of Revenue Opportunities

Management Strategy

Management Foundation

Corporate Information/Data

Creating businesses that solve social issues
Furukawa Electric Group will leverage its four core technologies of metals, polymers, photonics and high-frequency,
which have been cultivated over many years with a focus on materials capabilities, to create businesses that solve
social issues through open innovation and co-creation with diverse stakeholders.

Information■ Creation of photonics products to solve social issues in 2030
Based on its core technologies, the Group has theimportant task of contributing to the realization of nextgeneration networks as a partner in the IOWN concept*1.
In FY2022, we launched the “Next Generation Photonics
Business Innovation Project Team” under the directcontrol of the President. Toward the year 2030, we
aim to create photonics products that will play a role insupporting and which will be utilized in a society in which
various things are “simultaneously realized” through theuse of photonics and wireless technologies.
In FY2021, we developed the world’s first ExternalLight Source (ELS) for Co-Packaged Optics (CPO),
which will be introduced into next-generation network
switch equipment in data centers by means of utilizing aphotonics technologies of ours, high-power compound

semiconductor lasers, as well as optical packaging
technologies, with sample shipments beginning in FY2022.
In addition, we have developed an optical semiconductor
forward-excitation Raman unit with excellent low-noise
performance for the kind of transmission systems required
when it comes to the expansion of communication
capacities in terms of next-generation long-distancetransmission. In FY2023, we started shipping samples.
Through these new products, we will contribute to therealization of a high-capacity information communications
and a high-efficiency energy society.
Our mission is to create photonics products that willsolve social issues in 2030 by steadily advancing otherproduct groups from the ground up.

Energy■ Technology for Producing Green LP Gas* with Ramune Catalyst*
2

1

In addition to contributing to going carbon neutral
by 2050, our company aims to contribute to theestablishment of global infrastructure that enables the
local production and local consumption of energy alongwith the succession of local resources and local culture
for the future*3.
In FY2022, we established the “Sustainable Energy
Succession Project Team” under the direct control of
the President to develop new technologies based on theconcept of Succession Booster*4 to solve local social
issues.
One example of this, is our current development of atechnology serving to create green LP gas from biogasderived carbon dioxide and methane using Ramune
Catalytic technology (with a focus on livestock manure).
In addition to reducing greenhouse gases through therecycling of greenhouse gases,
we will create new vitality
within local communities byfacilitating the achievementof local production and local
consumption of energy,
thereby contributing to thesuccession of local resources and local culture for the
future.
Going forward, our company will continue to contributeto the realization of carbon neutrality and the building of
new social infrastructure in local communities throughco-creation initiatives undertaken with a wide range ofstakeholders, including local governments, which will
involve marketing, sales, research and development, andmanufacturing all working together as one.

*1. Ramune Catalyst: Furukawa Electric has succeeded in fixing a metal catalyst inside a porous material. This catalyst has flocculation and coking resistance, which has
been an issue with conventional catalysts, and is highly active and long-lived in dry reforming reactions where synthesis gas is obtained from biogas. We named thecatalyst Ramune Catalyst because the way the catalyst is fixed inside the porous material resembles a bottle of ramune (a Japanese carbonated soft drink).
*2. Green LP gas: LP gas produced from biogas (a mixture of methane gas and carbon dioxide produced when livestock waste or garbage is fermented)*3. Succession of local resources and local culture for the future: The passing on of local resources and culture to the next generation*4. Succession Booster: This is the brand logo for our green LP gas technology. It shows spheres which conceptualize local resources that are transformed into a more
usable form by passing through a ring representing our company’s products and services. The concept being expressed is the solving of local social issues throughthe deployment of our company’s products and services so as to subsequently facilitate the passing on of local resources to the future as those products and services
become more popularized.

Commercialization and Practical Application Roadmap Aimed at Creation of Businesses that Solve Social Issues
Products andservices

Creationo

ics prof photonsolv
duc ts tosues ine social is

2030

2030

Excitation lightsource for Raman
amplifiersHigh-speed
modulator
moduleHigh-power DFB
external lightsourceUltra-compact
wavelength
tunable laser

New functional
optic fibers

*1.
AnAn
abbreviation
for “Innovative
Opticaland Wireless
Network.”
The conceptof a network
and information
processing
infrastructure
including terminals*1.IOWN
IOWNconcept:
concept:
abbreviation
for “Innovative
Opticaland Wireless
Network.”
The conceptof a network
and information
processing
infrastructure
includingthat can provide high-speed, large-capacity communications and vast computing resources beyond the limits of conventional infrastructure by utilizing innovative
terminals
thatcanprovidehigh-speed,large-capacity
communications
andvast
computingresources
beyondthelimitsofconventional
infrastructurebytechnologies centered on optics.

utilizing innovative technologies centered on optics.

For details, please see our website.
“Optical active devices” https://www.furukawa.co.jp/optical-components/en/“Photoelectric Fusion Technology to Support Next-Generation Data Centers” https://www.furukawa.co.jp/rd/theme/10data-center.html

Furukawa Electric CPO ELS Wins the Best Paper Award from ICSJ2022(Only available in Japanese)

Technology for
producing green LP gas
with Ramune
Catalyst™

FY2023・・・

Demonstration
by small test
machine・・・

FY2026Field
demonstration
tests


Green
LP gas supplied for torch fuel as the official supplier of the Ichigo
Ichie Tochigi National Sports Festival

Succeeded in synthesizing green LP gas from biogas, a world firsthttps://www.furukawa.co.jp/release/2022/kenkai_20220523.html(Only available in Japanese) dopted in “Development of Green LP Gas Synthesis Technology,” a NEDO
A
Green Innovation Fund Project

Toward the realization of sustainable green LP gas without relying on fossil fuels
https://www.furukawa.co.jp/release/2022/kenkai_20220523-2.html(Only available in Japanese)(Note) NEDO (New Energy and Industrial Technology Development Organization):
A national research and development agency in Japan.

 urukawa Electric and Shikaoi Town, Hokkaido Sign Comprehensive Collaboration
F
Agreement

Torch for the Ichigo Ichie Tochigi NationalSports Festival

Development of the Forward Raman Unit for low noise signal transmission

Furukawa Electric Group to exhibit next generation technologies at OFC 2023 (#3229)

 stablished a new organization for the practical use of LP gas to contribute to the realization of a decarbonizedEsociety, called the “Sustainable Energy Succession Project Team”

Incoherent light generated by optical semiconductors enable longer distance and higher signal transmission
https://www.furukawa.co.jp/en/release/2023/comm_20230227.html
Introducing the latest optical communication technologies, such as high-performance connector and laser products, and forward-excitation Raman units
https://www.furukawa.co.jp/en/release/2023/comm_20230303.html

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

FY2030Practical use

Toward the Realization of a Carbon-free and Recycling-Oriented Society that Maximizes theUtilization of Local Resources
https://www.furukawa.co.jp/release/2022/kenkai_20220818.html(Only available in Japanese)

Contributing to the realization of next-generation network switch servers in data centers
https://www.furukawa.co.jp/en/release/2022/comm_20221031.html

046

FY2022For details, please see our website “Sustainable Energy Succession Project Team.”https://www.furukawa.co.jp/rd/theme/01lpgas.html (Only available in Japanese)

2022
Opticalamplification chipfor silicon photonics

FY2021

https://www.furukawa.co.jp/release/2022/kei_20220915.html(Only available in Japanese)

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

047

About Furukawa Electric Group

Material issues of Revenue Opportunities■ High-temperature superconducting wire material for advanced fusion prototype reactors
In the 1960s, our Group began research and development
on metal-type superconducting wires (low-temperature
superconductivity). Since then, we have been developing
technologies not only for metal-type wires, but also
for wires made from oxide superconductors (hightemperature superconductivity), which were discoveredin 1986. With regard to nuclear fusion, which is expected
to be a stable and sustainable new energy source to takethe place of fossil fuels, we have continued to develop
technology and provide products for superconducting
wires used for plasma generation, which are
indispensable for fusion reactors.

In FY2022, we
signed a contract withTokamak Energy inthe United Kingdom
for the supply ofsuperconducting wires,©Tokamak Energy Ltd.
and began supplying
Manufacture of ST-80 magnet coils
high-temperature
superconducting wires for use in the ST80-HTS, theworld’s first high field spherical tokamak fusion reactor
using high temperature superconducting (HTS) magnets,
at scale.

Tokamak Energy and Furukawa Electric Group Strengthen Relationship to Progress Commercial Fusion Energy

Mobility■ Development of Blue-IR hybrid laser “BRACE ” to contribute to the electrification of mobility
TM

In FY2022, we established a laser application lab called“CALL”*2 at the Furukawa Electric Toyota TechnicalCenter (Toyota City, Aichi Prefecture) as a site for cocreation to be undertaken with partners based in the
Chubu region. The laser application lab is equipped with
BRACE, allowing for the performing of test processing on
samples brought in by partners.
We will continue to provide new copper processing
solutions to solve
our customers’
challenges andcontribute to
the expansion ofdemand for electric
mobility based on
the acceleration of
A view inside CALL
carbon neutrality.

*1. B lue-IR hybrid laser: A hybrid laser combining a high-power blue oscillator featuring the world’s highest-performance GaN laser diode (LD) from Nichia Corporation witha high-brightness blue laser diode module that combines Furukawa Electric’s laser module assembly technology with a near-infrared (IR) single-mode fiber laser*2. C
 ALL: Chubu Advanced Laser processing Laboratory. With this name, we are expressing our strong desire to go approach (CALL) partners and work together to generate
processes for processing all kinds of things together (Co-creation + ALL).

Commercialization and Practical Application Roadmap Aimed at Creation of Businesses that Solve Social Issues
Products and services

FY2020

FY2021

Blue-IR hybrid

BRACETMI
commercialized

BRACETMX
commercialized

laser BRACETM

FY2022

FY2023Further advancement

For details, please see our website page “Industrial Lasers.” https://www.furukawa.co.jp/fiber-laser/en/
Laser application lab established in Toyota City, Aichi Prefecture

Contribution to the accelerated development of electrification parts through new co-creation sites
https://www.furukawa.co.jp/release/2022/comm_20221125.html (Only available in Japanese)Strengthening our lineup of BRACETM Series products

Providing new copper processing solutions that contribute to the electrification of mobility
https://www.furukawa.co.jp/release/2023/comm_20230926.html (Only available in Japanese)

048

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

FY2024

Management Foundation

Corporate Information/Data

New areas

https://www.furukawa.co.jp/en/release/2023/kenkai_20230112.html

As the move toward carbon neutrality is accelerating
globally, demand for the electrification of mobility
is expected to grow further. Furukawa Electric hasdeveloped the Blue-IR hybrid laser*1 BRACE I equippedwith a high-brightness blue laser diode module developed
jointly with Nichia Corporation. This product cancontribute to the improvement of productivity (quality
and processing speed) in the process of welding copper,
which is a conductor in lithium-ion batteries, motors,
inverters, and other components that are key components
for electric mobility, as well as to labor saving in the
manufacturing process. Furthermore, in response to theissues of the amount of spatter during processing and thenarrow application area for weldable thickness, BRACE X,
which we launched in FY2021, has been able to cover themain areas for copper materials used in xEV powertrains
by further increasing the output of the blue laser.

Management Strategy

FY2025Introductionof electric
mobility massproduction line

■ Maintenance/Inspection Support Solution for Roadside Equipment
Accidents due to aging road fixtures (road signs, roadlighting, guardrails, etc.) are occurring throughout Japan.
Although systematic maintenance and managementof facilities is important to prevent accidents fromoccurring, many municipalities and road administrators
are expected to find it difficult to sustain inspection andmaintenance work on a vast number of road fixtures due
to labor shortages and financial challenges caused by theadvent of a society with a shrinking population.
Therefore, our company has developed Maintenance/
inspection support solution for roadside equipment
for roadside fixtures to facilitate the realization of new
maintenance cycles using our own DX technology.
This makes it possible to carry out the inspection andmaintenance of roadside fixtures with high accuracy

Inspection chartand efficiency,
preparing service
somethingwhich has been
traditionallyInspection
Patrol support
handled only bysupport systemsystempersonnel. Many
municipalities
and roadadministrators
have already adopted the Michi-ten series. We are also
working on demonstration experiments in cooperation
with municipalities and road administrators with the aimof facilitating further sophistication.
Maintenance
base

Just
drive!

1) Dashboard
camera2) Video analysis

3) Database/Inspection chat

Type
Location
Map
Pictureetc.

Updatedatabase

Detailed
inspection5) On-site inspection

Extract
short video

RegularpatrolUpdatedatabase

Paper
less!

4) Off-site inspection

Carefuljudge!

No
oversight

ScreenFor details, please see our website page “Maintenance/Inspection
Support Solution for Roadside Equipment.”
https://www.furukawa.co.jp/en/product/development/infra/
maintenance.html■ Infrastructure Laser , a surface treatment solution for infrastructure structures
TM

Infrastructure LaserTM is a surface treatment solution for infrastructure structures thatcombines digital technology with laser technology cultivated in the area of industrial
lasers. In contrast to conventional methods, the use of lasers means that grinding
materials and other materials are not discharged. With this, our aim is to reduce
environmental impacts and improve occupational health, thereby improving theefficiency of infrastructure maintenance work.
For details, please refer to our company website “Surface Treatment Solutions for Infrastructure Structures.”https://www.furukawa.co.jp/infra-laser/ (Only available in Japanese) aunched Infrastructure Laser , a new brand for our businessL
involving surface treatment solutions for infrastructure structures
TM

Contribution to measures against the aging of infrastructure structures
through the application of technology cultivated for industrial lasers
https://www.furukawa.co.jp/release/2022/kenkai_20221130.html(Only available in Japanese)

Infrastructure Laser Lab experiment spaceI nfrastructure Laser Lab established as a base for the co-creationof surface treatment solutions for infrastructure structures

Contribution to the increased efficiency of infrastructure maintenance
operations through new co-creation sites
https://www.furukawa.co.jp/release/2023/dev_20230126.html(Only available in Japanese)■ Tellumino, a detection solutions for internal medical devices
In the life sciences field, our company is developing new solutions using optical (Photonics)
technology based on the key phrase “find with light, measure with light, and heat with light.”
For example, “Tellumino” is a new technology that enables users to visually confirm thelocation of implantable medical devices from outside the body. Combined with existing
medical device manufacturers’ CV ports, usage is safer than ever with safety and security
provided for both patients and healthcare professionals by “Luminous CV ports.”
For details, please see our website page “Detection solutions for internal medical devices.”
https://www.furukawa.co.jp/en/product/development/lifescience/tellumino.html

Luminous CV port

■ New solutions in the space sector
In terms of new business areas, we are currently driving
further forward with our expansion into the space sector.
Utilizing Photonics technologies such as optical fiber
cables and fiber lasers, heat dissipation technologies
such as heat pipes, power supply technologies, andcomprehensive technologies related to design andmanufacturing (which we have cultivated over many yearsof research and development), we are working to provide
new solutions for the miniaturization of equipment in thespace sector, as well as for increased speeds and higher
capacities when it comes to communications.
 ocietal collaboration lectures and joint research conducted in theS
space sector by Furukawa Electric and the University of Tokyo“Creating a Business Ecosystem for Small and Micro Satellites” (Course
Chair: Professor Shinichi Nakasuka)
https://www.furukawa.co.jp/release/2023/dev_20230315.html (Only available in Japanese)
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023049

About Furukawa Electric Group

Material issues of Revenue Opportunities

Our group currently operates research laboratories
in Japan and overseas. Our overseas facilities include
OFS Laboratories, LLC, Furukawa Electric Institute ofTechnology Ltd. (FETI), SuperPower Inc. and Silicon
Valley Innovation Laboratories, Furukawa Electric (SVIL).
Along with advancing digitalization through the Digital

Transformation & Innovation Center, we are working
to strengthen the marketing and incubation functions
through the Social Design & New Business Development
Department and are actively promoting the creation of
new businesses.

For details, please see the “R&D Laboratories” on Furukawa Electric’s website. https://www.furukawa.co.jp/en/rd/profile/

Network of Japan

Yokohama

Hiratsuka

SuperPower(United States:
Superconducting)

Nikko

FETI
(Hungary: Simulation
technologies)

ImaichiHead Oﬃce

Strategic Planning Department

Mie

Shiga

(Yokohama・Hiratsuka)(Yokohama・Chiba・Hiratsuka・Nikko・Shiga)

Photonics Laboratory(Yokohama・Chiba・Hiratsuka・Mie)

Material Laboratory(Yokohama・Chiba・Hiratsuka・Nikko・Imaichi)

Superconducting Products Department(Nikko)Intellectual Property Department(Yokohama・Chiba・Hiratsuka・Shiga)

Strategy Division
Digital Transformation & Innovation Center(Head Oﬃce・Yokohama)

Global Marketing Sales Division
SVIL(United States: Openinnovation)

Social Design & New Business Development Department(Head Oﬃce・Yokohama・Chiba・Hiratsuka)

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

19.2%

FY2022 Total

Functional
Products

23.3

9.3%

billion yen

Electronics &Automotive Systems

20.3%

For details on R&D activities by segment, please refer to the section
titled “6 [Research and Development Activities]” on pages 50-53 of the
201st Annual Securities Report.

https://www.furukawa.co.jp/en/ir/library/sr/pdf/20230828_
annual-securities-report.pdf“Open, Agile, Innovative” and “Building partnerships with various stakeholders”

ResultTarget: Sustainability Indicator

FY2021

FY2022

FY2022

FY2023

FY2025R&D expense growth rate for new
businesses (compared to FY2021)(100%)

116%

115%

125%

125%

Environmentally friendly products
Environmentally friendly products and “e-Friendly” accreditation system
Our Group defines environmentally friendly products as products (andservices) that contribute to reducing environmental impacts or which havepositive effects on the environment throughout the entire product lifecycle.
The “e-Friendly” environmental mark is displayed on product exteriors and in
catalogs to indicate that the products in question are environmentally friendly
products.

e-Friendly markCategories of environmentally friendly products
The Group’s environmentally friendly products fall under one of the following four categories.
Category

Description

Prevention of global
warming

Products that have the function of reducing greenhouse gas emissions or contributing to their absorption or fixation

Zero emissions

Products using recycled materials, products designed to facilitate recycling of components, products that reduce the amount of waste
by using materials and designs that facilitate volume reduction, and products with common designs for components and products

Environmentally sensitive
substance-free

Products that do not increase the use of ozone-depleting substances in the manufacturing process, that contain hazardous
substances in the product below the specified value, and that do not generate hazardous substances above the specified value
during use and disposal

Saving of resources

A product that is resource-saving overall due to reduced use of raw materials and parts, reduced use of scarce resources, improved
product life, easier maintenance of parts and products, and reduced use of resources for packaging materials

For details, please see our website page “Environmentally friendly products” https://furukawaelectric.disclosure.site/en/themes/102

Reorganization of Laboratories
In order to accelerate research and developmentin the converging areas of information, energy andmobility as outlined in Vision 2030, we reorganized
our laboratories effective as of April 1, 2023. With
the goal of contributing to business and creating
new businesses through the further deepening andleveraging of our core technologies, and to further
strengthen our efforts when it comes to addressing
social issues such as carbon neutrality, we have madechanges to our research organizations, going froman arrangement where our research organizations
correspond to our existing business segments, to

Group

51.2%

Sustainable Technology Laboratory
Electronics Laboratory

050

Material issues

Infrastructure
Services andDevelopment, etc.

Research & Development Division(Head Oﬃce・Yokohama)

TOPICS

We set the “R&D expense growth rate for new businesses(compared to FY2021)” as a sustainability indicator when it
comes to the items “Open, Agile, Innovative” and “Building
partnerships with various stakeholders,” which constitutematerial issues of revenue opportunities aimed at creating
businesses that solve social issues. Having done that, we areaiming for a sustainability target of 125% for FY2025.
In FY2022, R&D expenses increased 12.3% from the previous
year to 23,324 million yen, with new products and businesses
being developed in each segment. In FY2022, the R&D expense
growth rate for new businesses (compared to FY2021) was
116%, meaning that we achieved our target of 115%.
Indicators and targets

Hiratsuka

Corporate Information/Data

Ratio of R&D Investment by Our Group Segment

Indicator

Chiba
OFS Laboratories(United States:
Optical ﬁber)

Management Foundation

R&D Investment

R&D and new business creation activities

Global Network

Management Strategy

an arrangement where our research organizations
correspond to our technical fields. This reorganization
has resulted in an arrangement comprised of four
laboratories, which includes our newly established
Material Laboratory (which consolidates functions
related to metals and polymers, our core technologies),along with the Sustainable Technology Laboratory, theElectronics Laboratory, and the Photonics Laboratory.
We will accelerate business growth and new businesscreation by developing technologies that are essential
to achieving Vision 2030.

We set the “sales ratio of environmental-friendly
products” as a sustainability indicator for the material
issues of revenue opportunities of “Creating businesses
that solve social issues and Creating environmentalIndicators and targets

Material issues

friendly products businesses.” We are aiming for asustainability target of 70% for FY2025. In terms of
FY2022 results, that figure was at 65.0%, meaning that
we achieved our target of 64%.

“Creating businesses that solve social issues/Creating environment-friendly businesses”

Indicator: Sustainability Indicator

Group

Sales ratio of environmentalfriendly products

ResultTargetFY2021

FY2022

FY2022

FY2023

FY2025

61.9%

65.0%

64%

66%

70%

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

051

About Furukawa Electric Group

Material issues of Revenue Opportunities

Management Strategy

Management Foundation

Corporate Information/DataIntellectual Property
Intellectual Property Strategy of Furukawa Electric Group
Furukawa Electric Group has positioned intellectual
property such as patent and know-how, and intellectual
assets that are our strengths including human assets,organizational capabilities and customer network, as
important management resources. To enhance utilizationof them, we have formulated our Group’s basic policy
with the following three pillars.We promote group andglobal intellectual property activities by integrating
business, R&D, and intellectual property.

(ii) Activities for Chance Maximization
We seek new business fields and business models
through IP Landscaping, which analyzes the competitiveenvironment and market environment including
intellectual property information of our own and othercompanies.
In order to realize a leap forward through the creationof businesses that solve social issues, we will promote
the use of IP landscapes in businesses that support
next-generation infrastructure and environmentallyfriendly businesses while supporting the development offoundations for the creation of new businesses toward2030.

Run a cycle* that starts from analysis utilization of intellectual property(analysis <--> utilization -> creation -> protection), and formulate/implement
Open and Closed strategies to reinforce business strategies.

Stabilizing business by reducing
intellectual property risks

Identify four categories of risks, which are infringement risk, technology
outflow risk, contract risk, and counterfeit risk, as frequent risks with asignificant impact, and continuously reduce such risks to stabilize business.

*1. The basic concept of promoting intellectual property management:In order to enhance our business, we implement intellectual property strategies for our unique differentiating technologies and run a cycle starting from the utilization of
intellectual property.

Based on (1) to (3) above, we are working from the two
major perspectives of risk minimization and chance(i) Risk minimization
We minimize business risks by protecting our unique
technologies that differentiate our products from otherswith intellectual property rights and technical know-how.
In the areas of information, energy, and mobility, wedevelop and thoroughly use the intellectual property
portfolio on the basis of detailed competitor analysis
in order to grow by enhancing businesses that solve
social issues. We also support maximizing the revenueof existing businesses with a focus on capital efficiency
toward 2025.

maximization to realize the Furukawa Electric Group
Vision 2030 and achieve the SDGs.

Number of domestic intellectual property rights held
Research

10% 509
Other businessdivisions

34% 1,733

Total

5,106
Automotive
productsPower

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Material issues

A

Apply Risk
Minimization
Approach

B

Existing

New“Open, Agile, Innovative” and “Building partnerships with various stakeholders”

Indicator

ResultIP landscape implementation rate for businessenhancement and new business creation themes*1

Group

TargetFY2021

FY2022

FY2022

FY2023

FY2025

17%

40%

30%

45%

100%*2*1. The business reinforcing and new business creating themes include: i) maximizing the profitability of existing business (e.g., fiber optic cables, power cable systems)with a focus on capital efficiency toward 2025; and ii) establishing a foundation for creating new business (e.g., green LP gas) by 2030.
*2. This means that all projects with respect to the business reinforcing and/or new business creating themes set as of 2022 have been implemented.

Number of foreign rights held

Number of rights held in JapanAT and functional
plastics

5,000

13% 693■Patents ■Designs ■Trademarks ■Utility models

6,000

4,500
4,000
3,500
3,000

4,000

2,500

10% 400
Fiber cable

0

8% 315
Total

3,893

Power

1% 52
AT and functional
plastics

22% 841

2,000
1,500

2,000
1,000

■Patents ■ Designs ■Trademarks ■ Utility models(Cases)3,000

Other businessdivisions

20% 790

Domains to be
reinforced under the2025 Mid-term Plan

Indicators and targets

4% 183

Research

Automotive
products

D

Products(Cases)Number of foreign intellectual property rights held

39% 1,495

C

Fiber cable

10% 510

Expand the intellectual property portfolio052

and business strategies to create new value andacquire revenue opportunities.

: Sustainability Indicator

29% 1,478
Approximately half of the intellectual property
rights (patent rights, utility model rights,
design rights, and trademark rights) held by
the Company comprises a portfolio of opticalfiber cables (Optical Fiber and Cable ProductsDiv.), power cable systems (Power Cable Div.),
wire harnesses (Automotive Products Div.), andtape for semiconductor manufacturing (AT &Functional Plastics Div.). In these businesses,
we will utilize intellectual property through theOpen and Close strategy and stabilize businessexecution by reducing intellectual property risks.

We have been expanding our intellectual property
portfolio and reducing business risks in domain
A of Ansoff’s growth matrix. Going forward, we
will put more focus on business reinforcing and/or new business creating themes in the otherthree domains B to D. We will use IP landscaping
to reinforce our ability to formulate management

Existing

3

Utilizing intellectual assets
with Open & Closed strategies

1

Implementation of IP landscaping

Markets2

Reinforce management and business strategy planning capabilities by IP
Landscaping that incorporates, analyses and utilizes intellectual property
information into strategy planning processes.

New

1

Reinforcing management andbusiness strategy planningcapabilities by IP Landscaping

Activities for Chance
Maximization

New businesses to berealized by 2030

Our basic policy consists of the following three pillars:

1,000
500
2017

2018

2019

2020

2021

2022 (FY)

0

2017

2018

2019

2020

2022 (FY)2021Intellectual property (patent) data

Furukawa
ElectricUnits

FY2018FY2019FY2020

FY2021

FY2022

Number of patents held in Japan

Patents

4,605

4,523

4,388

4,423

4,364

Number of foreign patents heldPatents

2,712

2,910

2,976

3,160

3,225

* The increase or decrease in the number of patents includes the results of periodic update of inventories of patents held.

For details, please see the “Intellectual Property Report” on Furukawa Electric's website. https://www.furukawa.co.jp/en/rd/ip-report/

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

053

About Furukawa Electric GroupDX

Digital Transformation (DX) of
Furukawa Electric GroupIn anticipation of the societal changes leading up to 2030,
we are committed to enhancing our corporate value by leveraging digital technologies
to revolutionize our business operations and work practices.
■To Go about Increasing Our Corporate Value...
• We will go beyond the “smiling-face curve” phenomenon and take a wider view of the value chain.
• We will, based on the digitalization and data conversion taking place at factories, promote company-wide data
sharing and go about working to ensure greater sophistication when it comes to Monozukuri DX (in terms ofimprovements to quality, productivity, maintainability, etc.) and when it comes to factory management.
• We will accelerate the development of new materials using AI.
• We will pursue a New DX Business for Kotozukuri (involving the identification of what customers actually want to dowith their products) as we take aim at advancement into service and maintenance.
Pursuit by digital twins and deepening of technology to realize it

Value
innovation

Knowledge database
Natural language
processing

Remote support

Process
innovation

Visualinspection

Manyprojects

Promotion ofcomprehensive
efficiency of facilities

Simple replacementof human work

Kotozukuri DX
New DX BusinessPhysical condition
prediction

Alerting

SafetyPrevention
Technology transfer

Material design

Kotozukuri DX
Services, usage of data

Optimal value
suggestion

Monozukuri DX
Improving the efficiencyof manufacturing

Simulation

Attribution
analysis

Forecast

Automatic
control andprevention

Solutions Subject to Focus•S olutions when it comes to image-related
judgements based on visual inspections•S olutions for quality improvements achieved throughimage analysis•S olutions when it comes to forecasts ofcharacteristics using data and prescription
proposals•S olutions for streamlining the development ofmaterials through Materials Informatics•S olutions for data analysis foundations in productdevelopment•S olutions for the detection of abnormalities inequipment and processes•S olutions for manufacturing process optimization

With regard to business transformation, we will aim
to improve upon business management abilities(management abilities) marked by adaptability whenit comes to environmental changes and work to ensure
digitalization within each layer of our hierarchy so that
we can make the acceleration of management decisions
a reality when it comes to the entirety of our business.
When it comes to promoting this kind of data utilization,
it is essential for us to establish data and environments
serving as the foundation for that. Since the introductionof SAP, we have seen the quality and quantity of data
increasing as production planning and management
systems have been updated and as data acquisition has
been expanded through SCADA. However, we are still
unable to say that sharing and daily utilization taking

place across sites and organizations are at sufficientlevels. We have established a “foundation for data
integration” which serves to centrally manage theaccumulation and analysis of data collected in each area
throughout the entire company. In doing this, we areworking to ensure that the consolidation of data therein
and its utilization take root throughout the company.
In order to keep pace with the trend of accelerating thedevelopment and business use of AI, we will strengthen
the capabilities of our specialized units, strengthen
our efforts to raise digital user literacy throughout thecompany, and accelerate human resource development
serving to embody AI and data utilization (meaningraising the level of all staff).

Acceleration of Cycles whereby Business Decision-making Takes Place Based on the Ascertaining of Results and Forecasts

Technology
deepening

Support for Decisions
Made in Response to Changes

Management
layerManagement
Visualization

Planning

Business planning

Planning
layer

Expected attainment
Recovery plan

■Make Full Use of Digital Technologies to Transform Businesses and Work Styles
systems, and business systems.
In order to strengthen functions serving as core of
When it comes to strengthening AI and IoT solutions,promotion of DX in our Group, we established thewe have implemented the following initiatives. When it
Digital Transformation & Innovation Center (DXIC)
comes to important solutions, we will establish “digital
through the integration of the existing Digital Innovation
solution models” involving the bringing together of theCenter and the ICT Strategy Planning Department. We
elements of data collection, storage, processing andare undertaking the integration of the planning andutilization and will go about making quick delivery todrafting of AI and IoT solutions, planning and drafting
business units a reality.
when it comes to Monozukuri DX, and the planning,
implementation, and operation of IT infrastructure , core
• Creation of solutions which involve the improvement of characteristics through AI image inspections and data
analysis (some introduced for mass production)• Building of database infrastructure relating to research data and manufacturing data
• Detection of abnormalities in equipment and processes and manufacturing process optimization• Streamlining of the development of materials through Materials Informatics

054

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Corporate Information/Data

To Meet Growing Needs when it Comes to Solving Business Challenges

Existing Solutions

Transformational
areasManagement Foundation

Develop Digital Core Technologies which Contribute to the Solving of Business Challenges and Provide Solutions in a
Timely Manner

Furukawa Electricʼs DX Vision

Operationalinnovation

Management Strategy

Plan and prospect management
Maintenance plans and expected orders

Data
collection

Planning
layer

Manufacturing Operational
management
Order results management, traceability, and quality management instructions
layer

Production and order results management

Collection and management ofoperation-related and site-related information•Data on equipment and manufacturing conditions•Movement of people and things•Inspection and measurement results•Automation•Implementation ofrobotics

Edge layer

Operational
management
layer

Edge layer• Results-oriented recipient establishedthrough introduction of SAP• Promotion of the capturing of results andthe promotion of planning-oriented
implementation of IT• Revamping of production planning,
results and cost management based on
IT renewal deadlines for factories• Promotion of data utilization through the
integrated development of data
infrastructure• Reduction of investments throughstandard packaged solutions• Promotion of improvement of
productivity when it comes to the active
use of solutions such as IoT implementation and AI along with the accelerationof feedback

TOPICS
Recognized as a DX-certified operator by the Ministry of Economy, Trade and Industry- Received positive assessment for the development of a system
based on a DX Vision, the leveraging of digital technologies,
and other elements https://www.furukawa.co.jp/release/2023/kei_20230613.html(Only available in Japanese)

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

055

About Furukawa Electric Group

Directors and other officers

Management Strategy

Management Foundation

Corporate Information/Data

Furukawa Electric’s Directors and other officers
Directors (as of June 23, 2023)
Keiichi Kobayashi
Chairman of the Board
Director
Tenure as Director: 8 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Nominating/Compensation
Committee: 88.9% (8/9)

Hideya Moridaira
President
Representative Director
Tenure as Director: 1 years
Meeting attendance (FY2022)
Board of Directors:
100% (13/13)

Osamu Tsukamoto
Director (Outside, part-time)
Tenure as Director: 10 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Nominating/Compensation
Committee: 100% (9/9)

Takashi Tsukamoto
Director (Outside, part-time)
Tenure as Director: 2 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Nominating/Compensation
Committee: 100% (9/9)

Yoshiro Miyokawa
Director (Outside, part-time)
Tenure as Director: 4 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Nominating/Compensation
Committee: 100% (9/9)

Yukiko Yabu
Director (Outside, part-time)
Tenure as Director: 4 years
Meeting attendance (FY2022)
Board of Directors:
94.1% (16/17)
Nominating/Compensation
Committee: 100% (9/9)

Tamotsu Saito
Director (Outside, part-time)
Tenure as Director: 2 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Nominating/Compensation
Committee: 100% (9/9)

056

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Satoshi Miyamoto
April 1985 Joined Furukawa Electric Co., Ltd.
April 2014 Corporate Vice President and General Manager of Copper& High Performance Material Products Division
April 2015 Corporate Senior Vice President, Advisor of Automotive
Electronics Material Business, and General Manager of
Copper & High Performance Material Products Division
June 2015 Director and Corporate Senior Vice President, Advisor ofAutomotive Electronics Material Business, and General
Manager of Copper & High Performance Material Products
Division
April 2016 Representative Director and Corporate Executive Vice
President, General Manager of Global Marketing Sales
Division

April 2017 President and Representative Director
April 2023 Chairman and Director (present post)

April 1990 Joined Furukawa Electric Co., Ltd.
March 2011 Manager of Strategic Planning Group, Intellectual Property
Department
April 2013 Assistant Section Chief of Corporate Planning Section,
Strategy Division
April 2014 Section Chief of Corporate Planning Section, Strategy
Division
April 2016 General Manager of Planning & Administration
Department, Communications Solutions Division
April 2017 Deputy General Manager of Communications Solutions
Division, General Manager of Planning & Administration
Department (concurrent posts)
Feb. 2020 General Manager of Optical Fiber & Cable Products
Division in Communications Solutions Division

April 2020 Corporate Vice President, General Manager of OpticalFiber & Cable Products Division in Communications
Solutions Division
April 2021 Corporate Vice President, General Manager ofCommunications Solutions Division, General Manager of
Optical Fiber & Cable Products Division (concurrent posts)
May 2021 Corporate Vice President, General Manager ofCommunications Solutions Division
April 2022 Corporate Senior Vice President, General Manager ofCommunications Solutions Division
June 2022 Director and Corporate Senior Vice President, General
Manager of Communications Solutions Division
April 2023 President and Representative Director (present post)

April 1977 Joined the Ministry of International Trade and Industry(currently Ministry of Economy, Trade and Industry)
July 2003 Deputy Director-General for Regional Economic andIndustrial Policy Group, and Agency for Natural Resources
and Energy
June 2004 Director-General for Manufacturing Industries Bureau
July 2006 Deputy Director-General for Technology Policy
Coordination
July 2008 Director-General, Kanto Bureau for Economy, Trade andIndustry
July 2009 Director-General for Regional Economic and Industrial
PolicyJuly 2010 Retire from office
Oct. 2010 Distinguished Professor of Tokyo University of Science
Advisor of Furukawa Electric Co., Ltd. (part-time)
June 2013 Director (Outside) of Furukawa Electric Co., Ltd. (present
post)
March 2014 Retire from Distinguished Professor of Tokyo University of
Science
June 2014 President of Japan Coal Energy Center (currently JAPANCARBON FRONTIER ORGANIZATION, present post)

April 1974 Joined The Dai-Ichi Kangyo Bank., Ltd. (currently Mizuho
Bank, Ltd.)
April 2002 Executive Officer/General Manager of Human Resources
Division of Mizuho Corporate Bank, Ltd. (currently Mizuho
Bank, Ltd.)March 2003 Managing Executive Officer/Head of Risk Management
Group and Head of Human Resources Group of Mizuho
Financial Group, Inc.
April 2004 Managing Executive Officer/Head of Europe, Middle East
and Africa of Mizuho Corporate Bank, Ltd.
March 2006 Managing Director/Chief Strategy Officer and Chief
Financial Officer of Mizuho Corporate Bank, Ltd.
April 2007 Deputy President of Mizuho Corporate Bank, Ltd.
April 2008 Deputy President-Executive Officer/Head of Financial
Control and Accounting Group of Mizuho Financial Group,
Inc.

June 2008 Deputy President/Head of Financial Control andAccounting Group of Mizuho Financial Group, Inc.
April 2009 President & CEO of Mizuho Financial Group, Inc.
June 2011 Chairman of Mizuho Financial Group, Inc. and President &CEO of Mizuho Bank, Ltd.
July 2013 Chairman of Mizuho Financial Group, Inc. and Chairman ofMizuho Bank, Ltd.
Nov. 2013 Chairman of Mizuho Financial Group, Inc.
April 2014 Senior Advisor of Mizuho Financial Group
April 2017 Honorary Advisor of Mizuho Financial Group
June 2017 Outside Audit & Supervisory Board Member of Furukawa
Electric Co., Ltd.
June 2021 Director (Outside) of Furukawa Electric Co., Ltd. (present
post)
July 2023 Senior Advisor of Mizuho Financial Group, Inc. (present
post)

April 1975 Joined Yamanouchi Pharmaceutical Co., Ltd. (currently
Astellas Pharma Inc.)
Jan. 2003 General Manager, Business Process Innovation Promotion
Department, Yamanouchi Pharmaceutical
Sept. 2004 Leader, Integration Secretariat, Merger Preparatory
Committee, Group Strategy Planning Department,
Yamanouchi Pharmaceutical
April 2005 General Manager, Integration Promotion Department,
Astellas Pharma Inc.
Sept. 2005 Executive Officer and General Manager, Business
Innovation Department, Astellas Pharma Inc.
April 2006 Executive Officer and General Manager, Human Resources
Department, Astellas Pharma Inc.

April 2008 Executive Officer and Chief Administrative Officer, Astellas
Pharma Inc.
June 2008 Senior Executive Officer and Chief Administrative Officer,
Astellas Pharma Inc.
June 2011 Vice President, Executive Officer and Chief Administrative
Officer, Astellas Pharma Inc.
June 2013 Representative Director & Vice President, Chief
Administrative Officer, and Chief Compliance Officer,
Astellas Pharma Inc.
June 2017 Retired from Astellas Pharma Inc.
June 2019 Director (Outside) of Furukawa Electric Co., Ltd. (present
post)

April 1981 Joined Matsushita Electric Industrial Co., Ltd. (currently
Panasonic Holdings Corporation)
Jan. 2006 Director of Lifestyle Value Research Laboratory, R&D
Headquarters, Home Appliances Company, Matsushita
Electric Industrial Co., Ltd.
Jan. 2011 Director of Global Consumer Research Center, Corporate
Brand Strategy Division, Panasonic Holdings Corporation
April 2012 Director of Consumer Research Center, Global Consumer
Marketing Sector, Panasonic Holdings Corporation
April 2013 Director and Group Manager responsible for consumer
research at the Global Marketing Planning Center,
Appliances Company, Panasonic Holdings Corporation

March 2014
June 2014
June 2015
June 2016

April 1975 Joined Ishikawajima-Harima Heavy Industries Co., Ltd(currently IHI Corporation)
June 2006 Executive Officer, Vice President of Aero-Engine & Space
Operations of Ishikawajima-Harima Heavy Industries Co.,
Ltd.
Jan. 2008 Executive Officer, President of Aero-Engine & Space
Operations of IHI Corporation
April 2008 Director, Executive Officer, President of Aero-Engine &Space Operations of IHI Corporation
April 2009 Director, Managing Executive Officer, President of AeroEngine & Space Operations of IHI Corporation
April 2011 Executive Vice President of IHI Corporation

April 2012 President, Chief Executive Officer of IHI Corporation
April 2016 Chairman of the Board, Chief Executive Officer of IHI
Corporation
April 2017 Chairman of the Board of IHI Corporation
April 2020 Director of IHI Corporation
June 2020 Senior Counselor of IHI Corporation (present post)
June 2021 Director (Outside) of Furukawa Electric Co., Ltd. (present
post)

Director
Corporate Executive
Vice President,
General Manager,
Strategy Division
Tenure as Director: 4 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)

Retired from Panasonic Holdings Corporation
Director (Outside) of DUSKIN CO., LTD.
Director (Outside) of TAKARA HOLDINGS INC.
Director (Outside) of DAIWA HOUSE INDUSTRY CO., LTD.
(present post)
June 2019 Director (Outside) of Furukawa Electric Co., Ltd. (present
post)June 2021 Director (Outside), Audit & Supervisory Committee
Member of IBIDEN CO., LTD. (present post)

Akihiro Fukunaga
Director
Corporate SeniorVice President,
General Manager, Finance &Accounting Division
Tenure as Director: 4 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)

Yoshio Masutani
Director
Corporate SeniorVice President,
General Manager, Global
Marketing Sales Division
Tenure as Director: 1 years
Meeting attendance (FY2022)
Board of Directors:
100% (13/13)

Toshio Yanagi
Director
Corporate Vice President,
General Manager,
Risk Management Division
Tenure as Director: —Meeting attendance (FY2022)
Board of Directors:—

April 1984 Joined Ministry of International Trade and Industry(currently Ministry of Economy, Trade and Industry)
1999 Director, Information Disclosure Promotion Office,Public Relations Office, Minister’s Secretariat, Ministry ofInternational Trade and Industry
June 2001 Deputy Director, Japan External Trade Organization(JETRO) New York Center
June 2004 Director, Commodity Derivatives Division, Commerce andInformation Policy Bureau, Ministry of Economy, Trade andIndustry
April 2006 CANON INC. (exchange via Act on Personnel Exchange
Between the Government Sector and Private Enterprises)
June 2010 Counselor to the Commissioner of the Small and Medium
Enterprise Agency, Ministry of Economy, Trade andIndustry
April 2011 Councilor for Policy Evaluation, Minister’s Secretariat,
Ministry of Economy, Trade and Industry
Feb. 2012 Councilor, Minister’s Secretariat, Ministry of Economy,

Trade and Industry (Manufacturing Industries Bureau)
June 2013 Deputy Chairman, JETRO
Oct. 2015 Deputy Commissioner of the Small and Medium Enterprise
Agency, Ministry of Economy, Trade and Industry
June 2016 Commissioner of the Small and Medium Enterprise
Agency, Ministry of Economy, Trade and Industry
July 2017 Retired from Ministry of Economy, Trade and Industry
Nov. 2017 Advisor (full-time), Furukawa Electric Co., Ltd.
April 2018 Corporate Vice President, and General Manager of
Administration & CSR Division
April 2019 Corporate Senior Vice President, and General Manager of
Administration & CSR Division
June 2019 Director and Corporate Senior Vice President, and General
Manager of Administration & CSR Division
April 2021 Director and Corporate Senior Vice President, and General
Manager of Business Basis Transformation Division
April 2022 Director and Corporate Executive Vice President, andGeneral Manager of Strategy Division (present post)

April 1986 Joined Furukawa Electric Co., Ltd.
Nov. 2005 Senior Vice President and Chief Financial Officer of OFS
Fitel, LLC
Aug. 2009 Manager of Corporate Tax Section, Finance & Accounting
Department
Aug. 2011 Manager of Corporate Accounting Section, Finance &Accounting Department
June 2013 Manager of Corporate Accounting and Tax Section,
Finance & Accounting Department, Finance & Procurement
Division
Nov. 2013 General Manager of Global Group Management Office,Global Group Management Division

April 2016 General Manager of Finance & Accounting Department,
Finance & Procurement Division
April 2018 Corporate Vice President and General Manager of Global
Management Division
April 2019 Corporate Vice President and General Manager of Finance& Global Management Division
June 2019 Director and Corporate Vice President and General
Manager of Finance & Global Management Division
April 2021 Director and Corporate Senior Vice President and General
Manager of Finance & Global Management Division
April 2022 Director and Corporate Senior Vice President and General
Manager of Finance & Accounting Division (present post)

April 1989
July 1993
Oct. 1998
April 2011

Joined Okura & Co., Ltd.
Okura & Co. UK Ltd.
Joined Furukawa Electric Co., Ltd.
General Manager of Overseas Sales Department,
Communications Company
April 2013 General Manager of Overseas Sales Department,
Environment/Infrastructure Sales Division, Sales Marketing
Division
April 2015 General Manager of Overseas Sales Department, Global
Business Division, and General Manager of Overseas Sales
Department, Environment/Infrastructure Sales Division,
Sales Marketing Division
July 2015 Deputy General Manager of Copper Foil Division, andGeneral Manager of Sales Department, Copper Foil
Division

April 2017 General Manager of Planning & Administration
Department, Global Marketing Sales Division
April 2018 General Manager of Group Marketing Department, Global
Marketing Sales Division
April 2020 Corporate Vice President, General Manager of Business
Innovation Design Department, Global Marketing Sales
Division
April 2021 Corporate Vice President, Deputy General Manager
of Corporate Strategy & Direction Division, General
Manager of Social Design & New Business Development
Department, General Manager of OneF Mobility Business
Development Team
April 2022 Corporate Senior Vice President, General Manager of
Global Marketing Sales Division
June 2022 Director and Corporate Senior Vice President, General
Manager of Global Marketing Sales Division (present post)

April 1988 Joined Furukawa Electric Co., Ltd.
April 2003 Manager of Planning & Administration Unit, FITEL
Products DivisionFeb. 2008 Assistant Manager of Corporate Planning Department
April 2013 Senior Manager of Planning Unit, Copper Foil Division
April 2016 General Manager of Corporate Planning Department,
Strategy Division
April 2018 General Manager of Corporate Planning Department,
Strategy Division
April 2020 Corporate Vice President, General Manager of Copper Foil
Division, Functional Products Division

April 2021 Corporate Vice President, General Manager of Risk
Management Division
June 2023 Director and Corporate Vice President, General Manager
of Risk Management Division (present post)

July

Audit & Supervisory Board Members (as of June 23, 2023)
Nozomu Amano
Audit & Supervisory Board
Member (Full-time)
Tenure as Audit & Supervisory
Board Member: 5 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Audit & Supervisory Board
Meeting: 100% (9/9)

Masao Terauchi
Audit & Supervisory Board
Member (Full-time)
Tenure as Audit & Supervisory
Board Member: 1 years
Meeting attendance (FY2022)
Board of Directors:
100% (13/13)
Audit & Supervisory Board
Meeting: 100% (7/7)

Hiroyuki Ogiwara
Audit & Supervisory Board
Member (Full-time)
Tenure as Audit & Supervisory
Board Member: —Meeting attendance (FY2022)
Board of Directors:
100% (4/4)
Audit & Supervisory Board
Meeting: —April 1980
June 2004
June 2008
March 2009
June 2010
April 2012
April 2013
April 2014

Joined Furukawa Electric Co., Ltd.
General Manager of Legal Department
General Manager of HR & Administration Department
General Manager of HR & Administration Department
and General Manager of Corporate Business Research
Department
Director and Corporate Vice President, CSO
Director and Corporate Vice President, CSRO
Director and Corporate Vice President, General Manager
of Administration & CSR Division
Director and Corporate Senior Vice President, General
Manager of Administration & CSR Division

April 2018 Director
June 2018 Audit & Supervisory Board Member (present post)

April 1984 Joined Furukawa Electric Co., Ltd.
Oct. 2006 Production Control Group Manager of Semiconductor
Devices Department, FITEL Products Division,Communications Company
May 2009 Assistant Manager of Procurement Department
June 2009 General Manager of Procurement Department
April 2013 Assistant Manager of Planning Unit, Electric Conductor
Division
June 2013 President of PT Tembaga Mulia Semanan Tbk
April 2017 Corporate Vice President, President of PT Tembaga Mulia
Semanan Tbk

June 2017 Corporate Vice President, General Manager of Electric
Conductor Division, Electronics Component Materials
Division
April 2018 Corporate Vice President, General Manager of Electric
Conductor Division, Electronics Component Division
April 2020 Corporate Vice President, General Manager of Electronics
Component Materials Division
April 2022 Advisor of Electronics Component Materials Division
June 2022 Audit & Supervisory Board Member (full-time) (present
post)

April 1983
Dec. 2003
Nov. 2005
June 2009
April 2013

Manager of Finance & Procurement Division and General
Manager of Global Group Management Division
April 2018 Director and Corporate Executive Vice President, General
Manager of Finance & Procurement Division
April 2019 Representative Director and Corporate Senior Executive
Vice President, Chief of Transformation Division
April 2021 Representative Director and Corporate Senior Executive
Vice President, General Manager of Corporate Strategy &Direction Division
April 2022 Director and Corporate Senior Executive Vice President
June 2022 Corporate Senior Executive Vice President
April 2023 Advisor
June 2023 Audit & Supervisory Board Member (full-time) (present
post)

April 2014
June 2014
April 2016
April 2017

Joined Furukawa Electric Co., Ltd.
Vice President and Chief Financial Officer of OFS Fitel, LLC
Manager of Tax & Accounting Department
General Manager of Finance & Accounting Department
General Manager of Finance & Accounting Department,
Finance & Procurement DivisionCorporate Vice President General Manager of Finance &Procurement Division
Director and Corporate Vice President, General Manager
of Finance & Procurement Division
Director and Corporate Senior Vice President, General
Manager of Finance & Procurement Division and General
Manager of Global Group Management Division
Director and Corporate Executive Vice President, General

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

057

About Furukawa Electric Group

Directors and other officers/Message from Outside Directors

Management Strategy

Management Foundation

Corporate Information/Data

Message from Outside Directors
Kunihiko Sakai
Audit & Supervisory Board
Member (Outside, part-time)
Tenure as Audit & Supervisory
Board Member: 5 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Audit & Supervisory Board
Meeting: 100% (9/9)

Sayaka Sumida
Audit & Supervisory Board
Member (Outside, part-time)
Tenure as Audit & Supervisory
Board Member: 3 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Audit & Supervisory Board
Meeting: 100% (9/9)

Takao Shiomi
Audit & Supervisory Board
Member (Outside, part-time)
Tenure as Audit & Supervisory
Board Member: 2 years
Meeting attendance (FY2022)
Board of Directors:
100% (17/17)
Audit & Supervisory Board
Meeting: 100% (9/9)

April 1979 Public Prosecutor, Tokyo District Public Prosecutors Office
July 1998 Senior Counsel, Minister’s Secretariat of Ministry ofJustice
April 2000 Public Prosecutor of Tokyo High Public Prosecutors Officeand Assistant Director, Public Security Department ofTokyo District Public Prosecutors Office
April 2002 Director, the United Nations Asia and Far East Institute for
the Prevention of Crime and the Treatment of Offenders
July 2005 Director, Trial Department of Tokyo High Public
Prosecutors Office
July 2006 Public Prosecutor, Supreme Public Prosecutors Office
June 2007 Chief Public Prosecutor, Nara District Public Prosecutors
OfficeJuly 2008 Director of General Affairs Department, Supreme Public
Prosecutors Office
June 2010 Director, Lay Judge Trial Department of Supreme Public
Prosecutors’Office

Oct. 2010 Chief Public Prosecutor of Nagoya District Public
Prosecutors Office
June 2012 President, Research and Training Institute, Ministry ofJustice
July 2014 Superintending Prosecutor, Takamatsu District Public
Prosecutors Office
Sept. 2016 Superintending Prosecutor, Hiroshima District Public
Prosecutors Office
March 2017 Resigned Above
April 2017 Advisor Attorney, TMI Associates (present post)
June 2018 Audit & Supervisory Board Member (Outside) of Furukawa
Electric Co., Ltd. (present post)
June 2019 Director (Outside), Audit & Supervisory Committee
Member of HONDA MOTOR CO., LTD.
June 2021 Director (Outside) of HONDA MOTOR CO., LTD. (present
post)

Oct. 1984 Joined Asahi Accounting Company (currently, KPMG
AZSA LLC)
May 1988 Registered as Certified Public Accountant
May 2006 Partner, KPMG AZSA LLC
July 2010 Executive Board Member, Japanese Institute of Certified
Public Accountants
Feb. 2017 Business Accounting Council Member, Financial Services
AgencyMarch 2020 Resigned from KPMG AZSA LLC

June 2020 Audit & Supervisory Board Member (Outside) of The
Nisshin OilliO Group, Ltd. (present post)		
Audit & Supervisory Board Member (Outside) of Furukawa
Electric Co., Ltd. (present post)		Outside Director (Audit & Supervisory Committee
Member) of ADVANTEST CORPORATION (present post)

April 1975 Joined ITOCHU Corporation
April 2000 General Manager of Automotive Business Strategy Officeof ITOCHU Corporation
Feb. 2001 General Manager of Corporate Planning Department,
Finance/Real Estate/Insurance/Logistics Company of
ITOCHU Corporation
June 2004 Executive Officer and General Manager of Logistics
Division of ITOCHU Corporation
April 2005 Executive Officer and General Manager of Finance
Division of ITOCHU Corporation
June 2006 Managing Director, and President, Finance/Real Estate/
Insurance/Logistics Company of ITOCHU Corporation
May 2008 Retired from ITOCHU Corporation
June 2008 Executive Vice President and Representative Director of
Orient Corporation
March 2012 Retired from Orient Corporation

April 2012 Managing Executive Officer and President, Machinery
Company of ITOCHU Corporation
June 2012 Representative Director, Managing Executive Officer andPresident, Machinery Company of ITOCHU Corporation
April 2014 Representative Director, Senior Managing Executive
Officer and President, Machinery Company of ITOCHU
Corporation
March 2016 Retired from ITOCHU Corporation
April 2016 Managing Executive Officer of ISUZU MOTORS LIMITED
June 2016 Executive Vice President of ISUZU MOTORS LIMITED
June 2018 Retired from ISUZU MOTORS LIMITED
Aug. 2018 President, ITOCHU Corporate Pension Fund
June 2021 Audit & Supervisory Board Member (Outside) of Furukawa
Electric Co., Ltd. (present post)
Aug. 2021 Retired from President, ITOCHU Corporate Pension Fund

(Note) Meeting attendance (FY2022)• In fiscal 2022, 17 Board of Directors meetings and nine Audit & Supervisory Board meetings were held. We have a “Nominating/Compensation Committee” with a majority of the members being
Outside Directors to ensure objectivity and transparency regarding deliberation and decision procedure of nomination/compensation for directors and officers. In fiscal 2022, nine Committee
meetings were held.
• Mr. Hideya Moridaira, Mr. Yoshio Masutani and Mr. Masao Terauchi were newly elected at the 200th Annual Shareholders Meeting held on June 23, 2022. Therefore, their meeting attendance
numbers differ from those of other Directors or Audit & Supervisory Board Members. In addition, Mr. Hiroyuki Ogiwara resigned as of the 200th Annual Shareholders Meeting of June 23, 2022,
due to the expiration of his term of office. Therefore, he attended four Board of Directors meetings.

Corporate Vice Presidents and Senior Fellows, except Director(as of August 16, 2023)

Corporate
Senior Vice
Presidents

Corporate
Vice
Presidents

Senior
Fellows

058

Foad Shaikhzadeh

President, Furukawa Electric LatAm S.A (Brazil)

Ryoji Ono

General Manager, Functional Products Division

Shigenobu Abe

General Manager, Automotive Products Division

Toshihiko Ota

General Manager, Communications Solutions Division and General Manager, Next Generation Photonics Business Innovation Project

Takashi Yamamoto

General Manager, Electronics Component Material Division

Gyula Besztercey

Director, Furukawa Electric Institute of Technology Ltd. (Hungary) and Deputy General Manager, Research & Development Division

Toru Fukushima

General Manager, Sustainable Energy Succession Project Team and Deputy General Manager, Research & Development Division

Keiichiro Urakami

General Manager, Chubu Branch, Global Marketing Sales Division

Teruyoshi Uchida

General Manager, MONOZUKURI Innovation Division

Eiichi Nishimura

General Manager, Energy Infrastructure Division

Mami Masuda

General Manager, Corporate Sustainability Office and General Manager, Public Relations Department, Strategy Division

Kazunori Saka

General Manager, Kansai Branch, Global Marketing Sales Division

Akira Fujisaki

General Manager, Research & Development Division

Katashi Hanaya

General Manager, Business Transformation Team

Shozo Yano

General Manager, AT & Functional Plastics Division, Functional Products Division

Takaaki Sugii

Deputy General Manager, Strategy Division

Koji Kawano

General Manager, Sales Department, Global Marketing Sales Division

Yukitoshi Sawamoto

Managing Director, Furukawa (Thailand) Co., Ltd.

Shinji Asao

Deputy General Manager, Communications Solutions Division

Akihiko Kasukawa

Photonics Laboratory, Research & Development Division

Michio Okubo

General Manager, Intellectual Property Department, Research & Development Division

Hiromi Ohashi

Deputy General Manager, Next Generation Photonics Business Innovation Project

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

We look forward to the leadershipof new President Moridaira —who was appointed through afair and transparent process — in
implementing the business strategiesof the 2025 Mid-term Plan

Outside Director

Takashi Tsukamoto

About the New President and Representative Director
Miyokawa I feel that new President Moridaira, who waselected in April of this year, is a thoughtful person who
cooperates with those around him. He also has greatawareness and power of expression, and I feel that he is
the type of person who does what he says and has theability to coordinate and motivate people toward a goal.
And as a management leader, he carefully anticipates
the most worrisome aspects and risks in the future of ourGroup. As he implements reforms in our Group, I have highhopes for his leadership, which will change the perceptionsof employees, point them in the right direction, and bring
together the Group's strengths swiftly.
Tsukamoto Yes, that’s right. Although he has only
recently taken office, I feel that he is a wonderful leader
who can persuasively express ideas and opinions in his
own words. President Moridaira has a background in
the area of communications solutions, a core businessof our Group. While external expectations for this area
are extremely high, market trends are severe in addition
to issues such as factory productivity and operations,and addressing these issues is an urgent issue. I believethat overcoming all difficulties to nurture this businessas a core business will be the cornerstone of our Group’s
growth in the future. President Moridaira clearly has

Outside Director

Yoshiro Miyokawa

this awareness, and he is the ideal leader to strengthen
existing businesses, including this one, even given
difficult business environments. It is also noteworthy
that, based on his extensive experience overseas, he has
the knowledge needed to determine the appropriate
products and businesses to focus on in individual regions.
He has drawn a dynamic concept that takes advantageof regional characteristics on a world map, and we hopethat his global perspective will help us rebuild the Group’sbusiness foundation into an even stronger one.
Nomination Process for a New President by the
Nominating/Compensation Committee
Tsukamoto I recognize that the appointment of new
President Moridaira involved an extremely fair andtransparent process and discussion. The process of
nominating a new president began about three and a halfyears ago. We first discussed what an ideal president isin light of changes in the external environment, narrowed
down the list of candidates from internal personnel, andexamined appropriate training and guidance methods forcandidates with the support of external experts in orderto bridge the gaps between the abilities and aptitudes
required of a president.
The nomination process began in earnest in the fall of2021, when the list of candidates was narrowed down to
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

059

About Furukawa Electric Group

Message from Outside Directors

The appointment of the new president
involved an extremely fair and transparent
process and discussion

Outside Director Takashi Tsukamoto
In 1974, he joined Dai-Ichi Kangyo Bank (currently Mizuho Bank, Ltd.).
He served as a director in charge of ﬁnance and representative director ofMizuho Financial Group, Inc., and has provided useful recommendations
based on his extensive experience and knowledge of overall corporate
management, including finance and accounting. In 2017, he became an
Outside Audit & Supervisory Board Member of the Company, and in 2021,
he became an Outside Director of the Company.

just a few. Over the course of the following year, we held
three interviews with these candidates. Each candidate
presented his or her intentions to address our companyʼs
challenges and initiatives. Each was asked about his or
her mindset through candid and tough questions frommembers of the Nominating/Compensation Committee.
Following this process, at the end of 2022, it wasdetermined that President Moridaira was the most qualified
candidate. After formal decision-making, an externalannouncement was made at the beginning of 2023.
Miyokawa In addition to what Director Tsukamoto
said, a point worth mentioning is that the new president
was selected from multiple candidates based on thediverse perspectives and experiences of the Nominating/Compensation Committee members. At many Japanesecompanies, the president directly selects their successor.
However, our company determined the right person
for the job slowly through several interviews with themembers of the Nominating/Compensation Committee,
while also conducting external evaluations. We feelthat this process was highly transparent and impartial.
During the interviews, we were able to communicate not
only about the backgrounds and work experience of thecandidates but also about their hobbies and the people
they respect, thereby deepening our understanding ofeach candidate. President Moridaira has long experiencein the Intellectual Property Department, which makes
him a unique candidate.
Tsukamoto It was assumed to some extent that thetiming of the change in the president would be in the
middle of the mid-term plan period even before the startof the 2025 Mid-term Plan. Aiming to ensure continuity
in management even with a change during the four
year period of the 2025 Mid-term Plan, in addition to
President Moridaira, the other candidates were also
members who had participated in the discussion on

060

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

formulating the strategies for the 2025 Mid-term Plan.
Introduction of ESG-linked Remuneration in the
Nominating/Compensation Committee
Miyokawa ESG-linked remuneration was introduced
in July 2023. Climate change indicators were newly
incorporated into the remuneration determination process
for officers other than Outside Directors and Audit &Supervisory Board Members. First of all, in the field of
climate change — the most critical issue for our company— we have incorporated the rate of reduction rate forgreenhouse gas emissions (Scopes 1&2), a sustainability
indicator, into remuneration. Our company has long
been interested in green energy, but we believe thatincorporating climate change indicators as ESG-linked
remuneration into management evaluations will further
accelerate our efforts. We feel that the introduction of ESG
indicators in Directors’ and other officers’ remuneration
for the first time is a symbolic initiative in the promotion of
medium- to long-term sustainability.
Tsukamoto The introduction of ESG-linked remuneration
was based on the recognition of the necessity by boththe executive side and the Outside Director side. In
discussing ESG-linked remuneration, we first focused on
which fields of indicators should be incorporated into the
remuneration structure. In the social sector, for example,
employee engagement scores have been included as
one sustainability indicator since FY2022. However,as the initiative is still new, we lack the data internally,
and the prerequisites for evaluating the performanceof the indicator have not yet been established. It wastherefore not included this time. On the other hand, in theenvironmental field, the data and evaluation criteria areclear, and we have decided to incorporate these indicators
into remuneration. By incorporating climate change —an issue that our company must focus on in its ESG
management — into its remuneration indicators, I feel thatthe remuneration design is also persuasive externally.
In the actual introduction of ESG indicators, we initially
had difficulty selecting indicators, determining the target
period, and determining the criteria for evaluations dueto the current medium- to long-term incentives of the
remuneration system for Directors and other officers. We
decided to first introduce ESG indicators as short-term
performance-linked remuneration, and we will examine
incorporating them into long-term incentives in the future.
Investors expect corporate value creation and sustainablegrowth to be directly linked by sustainability management.
We are required to conceptualize and execute medium- tolong-term value creation stories that make the resolutionsof social issues central. In order to promote this, we willconsider increasing the ratio of ESG-linked remunerationand increasing social indicators such as employee
engagement indicators in the future. Although there arevarious ways to deploy this system, care must be taken
to avoid excessively increasing the weight of incentive

Management Strategy

remuneration and to focus on business issues and details
that need to be addressed.
Enhancing the Effectiveness of the Board of Directors
Miyokawa We believe that authority for individual
decision-making regarding the content of each businessand the execution of management plans should bedelegated to the executive side. At the same time,
it is important to spend considerable time on board
discussions when it comes to overall corporate strategy.
As an Outside Director, I am mindful of my outside
perspective, offer advice, ask precise questions, provide
opinions and ideas that do not come up in internal
discussions, and guide members on the executive side
to make decisions from more options. In the evaluationof the effectiveness of the Board of Directors, I express
my honest opinions, and I feel that the roles of Outside
Directors are functioning properly.
Tsukamoto “Effectiveness” in Japanese can also mean“efficiency,” but I believe that attention should be paid
to how “effectively” the Board of Directors fulfills its
objectives and role expectations. At our company, thecontents of the discussions at management meetings arealso available for outside officers to view on the database,so it is easy to see that a wide range of in-depth
discussions take place at those meetings. However, aboard meeting that performs roles overlapping with suchmanagement meetings is not effective. The primary roleof the Board of Directors is to engage in discussions witha different perspective, depth, and breadth than within
the company, to provide new awareness, to stimulate
chemical change, and to create new added value.
At our company’s Board of Directors meetings, Outside
Directors actively express their opinions, and the executiveside swiftly incorporates these opinions in action plans.
When Outside Directors express their opinions, often
directions and action plans are presented at the next
board meeting based on these opinions, and I feel that theeffectiveness of the Board of Directors is increasing.
Achievements in the First Year of the Mid-term Plan,
Challenges in the Second
Miyokawa The current mid-term plan depicts theGroup’s vision for 2030. From there, we established amanagement path for the 2025 Mid-term Plan from abackcasting perspective. This incorporates our recognitionof the issue of a lack of a backcasting perspective, areflection on the previous mid-term plan. In the past, midterm plans and management plans were formulated byaccumulating numerical targets. However, in the face ofintense changes in the external environment, the ability toappropriately anticipate and respond to future changes —in other words, a backcasting perspective — is essential.
The lack of planning and creation of new business models
was also a point of reflection on the previous mid-termManagement Foundation

Corporate Information/Data

The introduction of ESG indicators in Directors’
and other officers’ remuneration for the firsttime is a symbolic initiative in the promotion of
medium- to long-term sustainability

Outside Director Yoshiro Miyokawa
In 1975, he joined Yamanouchi Pharmaceutical Co., Ltd. (now Astellas
Pharma Inc.). He served as representative director and vice president, etc. of
Yamanouchi Pharmaceutical and provides useful recommendations based on
his extensive experience and knowledge regarding compliance and corporate
governance. He became an Outside Director of the Company in 2019.

plan. Although our company has four core technologies— metals, polymers, photonics, and high frequency —we have been unable to develop these technologies intobusinesses of a certain scale. However, technologies forcreating new businesses are emerging, such as bipolar
lead storage batteries that contribute to the utilizationof renewable energy, a Ramune Catalyst that creates
green LP gas using biogas derived from cow manure, andsubcutaneously implantable ports (luminous CV ports) for
injecting drugs in the field of life sciences. I believe thatthe direction of the 2025 Mid-term Plan efforts to nurturethese new businesses is appropriate. And if they take off,
they will be opportunities for growth for our company.
Tsukamoto Although we had expected from the beginningof the 2025 Mid-term Plan that the business environmentsfor our core businesses of automotive products andcommunications solutions would grow tougher, theconditions for FY2022 were even more severe than weassumed. These businesses need to be restructured toensure that they can generate revenue. However, it was ayear in which we were unable to fully implement measures
to deal with the external environments through changes in
productivity, marketing, and product mix. With regard to
the creation of new businesses, we have continued to invest
in the energy sector and R&D without restraint, despite
the difficult business environments. As Director Miyokawa
said, we are gradually seeing results. In FY2022, we soldtwo existing medium-sized businesses. Going forward,
we need to further dynamically advance our businessportfolio strategy. In order to achieve this, it is important
for the Board of Directors to further deepen discussions on
the selection and concentration of business areas and to
implement action swiftly. I hope that President Moridaira will
demonstrate his bold decision-making and execution skills
and implement strong business strategies for the future.

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About Furukawa Electric Group

Material issues of risks

Management Strategy

Management Foundation

Corporate Information/Data

Corporate Governance
Basic Views on Corporate Governance

Board of Directors

Based on the “Furukawa Electric Group Philosophy,”
Furukawa Electric and Furukawa Electric Group enhance
our management performance responding appropriately
to changes in the business and market environment
by prompt business decision making as well as withtransparency and fairness. At the same time, we ensure
sound management by developing and establishing aneffective internal control system. With these, we will
expand and develop our business on a sustainable basis
and increase our corporate value. Furthermore, we seek
to strengthen and enhance our corporate governance, in
accordance with the followings:

In light of its fiduciary responsibility and accountability
to shareholders, the Board of Directors of the Company
fulfills its responsibilities to promote sustainable corporate
growth and the increase of corporate value over the
medium-to-long-term, and enhance earnings power andcapital efficiency; and therefore, do the following:
1

Determination of corporate governance-related matters;

2

Establishment and amendment of business strategies andoversight of execution of such strategies and plans;

3

Setting capital allocation policy;

4

Appointment and removal of the Management including
Representative Director and Corporate Vice Presidents, anddetermination of the remuneration of them (including delegatingthese to Nominating/Compensation Committee);2

We consider interests of stakeholders including shareholders,and cooperate appropriately with them;53

We ensure appropriate information disclosure and transparency;

Establishment of an internal control system relating tocompliance and financial reporting and risk management
systems, and oversight of them;Decision on important business matters;

4

Given its fiduciary responsibility and accountability toshareholders, Board of Directors carries out effective oversightof management from objective standpoint, respecting theindependent Directors’ role for the oversight;

6
7

Others prescribed by the applicable laws and regulations etc.

5

We engage in constructive dialogue with shareholders who haveinvestment policies in accordance with interests of medium-tolong-term shareholders;

For further details, please see our corporate website.
https://www.furukawa.co.jp/company/pdf/policy.pdf

Discussion
and decision
Supervising

Executive Directors

Outside Directors

社長以下、本部長がAll 5 members are
independent.

5 members

President and other
取締役を兼務generalmanagers of
the corporate divisions
are concurrently
appointed as directors.

Audit & Supervisory
Board Members

All 3 members are
independent.

OutsideMeeting
Appoints

Appoints

Appoints

Audits account

11 Directors (5 members are outside and independent)

Submits
proposals
and reports

Audit & Supervisory Board

Audits

6 Audit & Supervisory Board Members(3 members are outside and independent)

Submits reports

Nominating / Compensation Appoints
Committee
Supervising

Submits
reports

Accounting
Auditors

Collaboration

AuditsSubmits
reports

7 Directors (5 members are outside)

Business
operation

President

Auditsaccount

Internal Audits

Submits reports(Auditing Department)

instructions

Risk Management
Committee

Collaboration

Sustainability
Committee

Management
Committee
Provides guidance

Monitors
Provides guidance

Headquarters
Strategy Div.
Risk Management Div.

Monitors
instructions

Communications Solutions Division

Operations

Optical Fiber and Cable Products Div. / FITEL Products Div. / Broadband Solutions Business Div.

Energy Infrastructure Division

Power Cable Div. / Industrial Cable & Power Cable Accessories Div.

Electronics Component Materials Division

Audit & Supervisory Board and each its member auditor
collect information about management under statutory
investigation authority and report and express theirviews to the board meetings and the management froman independent and objective standpoint as a fiduciaryto shareholders. Auditors ensure coordination withinternal audit department through regular meetings, andreport the policy, plan and result of auditing to the board
regularly.
Full-time auditors attend the meetings such as
Management Committee which decides major businessmatters, and they report information obtained from theseaudit activities to the part-time and outside auditors. We
strengthen our audit function by appointing an assistantstaff to the auditors who is dependent of management.
At present, the Audit & Supervisory Board consists of 6
members (3 members are outside and independent).
In fiscal 2022, nine Audit & Supervisory Board meetings
were held.

Nominating/Compensation Committee

6 members

Shareholders’Consults andCommits

Audit & Supervisory Board

Draw attention Make opinions

Corporate governance organization chart (As of June 23, 2023)

Corporate Governance System

Electric Conductor Div. / Copper & High Performance Material Products Div.

INTEGRATED REPORT 2023

11 members
5 members

Board of Directors

FURUKAWA ELECTRIC GROUP

Connect between the Outside
Directors and the Executive
Directors.

Board ofDirectors

In-house

Monitoring and supervising

062

Chairman of
the Board

At present, the Board of Directors of the Company
consists of 11 Directors, five of whom are Outside
Directors (all independent officers). The Board of
Directors is chaired by non-executive Chairman of theBoard who does not have representative rights.
In fiscal 2022, 17 Board of Directors meetings were
held and the Directors made important decisions on theexecution of operations, checked the progress of the(Only available in Japanese)

The Company adopted the current corporate
governance system (in the organizational form ofCompany with the Audit & Supervisory Board),
believing that the effectiveness of auditing Directors’
execution of duties is secured by institutionally
maintaining the independence of the Audit &Supervisory Board and its Members from the Boardof Directors, while ensuring their cooperation withAccounting Auditor and internal audit division.
Furthermore, to complement the supervisory functionof the Board of Directors, the Company established
Nominating/Compensation Committee.

(As of June 23, 2023)

Chairman

We secure the rights and equal treatment of shareholders;

Based on the “Basic Views on Corporate Governance,” weadopted the “Guidelines on Corporate Governance” as apolicy to enhance corporate governance.

Board of Directors and Audit & Supervisory Board

A position of non-executive
without the representative right.

1

Guideline on Corporate Governancemid-term management plan and the management goals,
such as the annual budget, and deliberated corporate
governance and other basic management matters.

Finance & Accounting Div.

The Nominating/Compensation Committee consists offive or more members selected from among the Directors
by the Board of Directors, with a majority of the members
being Outside Directors. The committee deliberates
succession plans for officers and the president/CEO,
officer compensation and other matters, aiming to ensure
objectivity and transparency regarding these matters andto enhance corporate governance.
At present, the Nominating/Compensation Committee
consists of seven members, five of whom, including theCommittee Chair, are Outside Directors.
During fiscal 2022, Nominating/Compensation
Committee met 9 times. The primary matters deliberated
at the Committee meetings were the management
execution system from April 2023 for Nomination andthe executive compensation system for Compensation.

MONOZUKURI
Innovation Div.
ものづくり改革本部

Research & Development Div. Global Marketing Sales Div.

Provides support and guidanceNominating/Compensation Committee(As of June 23, 2023)

Functional Products Division

AT & Functional Plastics Div. / Thermal Management Solution &Products Div. / Memory Disk Div. / Copper Foil Div.

Automotive Products Division

Subsidiaries andaffiliatedcompanies

7 directors

In-house Outside

Committee chair: Outside Director

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

063

About Furukawa Electric Group

Material issues of risks

View Concerning Candidates for Members of the Board of Directors
Policy on Nominating Candidates for Directors
With respect to board members (Directors and Audit &Supervisory Board Members), the Company believes that
their skills, knowledge and experience, as well as multiple
views from diverse board members, in terms of genderand international experience, contribute to the Group’s
global business operations and appropriate oversight/
auditing. Based on this perception, the Company selects
candidates for board members as follows:

Candidates for Outside Director:
The Group should select a well-balanced mix of people withvarious skills and backgrounds, such as persons with experiencein corporate management and public policy, engineers withtechnological expertise, and experts in law, accounting, or otherareas.

The Group should select a well-balanced mix of people withvarious skills and backgrounds, such as persons with experiencein corporate management and public policy, engineers withtechnological expertise, and experts in law, accounting, or otherareas. Candidates for Director: In light of the consideration of
the Furukawa Electric Group’s business of having many affiliates
around the globe and various business lines, the Group should
select persons who have a sufficient skill set, knowledge andexperience so that they will contribute to improving the Furukawa
Electric Group’s corporate value.

Directors

Skill matrix for Directors and Audit & Supervisory Board Members
Taking into account expected roles and responsibilities of theBoard of Directors (i.e. (1) establishing corporate philosophy/business principles and setting strategic direction; (2)establishing an environment that supports appropriate risktaking; and (3) effectively overseeing the managementfrom an independent and objective standpoint), and towardrealizing new Medium-term Management Plan “Road to
Vision 2030” which covers a period ending in fiscal year
2025 as well as “Furukawa Electric Group Vision 2030”, theCompany identified the following 7 key areas of experienceand expertise the Company expects from Directors
and Audit & Supervisory Board Members: corporate
management, finance/accounting, legal affairs/compliance,
environment/energy, technology/IT, sales/marketing,and international experience/knowledge. The Company
will review and update these key areas, as necessary, in
response to changes in the external environment/businessenvironment, etc.
The following skill matrix shows current skills of
Directors and Audit & Supervisory Board Members. The
Company selected Directors and Audit & Supervisory
Board Members by ensuring the balance between areasof expertise and experience.

Candidates for Outside Director:

Finance/accounting

Have experience/expertise in finance/accounting; havesignificant experience as the person in charge of finance/accounting division

Legal aﬀairs/
complianceHave experience/expertise in establishing legal/compliancesystem, etc.; have significant experience as the person in
charge of legal affairs/compliance division

Environment/
energyHave extensive experience, expertise and/or network in thearea of environment/energy

Technology/IT

Have experience/expertise in R&D, IT, DX, etc.; have significant
experience as the person in charge of technology/IT division

Sales/
marketing

Have experience/expertise in sales/marketing; have significant
experience as the person in charge of sales/marketing divisionInternational
experience/
knowledge

Have experience in running a company abroad or have international
knowledge of international trade or a relevant specialized area

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Audit & Supervisory Board Members

064

Corporate
management

Position in Furukawa
Electric

Gender

Keiichi Kobayashi

M

Chairman of the Board
and Director

Hideya Moridaira

M

President andRepresentative Director

Osamu Tsukamoto

M

Director(Outside, part-time)

Takashi Tsukamoto

M

Director(Outside, part-time)

Yoshiro Miyokawa

M

Director(Outside, part-time)

Yukiko Yabu

F

Director(Outside, part-time)

Tamotsu Saito

M

Director(Outside, part-time)

Satoshi Miyamoto

M

Akihiro Fukunaga

M

Yoshio Masutani

MToshio Yanagi

M

Nozomu Amano

M

Masao Terauchi

M

Hiroyuki Ogiwara

M

Kunihiko Sakai

M

Sayaka Sumida

F

Takao Shiomi

M

Details of skillsets
Have experience in serving as Representative Director
or equivalent (i.e. an officer with a broad scope of
responsibilities that are similar to that of an officer)

Independent
Oﬃcer

Name

Management Strategy

Outside Directors’ Expertise and Principal Activities
The Outside Officers of the Company have extensive
experience in financial institutions, trading companies,
and business corporations or expert knowledge andexperience in such areas as laws, finance/accounting,and industrial policies, etc. The Board of Directors, inmaking decisions, respects Outside Directors’ opinions
and suggestions from diverse viewpoints based on theirexperience.
The Outside Officers’ meetings are regularly conducted
so that Outside Officers can exchange opinions while
establishing a shared understanding of the Company
from an objective viewpoint and submit the resulting
opinions to the Board of Directors if necessary. The
Outside Officers’ meeting consists of Outside Directors
and Outside Audit & Supervisory Board Members

Company
Management

Finance/
Accounting

Legal Aﬀairs/
ComplianceManagement Foundation

Corporate Information/Dataand the chair of the meeting* is selected from among
Independent Outside Directors.

Outside Officers’ Meeting (As of June 23, 2023)

Outside Directors

5 members

Outside Audit & Supervisory
Board Members

3 members

Meeting chair: the secretaryof the Outside Officers* Secretary of the Outside Officers serves as chairperson of the Outside Officers
Meeting, reports what was discussed at the Outside Officers Meeting to theBoard of Directors and management as needed, and acts as a liaison of outside
directors to cooperate with the management team or the Audit & Supervisory
Board (meeting).

Environment/
EnergyTechnology/
IT

Sales/
MarketingInternational
Experiences andKnowledge

Director andCorporate Executive Vice
President
Director andCorporate Senior Vice
President
Director andCorporate Senior Vice
President
Director andCorporate Vice President
Audit &
Supervisory Board Member(Full-time)
Audit &
Supervisory Board Member(Full-time)
Audit &
Supervisory Board Member(Full-time)
Audit &
Supervisory Board Member(Outside, part-time)
Audit &
Supervisory Board Member(Outside, part-time)
Audit &
Supervisory Board Member(Outside, part-time)(Note) The above table does not list all of the areas of experience or expertise each person has but shows the areas the Company highly expects in particular.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

065

About Furukawa Electric Group

Material issues of risks

Implementation Procedure for the Evaluation of the Effectiveness of the Board of Directors
For the purpose of improving the function of the Boardof Directors, we have been working on analyzing andevaluating the effectiveness of the Board of Directors every
year since fiscal 2015. Through this continuous process,necessary measures are taken in order to improve issues orfurther reinforce strengths reported through the verificationof the suitability of the Board of Directors’ functions.
Since fiscal 2017, in addition to having a questionnaire
filled in by all members of the Board of Directors andthe Audit & Supervisory Board Members, an individualinterview has been conducted by the Chair of the Board(an interview with the Chairman is conducted by an
Outside Officer other than the Chair), for the purpose ofproviding a deeper understanding of the responses to thequestionnaires. More substantive analysis and evaluation
have thus been implemented.
Current FY
Questionnaire
Implementationof the anonymousquestionnaire

Evaluation Items on the Eﬀectiveness of theBoard of Directors
Roles and responsibilities of the Board of Directors (general matters,
and speciﬁc matters related to the mid- to long-term management
plan, business execution, risk management and compliance,sustainability, and Nominating/Compensation Committee)
Operation of the Board of Directors
System to support and cooperate with outside oﬃcers
Roles of and expectations for Audit & Supervisory Board Members
Relationships with shareholders and other stakeholders
Other (Board of Directors overall, individual/mutual evaluations)

Flow of the Board of Directors Effectiveness Evaluation
Individualquestionnaires by
the Chairman
Implemented
from fiscal 2017,
aiming at a deeper
understanding of
the responses tothe questionnaire

Next FY

Outside officers’
Meeting

Multiple
Discussions by the
Board of Directors

Completion of
the analysis andevaluation

Compilation of
the opinions on
the results of thequestionnaire.

Confirmation of thestatus of ensuring theeffectiveness of theBoard of Directors

Publish the analysis
and evaluation
results.

The businessexecution andthe managementof the Board of
Directors basedon the actions

Results of the Evaluation of the Effectiveness of the Board of Directors and Future Initiatives
Given the results of the effectiveness evaluation of2022. As a result of discussion with due consideration to
the previous year, the Board of Directors continued tomany proposals and opinions from Directors and Audit &implement measures to further improve its effectivenessSupervisory Board Members, we have decided to makeand worked on analyzing and evaluating it again in fiscal
further improvements regarding the following items.
Item

Future initiatives to be taken in consideration of the analysis and evaluation for ﬁscal 2022

Medium-term Management Plan,
review of business portfolio,
and global group management

We will stimulate discussions on the business portfolio and global management, as well as MTMP progress checking andconsideration of relevant issues, and ensure that outcomes will be reported to and discussed by the Board of Directors.
We will regularly conduct a tour of our business facilities in order to provide outside oﬃcers with an opportunity to further
deepen their understanding of our businesses.

Operation of the Board of Directors

We will increase opportunities to enhance communications between inside and outside oﬃcers, as well as among outsideoﬃcers.

Nominating/Compensation Committee

Nominating/Compensation Committee will discuss the Board composition and skills matrix of directors, and report theresults to the Board of Directors.

Sustainability(including ESG and SDGs)

With respect to risks and opportunities related to sustainability, and progress on each of the newly-establishedsustainability indicators, we will encourage discussions at the Sustainability Committee, which in turn will report to theBoard of Directors.

Risk management

The Board of Directors will continue to bring greater risk awareness across the enterprise. It will also encourage risk
management activities at aﬃliate companies abroad, in addition to the Company and its aﬃliate companies in Japan.

For details, please see our website page “Corporate Governance”
https://www.furukawa.co.jp/company/governance.html (Only available in Japanese)

Design of the Company’s remuneration system
for Directors, etc.
Policies for determining remuneration, etc. for Directors, etc.
The Company’s policies for determining remuneration, etc.
for Directors, etc. are as stated below:

The remuneration for Directors, etc. shall be determinedin a way that encourages individual Directors, etc. to exert
his/her abilities to the maximum level and proactively fulfill
his/her duties so that the Company Group will increase
its corporate value and achieve sustainable growth while
contributing to society through its business activities.

In accordance with the above-mentioned policy, theBoard of Directors resolved to approve the policy for
determining remuneration for individual Directors,
etc.. Nominating/Compensation Committee confirms
adequacy, effectiveness and appropriateness of plan
design and level of remuneration every year, by meansof outside survey that is comparing the Company’s
remuneration level with those of other similar size 30

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Management Foundation

Corporate Information/Data

manufacturing companies.
The Company’s remuneration for Directors, etc.
consists of base salary, short-term performancelinked remuneration (on an individual level), short-term
performance-linked remuneration (on the company
level) and medium-to-long-term performance-linked
remuneration.

Policy for determining remuneration for individual oﬃcer by element
Recipient

Element of
remuneration

Overview

Base salaryThis element is paid in cash in a ﬁxed amount every month, and the amount is determined
depending on his/her role (e.g. management oversight or business execution) and oﬃcial position.

Short-term
performance-linked
remuneration(individual level)

This element is paid in cash every month, and the amount paid to individual Directors, etc.
is determined by Nominating/Compensation Committee upon comprehensively evaluating
achievements*1 of the relevant business plan in the previous ﬁscal year, such as operating proﬁt
and inventory balance in the division(s) he/she is in charge of, and the status of relevant measures.

−−

Short-term
performance-linked
remuneration(company level)

This element is paid in cash once a year, and the amount is ﬁxed according to the evaluation
criterion*2 based on consolidated operating proﬁt, as deﬁned by Nominating/Compensation
Committee.

−−

Medium-tolong-term
performance-linked
remuneration

This is the stock remuneration program*3, under which Directors, etc. are paid with the Company’s
stocks acquired by the Trust that was funded by the Company.

−−

Director
except Outside
Director

OutsideDirector

Corporate Vice
Audit &
Presidents and Supervisory
Senior Fellows,
Board
except Director
Member

*1. Short-term performance-linked remuneration (on an individual level) is designed for comprehensively evaluating achievements of individual business(es). For the evaluation, score is used
for measuring achievements versus planned operating proﬁt and inventory reduction, achievements versus safety and quality targets, etc., and risk readiness, and an evaluation is madebased on a total score.
*2. For short-term performance-linked remuneration (on the company level), we adopted consolidated operating proﬁt as an indicator for ensuring the Company’s performance in a
relevant ﬁscal year is appropriately and clearly reﬂected to the remuneration. The following table shows remuneration amount corresponding to consolidated operating proﬁt, whichis the evaluation criterion here, and oﬃcial position. Nominating/Compensation Committee regularly checks and reviews this table to ensure the remuneration levels are adequate,
taking into account consolidated operating proﬁt in the past several years. The Company has partially amended the remuneration system for Directors, etc. mainly for the purpose of the
remuneration for Directors, etc. other than Outside Directors and Audit & Supervisory Board Members more explicitly reﬂecting the results of initiatives toward ESG-related matters. The
amended remuneration system for Directors, etc. is scheduled to come into eﬀect in July 2023.
The amended short-term performance-linked remuneration table corresponding to consolidated operating proﬁt and oﬃcial position (on the Company level) is as follows:

Short-term performance-linked remuneration table corresponding to consolidated
operating proﬁt and oﬃcial position (on the company level)(Unit: JPY thousand per year)

Consolidated Operating Proﬁt
Classiﬁcation of Director, etc.

650550-650
450-550
350-450250-350150-250-150(JPY 100 million) (JPY 100 million) (JPY 100 million) (JPY 100 million) (JPY 100 million) (JPY 100 million) (JPY 100 million)

Chairman of the Board

15,10012,458

9,815

7,550

6,040

3,775

－

President (Representative)

29,60024,42019,24014,80011,8407,400－

Corporate Senior Executive Vice President

18,00014,85011,700

9,000

7,200

4,500

－

Corporate Executive Vice President

14,100

11,633

9,165

7,050

5,640

3,525

－

Corporate Senior Vice President

8,200

6,765

5,330

4,100

3,280

2,050

－

Corporate Vice Presidents/Senior Fellows

4,200

3,465

2,730

2,100

1,680

1,050

－

For details of ESG-linked remuneration, please see “TOPICS Partial Revision of the Companyʼs remuneration system for Directors, etc.” on page 69 of this report.
*3. For medium-to-long-term performance-linked remuneration, we adopted the Company’s stock price as an indicator, in order to appropriately reﬂect increased corporate value toremuneration amounts, and to share incentives for increasing corporate value with shareholders. In this stock remuneration program, three ﬁscal years constitute a performance period
and the Company contributes funds up to the maximum amount of ¥450 million per performance period to the Trust as remuneration for Directors, etc. Directors, etc. are granted a predetermined number of points depending on their titles/positions every year as the basis of their rights to receive the Company’s stocks. After the end of each performance period, thenumber of points qualifying Directors, etc. for receiving the Company’s stocks are ﬁnalized after an adjustment for certain cases, according to the criteria for comparing changes in the
Company’s stock prices with those of TOPIX during the period. (The actual points to be granted are calculated by multiplying the payout ratio, which is determined by multiplying thedegree of divergence of the volatility of the Company’s stock price and volatility of TOPIX by the cumulative total points granted during the evaluation period.) In case any of Directors, etc.
retire from the position during the period, in principle, an adjustment is to be made in a similar manner.

Medium-to-long-term performance-linked remuneration: point table by oﬃcial position (from April 1, 2022 to March 31, 2025)

The maximum total number of points granted to Directors, etc. in a performance period is 180,000, and 1 point is convertible into 1 share unit of the Company’s common stock.

Classification of Directors, etc.

Number of Point Granted

Number of Stock Granted per period

Chairman of the Board

7,640

29,796

President (Representative)

9,340

36,426

Corporate Senior Executive Vice President (Director)

4,800

18,720

Corporate Senior Executive Vice President

3,930

15,327

Corporate Executive Vice President (Director)

3,930

15,327

Corporate Executive Vice President

3,060

11,934

Corporate Senior Vice President (Director)

2,190

8,541

Corporate Senior Vice President

1,310

5,109

Corporate Vice President (Director)

1,310

5,109

660

2,574

Corporate Vice President/Senior Fellows

066

Management Strategy

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

067

About Furukawa Electric Group

Material issues of risks

TOPICS

Medium-to-long-term performance-linked remuneration: Formula for calculating the degree of divergence
Degree of divergence = Volatility of the Company’s stock price/Volatility of TOPIX
Volatility of the Company’s stock price = average stock price of the Company in the final year of the evaluation period/
average stock price of the Company in the year prior to the start of the evaluation period
Volatility of TOPIX = average TOPIX in the final year of the evaluation period/average TOPIX in the year prior to the start of the evaluation period

Medium-to-long-term performance-linked remuneration: Rate correspondence table for each degree of deviation
Deviation (Scope)

X ≥ 1.3

1.3>X ≥ 1.2

1.2>X ≥ 1.1

1.1>X ≥ 0.95

Rate (%)

130

120

110

100

0.95>X ≥ 0.85 0.85>X ≥ 0.75 0.75>X ≥ 0.65 0.65>X ≥ 0.55

90

80

70

0.55>X ≥ 0.2

60

0.2>X

50

0

Medium-to-long-term performance-linked remuneration:
Formula for determining the number of points granted to individuals during a performance period
Finalized points = (cumulative total points granted to each Director, etc. during the evaluation period) x (payout ratio for the evaluation period)“Payout ratio” represents the percentage of change in the actual remuneration amount as a result of performance evaluation, where the standard amount of the medium-tolong-term performance-linked remuneration is 100%.
At the time of their retirement, Directors, etc. receive the Company’s stocks and money calculated by the following formula as the medium-to-long-term performance-linked
remuneration from the Trust.

Management Strategy

Management Foundation

Corporate Information/Data

Partial Revision of the Company’s remuneration system for Directors, etc.

We have partially revised the Company’s remuneration system for Directors, etc. with aims in mind such as more
directly reflecting the results of ESG initiatives upon compensation paid to individuals other than Outside Directors
and Audit & Supervisory Board Members. The ESG-linked remuneration is a monthly monetary payment madein an amount that is based on an assessment of our Group’s progress when it comes to achieving sustainability
targets in terms of important
Overview of the Remuneration System for Directors, etc. (Since July 2023)
management issues (material issues)
Element of remuneration
to be addressed. In fiscal 2023, theShort-term
Short-term
Medium-to-longRecipient
performanceperformance-linked ESG-linked
first year for this arrangement, theBase salaryterm performancelinked remuneration remuneration (the remuneration
linkedremuneration
item subject to evaluation is theCompany level)(Individual level)
achievement of targets concerning
Director except Outside
Director
the “GHG emission reduction rare,”which is related to the environment.
Outside Director－－－－
We have been operating the revised
Corporate Vice Presidents
remuneration system for Directors,
and Senior Fellows,
except Director
etc. since July of 2023.
Audit & Supervisory
Board Member● Number of the Company’s shares to be granted = (cumulative total points as of the vesting date x payout ratio – number of points corresponding to a fraction of shares) x 0.7

－

－

－

－

– If there is a fraction of shares of the Company upon calculation by the above formula, such shares will be disregarded.

● Amount of money to be paid = (Number of points convertible into share units x 0.3 + number of points corresponding to a fraction of shares) x

market value of the Company’s stock as of the vesting date
– “The number of points convertible into share units” is defined as (cumulative total points as of the vesting date x payout ratio – the number of points corresponding to a fraction of shares).
– If there are any points corresponding to a fraction of shares upon calculation by the formula “the number of points convertible into share units x 0.3”, such a fraction will be rounded up to ashare unit and added to the number of share units.
– The vesting date is defined as the first end date of June after the retirement of Directors, etc., and after the closing of the last fiscal year, in which he/she is eligible for receiving points.

Policy of Determining the Percentage of Remuneration Paid to Each Individual for Each Remuneration System
In terms of a percentage of each component of
performance-linked remuneration. When the aggregate
remuneration, it is designed as follows: the higher the
total of the standard percentage of each component isrank of Directors, etc., the larger the percentage of100%, the percentage of each component is shown below:
Base salary

Short-term
performance-linked
remuneration(Individual level)

Short-term
performance-linked
remuneration (theCompany level)

Mediumto-long-term
performance-linked
remuneration

Total

Chairman of the Board

55%

12%

12%

21%

100%

President (Representative)

51%

15%

15%

19%

100%

Director and Corporate Senior Executive
Vice President

55%

15%

15%

15%

100%

Director and Corporate Executive Vice President

58%

14%

14%

14%

100%

Director and Corporate Senior Vice President

68%

11%

11%

11%

100%

Corporate Senior Executive Vice President

54%

16%

16%

14%

100%

Corporate Executive Vice President

56%

15%

15%

14%

100%

Corporate Senior Vice President

67%

13%

13%

8%

100%

Corporate Vice President/Senior Fellow

71%

16%

8%

5%

100%

Classiﬁcation of Directors, etc.

Remuneration for Directors and Audit & Supervisory Board Members for Fiscal 2022
The total amount of remuneration for Directors and Audit & Supervisory Board Members for fiscal 2022 is as follows.

Oﬃcer classiﬁcation

Total
remuneration(JPY millions)

Total remuneration by type (JPY millions)Base salary

Number of
Short-term
Short-term
Medium-to-longsubject oﬃcers
performance-linked performance-linked
term performanceremuneration
remuneration(persons)
linked remuneration(Individual level)(the Company level)

Directors (excluding outside directors)

362

234

25

25

77

8

Audit & Supervisory Board Members (excluding
Outside Audit & Supervisory Board Members)

92

92

－

－

－

4

Outside Oﬃcers

110

110

－

－

－

8

Outside Directors

74

74

－

－

－

5

Outside Audit & Supervisory Board Members

36

36

－

－

－

3

1. The amounts and numbers of officers in the above table include two Directors and one 4. Short-term performance-linked remuneration (on the company level) falls under the
category of performance-linked remuneration. For this remuneration, the Company
Audit & Supervisory Board Member who retired from the positions due to the expiry
adopted consolidated operating profit as an indicator to appropriately and clearly reflectof their terms at the end of the 200th Annual Shareholders Meeting held on June 23,
the Company’s business performance during a relevant fiscal year to the remuneration.
2022 as well as amounts of their remuneration.
The Company’s consolidated operating profit in fiscal 2022 was ¥15,441 million.
2. Short-term performance-linked remuneration (on the company level) amounting to
5. Medium-to-long-term performance-linked remuneration falls under the categories¥25 million will be paid to eight Directors (excluding Outside Directors) in July 2023.
of performance-linked remuneration as well as non-monetary remuneration. For this
3. The amount of medium-to-long-term performance-linked remuneration in the above
remuneration, the Company adopted its stock price, in order to appropriately reflect
table is calculated by deeming the number of shares corresponding to the number
increased corporate value to remuneration amounts, and to share incentives forof points granted for fiscal 2022 under the stock remuneration program as theincreasing corporate value with shareholders. Actual deviation was 0.93 (a reference
remuneration for the year
value calculated by using numerical value in fiscal 2022).

068

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Succession Plan
The Nominating/Compensation
Committee checks an update of thesuccession plan for the CEO and thedevelopment of the next generationof managers, and deliberates
such matters as the selection ofcandidates for the next generationof managers and the effectivenessof their development process.

Furukawa Electric Co., Ltd.
Guideline on Corporate Governance (extract)
Chapter 3 Corporate Governance System
Section 3 Nominating/Compensation Committee

3. Succession Plan
(1) Based on the Furukawa Electric Group Philosophy and a concrete management strategy, a succession plan for
the President/CEO is deliberated and determined by the Nominating/Compensation Committee, are annuallyreviewed by the Committee.
(2) Each Succession plan for Corporate Vice Presidents is annually reviewed and submitted to the Nominating/Compensation Committee, then the Committee checks an update of the succession plans for Corporate Vice
Presidents.
(3) The Company makes eﬀorts to systematically develop the next generation of executives. Candidates of prospective
president and corporate vice presidents selected by succession plans obtain advice from outside consultants, taketraining for the development of executives, and transfer to a diﬀerent division to acquire necessary experience.

Policy-holding Shares
Each year, the Board of Directors verifies the validity of alllisted shares of the policy-holding shares, and decides tocontinue holding some of the shares from the viewpointof their relationship with the Company and of thecooperative relationship. We intend to reduce the shares
deemed unsuitable for holding.
For ﬁscal 2022, the Board of Directors examined
Policy on Policy-holding Shares
We will hold the shares if they are deemed to besignificant from the viewpoint of improving capitalefficiency or from need for the Companyʼs businessactivities, and will reduce the shares if they are deemed
to be unsuitable for holding. Each year, the Board of
Directors shall conduct a verification of the validity of alllisted shares of the policy-holding shares. The verification
shall be conducted from a comprehensive perspective,
including the creation of business opportunities, themaintenance and strengthening of business relationships
and cooperative business relationships, as well as thecomparison of quantitative benefits derived from theholdings of shares with the cost of ownership calculatedby the market value and capital cost of the shares.

the appropriateness of the policy-holding shares ata meeting held in December 2022. As a result of theverification, we reduced some policy-holding shares,
including ﬁve listed stocks (5,435 million yen). Ourpolicy-holding shares as of March 31, 2023 include 19
listed shares (19,209 million yen).

Policy-holding Shares Recorded on the Balance Sheet andthe Number of issues(Unit; Million yen)

■ Cost■ Fair-value impact

Number of issues

36,24824

22,825
18

2018

2019

24,38723,061

17

17

2020

2021

19,209
19

2022

（FY）

* Policy-holding shares are defined as the shares subject to “investment shares
held for other than purely investment purposes” in the Annual Securities Report.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

069

About Furukawa Electric Group

Material issues of risksGroup Governance
While respecting the independence of each affiliatedcompany’s management, Furukawa Electric shallunderstand the overall status of its management,
including compliance and risk management, and provide
appropriate management guidance, including advice andsupport on the establishment of each company’s legal
and internal control systems. That is how we ensure thesoundness of each company’s management, and we
also strive to strengthen the entire Group’s management
structure and to increase corporate value.
The Furukawa Battery Co., Ltd. — our subsidiary —is listed on the Tokyo Stock Exchange. With the aimof maximizing corporate value as a group, we willcontinue to analyze the significance of the holding oflisted subsidiaries in light of the proper allocation ofmanagement resources across the entire Group.
Given the fact that there is a structural conflict ofinterest risk between the Company and minority
shareholders of its listed subsidiary, we have taken
measures to secure the interests of minority shareholdersof the listed subsidiaries. Specifically, the ratio ofindependent outside directors (outside directors whoreport to the Tokyo Stock Exchange as independent
directors) at their Board of Directors has been increased
to represent more than a third. In addition, both The
Furukawa Battery Co., Ltd. has established a Conflictof Interest Management Committee as an organization
to examine the rationality and fairness of transactions
with their parent company. Independent outside
directors represent a majority of the Committee. We willcontinue to work with the listed subsidiaries to establish
and strengthen an effective governance system that
effectively utilizes independent outside directors.

Management Strategy

Management Foundation

Corporate Information/Data

uniform standards and has implemented an information
management system.

the perspective of the importance as information assets
and the necessity for protection, the Company establishede. Group company management
In accordance with the “Regulations on GroupManagement Control”, an administrative manager isappointed at each Group company; and the Company
requests the Group companies to regularly report
information necessary for grasping their businessconditions, provides guidance on business management,
and requires them to obtain the Company’s approval
before making decisions on certain matters. Budgets
are prepared for the entire Group, setting specificmanagement targets to be achieved by subsidiaries.
f. Securing appropriateness of financial reportingIn accordance with the “Basic Regulations on Risk
Management and Internal Control”, the Company
established “Furukawa Electric Group Basic Policy
for the development and evaluation of an internal
control system, to ensure the appropriateness offinancial reporting” (J-SOX Core Policy), and clarified
the establishment, development, and operation of the

As for the risk management at subsidiaries, Risk
Management Division plays a central role to provide
training, advice, and guidance on risk management,internal control, and compliance. Subsidiaries are
required to appoint their own compliance officers.
The Company sends part-time officers to key Group
companies, and monitors overall management, including
compliance and risk management, of the Group
companies through audits by the Company’s Audit &Supervisory Board Members and Auditing Department.
internal control system, monitoring mechanism, andresponsibilities. As for preparation and submission of
the Internal Control Reports stipulated in the Financial
Instruments and Exchange Act, the Company established
J-SOX Council for deliberations of important matters,
aiming at maintaining and improving the reliability of theGroup’s financial reporting.

Status of development of internal control system
The Company believes that internal control is intended
for maintaining/improving the efficiency of executionof duties, ensuring compliance, risk management,a. Efficient execution of duties
After management targets are set in budgets, each
executive officer fulfills his/her duties to achieve suchtargets, and regularly reports the progress to the Boardof Directors. Such achievements are adequately reflected
in his/her remuneration. As for matters to be decided
by the Board of Directors or Management Committee,
or by means of requests for management approval, theb. Compliance system
The Company regards “Furukawa Electric Group Corporate
Philosophy” and “Furukawa Electric Group CSR Codeof Conduct” as the basis for complying with ethicalstandards as well as laws and regulations; and according
to the “Compliance Regulations”, the Company promotes
such compliance activities as internal education andprograms to prevent/detect legal violations, while Risk
Management Committee chaired by President and Risk
Management Division play central roles. Each division
appoints a risk management officer, who is responsible
for effectively promoting risk management activities,
including compliance, within the division. Especially, toc. Risk management system
The Company stipulated its risk management system andmanagement method in the “Basic Regulations on Risk
Management and Internal Control”, and Risk Management
Committee identifies overall risks associated withd. Information management system
Records and documents related to important decisions by
the Board of Directors, Management Committee, or via
requests for management approval are properly managed/

070

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

information management and group company
management, and established and implements theinternal control system as follows:
Company established detailed and specific standards fordeliberations. The Company has in place internal rules
to clarify administrative authorities of executive officers
and General Managers, as well as division of duties; andalso has a mechanism to constantly review them upon anorganizational change and the like.

prevent a recurrence of cartel behavior, the Company has
reinforced the control over contacts with other companies
in the same industry and the pricing procedures, andstrengthened oversight by receiving advice from external
experts from time to time. The Company also introduced
a whistleblowing system, aiming at early detection
and correction of compliance violations. Furthermore,
Auditing Department, which is responsible for internal
audits, monitors the execution of duties in each division,verifies whether the internal control system, including thecompliance system, is working effectively, and reports theresults to the management.
Furukawa Electric Group’s business operations, andverifies the adequacy of such risk assessment and risk
management methods.
For more information, please refer to “Risk Management” on pages 71-72 of thisreport.

retained in accordance with laws and regulations as well as
the Company’s “Regulations on Retention of Documents”.
As for other information on the execution of duties, from

Risk Management
Overview of Risk Management and System
Furukawa Electric Group has established the Risk
Management Committee, which comprises management
as members, with the President as chair and the General
Manager of the Risk Management Division as vice chair.
The committee is structured to supervise and promoterisk management, internal control and compliance.
Furukawa Electric Group Risk Management Committee
conducts regular risk assessment to determine what risks
exist, define important risks that require a companywide
response, and prioritize measures to counter these risks.

Through specialized committee activities in segmentspecific areas — occupational health and safety, quality
control, the environment, and disaster prevention andbusiness continuity management — we are enhancing oursystem to manage risks related to our business activities.
In addition to this system, important decision making is
conducted by the Board of Directors and the Management
Committee or through the approval processing system,
after the expected risks based on each case have beenclearly presented and acknowledged.

Board of Directors
Submit proposals
and reports

Risk Management Committee

President

Chair: President
Vice Chair: General Manager,
Risk Management Division
Committee members: Management
Organizer: General Manager,
Risk Management Department
Furukawa Electric Group
Quality Management Committee
Furukawa Electric Group
Occupational Health and Safety Committee
Furukawa Electric Group
Environment Committee

Risk Management Division

Other corporate divisions

Risk Management
Department

Each corporate
department

Collaboration

Central Disaster Prevention andBusiness Continuity Management
Promotion Committee

Monitors

Collaboration
Promotion / Support

other

Business divisions (Furukawa Electric + Group companies)

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

071

About Furukawa Electric Group

Material issues of risks

Management Strategy

Management Foundation

Corporate Information/Data

Supply Chain Management
Basic Concept for Procurement

Business-Related Risks
Furukawa Electric Group’s financial results and financial
situation are affected by the economic conditions in thevarious markets in which the Group sells its products andprovides services.
The important risks that have the potential to affect
the Group’s financial results and financial situation arelisted, as shown below. Risk items are defined as thosewith a medium or higher likelihood of occurrence andmagnitude of impact, and, based on how the risks areperceived, they have been broadly categorized into
“Management perspective risks” and “Operational
perspective risks.” When implementing responses to eachrisk, particularly for the management perspective risks,rather than being independent risks, they are recognized
to be mutually related. The forward-looking statements
contained in the descriptions below are based on theGroup’s estimates and assumptions made as of the endof the current fiscal year.

Under the Furukawa Electric Group Procurement
Policy, our Group will act with fairness and integrity andfulfill its corporate social responsibility by conducting
procurement activities with due consideration forsafety and the environment in order to realize a truly
prosperous and sustainable society. We value thetrusting relationships we have with our partners* andare committed to contributing to the creation of global
infrastructure that combines information, energy
and mobility through the undertaking of co-creation
initiatives with our partners.

* Our Group calls suppliers who do business with us “partners” who collaborate with us to create value.

Furukawa Electric Group Procurement Policy
Management perspective risks
Business portfolio
Creation of new businesses
Climate change (carbon neutral)
Human resources and organizations
Regional strategy andinternational political economics

Major

Human rights and labor practices

ImpactImpact of disasters or infectious disease
Quality management
Legal violations

Raw material and fuel price fluctuations
Information systems andinformation security
Exchange rate, interest rate andshare price fluctuations
Research & development andintellectual property

Medium

Employee health and safety
Deteriorated profitability of
construction projects
Environmental pollution andenvironmental regulations
Impairment of non-current assets
Capital management
Disclosure and brand

Major

Likelihood of occurrence
See details on our corporate website for “Business-related risks”. https://www.furukawa.co.jp/en/ir/management/risk.html

Efforts to risk management activity
For the purpose of continually enhancing and deepening
an activity on the risk control of Furukawa Electric Group,
we have assessed the control activity on each item of the“business-related risks.” Those results are totalized andsummarized, and then the overall assessment of the risk
control activity is annually and regularly reported to Risk
Management Committee.

In addition, “the ratio of follow-up on risk management
activities for all risk domains,” that contains itemsof the business-related risk, has been assigned as asustainability indicator. Then, the improvement of thecontrol activity has been enhanced by monitoring its
indicator.

“Building a governance system to strengthen risk management/Group Governance”
Indicator: Sustainability Indicator

Group

072

Ratio of follow-up on risk management
activities for all risk domains

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

2

Toward the realization of a sustainable society, we conduct our procurement activities considering environment preservationand safe operation in comply with all applicable laws and regulations and we do fulfill our Corporate Social Responsibility.

3

We always value relationships of mutual trust with our business partners to create new values by collaboration. We pursue to
optimize our procurement conditions from the viewpoint of quality, cost, delivery, technological capabilities and CSR activities.

Compliance with Laws and Regulations and CSR Procurement
Partnership

Our Group promotes CSR procurement activities in
keeping with the best interests of the environment andsociety in general. In FY2020, we published the revised
Furukawa Electric Group CSR Procurement Guidelines(3rd Edition), to which we added the latest social
requirement items with reference to the RBA Code of
Conduct and JEITA Guidelines.
We ask new suppliers for agreement to comply with our
CSR Procurement Guidelines as a prerequisite for starting
business with us.
Based on our CSR Procurement Guidelines, wework together with existing partners to ensure “strict
compliance with laws and regulations and fair trade,”“consideration for human rights, safety, and theenvironment,” “reduction of environmental impact,”and “Responsible Mineral Procurement Efforts” in our
procurement activities. We also hold an annual Partners
FY2021
Furukawa Electric

Indicators and targets
Material issues

We are open to any and all business partners in accordance with the principle of free competition and we all act with fairness
and integrity.

Promotion of CSR Procurement Activities

Operational perspective risks

MediumFairness and Integrity

1

ResultGroup companies
in JapanTargetFY2021

FY2022

FY2022

FY2023

FY2025

88%

100%

93%

100%

100%

Group companies
overseas

FY2022Meeting to directly explain our CSR procurement
guidelines and our environmental and social policies,
targets, and initiatives to our partners, and to provide
ongoing encouragement to them.
As a risk survey for existing partners, in addition to
the conventional questionnaire, we also issued a selfassessment questionnaire (SAQ) for 56 major business
partners in accordance with the contents of the CSR
Procurement Guidelines in FY2021. In FY2022, we
expanded the scope of coverage to include partners ofdomestic and overseas Group companies, and issued
SAQs for approximately 500 companies.
For partners falling under the categories of any of thesurvey items that we have identified as high-risk, wereconfirm the situation through interviews and othermeans, and encourage the partner(s) in question tocorrect the situation as necessary.

FY2023

FY2025

Sustainability indicator:
FY2025 Target

Major business
partners of
Furukawa Electric
100%

Business
partner SAQ :Conducted for
56 companies

Internal SAQ :Conducted for
79 companies

FY2024

Business
partner SAQ :Conducted forapprox. 500
companies

Business
partner SAQ
Business
partner SAQ

Major business
partners ofgroup companies
in Japan
100%
Business
partner SAQ

Ratio of SAQ
implementation
based on the CSR
Procurement
Guidelines for
major suppliers
Global 100%FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

073

About Furukawa Electric Group

Material issues of risks
In addition, we have established contact points forinquiries about compliance and inquiries about humanrights (JaCERʼs Grievance Form) on our company website
for the acceptance of reports on non-compliance andsuspicious activities taking place within the context ofour procurement activities. When a report has been
received, we will check the described facts of that report,
undertake a response such as an investigation, andprovide feedback to report-issuing party as deemednecessary.
Decisions made based on purchaseamounts and importancePartners Meeting and Evaluation of Partners

Major business partners

We conduct evaluations of partners when it comesto partners selected based on purchase amounts
and importance (80% of the material and equipment
purchase amount). At the annual Partners Meeting,
we explain our group procurement policy and our
CSR Procurement Activities directly to our partners inorder to deepen their understanding of our company.
In FY2022, the event was held in June with 58 major
business partners participating. In FY2022, we expanded
our evaluation of partners to include 260 partners
and provided feedback on the results. We are also
continuously issuing requests for cooperation when it
comes to our efforts to continue the business and ensurestable supply.

5,000

Collaboration with external organizations
In order to prevent or mitigate the adverse effects
associated with mining of minerals in conflict- or highrisk areas, we have joined the Responsible Minerals Trade
Working Group of the Japan Electronics and Information
Technology Industries Association (JEITA) in addition(FY2022)

About
companies

About 80% of thematerial and equipment
purchase amount

Promoting CSR
when it comes toprocurement activities

Initiatives to strengthen
our supply chain
and value chain

Existing partners:

Evaluation of partners

Continue CSR procurement
activities through co-creation
undertaken based on our CSR
Procurement Guidelines

BCM for the value chain

58 companies

participating in thePartners Meeting (FY2022)

New partners:
Encourage compliance with
the CSR Procurement
Guidelines when the partner
begins doing business with us

Responsible Mineral Procurement Efforts
The Group policy on responsible minerals procurement
is clearly stated in our CSR Procurement Guidelines andis made known by our Group companies and partners.
Given the recent changing trend toward mineralprocurement and the heightened demand in society, we
have established the Furukawa Electric Group Responsible
Minerals Sourcing Policy on September, 2022.

260 companies

Partners (Suppliers)

25 co-creation partners

undertaking CO2 reduction
through procurement
logistics (FY2022)

Furukawa Electric Group
Responsible Minerals Sourcing Policy(Established on September 12, 2022)

Furukawa Electric Group shall not procure tantalum, tin,tungsten, gold, and other minerals associated with humanrights violations, environmental degradation, corruption,
conﬂicts, and other incidents in conﬂict-aﬀected and highrisk areas. We will work to correct any concerns about risks
that arise in our supply chain and engage in responsible
minerals sourcing throughout the entire supply.

to making our own efforts, and are working to resolve
issues related to conflict minerals around the world andto improve our supply chain research activities throughintra-industry collaboration.

Indicators and targets
Material issues“Building a governance system to strengthen risk management/Supply chain management”

Indicator: Sustainability Indicator
Group

ResultFY2021

Ratio of SAQ implementation based on the CSR Furukawa Electric20%
Procurement Guidelines for major suppliers

TargetFY2022

FY2022

FY2023GlobalGlobalGlobal34%

20%

FY2025Global40%

100%

Supply chain data

Furukawa
Electric

Based on the Furukawa Electric Group Philosophy,
our Group fully understands that the human rights
of all people affected by its business activities must
be respected as it develops its global business, andrespects human dignity and all internationally recognizedhuman rights. We also promote initiatives to respecthuman rights in line with the “Establishment of Human
Rights Policy,” the “Implementation of Human Rights
Due Diligence,” and the “Establishment of Remedy
Mechanisms,” which are the three requirements ofcompanies according to the United Nations Guiding
Principles on Business and Human Rights.

Establishment of Human Rights Policy

Furukawa Electric Group Human Rights Policy (items only)

In accordance with the International Bill of Human Rights(Universal Declaration of Human Rights and International
Covenants on Civil and Political Rights), International
Labour Organization’s (ILO) Fundamental Rights at Work,and the United Nation’s Guiding Principles on Human andBusiness Rights, the Group has established Furukawa
Electric Group Human Rights Policy.

(established on January 27, 2020)

1 Positioning

6 Training

2 Scope

7 Compliance with applicable

3 Responsibility to respecthuman rights

4 Human Rights Due Diligence

In response to changing social demands for humanrights, such as in relation to forced labor, child labor, anddiscrimination, as well as in response to growing interestin human rights throughout the supply chain, our Groupbegan efforts to implement human rights due diligencein FY2021. In this context, we have set “employees” and“partners” as the target stakeholders to be prioritized interms of human rights issues tackled by our Group.
With regard to employees, we have set harassment in theworkplace as an issue to be tackled, analyze the results of
instances of whistleblowing and compliance awarenesssurveys, and make necessary improvement measures thenbeing implemented. We plan to verify the improvement
effects through means such as compliance awarenesssurveys. In FY2022, we also commenced “Discriminationand Harassment Education” for individuals working inlaws and regulations

8 Dialogue and consultation
9 Information disclosure

5 Remedy
For details, please see our website page “Human Rights”
https://furukawaelectric.disclosure.site/en/themes/95

Implementation of Human Rights Due Diligence

management positions at our Company and at Group
companies in Japan and overseas. With this, we have set
the “implementation rate of human rights risk training for
managerial positions” as a sustainability indicator and plan
to undertake the implementation of such training on acontinuous basis until 2025.
Meanwhile, we began issuing self-assessment surveys(SAQ) to our partners based on the CSR Procurement
Guidelines. We began doing this in FY2021 with 56 major
suppliers based on our belief that the grasp of the humanrights risks existing within supply chains was insufficient.
In FY2022, we implemented this survey for approximately
500 partners doing business with our company andGroup companies in Japan and overseas. At present, theresults of these surveys have not revealed any serious
problems presenting adverse impacts on human rights.

Establishment of remedy mechanism
As a point of contact for reporting adverse impacts onhuman rights, we are establishing an internal whistle-blowing
system involving third parties for internal. Further, for external
stakeholders, the Japan Center for Engagement and Remedy
on Business and Human Rights (JaCER), established mainly by
the CSR Committee of the Japan Electronics and Information
Technology Industries Association (JEITA), is utilized.
In FY2022, there were 103 cases of whistleblowing
taking place within our Group, around half of which were

FY2019FY2020

FY2021

FY2022

Number of partner evaluations(Number of major business partners)

Companies

213

199

198

248

260

Number of participants in the Partners Meeting

Companies

57

59

—*

57

58

Number of co-creation partners undertaking
CO2 reduction through procurement logistics

Indicator

Companies

20

24

25

25

25

: Sustainability Indicator

INTEGRATED REPORT 2023

Corporate Information/Data

Basic Policy on Human Rights

FY2018FURUKAWA ELECTRIC GROUPManagement Foundation

Human Rights and Labor Practices

Unit* From the perspective of preventing new coronavirus infections, we have canceled the Partners Meeting.

074

Management Strategy

Indicators and targets

Group

Material issues

related to human resources and labor. Only a limited
number of cases, however, were found to involve facts thatwere exactly as indicated by the whistleblower. All cases,
including those where some of the indications made were
found to be factual, have been corrected by means of
implementing measures serving to prevent recurrence.
Moreover, in our Group, we do consider the existence of acertain number of reports to constitute an indication that
our Internal Reporting System is functioning.

“Building a governance system to strengthen risk management/Human rights and labor practices”

Implementation rate of human rights
training for managerial positions

ResultTargetFY2021

FY2022

FY2022

FY2023—GlobalStart measuring
in JapanGlobal100%

100%

FY2025Global100%

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

075

About Furukawa Electric Group

Material issues of risks

Developing Business Activities that
Consider Climate ChangeManagement Strategy

Management Foundation

Corporate Information/Data

Information Disclosure in line with the TCFD Recommendations

Furukawa Electric Group Basic Environmental Policy (Formulated in 2008, revised in April, 2011)
Basic
Philosophy

ActionGuidelines

We, the employees of the Furukawa Electric Group, recognize that conservation of the global environment is a serious issue
confronting the international community, and we pledge to contribute to a sustainable future for the world through technologicalinnovation that utilizes our strength in advanced materials.

1

We shall comply with environmental laws and regulations as well as the demands of our customers and others, setting everhigher environmental targets as we continuously improve our global environmental conservation efforts.

2

We shall strive to develop products that are friendly to the Earth, and create new environmental businesses.

3

We shall strive to reduce environmental risk by incorporating anti-climate change and resource conservation/recycling
considerations, as well as a reduction in the use of environmental impact causing substances, across the entire product lifecycle.

4

We shall evaluate the ecological impact of all of our businesses, and strive for the conservation of biodiversity and sustainable
use of resources.

5

We will seek harmony with the natural environment and local communities through dialogue with our stakeholders.

Furukawa Electric Group Environmental Vision 2050 (Formulated in March, 2021)
Through the provision of environmentally friendly products and services and recycling-based production
activities, contribute to the realization of a sustainable society throughout the value chain1
2
3

Contribute to a carbon-free society

Aim to reduce greenhouse gas emissions throughout the value chain (Greenhouse gas emissions
from business activities (Scope 1&2): Challenge target of zero emissions in 2050)

Contribute to realizing a recycling-based society for water & resources

In January 2020, recognizing that climate-related risks
and opportunities are an important management issue,
Furukawa Electric Group declared its endorsement of the
Climate-related Financial Information Disclosure Task
Force (TCFD). We will promote disclosure in line with the
TCFD recommendations to strengthen our relationshipsof trust with our stakeholders.

For details, please see the “Information Disclosure in line with the TCFD Recommendations” on Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/199

Governance
Recognizing that climate-related risks and opportunities
are important management issues (material issues), theBoard of Directors and the Management Committee
conducted the discussions related to climate change.

Contribute to society in harmony with nature

Minimize the impact on ecosystems through value chain management that includes raw materials

Furukawa Electric Group’s Basic Policy for Carbon Neutrality

Environmental Targets 2030 (Formulated in March, 2019, revised in November, 2022)
Contribute to a carbon-free society(1) Greenhouse gas emissions from business activities (Scope 1 & Scope 2): Reduce by at least 42% compared to FY2021(2) Greenhouse gas emissions in the value chain (Scope 3):

Reduce by at least 25% compared to FY2021

Contribute to realizing a recycling-based society for water and resources/Contribute to society in harmony with nature(1) Efficient use of water resourceWater consumption:(2) Efficient use of metals and plastics
New material*1 consumption:

Reduce by at least 10% compared to FY2020 (per unit of net sales)

Single-use plastic*2 consumption:

Reduce by at least 25% compared to FY2020 (total volume).

TOPICS
Start of Evaluation by the LEAP approach of TNFD
Recognizing the impacts of our business activities on
biodiversity, we started initiatives not only on climatechange but also on biodiversity. The characteristics
of biological resources and water vary dependingon the region. Therefore, we are investigating

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

1

Eliminate or reduce direct
CO2 emissions

2

Eliminate or reduce CO2
emissions by society

3

Capture or transform theCO2 that is emitted

Speciﬁc Measures and Examples of Technology
Development

Material Issues(Risk)Developing business activities that consider
climate change(Revenue opportunities)
Creating businesses that solve the social issues/
Creating environment-friendly businesses
Building partnerships with various stakeholders nergy saving, fuel conversion, and recycling rate
E
improvement
Use of renewable energyReduce GHG emissions throughout the value chain
Power cable systems
Next Generation Photonics Business Innovation
 evelopment of technology for producing green LP gas withD
Ramune Catalyst®

Reduce by at least 10% compared to FY2020 (per unit of net sales)

SBT*3 1.5˚C certification was obtained for the Group’s 2030 greenhouse gas reduction targets in July 2023.
*1. New material: virgin materials for electrolytic copper, new aluminum ingots, and plastics, etc.
*2. Single-use plastic: disposable plastics used in containers, plastic bags, etc.
*3. SBT: Science Based Target.

076*F or details, please refer to “Sustainability Promotion Framework” onpages 22 to 23 of this report.

Strategy

Three Carbon Neutrality Initiatives

2

The Board of Directors also reports and shares quarterly
progress related to climate change.

Minimize water usage, and promote the use of recycled materials, including waste plastic,
throughout the value chain

Scope 1: Direct emissions from the company’s plants and offices
Scope 2: Indirect emissions from the electrical power and heat paid by the company

1

The status of the Furukawa Electric Group’s responses
since FY2022 are shown as underlined text:“Locate”— Locate your interface with nature —while referencing LEAP (Locate, Evaluate, Assess,and Prepare) approach shown in beta versions of
the TNFD (Taskforce on Nature-related Financial
Disclosures) Framework.

■Scenario Analysis
In FY2019, we participated in the Scenario Analysis
Support Project for Climate-related risks andopportunities in line with the TCFD, conducted by the
Ministry of the Environment. We identified climaterelated risks (transition risks and physical risks) andopportunities and conducted scenario analysis for the
Infrastructure business (optical fiber and cable productsof the Communications Solutions business and power
cables of the Energy Infrastructure business). We thenidentified climate-related risks and opportunities andconducted a scenario analysis for the automotive
products business in FY2020 and for the AT & functional
plastics business and the copper & high-performancematerial products business in FY2021.
Through FY2021, in examining the “different climate-

related scenarios, including a 2°C or lower scenario”
recommended by the TCFD, we examined a “2°C or lower
scenario” and a “4°C scenario” step-by-step for eachbusiness field by referring to several existing scenarios
published by the International Energy Agency (IEA) andthe Intergovernmental Panel on Climate Change (IPCC).
In FY2022, to accelerate our efforts toward achievingcarbon neutrality by 2050, we revised the Environmental
Targets 2030 and applied for an SBT (1.5°C Targets)
initiative certification. Accordingly, the scenarios forthe business fields, for which we had been conducting
scenario analysis, were revised to the “1.5°C scenario”
and the “4°C scenario.”FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

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About Furukawa Electric Group

Material issues of risks

 urukawa Electric Group’s Definition of the period to Consider Climate-related Risks
F(Transition Risks and Physical Risks) and Opportunities
Medium-term

Up to FY 2025

Period up to achieving the 2025 Mid-term Plan and sustainability targets

Long-term

Up to FY 2030

Period up to achieving the Vision 2030 and the Environmental Targets 2030

Super-long-term

Up to FY 2050

Period up to achieving the Environmental Vision 2050

Identified climate related risks and opportunities

1.5°C

4°C

Major

Minor

Increase in procurement costs of renewable energy
Increase in procurement costs of materials (copper, aluminum, plastics) due to carbon taxation

Major

Minor

Damage to buildings due to large-scale disasters (large typhoons, heavy rains, heavy snow,
lightning strikes) caused by abnormal weather
Supply chain disruption of customers or suppliers caused by weather disaster

Minor

Minor

Shut-down of coastal factories caused by flooding and drought

MediumMajor

Increase in air conditioning costs due to a rise in average temperature

MediumMajor

Markets

Increase in revenue and profit from accelerating development of 5G/B5G along with the constructionof smart cities and the surge of communications traffic
Increase in revenue and profit from demand growth for products related to telecommunications,semiconductor memory, 5G and smartphones
Increase in revenue and profit from demand growth for submarine cables and the enhanced coretransmission network along with the increase in renewable energy generation
Increase in revenue and profit from demand growth for products along with automotive
electrification and weight reduction

Major

MediumProducts and services

Increase in sales from demand growth for low-carbon and carbon-free products and recycled
products in response to requests for caron neutrality and circular economy

Major

MediumRisks
Physical
risks

Acute

Chronic

Opportunities■Efforts toward Achieving Carbon Neutrality
By conducting scenario analysis, we identify climaterelated opportunities and risks and work to achievecarbon neutrality by both capturing revenue opportunities
and mitigating risks.
As for revenue opportunities, during the period of the2025 Mid-term Plan, we will continue to stabilize revenue
from existing businesses and develop a foundation forthe creation of new businesses; and we will contributeto achieving carbon neutrality by 2030 by solving social
issues in each business field. For example, to strengthen
our existing businesses, we are working to expand theuse of renewable energy in our power cable business; tocreate new businesses, we are working to realize a B5G
society in the communications field; and to build a social

infrastructure that enables “Succession of local resources
and local culture for the future”* through the use of green
LP gas.
As for risks, we have established the Environmental
Vision 2050 as our super-long-term goal, with thechallenge target of reducing GHG emissions (Scopes
1&2) in our business activities to zero by 2050, as well as
another target of reducing GHG emissions throughout thevalue chain. Backcasting from these targets, we have set
targets for reducing GHG emissions in the Environmental
Targets 2030 and the sustainability targets in the 2025
Mid-term Plan to work toward achieving these reductions.
* Succession of local resources and local culture for the future: This expresses
passing on regional resources and cultures to the next generation in addition to
local production for local consumption■Efforts to Reduce Greenhouse Gas (GHG) Emissions: Use of Renewable Energy
The FY2022 result of “Ratio of renewable energy use to
In our efforts to reduce greenhouse gas emissions
total electricity consumption”, assigned as a sustainability(Scopes 1&2) in business activities, we are promoting
indicator, was 20.2%. We will improve renewable energy
energy saving and fuel conversion at our factories, anduse to achieve the FY2025 target of 30%.
the use of renewable energy throughout our domestic
and overseas Group companies.
Usage of hydroelectric power and solar power:
One of the group companies, Furukawa Nikko Power
Generation Inc. owns four power plants and supplies

078

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Corporate Information/Data

Solar power generation panels installed at the
Imaichi East Plant of the Copper Foil Division(operation start, February 2019), and introductionof electricity derived from renewable energy(operation start, April 2022)

Business impact

Carbon tax on GHG emissions

Policies andTransition regulations
risks
Markets

Management Foundation

strip products are produced using hydroelectric power. In addition, solar
power systems are installed for utilization in Copper Foil Div., Mie Works,
domestic Group companies such as Furukawa Automotive Systems
Inc., Furukawa Battery Co., Ltd. and production sites at overseas Group
companies in Mexico, China, India, and Brazil. Out of these, Mie Works
installed the system of on-site PPA. We will continuously move ahead on
the installation of the solar power system.

Assessment of Impact on Business in 2030
Category

Management Strategy

electricity generated by hydroelectric power. It covers
100% of the electricity for Nikko Works, and copper

Introduction of electricity derived from renewable energy:
At overseas group companies, electricity derived from renewable energy
is used at production sites in Germany, Italy, Hungary, and the Philippines.
Also in Japan, from April 2021, Hiratsuka Works partially started
introducing electricity derived from renewable energy. From April 2022
onwards at domestic production sites in all Copper Foil Div.(Imaichi East
Plant), Chiba Works, Mie Works, and four domestic group companies havebeen partially using electricity derived from renewable energy. In addition,
all electricity used in Tokiwanbashi Tower, where the headquarters is
located, is derived from renewable energy.

Philippines Plant of the Thermal Management
Solution & Products Div.: Replace all electricity
used with electricity derived from renewableenergy (October 2022)■Efforts to Reduce GHG Emissions Throughout the Value Chain
We are working on reducing GHG emissions in thevisible the reduction of GHG emissions from our core
upstream operation of the value chain: use of aluminumproducts, such as aluminum wiring harnesses and copperbare metal, manufactured by hydroelectric power, tofoil, when used in customersʼ products.
make aluminum wire rods — the material of aluminum
We thus promote GHG emissions reduction across thewiring harnesses; and use of recycled copper to makeupstream and downstream operations of value chain,copper foil raw materials. In the downstream operation ofin addition to reducing GHG emissions from businessthe value chain, we adopt Life Cycle Assessment to makeactivities.

Raw materials

Production

Aluminumsubstrate

Aluminumdrawing stock

Aluminum
conductor wire

Raw materials madeusing hydroelectric
power (Indonesia)

TMS (Indonesia)

FAPV (Vietnam)

Copper substrate
Recycled copper

Solar power

Original copper
alloysαterminal, etc.

Nikko Works

FAS Mie Works

Hydroelectric power(Furukawa Nikko Power Generation)

Solar power

Product uses
Aluminum wire
harnesses

Contribute to reducing
CO2 through the use ofaluminum wire harnesses
for automobiles

Wire harnesses &components
Solar power
FAS Headquarters
FEAP (Philippines)
FURMEX (Mexico)
FME (India)
FAST (Thailand)
FAPD (China)
FAVV (Vietnam)

Reduce CO2 through thepartial use of recycledcupper material

Geothermal power
FALP(Philippines)

Electrolytic
copper foil

Recycled copper
Reduce CO2 through Copper foil products
containing 100%
the use of recycled
recycled copper
copper wires

Copper Foil Division(Imaichi East Plant)

Solar power
Electricity derived fromsubstantial renewable energy

Contribute to reducing
CO2 through the use of
copper foil for lithiumion batteries(Completed UL 2809
validation in July, 2022)

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

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About Furukawa Electric Group

Material issues of risks

Risk management
compliance. Subcommittees are established for eachrisk of high importance, such as environmental risk.

• By considering climate-related risks such as those
posed by climate change and natural disasters as
the priority issue for environmental risk, we regularly
discuss preliminary strategies for climate-related risks
mainly at Furukawa Electric Group Environmental

Committee (hereinafter, “Environmental Committee”)
and business continuity measures after the occurrenceof risks are discussed mainly at Central Disaster
Prevention and BCM Promotion Committee.

Central Disaster Prevention and BCM
Promotion Committee, chaired by theGeneral Manager of Risk Management Divisionand composed of general managers of eachbusiness division, divisional representatives,
etc., meets every three months to establish
Business Continuity Management (BCM),
identifies business continuity risks, including
natural disasters, and promotes and manages
the identification process.

For more information, please refer to “Overview of Risk Management
and System” on page 71 of this report.

Risk Management Promotion Framework

Board of Directors
Submit proposals and reports

Risk Management Committee
chair: President
Vice chair: General Manager,
Risk Management Division
Committee members: Management
Organizer: General Manager,
Risk Management Department

Furukawa Electric Group
Environment Committee

Central Disaster Prevention and
BCM Promotion Committee

Chair: General Manager,
Risk Management Division
Vice Chair: General Manager,
MONOZUKURI Innovation
Division
Committee
members: Management
Organizers: General Manager,
Environment Department,
and General Manager,
Facility Strategy Department,
Production Technology &Engineering Department

Chair: General Manager,
Risk Management Division
Vice Chair: General Manager,
Strategy Division
and General Manager,
MONOZUKURI Innovation
Division
Committee
members: General managers
of each business division,
divisional representatives, etc.
Organizer: General Manager, Risk
Management Department• Internal carbon pricing (using a shadow price) has
been calculated since FY2019. By visualizing theamount of CO2 emissions for each division using carbon
prices, we encourage preparation to avoid climatechange risks toward decarbonization. For example, adivision that cannot meet its reduction target will have anegative shadow price and will incur a hypothetical loss.
Conversely, a division that meets the target will have apositive shadow price and will bring hypothetical profit.
• The Group takes appropriate management andpreventive measures against physical risks related
to climate change (heavy rain, heavy snow, etc.). Each080

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Management Foundation

Corporate Information/Data

Indicators and targets• Furukawa Electric Group has established Risk
Management Committee, which has the function ofsupervising and promoting risk management.
The Committee meets every six months to discuss
issues such as risk management, internal control, andEnvironmental Committee, chaired by theGeneral Manager of Risk Management Divisionand composed of top management including
general managers of each business divisionand corporate division meets every threemonths to discuss issues related to climatechange among others, and submits proposals
and reports to Management Committee andthe Board of Directors.
In FY2022, to accelerate our efforts
toward achieving carbon neutrality by 2050,
the Committee discussed the revision of
the Environmental Targets 2030 and theapplication for an SBT (1.5°C Targets) initiativecertification, and submitted proposals andreports to Management Committee.

Management Strategy• Furukawa Electric Group Environmental Vision 2050 (Formulated in March 2021)
Environmental Vision 2050 embraces the contribution
a carbon-free society, we aim to reduce GHG emissions
to the realization of a sustainable society throughout thethroughout the value chain, and have set the challenge
value chain through the provision of environment-friendly
target of zero GHG emissions from our business activities
products and services and recycling-based production(Scopes 1&2) by 2050.
activities. As part of our contribution to the realization of• Environmental Targets 2030 (Revised in December 2022)
We have revised the Environmental Targets 2030, a milestone toward the realization of the Environmental Vision
2050. To contribute to the realization of a carbon-free society, we have updated our 2030 target as follows.
(1) Greenhouse gas emissions from business activities (Scopes 1&2): Reduce by at least 42% compared to FY2021(2) Greenhouse gas emissions in the value chain (Scope 3): Reduce by at least 25% compared to FY2021
Furukawa Electric Group’s GHG reduction targets of 2030 obtained SBT (Science Based Targets) 1.5°C
certification in July 2023.
• Setting sustainability indicators and targets
We aim to achieve the sustainability target for FY2025
setting 2025 Mid-term Plan of “GHG emissions reduction
rate (Scopes 1&2)”, “Ratio of renewable energy use
to total electricity consumption” and “Sales ratio ofenvironment-friendly products,” as sustainability
indicators that measure the progress of addressing
material issues of “Developing business activities that
Material issues“Developing business activities that consider climate change” and“Creating businesses that solve social issues/Creating environment-friendly businesses”

Indicator: Sustainability Indicator
GHG emissions reduction
rate (Scopes 1&2)

Group

Ratio of renewable energy use tototal electricity consumption
GHG emissions reduction
rate (Scope 3 )Sales ratio of environmentfriendly products

Based on the quarterly evaluation and posting effects,
a renewable energy introduction plan is promoted forany division that does not meet the target. In addition,
we have set GHG emissions targets for each businessdivision since FY2023, and have established a rulethat each business division will bear the increase inprocurement costs of renewable energy if the targets
are not met.

consider climate change” and “Creating businesses
that solve social issues/Creating environment-friendly
businesses.” In accordance with the revision of theEnvironmental Target 2030 for FY2022, we raised the
FY2025 targets for “greenhouse gas emission reduction
rate (Scopes 1&2)” and “ratio of renewable energy use tototal electricity consumption.”

Base
year

ResultChallenge
targetTarget (Reference value)

FY2021

FY2022

FY2022

FY2023

FY2025

FY20302017-29.0%-36.8%-17.7%-21.2%(-42%)*1(-59%)*1

2021

—

—

—

—

-18.7%*-42%*2

—

10.9%

20.2%

11.5%

12%

30%*3

—

—

2019

-1.0%

-6%

-4%

-5%

—

—

—

2021

—

—

—

—

-11%*2-25%*2

—

61.9%

65.0%

64%

66%

70%

—

—

—

2

FY2050
Zero emission*1. Base year was updated to FY2021; the reduction target value when applied to the former base year of FY2017 is also shown for reference.
*2. Target value for FY2025 was updated upon the revision of Environmental Targets 2030 in FY2022.
*3. The FY2025 target value for the ratio of renewable energy use to total electricity consumption was raised upon the revision of Environmental Targets 2030.

For details of Scope 1, Scope 2, and Scope 3 by category, please see the “Climate change data” on page 94 of this report.

TOPICS
Furukawa Electric Received the highest rating for CDP’s Supplier
Engagement Rating for Fourth Consecutive Year- High recognition for the initiatives for greenhouse gas emissions in the supply chain https://www.furukawa.co.jp/en/release/2023/kei_20230320.html

works take measures for air-conditioning to cope with
global warming.

Furukawa Electric obtains SBT 1.5°C certification for greenhouse gas
emissions reduction targets- Raising the greenhouse gas emissions reduction targets with the aim of becoming
carbon neutral in 2050 –https://www.furukawa.co.jp/en/release/2023/kei_20230803.html
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

081

About Furukawa Electric Group

Material issues of risks

Strengthening Human Capital and Organizational
Execution Abilities
Furukawa Electric Group Vision for Our People

Furukawa Electric Group Vision for Our People
SUSTAINABLE SUCCESS

are our greatest value.
Transformation

the development of our people

Diversity

will enable sustainable longterm success of our Group.

Positive

SupportCollaboration
R

GrowthEngagement

Challenge

Innovate
Challenge

Role of the Individual

Role of the Leader

Principles of Human Resources●E ach individual proactively and continuously develop
and deliver the best of their skills and competencies
through engagement and collaboration.

●L eaders encourage the engagement of all people while
supporting the growth of the individual.

●A ll human resource policies, procedures and systems willreflect fairness, support diversity and encourage all of ourtalent to proactively challenge and develop themselves.

●L eaders facilitate the transformation of the individual’s
skills and competencies to deliver successfulorganizational accomplishments.

●A s a member of both Furukawa Electric Group and theglobal community, each individual must work withethics and integrity in mind, and put their effort towards
making the world a better place.

●L eaders demonstrate behaviors that support a creativeand positive organizational culture through teamwork
and collaboration.

Basic Policies of Our Vision for 2030

●B
 y fostering on organizational culture which value people,
Furukawa Electric Group will nurture each individual’s
confidence in the company.

Basic Policies

Our group has identified “strengthening humancapital and organizational execution abilities” as a key
management issue (material issues) to solve when it
comes to achieving Furukawa Electric Group Vision 2030(“Vision 2030”) and have set three basic policies (shownon the right) aimed at the achievement of the Furukawa
Electric Group Vision for Our People.

I.

Secure diverse personnel and support the growth ofpeople who continually take on challenges.
II. Aim at becoming an enterprise group where everyone
plays a leading role and feels excited to work with pride
III. Nurture Furukawa Electric Group’s culture where
teams accomplish things to the end.

Human Resource Management Strategies for 2025 Mid-term Plan
In the implementation of our management and businessstrategies, we will coordinate our growth vectors throughdialogue so that both individuals and organizations canimprove their performance, grow, solve social issues, andachieve Vision 2030.

Grow significantly through work
experience and self-directed
learning after producing a clear
image of one’s career goals
Changes in values• Increasing of diversity• 100-year lives• Company-focused tojob-focused082

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Improve“Will”
Increase
“Can”

Share
“Must”

Companies andorganizations
Increase competitiveness byacquiring and developing
appropriate human resources for
executing business strategies

Improving productivity byaligning growth vectors through dialogue

Taking into consideration the “four perspectives
and six elements of human capital andorganizational execution abilities,”
work to deploy multi-faceted measures

Awareness/mindset/culture

Actions/Systems

Engagement

Abilities/Skills

VisionTargets
Leadership/
Team mindset

Design of theorganization/Personnel
composition

Organizational Culture/
Communication

Flow of Information,
coordination, and decisionmaking machanism(1) Measurement and Utilization of Engagement
In promoting our basic policy (2) “Aim at becoming an enterprise group where everyone plays a leading role andfeels excited to work with pride,” we set targets based on the score of “sustainable engagement” in the Furukawa
E-Survey as a sustainability indicator in the 2025 Mid-term Plan, and will steadily implement a variety of measures.
Engagement is closely linked to the other five of the six elements, and is therefore used as a comprehensive indicatorfor strengthening human capital and organizational execution abilities. Doing that, we will conduct activities targeting
the global manufacturing industry standard value of 85.
(2) Overhaul of Our Compensation System and Strengthening of Employee Communication
Based on our basic policy (1) “Secure diverse personnel and support the growth of people who continually takeon challenges,” in December 2021, we revised our personnel treatment system based on the concepts of “promotionof the taking on of challenges,” “simplicity and openness,” and “human resource development.”(i) We will redefine the communication processes related(ii) A gainst the backdrop of communication related toto our personnel evaluations, and have superiors
the personnel evaluations described in item (i), we
communicate their expectations to employees based
will move away from a pay raise system that is basedon the job classification system in accordance withon the assumption that one’s ability will increase eachthe individual’s functions and roles, while also having
year and overhaul our pay raise system (including pay
them observe the efforts and actions being undertaken
reductions) that reflects the abilities and attitudes
by members of their team on a daily basis. In doing
currently being demonstrated by the subject
this, we will go about increasing the extent to which
individuals. In doing this, we will aim to provide a
individuals are satisfied with their evaluations throughspark for the motivation of each employee when it
the conducting of evaluations that are based on facts
comes to taking on challenges, and aim to foster
alongside the provision of responsible feedback on areas
healthy competition and a healthy feeling of tensionof improvement, thereby leading to individual growth.
within the company.
(3) Employee Benefits
Through the development of welfare facilities and systems, we are working to maintain and improve the health of ouremployees and support them in their daily lives. We strive to create an environment in which employees can face theirwork with peace of mind.

Have individuals and businesses grow together andimprove upon their execution abilities—> Solve social issues —> Achieve Vision 2030

Individuals* PDS cycle: Plan Do See cycle

Engagement (individuals × awareness/mindset/culture)Conﬁdence

GrowthCorporate Information/Data

execution abilities that includes the six elements ofpeople and organizations), constructing visualizationsof the state of human resources and organizations, andreflecting improvement measures based on those results
upon our business activities.

Organizations

Accomplishment

We recognize that investment in

When it comes to carrying out specific activities, we will
set up a framework focusing on people and organizations,guided by four perspectives (“individuals,” “organization,”“awareness/mindset/culture,” and “actions/systems,” ）andsix elements（ “engagement,” “leadership/team mindset,”“organizational culture/communication,” “abilities/skills,”“design of the organization/personnel composition,” and“flow of information, coordination and decision-making
mechanism”) Having done that, we will ascertain an
overall picture of our activities and consciously work
toward improving them as we go about conducting daily
business activities.
We will go about promoting initiatives by going througha PDS Cycle* which entails conducting the Furukawa
E-Survey (a survey on human capital and organizational

Management Foundation

Individuals

The people of Furukawa Electric GroupManagement Strategy

External environmental
changes• VUCA• Globalization• Job mobility

Indicators and Targets
Material issues“Strengthening human capital and organizational execution abilities”

Furukawa ElectricGroup

Indicator

Result: Sustainability Indicator

FY2022

FY2023

FY2024FY2025

FY2030

65

65

70

75

85

—

—

—

—

85

Employee Engagement Scores

TargetFURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

083

About Furukawa Electric Group

Material issues of risks

Leadership and team mind (organization × awareness/mindset/culture)
In order to achieve our basic policy (3) “Nurture Furukawa Electric Group’s culture where teams accomplish things
to the end,” we are working on leadership transformation initiatives.

Furukawa Electric’s Seven Principles for Leaders
In an environment of rapid change and high uncertainty, it isnecessary for us to ensure the psychological safety of teammembers and achieve results as a team when it comes togoing about continuously generating corporate value.
In 2020, with the aim of forming organizations which
produce results as teams, we established Furukawa
Electric’s Seven Principles for Leaders, which consistsof one basic mindset and six action principles forleaders to build good working teams. We implement
leadership training, have executives and managers (atthe level of section manager and above) provide “action
declarations” to those around them and subsequently put
the content thereof into practice on a daily basis. We also
have 360-degree feedback provided to facilitate further
changes when it comes to action.
Adherence to the Furukawa Seven has been practiced
by about 500 officers and general managers of Furukawa
Electric and Group companies in Japan since fiscal
2020, and by a total of about 1,300 employees including
managers since fiscal 2021. In addition, we ask otherregular employees to make efforts similar to those of
their leaders, as they are pre-positioned to understandthe leader’s efforts, and support and cooperate withthem. We also make various efforts to work together as
openly as possible and encourage each other, under theconcept of enjoying change, taking on challenges, andaccomplishing them.
With three years having passed since the start of theinitiative, the results of Furukawa E-Surveys have confirmed
for us that the relationships existing among team members
have improved. Going forward, we will focus on theconnection between team activities and results, andaccelerate our efforts to further strengthen teamwork.
1 important mindset and 6 action standards

Have gratitude
and trust

M IND SET

Take theinitiative

Communicate
to be understood

A CTION

A CTION

Encourage
the challenges

A CTIONF U RU K AWA S E VE N

Seven principles for leadersGiveappropriate
feedback

A CTION

Listen anddialogue

A CTION

Empowerand hold
accountable

A CTION

Organizational culture/communication (organization × awareness/mindset/culture)
Based on our basic policy (1) “Secure diverse personnel and support the growth of people who continually takeon challenges,” we are promoting the creation of an environment and culture that embraces diverse personnel andbrings out the best in them.
(1) Promotion of Diversity and Inclusion (D&I)
comes “strengthening human capital and organizational
Based on our basic policy “Secure diverse personnel
execution abilities.” Having done that, we haveand support the growth of people who continually takeestablished the HK* and D&I committees directly
on challenges,” the Group is promoting the creation
under the president to actively promote company-wideof an environment and culture that embraces diverse
initiatives.
personnel and brings out the best in them.
* HK: Hatarakikata Kaikaku, or work-style reform
We position D&I as an important element when it

084

The Group aims to create a situation where the statutory employment rate can be stably carried out while
anticipating an increase in the rate.

NonJapanese

We realize the right person for the right place from a global perspective, in terms of demand in each businessstrategy and strengthening management capabilities.

Mid-career
hiringWe actively promote mid-career hires of diverse human resources to strengthen expertise and accelerate thediversification of perspectives.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Corporate Information/Data

Objectives Related to Support
the Success of Women in the Workplace(ii) Promotion of the Employment of People with Disabilities
From the perspective of D&I, which not only serves tohave us fulfill our social responsibilities but also has us
pursuing the potential of diverse human resources andorganizations as a foundation for corporate growth, weare actively working to expand our working environments
to accommodate the employment of people withdisabilities. In addition to hiring activities undertaken
through Group companies and our special subsidiary

Furukawa New Leaf, we will further
improve upon our work environments
and undertake work style reform,
including when it comes to remote
work and accessibility for those with disabilities so that
we can establish environments which allow employees towork more comfortably.

(iii) Work Style Reform
We are promoting a variety of measures from thetwo sides of “work style reform” aimed at improving
productivity and work satisfaction, and “organizational
culture reform” aimed at promoting the realization of theGroup’s Core Value.
As a measure serving to support the taking on ofchallenges and the growth of individuals, and to enable
individuals to demonstrate their abilities, we are working
to improve work-life balance for employees by expanding
upon our system which supports the balance between
work and various life-stage events, such as pregnancy,
childbirth, childcare, and the providing of nursing care, as
well as various types of vacations, flextime, and remote
work systems. As an employer certified as a Kurumin

In recognition of these efforts,
our company has been recognized
as an Excellent Eruboshi (thirdstage) Company under the Act on
the Promotion of Women's Active
Engagement in Professional Life.

1

We aim for 7% of females in managerial positions by fiscal 2025

2

We aim for 15% of females in chief positions by fiscal 2025

3

We aim for 40% of females in university graduates recruits byfiscal 2025

(Note): A summary of our initiatives and information on our results are available
in the Ministry of Health, Labour and Welfare’s Database on Promotion of
Women’s Participation and Advancement in the Workplace
https://positive-ryouritsu.mhlw.go.jp/positivedb/detail?id=529(Only available in Japanese)company actively supporting the balance between workand the raising of children since 2007, we have been
actively supporting the raising of children.
In order to flexibly respond to the rapidly changing
environment and continue growing even after the
COVID-19 pandemic is behind us, we will promote a
hybrid style of work in which each organization andindividual employee flexibly combines real and remote
work according to the characteristics of the business andoperations involved. By taking full advantage of the benefitsof this way of working, we aim to increase productivity andsatisfaction, and achieve results as a team.

Indicators and Targets
Material issues“Strengthening human capital and organizational execution abilities”
Indicator

Result: Sustainability Indicator

In light of women’s influence on discussions and decision-making, we implement initiatives to enrich human capital fromrecruitment to the development of persons who play central roles. We keep in mind that 30% of management positions
are held by women as the future target, which is generally said to the minimum ratio for affecting decision-making.

People withdisabilities

Management Foundation(i) Womenʼs Empowerment
We believe that ensuring diversity within the decisionmaking layer is particularly important as a foundation forcorporate growth, and we have set the ratio of women in
managerial positions as a sustainability indicator within
the 2025 Mid-term Plan. Seeing the fact that the absolute
number of female employees is small as the biggest issue,
we are persistently working to maintain and strengthen our
pipeline in terms of all aspects ranging from recruitment to
the development and promotion of core human resources.
We are also working to improve the organizational culture
and environment found throughout the company, suchas by reforming things when it comes to the leadership ofsupervisors, strengthening feedback, developing flexible
working styles, and supporting self-directed careerdevelopment so as to allow for female employees and theirsuperiors to view career advancement in a positive manner.

Basic Policy on Diversity & Inclusion
Women

Management Strategy

FY2022

FY2023

Ratio of female in managers*

3.8%

4.8%

Ratio of female candidates for managerial
positions (sub-section manager positions)*1

11%

Ratio of female individuals in terms of new
graduate hires (graduates of universities)*2
Employment rate of people with disabilities*3

1

Furukawa
Electric

TargetFY2021

FY2025

FY2030

5%

7%

15%

12%

—

15%

20%

20%

27%

—

40%

40%

2.32%

2.35%

—

2.40%

2.65%

*1. As of March 31, the end of fiscal year
*2. The number of new graduates hired is as of April 1 of each fiscal year
*3. The actual employment rate of people with disabilities as of June 1 of each fiscal year

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

085

About Furukawa Electric Group

Material issues of risks(2) Promotion of Health and Productivity Management
We define “Health and Productivity Management” as theaim for each employee to achieve good physical, mental
and social conditions (well-being). Based on the belief
that improving the vitality and performance of employees
will lead to the growth of organizations and companies,
we are promoting various health and Productivity
management measures as a unified organization.

From the managerial viewpoint, “Furukawa Electric Group Healthand Productivity Management Declaration” was established,in order to promote “Health and Productivity Management”
which strategically strives for the Health and Productivity
Management and the health promotion of the employees. We
assist our employees in raising their health consciousness andactively engaging in their own health promotion.

Furukawa Electric Group Health Management Declaration
Furukawa Electric Group recognizes the promotion of mental and physical health among employees as an important management issue.
Based on this recognition, we will make further progress in the activities we have undertaken as part of health and safety management.
It is important for employees to be able to face their work in good physical and mental condition when it comes to “aiming to forma corporate group that is creative and full of vitality which leverages diverse human resources,” which is part of our management
philosophy. For this reason, we at Furukawa Electric Group will prioritize safety and health at every step of our journey, promotevarious activities while keeping Health Management in mind throughout the company, thereby going about building “a company where
everyone works vigorously, keeps growing and is proud.”We will also strengthen work style reform initiatives and cooperation with public health services of health insurance associations, andwill work even more actively to support employee health and increase health-related awareness.

(3) Penetration of Our Philosophy
In 2007, we established our Group Philosophy andestablished Core Value, which is the set of values we wantinvolved in our achievement of the sustainable growthof the Group based on the Group Philosophy. In orderto promote the penetration of our Group Philosophy,
we distribute cards with Group Philosophy and Core
Value written on them to all employees. In particular, ourBased on the basic policy (1), “Secure diverse personnel and support the growth of the people who continuallytake on challenges,” we are developing personnel management initiatives aimed at developing the systems and humanresources necessary for our management and business strategies.
Integrating business strategies with our human resources portfolio (HRBP activities)
Achievementof Vision
2030

Adjustments made in relation tocompany-wide personnel strategies
Building ofa human resources portfolio

Drafting of
succession plans anddevelopment plans

Strengthening the developmentof human resources

Improving hiring skills(especially for
mid-career hiring)

Strengthening thedevelopment of humanresources (successors)(human resources for management)(1) Drafting of Succession Plans and Development Plans
Succession plans and development plans are formulated
and implemented for the purpose of developing
management personnel and candidates for generalmanagers of each organization.
With regard to human resources working in management
positions, we are promoting the formation of a talent poolusing external assessments and are dispatching employees totake part in external training. We are also conducting systemicorganizational transfers of personnel, including the assigning of
personnel to tough assignments based on development plans.
In addition, the Nominating/Compensation Committee, themajority of the members of which consists of Outside Directors,
monitors the appropriateness and operational status of the
management personnel development system, and systematicallyworks on the appointment of Corporate Vice Presidents and theCEO Succession Plan over the course of several years.

086

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Material issues

Management Foundation

channels, reviewing our recruitment processes, andstreamlining our onboarding program. In doing so, we areworking hard to prevent situations where new hires end
up being unsuitable for the role in question, to provide
support so as to ensure that new hires quickly become
acclimatized to their role, and to ensure their retention.

initial assignment. Limiting the types of jobs to which we
assign new hires serves to enhance the clarity of theircareer paths. We do this to make it easier to provide theemployee with an image of what their individual growth
could look like. We will also be promoting the acquisitionof talented people with diverse sets of ideas.

“Strengthening human capital and organizational execution abilities”

Indicator

Result: Sustainability Indicator
Furukawa
Electric

Corporate Information/Data

Ratio of mid-career hires*2 in total new hires*1

TargetFY2021

FY2022

FY2023

FY2025

FY2030

36%

45.7%

30%*3

30%*3

—

*1. New hires represent new graduates and mid-career hires, covering management, career-track, and clerical positions.
*2. As of March 31, the end of fiscal year
*3. This means that a figure of approximately 30% will be maintained for each fiscal year.

Flow of information, coordination and decision-making mechanism (organization × actions/systems)

Design of the organization/personnel composition (organization × actions/systems)

Clarification ofbusiness strategies
Embodiment of humanresource requirements(2) Improvement of Hiring(i) Mid-career Hiring
In order to secure diverse human resources in an effort
to realize our management and business strategies, wehave set a target when it comes to new hiring to achievea ratio of mid-career hires (management, career track,and clerical positions) of at least 30%.
In order to achieve that target, we are strengthening
our hiring team structure, expanding our recruitment(ii) Hiring of New Graduates
In addition to changes in the hiring environment,
students’ attitudes toward employment are alsochanging. The competition for talent is also becoming
more intense. As part of our efforts to make our company
more appealing to students, we have introduced a“course-based hiring” system which puts a limit to someextent on the jobs made available at the time of their

Indicators and Targets
management team takes the initiative to reflect on ourphilosophy at meetings and encourage employees totake action which embodies the philosophy. We also holdregular workshops and other such events aimed at thepenetration of Group Philosophy and Core Value and willcontinue implementing initiatives to that end.

Management Strategy

In FY2022, the scope of the Succession Plan was
expanded to include general managers, and regular
discussions were held between each division and thehuman resources department regarding the ideal state ofthings when it comes to organizations and the developmentof successors which serve to realize our business strategies.
Development of candidates forthe position of general manager
in each organization

Development of personnel
working in management(human resources
working in management)

Deployment Current deployment taking place
at Furukawa Electric (scheduled Continuing of initiatives
statusto be completed in FY2024)
Selection
Drawing up of succession plansand picking and candidate development
out of talent plans within each department

In addition to succession
plans, external assessments
are also utilized to form atalent pool

Systematic organizational
Development transfers for employees and theissuance of missions are plannedof talentwith regular reviews taking place

Tough assignments anddispatch to external
training(1) Reviewing the operation of the target management system and following up [Furukawa Electric]
To realize our basic policy (2) “Each employee plays a leading role and works with a feeling of pride and excitement,”
we reviewed the operation of the target management system when we revised the human resource system in 2021,
focusing on the following three items with the aim of improving performance, building a culture where people seek to takeon challenges, and nurturing talent: (i) increasing opportunities of and improving the quality of feedback with the aimof enhancing the nurturing of talent, (ii) checking the difficulty level of role expectations defined by qualification andrank as well as individual targets with the aim of promoting the taking on of challenges, and (iii) checking alignment
between individual target buildup and organizational targets with the aim of improving performance.
Speciﬁcally, at the beginning of the ﬁscal year, each
employee was encouraged to set challenging target. In
order to achieve those targets, supervisors provided support
during the ﬁscal year, which made people more consciousof communication taking place between supervisors andteam members. We have made changes to the operation ofthat system, so that it now involves positive impacts on bothin terms of the nurturing of talent and the improvementof performance, which is achieved by frequently providing
feedback through PDCA cycles taking place over shortspans of time. At ﬁscal-year-end meetings, supervisors andteam members undertake communication with one anotherconcerning the facts obtained during daily activities, andprovide feedback on positive points alongside points where
things can be improved, thereby providing motivation whenit comes to carrying out work in the next ﬁscal year.
Additionally, in terms of the results of monitoring(2) Strengthening labor governance(i) Global
In order to reduce risks in the area of labor, we aresystematically checking on the state of labor complianceundertaken in accordance with the laws and regulations

undertaken during FY2022, we found that there were
improvements in terms of employees’ actual sense for the
linkage between organizational targets and personal targets
and their actual sense of the support provided by superiors
when setting challenging targets at the beginning of the
fiscal year and the support provided throughout the fiscal
year. More than 90% of respondents saying that they were“satisfied” or “somewhat satisfied” with the fiscal-yearend evaluation. This confirmed for us that communication
between employees and their direct managers is generally
going well. In order to further improve upon the operationof this system in the future, we will continue to monitor
the implementation of target control, share information on
operational concerns and good practices, and enhance ourfollow-up activities so that individuals can proactively takeon the challenge of higher targets and get a sense for boththeir own growth and organizational contributions.

of the countries where our group operates and providing
guidance when it comes to improvements.
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

087

About Furukawa Electric Group

Material issues of risks(ii) Activities of Domestic Affiliate Companies
Individuals responsible for human resources at Group
companies in Japan meet twice a year to share information
on policies and issues related to human resources andlabor within our Group, and strive to strengthen theGroup’s cooperation when it comes to various issues.
(iii) Labor-management Relations (Furukawa Electric)
When it comes to labor-management dialogue, we maintainthe basic position that both labor and management should
endeavor to engage in sincere discussions. As such, we
focus on issue resolution and the deepening of mutual
understanding based on that position. We hold our Central
Management Briefings twice annually for formal exchangesof opinions between labor and management. We haveconducted such meetings for 70 years since fiscal 1952.
As of May 2023, meetings have been held 141 times intotal. Representatives from labor and management actively
exchange opinions and share information about a broad

In addition, in order to reduce the risks faced in the area oflabor, we regularly check on the state of labor compliancewith Group companies, and we provide them with support
when it comes to responding to items requiring improvement,
including in terms of reviewing the systems in place.
spectrum of items at these briefings, such as with respect
to the business environment, management, and topicalmatters. We also have in place various committees which
are designed to improve the working environment, suchas the Personnel System Exploratory Committee andthe Committee for Studying Shorter Hours. It is at thesecommittees where management and labor discuss things
on a daily basis. These discussions lead to improvements
in various systems and strengthen monitoring functions,such as compliance responses. Through these activities, we
endeavor to solve various issues.

Abilities/skills (individuals × actions/systems)
Based on basic policy (1) “Secure diverse personnel and support the growth of people who continually take onchallenges,” we are implementing various measures from the perspectives of realizing management and businessstrategies and supporting the taking on of challenges and growth of diverse human resources.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Global Human Resource Training System
Training global human resources

SP*2
Generalmanagers
Sectionmanagers

Renewed andcontinued

GlobalMindset Program

Recommend
key people
in eachdepartment
for training as
global humanresources

GBL

Implemented:
FY2006 - 2012

GMP

Diversity
Global Mind Set
Global Leadership
Business Situation

GlobalChallenge Program

GCP

GlobalDevelopment
ProgramGDP

FY 2013–

Data Base
Assistantmanagers

GlobalBusiness Leader

Partially carried out
jointly
Mini MBA
Accounting
Strategy,etc.

(For overseas NS*1)
Implemented startingin FY2010

1 One FURUKAWA course(Overseas dispatching)

2 Frontier course (JICA)(Overseas training
program)※
1. NS: abbreviation of “National Staff (Local employees)”※
2. SP: abbreviation of “Succession Plan”

We believe that generally speaking, there are manycases where, when it comes to OJT education, instructors
and section managers work hard to provide guidance andfollow up on operations in order to have new employees
become more productive. Our own OJT support, however,does not entail the placement of instructors or mentors.

Corporate Information/Data

Rather, we appoint people to the role of “arranger,”times a year to teach skills and share information onwhich we call an “OJT Leader.” The OJT Leader ensuresconcerns and good practices among OJT leaders. Since
that all team members get involved in discussions. The
2021, there has been an increase in the number of cases
goal of this, is to establish an educational system as ansuch as those involving mid-career hiring. We have thusorganization. We also provide opportunities to undertake
been providing the same OJT support as “training serving
PDCA cycles for OJT over the course of a year in orderto strengthen competencies when it comes to leadershipto go about establishing an educational system as an
and training” through open recruitment at workplaces
organization, which we do by providing training fourother than those that accept new employees.
(2) Improvement of MONOZUKURI Capabilities
As part of our creation of a corporate culture that allows
sessions to having training sessions held at each individual
manufacturing site employees and other employees tosite and the introduction of e-learning. We began work onshare information on targets and execute their tasks, we are
creating a tool which provides visualizations of the strengths
aiming to improve upon the “MONOZUKURI capabilities”
and weaknesses of divisions involved in manufacturing, andwe have as a whole unified group. Starting in FY2020,
have applied it to two divisions on a trial basis to improve its
in response to the COVID-19 pandemic, we took thelevel of completeness. In FY2023, we plan to begin its fullopportunity to implement a number of initiatives, such as
scale operations in five departments and expand the scopechanging some of the previous face-to-face joint trainingof departments in a sequential manner.
(3) Support for Career Development(i) Career Support Officeperspective of growth for both companies and individuals,
The Career Support Office was established in FY2021.
as well as the creation of mechanisms aimed at theWith this office, we are expanding our efforts to supportacquisition of capabilities and skills.
employees’ self-directed career development in tandemwith existing personnel systems, including
20s
30s
40s
50s
60s
career design training provided for each age
Tiered training, training undergone on a volunteer basis, correspondence courses,
group and class, seminars to help employees
e-learning, qualification incentive system
Work fora company,
develop their careers, and individual careerTarget control consultations (FM-BJ/FM-BOSS)
retire,start
related consultation meetings.
Career training
Career training
a company,(for mid-level(for younger
employees)
employees)
In FY2022, in addition to these initiatives, wevolunteer,orCareer consultations/Rotation program/Job Rotation Guidebook
began to consider reskilling measures. Thesedo
Establishment of Career Support Office (individual support)
community
include the production of visualizations of theactivities,
In-house secondary job system (F Career Plus)etc.
gaps existing between the current situation
Career information provision and awareness building (portal site utilization, events, etc.)
and the capabilities and skills required from the(ii) Mechanisms for Individuals to Choose Their Careers
Since FY2021, we have been operating an in-house secondary job
system. This system allows employees to volunteer for participationin projects that interest them and constitutes a mechanism
serving to contribute to their own growth, fulfillment, and careerdevelopment. Since the inception of the system, 71 employees
have participated in 27 projects. This has served as a source ofgreat stimulation for the departments taking on the volunteering
employees, improved the motivation of the volunteering employees
themselves, and has had a positive impact on the departments
sending volunteering employees to participate in such projects.
In FY2023, in order to accelerate the realization of more selfdirected careers for our employees, we are also considering
the introduction of an open recruitment system that will allow
employees to volunteer for organizational transfers.

TOPICS

In-house secondary job system(voluntary basis)· Provide support for self-directed career development andmotivate employees to take on challenges.
· Create opportunities for the co-creation of diverse humanresources across organizational boundaries.

Employee

Employee
Sustainable

GrowthGrowthInnovation
Giving back in theform of growth

New discoveriesCompany

Company

Department where the employee
conducts their secondary job

088

consider reskilling measures. These include the productionof visualizations of the gaps existing between the current
situation and the capabilities and skills required from theperspective of growth for both companies and individuals,
as well as the creation of mechanisms aimed at theacquisition of capabilities and skills.

Management Foundation

One’s regular department(1) Development of Human Resources
In addition to the existing tier-based training, we havealso implemented a program for training global humanresources that will eventually shoulder the role ofmanagement in the future, as well as on-the-job training
purposed with facilitating the realization of organizations
that achieve results through teamwork.
In FY2022, in addition to these initiatives, we began to(i) Global Human Resources Training System
We started our Global Business Leader (GBL) training
in FY2006 in order to develop personnel who will takeon the role of management in the future. In FY2013,
this was reformed into the Global Mindset Program(GMP), with an extra emphasis being placed on global
human resource education. We have also operated a
Global Development Program (GDP) for overseas local
employees since FY2010 with the aim of strengthening
links within Furukawa Electric Group, with the curriculum
being partly shared with the GMP. Furthermore, in
FY2014, we launched the Global Challenge Program(GCP). This program involves the dispatch of younger
employees to foreign countries for certain periods oftime, allowing us to secure diverse talent and provide
opportunities for growth.
(ii) OJT Training
In order to realize organizations that achieve results
through teamwork, we believe it is essential to improve thenurturing capabilities of our workplaces, including in relation
to employees who are not instructors. As such, we provide“training for the building of organizations which have peoplegrow” to all workplaces that accept new employees.

Management Strategy

Selected as a “Health Management Brand” and recognized as a “Health &Productivity Management Organization (White 500)” in 2023

https://www.furukawa.co.jp/release/2023/kei_20230308.html (Only available in Japanese)

Selected as a “Nadeshiko Brand” in FY2022: Diversity and Inclusion promotion activities
subject to positive assessment
https://www.furukawa.co.jp/release/2023/kei_20230323.html (Only available in Japanese)
FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

089

Management Analysis of Operating Results and Financial Position

Management Analysis of Operating
Results and Financial Position
Overall Business Condition and Business Results
In fiscal 2022, with the ease of restrictions on socioeconomic activities during the COVID-19 pandemic, theglobal economy has been in a moderate recovery trend interms of both demand and supply. On the other hand, theeconomic environment has remained uncertain due toglobal inflation along with further tightening in monetary
policy, and geopolitical tensions, among others.
The United States saw downward pressure on consumption
due to continued high prices, a decline in housing investments
due to sharp and repeated interest rate increases, and adverse
effects on financial positions of some financial institutions
due to sharp monetary policy tightening. The U.S. economy
has, however, stayed resilient, as consumer spending wasunderpinned by improved labor market conditions. In Europe,
although the region saw the recovery in consumption due tothe ease of restrictions for preventing the spread of COVID-19
as well as signs of recovery in car production, the economy
has slowed down because of continuously rising prices due
to energy price hike/supply constraint accelerated by the
impact of the Russia-Ukraine situation. In China, despite theeconomic growth-oriented policy, the country saw a limited
economic recovery due to strict movement restrictions underzero-COVID policy for a long time, followed by a rapid spreadof COVID-19 after relaxing the restrictions, as well as the
downturn in its real estate market.
In Japan, although the economy has been on a moderate
recovery path as socio-economic activities has been normalized,
it has not entered a full-fledged recovery due to such downward
factors as high prices in response to the depreciation of the yen,
as well as the impact of supply instability and price increases ofoil, natural gas, and various raw materials.
Under such circumstances, Furukawa Electric Groupdefined its ideal state in 2030 and specified relevant target
timeline and scope in “Furukawa Electric Group Vision2030” (hereinafter, “Vision 2030”); and then formulated
the Medium-term Management Plan “Road to Vision 2030:
Transformation and Challenges” (hereinafter, the 2025 Midterm Plan), looking forward from its ideal state in 2025 bybackcasting from Vision 2030. Based on the 2025 Mid-term
Plan, the Group has been working on “maximizing revenues
in existing businesses through a focus on capital efficiency”
and “building a foundation for creating new businesses
by strengthening development and proposal capabilities.”
Furthermore, the Group has also strived for “strengthening
the foundation for ESG management” as it supports theabove-mentioned two initiatives.
With respect to “maximizing revenues in existing
businesses through a focus on capital efficiency,” theGroup has visualized the positioning of each business byusing indicators for growth potential and profitability, andaccordingly allocated management resources to areasof growth potential in a targeted manner; and thereby
promoted management with a focus on capital efficiency
and reviewed the business portfolio. Under this initiative,
the Company considered the positioning of its consolidated
subsidiary, TOTOKU ELECTRIC CO., LTD., and sold all its
shares in the subsidiary in December 2022. Furthermore, as
for Communications Solutions business, the Company has
strived for expanding sales of high-value-added products,
and improving the productivity at its plants by securing
and further nurturing human resources. As for Automotive
Products business, the Company has established its
production/supply structure, which has cost competitivenessand is tolerant of changes, and also strived to reduce costs
through efforts for improving the operational processes,
taking advantage of DX (Digital Transformation).
With respect to “building a foundation for creating new
businesses by strengthening development and proposal
capabilities,” the Company has worked on developing atechnology to synthesize green LP gas*1 that does not rely
on fossil resources as an initiative for creating a new businessthat contributes to realizing carbon neutrality. To accelerate
this initiative toward practical use, in September 2022, theCompany launched Sustainable Energy Succession Project
Team under the concept of “Succession of local resources
and local culture for the future”*2. Moreover, the Company
concluded a contract with a UK client, who works on
development of nuclear fusion*3 power generation that is
expected to be a next-generation energy source, to supply
necessary high-temperature superconducting wire rods.
With respect to “strengthening the foundation for ESG
management,” the Company has been working on achieving“Furukawa Electric Group Environmental Targets 2030”(hereinafter, “Environmental Target 2030”), aiming at
contributing to a carbon-free society and contributing torealizing a recycling-based society for water and resources.
For the greenhouse gas (GHG) emissions reduction target
thereof, the Company obtained SBT WB2°C*4 certificationfrom the SBTi (Science Based Targets initiative). In orderto accelerate its initiatives for realizing carbon neutrality, in
December 2022, the Company revised the GHG emissions
reduction rate in FY2030 under the Environmental Target
2030 to a higher level. With this revised target, the Company
applied for SBT1.5°C certification*5. It aims at achieving thetarget by saving energy during production, reviewing productdesigns, and using hydropower and solar power, among
others. Furthermore, the Company has been continuously
working on “strengthening human capital and organizational
execution abilities.” In order to monitor the current stateof human resources and organizations as well as the effectof improvement measures, in July 2022, the Company

About Furukawa Electric GroupManagement Strategy

conducted a survey on human capital/organizational
execution abilities, including elements related to employee
engagement, with the participation of employees of theCompany and Group companies in Japan and abroad; andmade use of the results for its subsequent activity plan.
With respect to “human rights and labor practice”, Furukawa
Electric Group has provided its managementlevel employeeswith human rights education as a part of human rights
due diligence, and strived for establishing an objective andtransparent relief mechanism by using an external point ofcontact for whistleblowing related to human rights.
With regard to the results in fiscal 2022, net sales of theentire Group increased due to increased sales from opticalfibers in North America in Communications Solutions business,
automotive products such as wire harnesses in the Electronics& Automotive Systems business, favorable exchange rates,
and copper bullion price increase. In terms of profits andlosses, despite the hike of raw material and fuel prices, profit
increased due to the progress in the rationalization of selling
prices via cost pass-through and depreciation of the yen.
As a result, the Group recorded consolidated net sales of¥1,066.3 billion (up 14.6% year-on-year), consolidated operating
profit of ¥15.4 billion (up 35.1% yoy), and consolidated ordinary
profit of ¥19.6 billion (down 0.1% yoy). Furthermore, gain onsale of investment securities of ¥15.3 billion by selling stocks ofconsolidated subsidiaries was recorded as extraordinary income,and loss on business of subsidiaries and associates of ¥2.3
billion was recorded as extraordinary losses. Accordingly,
profit attributable to owners of parent amounted to ¥17.9
billion (up 77.4% yoy). Overseas net sales amounted to¥549.0 billion (up 17.0% yoy), and the overseas net sales
ratio was 51.5% (up 1.1 percentage points yoy).

Financial Position
Total assets at the end of the current fiscal year decreased¥1.0 billion from the end of the previous fiscal year to¥934.8 billion, inventories increased ¥8.2 billion, property,
plant and equipment increased ¥9.1 billion, and investment
securities increased ¥4.2 billion, while cash and deposits
decreased ¥17.7 billion.
Total liabilities decreased ¥18.0 billion from the end of
fiscal 2021 to ¥603.8 billion, with interest-bearing debt,
including borrowings, bonds, and commercial papers,
having decreased ¥18.3 billion compared to the end of
fiscal 2021 to ¥323.8 billion.
Total net assets increased ¥16.9 billion from the end of090

INTEGRATED REPORT 2023

Corporate Information/Datafiscal 2021 to ¥331.0 billion. Retained earnings increased¥14.5 billion due to factors, such as an increase in profit
attributable to owners of parent, and accumulated othercomprehensive income increased ¥9.8 billion. As a result,the equity capital ratio rose 2.7 percentage points fromthe end of fiscal 2021 to 32.5%.

Cash Flows
Cash and cash equivalents at the end of fiscal 2022 were¥52.0 billion (down ¥15.7 billion from the end of fiscal 2021).
Net cash provided by operating activities amounted to¥36.5 billion (up 49.8 billion from fiscal 2021) due to therecording of profit before income taxes of ¥30.3 billion,
depreciation of ¥39.1 billion, loss on sale of short-termand long-term investment securities of ¥15.3 billion, anddecrease in trade payables of ¥8.7 billion.
Net cash used in investing activities amounted to ¥21.7
billion (up ¥18.4 billion from fiscal 2021) due to therecording of purchase of property, plant and equipment of¥35.9 billion, proceeds from sale of shares of subsidiaries
resulting in change in scope of consolidation of ¥11.9 billion.
Net cash used in financing activities amounted to ¥34.5
billion (down ¥69.5 billion from fiscal 2021) due to therecording of net decrease in commercial papers of ¥26.0
billion, proceeds from long-term borrowings of ¥10.6
billion, repayments of long-term borrowings of ¥13.0
billion, and dividends paid of ¥4.2 billion.

Basic Policy on Profit Distribution and Dividends
The Company’s capital allocation policy is to strikea balance among investments in growth and new
business opportunity, improvement of balance sheet andshareholder returns, with management priority.
Based on this policy, as its shareholder return policy
during the period of the Medium-term Management
Plan “Road to Vision 2030: Transform and Challenge”
ending in FY2025, the Company will focus its investment
in growth segments in order to increase corporate
value through profit growth, and provide a returnto shareholders in aConsolidated
stable andcontinuous
manner.
net sales
Consolidated
operating profit(Billion yen)(Billion yen)
Specifically, the Company
will make performance-linked
1,200
18
1,066.3
15.4
16
1,000
930.5
dividend distribution,
which
is projected to
be roughly
14
11.4
800
12
30% of profit attributable to owners of parent.
10600
8Based on the above policy, the Company paid
the year-end
400
6
dividends of ¥80 per
share
for
fiscal
2022,
and
will
distribute
4200
2
the year-end dividends
of
¥60
per
share
for
fiscal
2023.
0
0
2021

2022

(FY)

2021

2022

(FY)

Profit attributable to*1. Green LP gas: LP gas produced from
Consolidated ordinary profit
Consolidated net sales
Consolidated operating profit
owners of parent
biogas (a mixture of methane gas,(Billion yen)(Billion yen)(Billion yen)(Billion yen)which is from the fermentation of
25
20
1,200
18
17.9
animal manure and food waste, and1,066.3
15.4
16
19.7
19.6
carbon dioxide).
1,000
930.5
20
16
14
*2. Succession of local resources and local
11.4
800
12
culture for the future: This expresses
15
12
10.1
10
passing on regional resources and
600
8
10
8
cultures to the next generation in
400
6addition to local production for local
4
5
4
consumption.
200
2
*3. N
 uclear fusion: The energy is released
0000from nuclear fusion reactions by
2021
2022
(FY)
2021
2022
(FY)
2021
2022
(FY)
2021
2022
(FY)
trapping high-temperature plasma (atseveral hundred million degrees), using a strong superconducting magnet. The fuel Profit
of nuclear
fusion comesfrom seawater (deuterium=2H), so it is possible to generate power
attributabletoConsolidated
ordinaryTherefore,
profitwithout CO2 emissions and with reduced environmental
burdens.
nuclear fusion
generation is attracting expectations as a next-generation energy source.
ownerspowerof parent(Billion yen)(Billionincreaseyen)*4. WB2°C: Greenhouse gas emissions reduction
target to limit the temperature
to “well-below 2 degrees Celsius” above pre-industrial levels.
*5. In July, 2023, the SBT 1.5°C certification was25
acquired for the revised targets.20
17.9
20

FURUKAWA ELECTRIC GROUPManagement Foundation

19.7

19.6

16

15

12

10

8

FURUKAWA ELECTRIC GROUP

10.1

INTEGRATED REPORT 2023

091

About Furukawa Electric Group

Financial and Non-Financial DataManagement Strategy

Management Foundation

Corporate Information/Data

Financial and Non-Financial Data
New Frontier 2012
Furukawa G

Mid-term management plan

Operating results(fiscal year)

Financial position(at the end of fiscal year)(fiscal year)

Per share data*2(fiscal year)

RatiosFurukawa G Plan 2020

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

Net sales

924,717

931,781

867,817874,879

843,344967,333

991,590

914,439

811,600

930,496

1,066,326

Operating profit

17,76325,456

17,873

27,116

38,62344,80440,842

23,565

8,429

11,42815,441

Ordinary profit

17,612

25,532

18,59818,71036,02446,90839,07822,771

5,189

19,666

19,639Profit attributable to owners of parent

3,576

5,608

7,355

10,007

17,57028,547

29,10817,63910,001

10,093

17,911

Capital expenditures (CAPEX)

47,77237,43630,67425,68731,58438,53950,03653,14439,96338,144

43,792

Depreciation

35,347

28,10622,50823,23523,307

25,10626,271

29,42332,16333,72139,098

Research and development costs

20,21017,461

16,59916,845

17,454

19,532

21,141

21,65020,217

20,761

23,324

Net assets

222,843

199,733

214,743

198,587

237,051

272,071

279,911

273,030

291,617314,062

330,990

Total assets

819,702714,845734,125

705,725

750,126

808,632

818,021794,616

832,044935,876

934,837

165,739

177,237

190,741

173,163

206,712236,518

247,659

240,280

259,870279,219

303,547

Operating assets*

396,951

294,333

307,688298,228

319,588341,825

364,456

386,176

387,832

444,800

461,822Equity capital

Inventories

104,249

93,66899,443

93,167104,355

113,792

122,890

115,862

120,836

164,116

172,297

Net cash provided by (used in)operating activities

54,947

18,912

41,48941,56940,402

38,42946,46041,942(479)(13,269)

36,516

Net cash provided by (used in)investing activities(44,939)(40,290)(23,533)

1,947(36,361)(34,319)(31,042)(33,119)(1,908)(40,074)(21,677)

Net cash provided by (used in)financing activities(11,402)

29,917(15,537)(20,942)(10,378)(1,943)(19,414)(171)

35,14035,020(34,475)

Basic earnings per share (Yen)

5.07

7.94

10.42

14.17

249.17405.05412.98250.20141.88143.40254.45

Net asset per share (Yen)

234.7

251.0

270.2

2,452.6

2,933.2

3,355.8

3,513.6

3,408.9

3,686.4

3,967.1

4,312.1

Operating profit margin on sales (%)

1.92

2.73

2.06

3.10

4.58

4.63

4.12

2.58

1.04

1.23

1.45

Equity capital ratio (%)

20.2

24.8

26.0

24.5

27.6

29.2

30.3

30.2

31.2

29.8

32.5

Return on operating assets (%)*

4.5

8.6

5.8

9.1

12.1

13.1

11.2

6.1

2.2

2.6

3.3

ROE (%)

2.3

3.3

4.0

5.5

9.3

12.9

12.0

7.2

4.0

3.7

6.1

ROA (%)

2.2

3.3

2.6

2.6

4.9

6.0

4.8

2.8

0.6

2.2

2.1

Total asset turnover ratio (times)

1.15

1.21

1.20

1.22

1.16

1.24

1.21

1.13

1.00

1.05

1.14

3

Figures are rounded down to the nearest one million yen. Other figures of financial data and non-financial data are round to the nearest value.

*1. Operating Assets are the total of inventories and tangible and intangible fixed assets.
*2. We conducted a one-for-ten reverse stock split of our company’s common shares effective October 1, 2016.
*3. Return on operating assets is the ratio of the operating profit over operating assets.

Information for each region
Net sales and overseas net sales ratio (Millions of yen)SocialNumber of Group employees (Unit: Persons)

2018

2019

2020

2021

2022

517,358

Japan

10,902

11,113

10,79811,02910,502

104,326

China

5,546

5,045

4,791

4,859

4,180

(FY)

2018

2019

2020

2021

2022

Japan

521,281495,658

435,195

461,450

China

94,00675,05982,777

100,457

Asia (excluding Japan and China)(FY)

213,260

183,033

141,029

190,877

224,931

Asia (excluding Japan and China)

23,557

23,21923,062

25,97628,200

North and Central America

72,67778,302

78,17991,716

127,793

North and Central America

9,518

7,843

6,739

5,809

5,137

South America, Europe, and others

90,364

82,386

74,41885,99491,915South America, Europe, and others

2,692

3,012

3,059

3,194

3,295

Consolidated net sales

991,590

914,439

811,600

930,496

1,066,326

52,21550,232

48,44950,86751,314

Overseas net sales

470,309418,781

376,403

469,046548,967

47.4

45.8

46.4

50.4

51.5

2018

2019

2020

2021

2022

Overseas net sales ratio (%)

As of March 31, the end of fiscal year. Net sales by region are based on the location of customers and are classified by country or region.

Environment
Greenhouse gas emissions (Scopes 1&2) (103 t-CO2e)

(FY)

Japan

41

44

42

42

41

China

19

18

17

18

19

255

Asia (excluding Japan and China)

34

35

33

33

34

104

North and Central America

12

12

14

13

13

South America, Europe, and others

16

17

17

18

20

122

126

123

124

127

(FY)

Japan

387

342

316

288

China

—

—

124

130

Asia (excluding Japan and China)

—

—

97

110

122

North and Central America

—

—

86

89

74

Total

South America, Europe, and others

—

—

23

23

15

As of March 31, the end of fiscal year.

843

742

648

640

571

INTEGRATED REPORT 2023

2021

Governance
Number of Group companies (Unit: Companies)

2019

FURUKAWA ELECTRIC GROUP

2020

Total
As of March 31, the end of fiscal year.

2018

Total

092

Road to Vision2030(Millions of yen)

1

Cash flows

Furukawa G Plan 2015

2022

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

093

About Furukawa Electric Group

Financial and Non-Financial Data

Climate change data

Human capital data

Greenhouse gas emissions throughout the value chain (Furukawa Electric + Domestic and overseas group companies) (FY)(103 t-CO2e)
2018
2019
2020
2021
2022
CO2

148

139

115

121

116

SF6

49

32

28

7

37

Scope 1

197

172

143

128

153

Scope 2

646

570

504

512

418

843

742

648

640

571

Category 1: Purchased goods and services*1

—

2,493

1,656

1,829

1,855

Category 2: Capital good

—

187

158

134

154

Category 3: Fuel- and energy-related activities*1

—

112

94

123

110

Category 4: 	Upstream transportation and distribution*1

—

73

126

207

323

Category 5: Waste generated in operations

—

22

21

22

18

Category 6: Business travel*1

—

7

6

57

12

Category 7: Employee commuting

—

23

23

24

24

Scope 1+2

Upstream

Downstream

(FY)

Unit

2018

2019

2020

2021

2022

Consolidated Number of employees

Persons

52,21550,232

48,44950,86751,314

Number of employees

Persons

3,816

3,925

4,084

4,201

4,267

9.2

10

12

12

12

Ratio of female employees%
Years old

44.2

44.1

43.8

43.8

43.7

Thousands yen

7,351

7,208

6,916

6,962

6,845

Years

19.6

19.4

18.8

18.4

19.9

Average of male employees

Years

19.7

20.8

20.2

19.7

20.3

Average of female employees

Years

18.4

18.2

17.2

16.5

16.8

%

1.2

1.7

1.6

2.8

3.5

Turnover rate of male employees

%

1.2

1.8

1.6

2.6

3.4

Turnover rate of female employees

%

1.6

0.8

1.5

4.8

4.1

Persons

507

502

520

522

557

Average age of employees
Average annual salary of employees
Furukawa
Electric

Average length of service of employees

Turnover rate of employees

Manager candidates in total
Furukawa
Electric

Ratio of female in manager candidates
Managers in total

%

7.1

8.8

10

11

12

Persons

960

940

964

1053

1,078

—

7

6

7

9

Ratio of female in managers

%

3.4

3.4

3.8

11

9

141

9

3.2

—

4.8

Number of new graduate recruits

Persons

111

119

119

—

—

—

17

108

Category 10: Processing of sold products

16

104

%

28

28

20

—

1,720

1,980

1,575

1,587

30

27

Category 11: Use of sold products*1
Category 12: End-of-life treatment of sold products*1

—

50

51

57

63

Category 13: Downstream leased assets

—

2

3

4

4

Category 14: Franchises

—

—

—

—

—

—

28

28

283

274

1,689

4,735

4,161

4,480

4,458

Scope 1+2+3*1

2,532

5,477

4,808

5,120

5,029

Furukawa
Electric(FY)

Electric power consumption and renewable energy (GWh)

2018

2019

2020

2021

2022

Purchased electric power (excluding renewable energy)

534

499

468

480

343

0

0

0

2

99

Purchased electric power (renewable energy)
Non-utility power generation (hydroelectric and solar photovoltaic)

109

113

93

97

94

Total electric power consumption

643

612

561

579

536

Renewable energy ratio to electric power consumption (%)

16.9

18.5

16.6

17.1

36.0

Purchased electric power (excluding renewable energy)

1,256

1,150

1,052

1,107

927

Purchased electric power (renewable energy)

13

26

25

36

138

Non-utility power generation (hydroelectric and solar photovoltaic)

110

116

95

99

97

1,379

1,292

1,172

1,242

1,162

8.9

11.0

10.2

10.9

20.2

Total electric power consumption
Renewable energy ratio to electric power consumption (%)

Sales ratio

Unit

Furukawa Electric + Domestic group companies
Consolidated
Furukawa Electric
Consolidated

Greenhouse gas emissions perunit of sales
Sales ratio of environmentfriendly products

Occupational Health & Safety Data

t-CO2e/million yen
%

(FY)

2018

2019

2020

2021

2022

0.678

0.660

0.660

0.621

0.494

0.850

0.811

0.798

0.687

0.535

64.8

66.4

68.4

74.3

73.7

40.5

56.2

58.2

61.9

65.0

2019

2020

2021

(FY)

2018

The frequency rate of accidents resulting in time off work

—

0.48

0.59

0.11

0.32

0.32

Domestic group companies The frequency rate of accidents resulting in time off work

—

0.56

0.32

0.21

0.25

0.38

2022

Furukawa Electric

Employees receiving safety training

Persons

1,345

1,890

1,490

1,484

1,858

Furukawa Electric

Employees receiving health training

Persons

7,109

6,271

7,391

6,626

9,684

Furukawa Electric

Total time of receiving health training

Hour

3,584

2,929

The frequency rate of accidents resulting in time off work expresses the number of casualties per million actual work hours,(the number of casualties/Total actual work hours) x 1,000,000.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

1

Ratio of mid-career hires in total new hires*

%

18

26

23

36

45.7

Employment rate of people with disabilities*2

%

2.12

2.14

2.09

2.32

2.35

Supply chain data
Furukawa
Electric

2,803

1,944

3,277

(FY)

2018

2019

2020

2021

2022

213

199

198

248

260

Companes

57

59

1

—*

57

58

Number of co-creation partners undertaking CO 2
Companes
reduction through procurement logistics

20

24

25

25

25

Unit

Number of partner evaluations (Number of major
Companes
business partners)
Number of participants in the Partners Meeting

Furukawa Electric Group calls suppliers who do business with us “partners” who collaborate with us to create value.
*1. From the perspective of preventing new coronavirus infections, we have canceled the Partners Meeting.

Executives data

2018

2019

2020

2021

2022

2023

Persons

12

12

12

11

11

11

Persons

5

5

5

5

5

5

Independent Directors

Persons

3

5

5

5

5

5

Female Directors

Persons

0

1

1

1

1

1

Persons

6

6

6

6

6

6

Outside Audit & Supervisory Board Members

Persons

3

3

3

3

3

3

Independent Audit & Supervisory Board Members

Persons

3

3

3

3

3

3

Female Audit & Supervisory Board Members

Persons

0

0

1

1

1

1

Audit & Supervisory Board Members
Furukawa
Electric

(FY)

Unit

Outside Directors

Directors

Persons

26

25

27

27

25

23

Female Corporate Vice Presidents

Persons

1

1

1

2

1

1

Non-Japanese Corporate Vice Presidents

Persons

4

3

3

3

2

2

Persons

2

2

1

1

3

3

Corporate Vice Presidents

Senior Fellows

Unit

Furukawa Electric

Ratio of female in new graduate recruits*1. New hires represent new graduates and mid-career hires, covering management, career-track, and clerical positions.
*2. As of June 1 of fiscal year

*1. They were recalculated retroactively to FY2021 due to the partial re-evaluation of the calculation method in FY2023.

094

Corporate Information/Data

Category 8: Upstream leased assets

Scope 3*1

Furukawa
Electric+
Domestic andoverseas groupcompanies

Management Foundation

Category 9: 	Downstream transportation and distribution*1

Category 15: Investments*1

Furukawa
Electric+
Domestic groupcompanies

Management Strategy

Numbers of Directors and Audit & Supervisory Board Members are as of the end of fiscal year, but are as of June 23 for fiscal 2023.
Numbers of Corporate Vice Presidents and Senior Fellows are as of April 1.

Intellectual property (patent) data
Furukawa
Electric

(FY)

Unit

2018

2019

2020

2021

2022

Number of patents held in Japan

Patents

4,605

4,523

4,388

4,423

4,364

Number of foreign patents heldPatents

2,712

2,910

2,976

3,160

3,225

Total

Patents

7,317

7,433

7,364

7,583

7,589

The increase or decrease in the number of patents includes the results of periodic update of inventories of patents held.

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

095

About Furukawa Electric Group

Consolidated Financial Statements

Consolidated Financial Statements

Management Strategy

Consolidated statements of income (Millions of yen)Previousﬁscal year

Current
ﬁscal year

Net sales
Cost of sales

930,496
791,804

1,066,326
909,622

Gross profit

138,691

156,703

Management Foundation

Corporate Information/Data

Consolidated statement of cash ﬂows (Millions of yen)Previousﬁscal year

Current
ﬁscal year

Profit before income taxes

20,43030,302

Depreciation

33,72139,098Interest and dividend income
Interest expenses(2,160)3,375(2,519)
6,334

Share of loss (profit) of entities accounted
for using equity method(9,045)(5,991)

1,309
(786)

(1,612)29(1,513)(15,279)

Settlement income(2,051)－－(800)

Refund of social contribution on net income(CSLL) for past years(2,722)

－

1,489
373

402
725

－

2,322

2,303

1,307

From April 1, 2021 From April 1, 2022
to March 31, 2022 to March 31, 2023

Consolidated balance sheets (Millions of yen)
AssetsPreviousﬁscal year

Current
ﬁscal year

As of March 31, As of March 31,
2022
2023

Notes, accounts receivable-tradeand contract assets

65,153
230,326

47,432229,550

Securities

3,257

5,127

Merchandise and finished goods

59,93265,755Work in process

40,11638,556

Raw materials and supplies

64,067

67,985

Other

41,15733,803

Allowance for doubtful accounts(1,048)(1,389)Total current assets

502,963486,821

Non-current assets

Buildings and structures

246,887

247,121

Machinery, equipment and vehicles

475,919

491,387

Tools, furniture and fixtures

75,22976,458Land

35,93533,473

Leased assets

1,273

1,169

Right-of-use assets

15,07823,099Construction in progress

20,07423,069(610,235)(626,488)

260,163

269,288

Total property, plant and equipment
Intangible assets
Goodwill
Other
Total intangible assets

573

211

127,988

125,409

Short-term borrowings

115,000

141,281Commercial papers

54,00028,000

Income taxes payable

2,649

4,730

Provision for product warranties

3,045

2,238

Other

77,03379,365

379,716

381,025

Total current liabilities
Non-current liabilities
Bonds payable

40,00040,000Long-term borrowings

133,120

114,547

9,343

9,284

Retirement benefit liability

43,80638,239Asset retirement obligations

1,485

1,588

Other

14,34019,161

Total non-current liabilities

242,097

222,821

Total liabilities

621,813603,846

Net assets
Shareholders’ equity
Share capital

69,39569,395

Capital surplus

23,17823,179Retained earnings

174,346

188,847

(901)

(871)

266,018

280,550

19,94720,024

Treasury shares

20,52020,236

Total shareholders’ equity

Investments and other assets

Accumulated other comprehensive
incomeInvestment securities

116,767

120,920

Investments in capital

6,082

4,262

Deferred tax assets

7,899

9,428

Retirement benefit asset

8,127

8,900

Other

14,264

15,894

(912)

(915)

152,228

158,490432,912448,015

Total accumulated othercomprehensive income

13,201

22,996

935,876

934,837

Non-controlling interests

34,84327,442

Total net assets

314,062

330,990935,876

934,837

Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

Valuation difference on
available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans

Total liabilities and net assets096

As of March 31, As of March 31,
2022
2023

Notes and accounts payable - trade

Provision for environmental measures

Property, plant and equipment

Accumulated depreciation

Current
ﬁscal year

Current liabilities

Current assets
Cash and deposits

Liabilities

Previousﬁscal year

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

12,446

10,546

2,963

204

817

14,541(3,024)

Selling, general andadministrative expenses
Selling expenses
General and administrative expenses
Total selling, general andadministrative expenses
Operating profit
Non-operating profit
Interest income
Dividend income
Share of profit of entities accounted
for using equity method
Foreign exchange gains
Other
Total non-operating profit
Non-operating expenses
Interest expenses
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on disposal of non-current assets
Gain on sale of investment securities
Insurance claim income
Settlement income
Refund of social contribution on net
income (CSLL) for past years
Other
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Impairment losses
Loss on business of subsidiaries andassociates
Business restructuring expenses
Other
Total extraordinary losses
Profit before income taxes
Income taxes-current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controllinginterests
Profit attributable to owners of parent

38,85088,41347,732
93,530127,263

141,262

11,42815,441

549
1,611

1,095
1,423

9,045

5,991

1,496
1,807
14,5101,668
3,267
13,447

3,375
2,897
6,272
19,666

6,334
2,914
9,248
19,639

2,082
1,859
2,051
—

1,158
15,279
—
800

2,722

—

864
9,580

404
17,642

1,296
1,489

1,187
402

—

2,322

2,303
3,727
8,816
20,430
5,673
1,517
7,190
13,239

1,307
1,758
6,979
30,302
9,455
1,198
10,654
19,648

3,145

1,737

10,093

17,911

Foreign exchange losses (gains)
Loss (gain) on disposal of non-current assets
Loss (gain) on sale of short-term andlong-term investment securities
Insurance claim income

Impairment losses
Loss on valuation of inventories
Loss on business of subsidiaries andassociates
Business restructuring expenses
Decrease (increase) in trade receivables andcontract assets
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in retirement benefit
liability
Increase (decrease) in provision for
product warranties
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes refund (paid)
Proceeds from insurance income
Settlement received
Payments of business restructuring expenses
Net cash provided by (used in)operating activities
Cash flows from investing activities
Decrease (increase) in time deposits
Purchase of investment securities
Proceeds from sale and redemption of
investment securities
Proceeds from sale of shares of subsidiaries
resulting in change in scope of consolidation
Purchase of shares of subsidiaries resulting
in change in scope of consolidation
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from sale of non-current assets
Decrease (increase) in short-term loans
receivable
Net cash provided by (used in)investing activities
Cash flows from financing activities
Net increase (decrease) in short-termborrowings

Previousﬁscal year

Current
ﬁscal year

13,23919,648(1,853)(2,329)(205)(2,639)Dividends paid to non-controlling interests

10,876

10,168Other, net

638

613

5,065

4,602

From April 1, 2021 From April 1, 2022
to March 31, 2022 to March 31, 2023

Proﬁt
Other comprehensive income
Valuation diﬀerence on
available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation
adjustment
Remeasurements of deﬁned beneﬁtplans, net of tax
Share of other comprehensive incomeof entities accounted for using equity
methodTotal other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

Cash flows from operating activities

Other, net

Consolidated statements ofcomprehensive income (Millions of yen)

(2,296)

From April 1, 2021 From April 1, 2022
to March 31, 2022 to March 31, 2023

14,521
27,76010,41630,064

23,814
3,946

27,6052,459

Net increase (decrease) in commercial papers
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Purchase of treasury shares
Dividends paid

Net cash provided by (used in)financing activities
Effect of exchange rate change on cash andcash equivalents
Net increase (decrease) in cash andcash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting
from inclusion of subsidiaries in consolidation
Increase in cash and cash equivalents resulting
from merger
Cash and cash equivalents at end of period(28,208)

5,775(36,005)
11,922(3,419)(8,656)(1,049)(3,997)

(796)

(986)

3,478
(5,934)2,473(3,429)(6,867)2,051－(1,563)717
43,751
5,296(6,442)(6,529)
－
800
(359)

(13,269)

36,516(645)(2,353)179(1,200)

2,462

6,613

595

11,943(266)－(36,493)(3,521)
2,220(35,878)(3,378)
2,302

72

(155)

(2,144)(2,104)(40,074)(21,677)

17,085

1,857

24,00016,049(24,776)
10,000(359)(4,240)(825)(1,912)(26,000)
10,568(13,000)－(1)(4,234)(1,204)(2,461)35,020(34,475)(1,815)2,750(20,139)(16,885)

87,18967,632

582

1,197

－

6

67,632

51,950FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

097

About Furukawa Electric Group

Company Profile and Stock / Dividends Information

Management Strategy

Management Foundation

Corporate Information/Data

Company Profile and Stock/Dividends Information
Company ProﬁleFurukawa Electric Co., Ltd. Organization Chart(As of Apr.1, 2023)

Company name

Furukawa Electric Co., Ltd.

President

Hideya Moridaira

Auditing Dept.

1884

Established

June 25, 1896

ChairmanPresident

Paid-in capital(As of March 31, 2023)

Net sales(Years ended March 31, 2023)

Number of employees(As of March 31, 2023)

TEL.

¥1,066,326 million (consol.)¥305,835 million (non-consol.)

Risk Management Div.

Equity-method aﬃliates(As of March 31, 2023)

Corporate Planning Dept.

Common stock issued

Common Stock 70,666,917 shares

Digital Transformation & Innovation Center

Number of shareholders

Common Stock 45,574 persons

Corporate Sustainability Office

Minimum trading units

100 shares

Shareholder register agent

3-3 Marunoichi 1-chome,
Chuo-ku, Tokyo, Japan
Mizuho Trust & Banking Co., Ltd.

Fiscal year

From April 1 to March 31

Administration Dept.

Shareholders’ meeting

June each year

Risk Management Dept.

Accounting auditor

Deloitte Touch Tohmatsu LLC

Main stock indices employed

Nikkei Index 225

Legal Dept.

Environment Dept.
Chiba Works
Nikko Works
Mie Works
Yokohama Works

Securities
companies

Domestic
companies

2.1%

6.6%

1,483,387 shares

4,687,255 shares

Number of shares held
(shares)

Shareholding ratio
(%)
6.75

Sustainable Technology Laboratory

BNYMSANV AS AGENT/CLIENTS LUX UCITS NON TREATY 1

3,154,100

4.47

Electronics Laboratory

Custody Bank of Japan, Ltd. (Trust Account 4)

2,718,200

3.85

Custody Bank of Japan, Ltd.
(Mizuho Trust & Banking; Employee Retirement Benefit Trust, Mizuho Bank Account)

2,413,500

3.42

Asahi Mutual Life Insurance Company

1,365,050

1.93

FURUKAWA CO., LTD.

1,329,045

1.88

DFA INTL SMALL CAP VALUE PORTFOLIO

1,292,296

1.83

Custody Bank of Japan, Ltd.
(Mizuho Trust & Banking; Employee Retirement Benefit Trust, FURUKAWA CO., LTD. Account)

1,091,900

1.55

The Nomura Trust and Banking Co., Ltd. (Trust Account)

1,072,400

1.52

Planning & Administration Dept.
Facility Assets Dept.

Quality Promotion Dept.
Safety Promotion Dept.

*1. Shareholding ratio is calculated with the number which deducted 50,453 shares of the Company’s treasury stock*2. In addition to the 2,413,500 shares in a retirement benefits trust mentioned above, Mizuho Bank, Ltd. has a further 173 shares in the Company.
*3. In addition to the above-mentioned 1,365,050 shares, Asahi Mutual Life Insurance Company holds additional 1,050,000 shares in its retirement benefits trust.

Global Trade Control Dept.
Business Management Dept.
Sales Dept.

Cash Dividends per Common Share

Kansai Branch Office
Chubu Branch Office
Kyusyu Branch Office

Okinawa Sub Branch

Hokkaido Branch Office
Tohoku Branch Office
Chugoku Branch Office

Shikoku Sub BranchSocial Design & New Business Development Dept.

Tohoku Branch

16,347,845 shares

16.75

NF Production System Dept.

Okinawa
Sub Branch

29,749,758 sharesshares

4,763,900

Procurement Dept.

Hokkaido Branch

42.1%

70,666,917

11,829,200

Intellectual Property Dept.

Global Marketing SalesDiv.

Financial
Institutions

Custody Bank of Japan, Ltd. (Trust Account)

Superconducting Products Dept.

(As of April 1, 2022)

23.1%

Total number ofshares issued andoutstanding

The Master Trust Bank of Japan, Ltd. (Trust Account)Material Laboratory

MONOZUKURI
Innovation Div.

Foreigncorporations

50,453 shares

Strategic Planning Dept.

Photonics Laboratory

Domestic Locations (Furukawa Electric Co., Ltd.)

18,348,219 shares

Name of major shareholders

Investor Relations Dept.
Global Management Office

15

26.0%

(As of March 31, 2023)

Finance & Accounting Dept.
Corporate Management Dept.

Research &Development Div.

0.1%

Individuals,
othersMajor Top 10 Shareholders of The Company andthe Company’s Capital Contributions to Such Shareholders

Hiratsuka Works

Finance & Accounting
Div.

111

(As of March 31, 2023)

Common Stock 250,000,000 shares

Secretary Officehttps://www.furukawa.co.jp/en/

Consol. Subsidiaries

Number of shares authorized

HR & Organizational Development Dept.

51,314 (consol.)
4,267 (non-consol.)+81-3-6281-8500

WebsiteTokyo Stock Exchange, Prime Market

Strategic HR Management Dept.

Tokiwabashi Tower,
6-4 Otemachi 2-chome,
Chiyoda-ku, Tokyo 100-8322,
Japan

Head oﬃce

Stock exchange listings

Public Relations Dept.

¥69,395 million

Treasurystock(As of March 31, 2023)

5801

Next Generation Photonics Business Innovation
Project Team

Strategy Div.

Distribution of Ordinary Stock Among
Shareholders(As of March 31, 2023)

Stock code on theTokyo Stock Exchange

Business Transformation Team

Sustainable Energy Succession Project Team

FoundedGeneral Stock Information

Marketing Dept.
Communications Solutions Div.

Fiscal year

2018

2019

Total Shareholder Return (TSR)

2020

2021

2022

Fiscal year

2018

2019

2020

2021

TSR (%)

50.4

37.4(81.7)

56.0(113.8)

43.2

2022

(113.4)(116.7)

49.6

Interim dividend (yen)

0

0

0

0

0

Year-end dividend (yen)

85

85

60

60

80

High (yen)

5,760

3,305

3,115

3,110

2,668

Total dividend (yen)

85

85

60

60

80

Low (yen)

2,453

1,620

1,746

2,050

2,033

(TOPIX)(%)(92.7)

Optical Fiber and Cable Products Div.
FITEL Products Div.

Nikko WorksBroadband Solutions Business Div.

Copper Foil Division

Head Oﬃce
Chubu Branch
Chugoku Branch

Mie Works

Power Cable Div.

Chiba Works

Industrial Cable & Power Cable Accessories Div.
Electronics Component Material Div.
Electric Conductor Div.

Haneda Oﬃce
Yokohama Works

Kyushu Branch

Energy Infrastructure Div.

Copper & High Performance Material Products Div.
Functional Products Div.
AT & Functional Plastics Div.

Kansai Branch
Shikoku Sub Branch

Hiratsuka Works

Thermal Management Solution & Products Div.
Memory Disk Div.
Copper Foil Div.
Automotive Products Div.

098

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Stock Price and Trading Volume (From April 1, 2018 to March 31, 2023)
Trading volume(yen, points)

Closing price

TOPIX(millions of shares)

6,000

15

5,000
4,000

10

3,000
2,000

5

1,000
0
2018/4/2

2019/4/2

2020/4/2

2021/4/2

2022/4/2

0

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

099

About Furukawa Electric Group

External Evaluation / Participation in initiatives

External Evaluation
Furukawa Electric became a constituent of the following ESG-related indices and received external evaluation andcertifications as follows during a period from April 1, 2022 to July 31, 2023.
FTSE4Good Index Series/FTSE Blossom Japan Index Series

MSCI Japan Empowering Women Index (WIN)Furukawa Electric was selected as a constituent of the FTSE4Good
Index Series and the FTSE Blossom Japan Index Series of FTSE Russell(June 2023).

Furukawa Electric was selected as a constituent of the MSCI Japan
Empowering Women Index (WIN) (June 2023).

FTSE4Good Index Series
https://www.ftserussell.com/products/indices/ftse4good
FTSE Blossom Japan Index Series
https://www.ftserussell.com/products/indices/blossom-japan

Morningstar Japan
ex-REIT Gender Diversity Tilt
Index (GenDi J)
We are selected as a constituent of theMorningstar Japan ex-REIT Gender Diversity
Tilt Index (GenDi J). The constituents are
categorized into five groups, with us beingclassified in Group 2, the second from thetop (December 2022).

THE INCLUSION OF Furukawa Electric Co., Ltd. IN ANY MSCI INDEX, AND THE USE
OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO
NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF Furukawa
Electric Co., Ltd. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE
EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOSARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

S&P/JPX Carbon Eﬃcient Index

SBT (Science Based Targets)

Furukawa Electric was selected as a constituentof the S&P/JPX Carbon Efficient Index, withinthe “Capital Goods” industry group, with decileclassification “8”, carbon disclosure status as“disclosed” and TCFD status as “Integrated” (June2023).

The SBT 1.5°C certification were acquired(July, 2023).

CDP
Furukawa Electric received an “A-” evaluation for“Climate Change” of the CDP in 2022, and was also
selected as a “Supplier Engagement Leader” in the CDP
Supplier Engagement Rating (SER) (February 2023).

MSCI ESG Rating
Furukawa Electric received a “BBB”
evaluation for the MSCI ESG Rating(April 2023).

Participation in initiatives
Furukawa Electric participates in the following ESG-related initiatives.
United Nations Global Compact
Furukawa Electric has been involved the United Nations
Global Compact since February 24, 2020.

Management Strategy

Management Foundation

Corporate Information/Data

Background for the Furukawa ElectricGroup Integrated Report 2023
I would like to say a few words on this occasion of
the issuance of Furukawa Electric Group Integrated
Report 2023.
We issued our first Integrated Report in FY2020
with the aim of providing investors and otherstakeholders with an understanding of theinitiatives we are undertaking when it comes tothe creation of value in the medium- to long-term
and the enhancement of our corporate value. After
undertaking a constant process of trial and error
each year thereafter, we were able to issue ourfourth Integrated Report based on the opinions ofinstitutional investors and analysts, the results ofassessments by rating agencies, and various kinds of
guidance. In particular, we worked on expanding thedisclosure in terms of the following three items.
(i)Expanding disclosure concerning sustainability
and value creation processes: With a strong focus
on linkage with our “Approach and Initiatives toward
Sustainability” described in our Annual Securities
Report, we have not only unified the charts
we publish, but we have also worked to selectdescriptions that are of high interest to institutional
investors and analysts in order to ensure thatreaders can smoothly go from reading the Annual
Securities Report to reading the Integrated Report.
When it comes to the sustainability indicators
set for each material issue, we have not only
been simply showing result figures. We have also
been working on the analysis of those results andexplanations concerning the directions we need to
go in when it comes to achieving targets.
(ii) Expanding disclosure concerning humancapital: With regard to the material issue of“Strengthening Human Capital and Organizational
Execution Abilities,” we set up a framework basedon four perspectives (“individuals,” “organization,”“awareness/mindset/culture” and “actions/systems”) and six elements (“engagement,”“leadership/team mindset,” “organizational
culture/communication,” “abilities/skills,” “designof the organization/personnel composition,”and “flow of information, coordination anddecision-making mechanism”) taking into
consideration the connection with our businessand management strategies. Having done that,
we have endeavored to have our efforts in thatregard make it possible for one to ascertain an
overall picture of our strategies.
(iii) Expanding disclosure concerning corporate
governance: With regard to the content of
discussions undertaken at the Board of Directors
and the Nominating/Compensation Committee,
which is of great interest to institutional
investors and analysts, we had the “Nomination
Process for a New President” and “ESG-linked
Remuneration” discussed as themes within the
Message from Outside Directors.
We are committed to further improving thequality of integrated reports, enhancing information
disclosure and transparency, and promoting dialogue
with stakeholders suchas investors. We would
appreciate hearing yourfrank comments orrequests in this regard.

October 2023
Corporate Vice President
General Manager, Corporate Sustainability Oﬃce,
Strategy Division

Mami Masuda

Task Force on Climate-related Financial Disclosures
Furukawa Electric expressed
approval of the recommendations
by the Task Force on Climaterelated Financial Disclosures (TCFD)
in January 2020.

For inquiries
Investor Relations Department, Finance & Accounting Division
Furukawa Electric Co., Ltd.
Tokiwabashi Tower, 6-4, Otemachi 2-chome, Chiyoda-ku, Tokyo, 100-8322, Japan

Editing and Publication
Corporate Sustainability Office, Strategy Division
Furukawa Electric Co., Ltd.

For details, please see Furukawa Electric’s website.

External evaluation
https://furukawaelectric.disclosure.site/en/themes/109
Participation in initiatives https://furukawaelectric.disclosure.site/en/themes/110

100

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

Inquiry form

https://www.furukawa.co.jp/srm/form/index.php?id=enir

FURUKAWA ELECTRIC GROUPINTEGRATED REPORT 2023

101