FURUKAWA
ELECTRICGROUP
INTEGRATEDREPORT
2020

Introduction

Drawing on more than aof advanced materials, wethrough continuous

Founded in

1884
Number of Group companies

126(As of March 31, 2020)* Combined total for parent company, consolidated
subsidiaries and equity-method affiliates

About Furukawa Electric Group

Consolidated net sales

50,232

914.4

Renewable energy ratio (Japan and overseas)

Number of patents held by
Furukawa Electric (Japan and overseas)

11

7,433
(As of March 31, 2020)00%(As of March 31, 2020)

billion yen(Fiscal year ended March 31, 2020)

INTEGRATED REPORT 2020

(As of March 31, 2020)

Business Foundation

Business Strategy

Number of Group employees

Corporate Information/Datacentury of expertise in the development and fabrication
will contribute to the realization of a sustainable society
technological innovation.

Contents/Editorial Policy

01

About Furukawa Electric Group
01

Introduction

02

Contents

03 Editorial Policy
04

Furukawa Electric Group's Values

06 FY2019 Business Results

08

Business Strategy
08 President’s Message
12
14

Changes in the External Environment

16

Business Model18

CFO Message

20

CAPEX

21

Intellectual Property

22

Research & Development

24

Review of the Mid-Term Management Plan

26

Business Overview
Communications Solutions
Energy Infrastructure
Automotive Products & Batteries
Electronics Component Materials
Functional ProductsContents
36

52
FURUKAWA ELECTRIC GROUP

Materiality

Business Foundation
36

CSR Management

37

Risk Management

38

Consideration of Climate Change

42

Human Capital Management

44

Supply Chain

45

Corporate GovernanceCorporate Information/Data
52

11-Year Financial and Non-Financial Data

54

Consolidated Financial Statements

56

Overview of Furukawa Electric Group

58

Company Profile and Stock/Dividend Information

00

60 External Evaluation/Participation in Initiatives
61 About Issuing the Furukawa Electric Group
Integrated Report 2020

Scope of This Report
Period Covered

Fiscal 2019, from April 1, 2019 to March 31, 2020

Organizations
CoveredThis report covers Furukawa Electric Co., Ltd. and group companies in Japan and overseas.
Where activities are limited to specific regions or companies, this fact has been clearly
indicated in the reporting.

Disclaimer
Regarding
Forecasts andProjections

This Integrated Report includes statements concerning the future strategies and earnings
forecasts of the Furukawa Electric Group. These forward-looking statements are basedon information that is currently available to the Group. As it is subject to changes in thebusiness environment surrounding the Group, the actual strategies and business may
differ from those projected.

(Note) Includes selected information on past initiatives and activities during fiscal 2021.

Information Disclosure System and Positioning of This Report

About Furukawa Electric Group
Business Strategy

Integrated Report

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

IR Information

Sustainability

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

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

Securities Report

Corporate Governance Report

Quarterly ReportIntellectual Property Report

Financial Summary, etc.

Sustainability Book, etc.

Non-financial

00

Financial

INTEGRATED REPORT 2020

Detailed

Coverage

SummarizedThis Integrated Report has concisely stated important financial and non-financial information regarding the
Furukawa Electric Group with the aim of promoting a better understanding of our medium- to long-term
initiatives and measures for the improvement of corporate value by investors and other shareholders. Pleasealso refer to Furukawa Electric’s website and other reports, which post or publish other information notcovered in this report or more detailed information.

Business Foundation

Since fiscal 2012, the Furukawa Electric Group has published the Sustainability Report,
which contains Environment, Social, Governance (ESG) and other non-financial information
as well as financial information, such as business results and strategies. Following theformulation of the “Furukawa Electric Group' Vision 2030”, identification of managerialmateriality, implementation of measures to counter climate change, enhancement ofcorporate governance, and other accelerated moves toward ESG management, we haveedited our first “Furukawa Electric Group Integrated Report” this year. We sincerely hopethat this report will help you better understand our Group’s current business situation, ESG
management and initiatives aimed at achieving the Vision, and other aspects.
As a reference for guidelines, we have used the International Integrated Reporting Council(IIRC) International Integrated Reporting Framework, the Guidance for Collaborative Value
Creation (the Ministry of Economy, Trade and Industry), the “Guidance on Climate-related
Financial Disclosures 2.0 (TCFD Guidance 2.0)”, and other publications.

Corporate Information/Data

Editorial PolicyFurukawa Electric Group’s Values

Furukawa Electric Group

Philosophy
Furukawa Electric Group Philosophy
Corporate
Philosophy

Drawing on more than a century of expertise in the development and fabricationof advanced materials, we will contribute to the realization of a sustainable society
through continuous technological innovation.

Management With an eye to the future, the Furukawa Electric Group management teampledges to:Philosophy• 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.
• Continuously strive to achieve world-class technological innovation, andtransform ourselves in every area of endeavor.
• Nurture human resources at every level, so that we can become a morediverse and creative organization.

Core Value

Furukawa Electric Group, Vision 2030
In order to build a sustainable world and make people’s
life safe, peaceful and rewarding, Furukawa Electric Groupwill create solutions for the new generation of global
infrastructure combining information, energy and mobility.

FURUKAWA ELECTRIC GROUP

The Furukawa Electric Group Philosophy comprises of the

Corporate Philosophy and the Management Philosophy andexplicitly explains what we aim to become in order to help realize aGroup Philosophy

sustainable society. The Core Value shows the five values that we wish toparticularly emphasize and enhance even more, for the achievement ofCore Value

the Group Philosophy and the sustainable growth of the Group.

00

The Furukawa Electric Group Vision 2030 clarifies thetargeted time frame and business domains, aimed by theGroup to be achieved by 2030.

Vision 2030

Sustainable Development Goals

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

Based on the “Sustainable Development Goals(SDGs)” adopted by the United Nations, theFurukawa Electric Group is committed to helping
solve social issues.

Business Strategy

value employees,
value customers,
value new technology, andcontribute to society.”(SDGs)

About Furukawa Electric GroupThe Future that Furukawa Electric is Envisioning andthe Furukawa Electric Group Vision 2030

Business Foundation

Since its foundation in 1984, Furukawa
Electric has inherited these words in its DNA
and has grown. We are determined to receiveand pass on these three valuable things andcontribute to society as members of society
who forge the future.

Becoming a corporate group thatcan provide value

Prevention of
global Warming
Preventive
medicine
Success ofelderly

Creation ofa diasaster-resistant society

Regional activation basedon information networks

Electrification
Self-driving cars
Energy saving,
Smart use ofenergyUtilization ofdata and AI

Electricity grid
Renewableenergy use

Furukawa Electric Group's employees, mainly in thegeneration that will lead management in around 2030
in Japan and overseas, carried out numerous
discussions, exhaustively projected the future, and put
together the Furukawa Electric Group Vision 2030.

We are committed to becoming a corporategroup that can provide value in society, which
is being integrated by advanced information
associated with progress in ICT technology. We
intend to achieve this goal by expressing our
specific target timeframe and areas aimed atby the Group, sharing the vision throughout
the entire Group, and bringing together ourstrengths.

Becoming a corporate group thatproactively innovates itself
We are committed to becoming a corporategroup that proactively innovates itself. We
intend to achieve this goal by imagining how
the world changes and how our group can help
solve social issues, while inheriting our
founders’ thoughts and valuing our everlastingvalues stated in our group philosophy and Core
Value.

Promotion of ESG management, directed at achieving
the Furukawa Electric Group Vision 2030

01

Directed at achieving “In order to build a sustainable world and make people’s life safe, peaceful andrewarding, the Furukawa Electric Group will create solutions for the new generation of global infrastructure
combining information, energy and mobility” set forth in Vision 2030, Furukawa Electric is openly, agilely andinnovatively promoting ESG management that shows consideration for the three key factors of environment,social and governance.

INTEGRATED REPORT 2020

The future society image of
Vision 2030

Corporate Information/Data

The future image of society in 2030 drawn by
Furukawa Electric and what we want to be

FY2019 Business Results

Current Performance
FY2019 Business Results Review
Net sales(Billions of yen)

Non-consolidated

15,000Consolidated

10,0001982
1974

Established an aluminum
power cable manufacturing
and sales company in Brazil

Completedlarge-scale
power transmission line
installation in
Iran

Succeeded in the world’s first
field trial of optical fiber cable

5,000

1971

Installed a communications network
in Bangkok,
Thailand1958

Installed an antenna and feed line
on Tokyo Tower

0
1956

1958

1960

1962

Net sales

1968

1972

967

992

914

843

45

40

39

41

27

24

20

0

0
2015

2016

2017

2018

2019

2015

(FY)

2016

2017

2018

2019

(FY)

Net income attributable toowners of the parent

Ordinary income(Billions of yen)(Billions of yen)

60

30

29

29

47
40

03

20

20

39

36

23

19

10

0

18

18

10

0
2015

2016

2017

2018

2019

(FY)

2015

2016

2017

2018

2019

1974

1976

1978

1980

1982

1984

Key Points of the
FY2019 Results

60

400

FURUKAWA ELECTRIC GROUP

1970

Operating income

1200

875

1966

(Billions of yen)(Billions of yen)

800

1964

(FY)

During fiscal 2019 ended March 31,
2020, in the Infrastructure Segment,
earnings in the Energy Infrastructurebusiness improved but theCommunications Solutions businessexperienced falling prices due tounbalanced optical fiber supply anddemand around the world and a delay
in improving optical fiber cableproductivity in North America. The
Electronics & Automotive Systems
Segment and the Functional Products
Segment were affected by weak
demand in the data center andelectronics-related markets. Moreover,
the COVID-19 outbreak from January
2020 affected the global economy andthe Furukawa Electric Group recorded a
decline in sales and profit compared tothe previous year.

Net income attributable to owners of the parent

55 billion

30 billion

At least ¥Net D/E ratio

0.8

At least ¥Equity ratio

ROE

Return on operating assets

30 % 10 % At least 10 %Progress of the Mid-term Management Plan “Furukawa G Plan 2020”
The Furukawa Electric Group has been promoting a 5-year management plan (FY2016-FY2020) called the “Furukawa
G Plan 2020”. Due to a slowdown in the Communications Solutions business from the second half of fiscal 2018 and
the COVID-19 impact in fiscal 2020, earnings in fiscal 2020 are expected to fall short of the Mid-Term Management
Plan’s targets. Nevertheless, we are steadily improving the financial position and are strengthening the management
structure to become resilient and withstand the changing business environment.

2011

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

2001

2018

Established aresearch centerin Silicon Valley

2012

Participated in the Floating
Offshore Wind Farm
Demonstration Project

Corporate Information/Data

Business Foundation

2000

Contributed to the establishment ofhigh-capacity communications based on
wavelength multiplexing technology(Mass production of 1480 nm pump laser
diode modules)

Contributed to the construction ofa global network by acquiring
Lucent Technologies’ optical fiber
division (OFS)

About Furukawa Electric GroupOperating income

Business Strategy

Furukawa G Plan 2020 - KPI

1988

1990

1992

1994

1996

1998

2000

2004

2006

2008

2010

2012

2014

Net sales by region

Net sales by segment(Billions of yen)(Billions of yen)Overseas

419
China
75

Japan

496

2002

FY 2019
Net sales

914

Billions of yen

Asia (ex. Japanand China)
183
North andCentral America
78

2019 (FY)

Service anddevelopment, etc.

Infrastructure

Functional
Products

Communications Solutions
166

281

50

116

FY 2019
Net sales

914

Electronics Component
Materials
252

Energy Infrastructure
115

Billions of yen

Automotive Products &Batteries
258

Electronics &Automotive Systems

509

03

Other (Europe,
Russia, Brazil, etc.)
82

2016

INTEGRATED REPORT 2020

1986

President’s Message

By placing ESG right in the centerof management, we willtransform into a sustainablecorporate Group.
Keiichi Kobayashi
President
Furukawa Electric Co., Ltd.

FURUKAWA ELECTRIC GROUP

Beyond the Crisis - the Spirit of Our Foundation

04

Since the start of 2020, the world has faced an
unprecedented crisis, namely, the pandemic causedby the COVID-19 infection. The world and themarkets confronting this crisis are currently
undergoing significant changes, but I am confident
that, after the crisis is overcome, the Group’s
technologies and products will definitely contributeto making a safe, secure and comfortable society
truly sustainable.
The Group’s DNA is based on the words of thecompany’s founder, Ichibei Furukawa, who said,“Value employees, Value customers, Value newtechnology, and contribute to society.” This idea islinked to the SDGs (sustainable development goals)
adopted by the United Nations, and I believe that it is
ESG management itself. As a result of implementing
these “three value,” which are the spirit of our
founder, and contribute to society, we are operating
our business every day by keeping in mind the factthat “we will become a company that gives
reassurance and expectations to our shareholders andall other stakeholders.”

Furukawa Electric Group Mid-term Management Plan
for 2016-2020“Furukawa G Plan 2020 -Group Global Growth-”

About Furukawa Electric Group

strengthening its communications, energy andautomotive business segments.

Delivering Sustained Profitable Growth
Key Initiatives

Strengthen and transform theI. businesses
II. Expand sales in the global market
Accelerate the creation of new
III.
business

Business Foundation

As a pillar of the measures under the current midterm management plan, “Furukawa G Plan 2020,” wehave been working to strengthen and transform ourbusinesses, and in particular, to strengthen theinfrastructure (communications and energy) andautomotive segments, which we have positioned aspriority areas. In order to secure the profits that wehave promised to our shareholders, we havewithdrawn from or downsized our non-core andlow-margin businesses and reassembled our businessportfolio based on the keywords of “strengthen andtransform the businesses.” I believe that thisreorganization of the business portfolio has clearly
conveyed the message that the Group isBusiness Strategy

Focusing on the Current Mid-term Management Plan

* It was established in FY2017 within the Laboratories for Fusion of Core Technologies
in the Research and Development Division as the core organization for presenting
concept samples in an agile way in response to needs obtained by VOC (Voices of
Customers).

INTEGRATED REPORT 2020

related issues.
In regard to Vision 2030 and the consideration ofmateriality, what we focused on particularly was theslogan related to “Open, Agile, Innovative”
transformation. We need to transform from a company
that has been utilized by society to a company that is
promoting its own value going forward, and we need toreform ourselves in the direction of what we want theGroup to be. In the context of the SDGs, this will lead
to Goal 17 regarding partnerships: therefore we intend
to promote “Open, Agile, Innovative” and “Building
partnerships with various stakeholders” as the action
principles of the Group.
As an organization that will launch new businesses toachieve Vision 2030, in fiscal 2018, we established the“Future Infrastructure Technology Center,” which will
aim for social implementation while devising nextgeneration infrastructure that combines information,energy, and mobility. In addition, as we believe that the
integration of digital technologies and AI technologies
is essential in order to control infrastructure and realizea safe, peaceful, and rewarding society, we alsoestablished the Digital Innovation Center. Between
these new business creation organizations andcustomers lies the “Advanced Prototyping Center*,”which was established in fiscal 2017. It will provide thevalue that customers need in an agile way by matching
the materialization of research and development
results with customers’ voices.

00

Looking ahead to 2030, the year in which the SDGs will
be achieved, in relation to global social issues andissues that arise within integrated social infrastructure,
I believe that rather than just growing each business in
the Group individually, we need to provide value by
ourselves in order to “realize, support, and make use ofthem” in the Group’s business operations. Therefore,
we gathered together the generation that will become
our management team in around 2030 and thoroughly
thought out what we wanted the Group to be byincorporating ideas in a backcasting. As a result, what weformulated was the Furukawa Electric Group, Vision 2030,
namely, to create solutions for the new generation of
global social infrastructure combining information,energy, and mobility in order to “build a sustainable
world” and “make people’s lives safe, peaceful, andrewarding.”
Looking ahead to the realization of this Vision 2030,
we concluded that the important management issue(materiality) for the Group was the “Creating ofbusinesses that solve social issues” based on theoutside-in thinking in the SDGs. Specifically, we areaiming to “Creating businesses that support nextgeneration infrastructure” and “Creating environmentfriendly businesses” that contribute to a decarbonizedsociety and a sound material-cycle society. In order toobtain these opportunities, it is necessary tostrengthen the sustainable management base. To
achieve this, we believe that “Developing of businessactivities that consider climate change,” “Strengthening
human capital management and organizational
execution abilities,” and “Building a governance system
to strengthen risk management” are important risk-

Corporate Information/Data

Strategy Toward Furukawa Electric Group, Vision 2030

President's Message

Esg Management Efforts Toward Vision 2030
We believe that ESG management initiatives are
essential in order to achieve this Vision 2030.
Regarding G (Governance), as we are a publiccompany, we are of course a company owned by its
shareholders, and we believe that ensuring
management transparency is of utmost importance. To
that end, we have increased the independence ofofficers and strengthened the supervision of the Boardof Directors, but I have told outside officers, “I want
you to be familiar with the history and current situationof our company, but do not get used to it.” We havereceived from outside officers the kind of harshindications and opinions that could not be expressedfrom inside the Company, and these have beenreflected in management.

ESG in General
April 2019
May 2019
February
2020

Established Administration & CSR DivisionCorporate Sustainability Office
Formulated Furukawa Electric Group, Vision
2030
Signed United Nations Global Compact

GovernanceMay 2019

June 2019

FURUKAWA ELECTRIC GROUP

December
2019

Partially revised performance-linked compensation system
Strengthened independence of outside directors, enhanced board diversity(All five outside directors are independent and one
female outside director appointed)

Effectiveness assessment of Board of Directors
implemented

Environment

March 2019 Environmental targets 2030 set
August 2019 Science Based Targets (SBT) certified
January
Expressed support for the recommendations of2020
the Task Force on Climate-related Financial
Disclosures (TCFD)

11

SocialNovember
2018
January
2020

Formulated Furukawa Electric Group Vision for
Our People
Formulated Furukawa Electric Group Human
Rights Policy

I think it is extremely important to work on E
(Environment) in order to strengthen governance,
establish a supervisory system, and enhance oursustainability as a company. It is vital to demonstratevalue to society, including the SDGs, while making
environmental initiatives a major premise. However, inorder to avoid being regarded as an SDGs wash, wehave initiated genuine efforts such as endorsing TCFD
recommendations, acquiring SBT certification, andsigning the United Nations Global Compact, as well as
increasing the awareness of our officers andemployees. Therefore, I believe that we can finally saythat we are “advocating SDGs and ESG management.”
Lastly, regarding S (Social), in order to transform thecompany for the better, I think it is important for each
employee to demonstrate their ability to follow things
through, become a “monolith” as a team, and work
toward their goals. One of the first things that I started
beginning with the members of the Management
Committee to transform the organization is the “mindbreakthrough practice” that I invented. This is areflection meeting in which the members of theManagement Committee look back on the meetingand discuss what they want to say after theManagement Committee meeting is over. As a result ofpracticing this, an absolute sense of trust and a senseof ownership among the officers grew. We are working
to ensure that all employees have this teamconsciousness.
Furthermore, from the perspective of promoting
diversity and inclusion, we also place importance on
dialogue with our current three foreign executive
officers, and we try to incorporate their opinions from a
global perspective into management. As a concrete
example, the “Furukawa Electric Group Vision for Our
People,” which is a basic way of thinking that pervades
all of our personnel measures, was formulated in fiscal
2018 through thorough discussions not only withexecutive officers but also with members of global HR
departments.

About Furukawa Electric Group
Business Strategy
Business Foundation

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

Corporate Information/Data

I firmly believe that accelerating our efforts to achieve
Vision 2030 and implementing ESG management will
become the foundation on which the Group
contributes to the sustainability of society. Over thecourse of 136 years since our founding, the history of
the Group, which has been able to “serve society” byprotecting the health and supporting growth ofpeople and social infrastructure, overlaps the SDGs.
The concepts of ESG and SDGs are truly the concepts
that our founder, Ichibei Furukawa, cherished, and I
believe they are the essence of management itself.
Now that we are confronted with the COVID-19
pandemic, we will continue to evolve ESG
management while focusing on the post-COVID-19
era as well, and in order to continue to be a company
that the next generation can be proud of, we will
create the foundation for our next stage of growthfrom a long-term perspective. The basis of this is
Vision 2030. In order to make a safe, peaceful andrewarding society truly sustainable, we will continue
to provide technologies and products that the Grouprealizes, supports, and can utilize in Open, Agile, andInnovative ways. We will thus continue to place thisconcept “right in the center” of our management andtransform the Group into a sustainable corporate group.
We appreciate your continued support for the Group.

Furukawa Electric Group, Vision 2030

INTEGRATED REPORT 2020

Summary and Future Thoughts

11Changes in the external environment

Changes in theExternal Environment
Worldwide Trends and the Furukawa Electric GroupFURUKAWA ELECTRIC GROUP

The global economy in fiscal 2019 continued to record
moderate growth, as consumer spending was strong
due to an improvement in the employment environment
in the United States. However, owing to the impacts ofthe trade friction between the United States and China,
which became drawn out and fiercer, and political andgeopolitical tensions in Europe and the Middle East,
weak economic growth was seen in China and Europe.
Moreover, since January 2020, the spread of the
COVID-19 pandemic has caused stagnant economic
activity on a global scale, resulting in an unpredictableand unstable global economic environment.
Meanwhile, looking at the Japanese economy in fiscal
2019, private capital investment remained steady inthe first half. However, owing to the impact of
successive major natural disasters such as wind andflood damage caused by Typhoon No. 15 in September
2019 and the consumption tax hike in October,consumer spending cooled. As this was then followedby the spread of COVID-19 around the world, theJapanese economy deteriorated sharply.
In this environment, the Group continued to endeavor
to strengthen the infrastructure (communications andenergy) and automotive segments, which are its
focused areas, based on the “Furukawa G Plan 2020”
mid-term management plan. In infrastructure-relatedareas, in the communications segment, while prices
continued to fall due to a deterioration in the supply
and demand balance for optical fibers and optical fiber
cables, we promoted efforts to increase costcompetitiveness through the expansion of sales ofhigh-value-added products and production in optimal
global locations. In the energy segment, we continued
to focus on the areas of ultra-high voltage undergroundcable and submarine/underground cable for renewableenergy in Japan, and submarine cable in Asia. In fiscal
2019, we steadily captured demand for ultra-highvoltage underground cable in Japan, and we also
accumulated orders for submarine cable projects in
Asia. In addition, we are also implementing the
expansion of facilities as planned to respond to the
production of submarine cable, which is expected tosee further demand growth in the future, and we willcontinue to strengthen this segment, which we havepositioned as a focused area. In the automotive sector,
sales of wire harnesses and other automotive products
were sluggish in fiscal 2019 due to a decrease in global
vehicle production until the second half. However, we willcontinue to expand our global business by making capital
investments aimed at increasing manufacturing capacity
in order to expand sales of wire harnesses for the
North American market over the medium to long term.

11About Furukawa Electric Group
Business Strategy
Business Foundation

Young members who will be responsible forPrevention ofmanagement in around 2030 gathered together
global Warming
and drew a future image of society by engaging
Preventive
in thorough discussion.
medicine
Creation of
Success ofa diasaster-reIn the case of “communications,” it will be theelderlysistant society Regional activation based
world of the sixth generation mobile
on information networks
communication system (6G). Much more
information traffic will be traveling acrossElectrification
Utilization of
global fiber-optic networks than it is today.
Self-driving cars
data and AI
This will not only make life more comfortable
Energy saving,
but will also enable the development ofElectricity grid
Smart use ofenergyremote medical care and preventive medical
Renewablecare. It will also be a society where the elderly
energy use
will be able to play active roles. The
sophistication of information networks willfurther revitalize local communities. In thecase of “energy”, renewable energy such as
comfortable. These technologies will be supported byhydroelectric power, wind power, and solar power
advanced digital technologies and AI. With regard togeneration will become the mainstream, replacing
the “global environment,” we expect that the prospects
fossil fuels. Energy efficiency has been improvedof resolving issues such as global warming and marine
dramatically, and a strong power grid network will
plastic, which are currently of concern, will have been
support this. In the world of “mobility”, automaticachieved and that resource recycling-based safe,
driving electric vehicles (EVs) will become thesecure, and comfortable cities and urban development
mainstream, making travel safer and morethat are resistant to disasters will have been realized.

Corporate Information/Data

The Future Image of Society in 2030 Drawn by Furukawa Electric

Changes in the External Environment
External environmental changes that will
be opportunities for Furukawa Electric

External environmental changes that will
be risks for Furukawa Electric

Although we initially assumed that the risk of a rapid
decline in car sales was low, the current spread of
COVID-19 infections has led to a sharp decrease in car
sales. As the Group manufactures parts used in
automobiles, such as wire harnesses, and upstream
products that make up those parts, sales of these products
declined. The downturn in the automotive market is
temporary and we expect a recovery in the future, but it
may not return to the market we originally assumed. We
will carefully verify the situation and take action to ensurethat we do not miss the changes in the automobile market
in this new environment.

00

We expected that the progress of the fifth generation
mobile communication system (5G) and theaccompanying increase in communication traffic would
be opportunities. However, the potential has increased
because various types of online activities andteleworking have advanced due to the impact of the
spread of the current COVID-19 pandemic while ourdaily lives and the way we work have changed
significantly. As a result, we are assuming that demand
for fiber-optic cables, information and communicationequipment, and equipment for data centers will
increase. Furthermore, with regard to the power
infrastructure that underpins this communication, we
expect the transition to renewable energy and theconstruction of a robust power grid network toaccelerate more than originally projected.

MINUS

INTEGRATED REPORT 2020

PLUS

Materiality

Materiality
Furukawa Electric Group, Vision 2030 and Important Management Issues
In the rapidly changing business environment
surrounding the Group, the Group is promoting ESG
management and striving to improve its medium- tolong-term corporate value in order to achievesustainable growth. In 2019, the Furukawa ElectricGroup formulated Furukawa Electric Group, Vision
2030, which clarified the targeted time frame andbusiness domains. Assuming 2030, the year when the
SDGs will be achieved, various social issues are
expected, such as the global social issues indicated by
the SDGs, which are highly relevant to the Group, andthe issues in the integrated society envisioned in Vision
2030. Therefore, we defined “materiality” as importantmanagement issues that the Group should address inorder to achieve Vision 2030, and we determinedmateriality in terms of both revenue opportunities andrisks, in accordance with the process of identifying
important management issues.
From the perspective of revenue opportunities, inorder to solve various social issues through thebusiness activities of the Group, we changed theconventional product-out way of thinking and adopted
the “creation of businesses that solve social issues”
based on outside-in thinking in SDGs as materiality. In
addition, we also defined materiality as “Open, Agile,
Innovative,” which reflects the aspiration included in
Vision 2030, namely, the desire to become a company
that actively transforms itself, and the “Building
partnerships with various stakeholders,” focusing on
breaking away from self-reliance and building
partnerships with outside parties to create friends. We
are currently carrying out initiatives to materialize
businesses that solve social issues. These include“creating businesses that support next-generation
infrastructure,” which will be the foundation of theintegrated society, and “creating environment-friendly
businesses” that contribute to a decarbonized society
and a sound material-cycle society.
On the other hand, from a risk perspective, in order toachieve sustainable growth, it is essential thatcompanies develop business activities that consider
climate change, and we see this as materiality. In
addition, in order to become a company that activelytransforms itself, we will strengthen the foundation of
ESG management by focusing on the materiality of“strengthening human capital management andorganizational execution abilities” and “building agovernance system for strengthening risk
management” including corporate governance.

Revenueopportunities

Materiality

Important management issues forachievement of
Furukawa ElectricGroup, Vision 2030

Risks

2020

2030

FURUKAWA ELECTRIC GROUP

Materiality of revenue opportunities

2

Open, Agile, Innovative

11

3

Building partnerships with various stakeholders

1

Creating businesses that solve
social issues
Creating businesses that support next-generation infrastructure
Creating environment-friendly businesses

Materiality of risks

E

Developing business activities that consider
climate change

S

Strengthening human capitalmanagement and organizational
execution abilities

G

Building a governance system to strengthen risk
management
Corporate governanceGroup governanceSupply chain management

Step 2

Step 3

Understanding andorganizing social issues

Materiality map evaluation

Identification of materiality

In identifying materiality, we identified social
issues by referring to “external factors” and“internal factors,” adjusted duplicate items,
and created a list of 29 items.

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

High-priority items are categorized by revenue
opportunity and risk aspects and identified asmateriality items.
The identified materiality items are categorized and rearranged as important issues forachieving Vision 2030, and expressed as themateriality of three revenue opportunities andthe materiality of the E, S, and G risks.

External factors

Importance to shareholders and investors•17 SDG goals and 169 targets•Interviews with institutional investors•FTSE, MSCI and DJSI ESG evaluation items, etc.

•Impact on ESG rating assessment

Internal factors

Importance to achieving Vision 2030

•Important measures of Furukawa G Plan 2020

•Management and executive officers gather together•Values of the Furukawa Electric Groupregularly to discuss materialization of Vision 2030

•Important Companywide risks, etc.

•Discussions of CSR and Risk Management* With regard to materiality, we distinguish between
important issues for achieving Vision 2030 and important
issues for fulfilling corporate social responsibility (CSR)
and strengthening the trust of stakeholders. For moredetails, see “Risk Management” on page 37 of this report.

About Furukawa Electric Group

Step 1Business Strategy

Process of Identifying Important Management Issues

Committee reflected

Importance to achieving Vision 2030

Risks

Importance to shareholders and investors

Materiality of revenue opportunities

High area

Important issues for fulfilling “corporate social responsibility(CSR)” and strengthening the trust of stakeholders
Human rights and labor practices
Occupational health and safety
QualityCompliance

Medium area

Biodiversity(Land area/marine & river)

Materiality of risks
Climate change

Risk management

Sustainable economic growth

Human resource develop
and employee satisfaction

Subsidiary governance

Clean energy

Diversity

Innovation

Corporate governance

Building sustainable cities andcommunities

Supply Chain(environment/society)

Partnerships
Utilization of intangible assets

Anti-corruption
Information security

Corporate Information/Data

Sustainable resource management
Pollution prevention and chemical
substance management
Safe water and sanitary environment
Sustainable tourism

Low area

Poverty
Food problems and food security
Health & welfare

Business Foundation

Revenue opportunities

Not directly important issues
for achievement of Vision 2030

Appropriate education
Deterrence of crime and violence

Low area

Medium area

High area Importance to achieving Vision 2030

SDGs Which are Highly Relevant to Important Management Issues
The SDGs that are highly relevant to identified
materiality are associated with multiple SDG targets. In
the future, we will set medium- to long-term goals andevaluation indicators for the identified materiality, andwe recognize that concrete efforts are necessary. With
regard to “climate change,” we are proceeding withleading initiatives such as setting greenhouse gas
emission reduction targets for 2030 and obtaining SBT
certification.
By working on materiality, the Group will achieve
Vision 2030 and contribute to the achievement of theUnited Nations SDGs.

SDGs
Creating businesses thatsolve social issues

2

Open, Agile, Innovative

3

Building partnerships withvarious stakeholders

E

Developing businessactivities that consider
climate change

S

Strengthening human capitalmanagement and organizational execution abilities

G

Building a governancesystem to strengthen risk
management

11

1

INTEGRATED REPORT 2020

Materiality* Materiality and each SDG goal are associated with multiple SDG targets.

Business Model

Business Model
Existing Business ModelIn the Furukawa Electric Group, four businessdivisions and the Automotive Products Division are
expanding sales of a wide range of products in theinformation and communications, energy, andautomotive markets and the electronics markets(semiconductors, etc.) that support these products.

We also handle a wide range of products, frommaterials far upstream from the final market to
products downstream near the final market. Some ofthese products have the largest share in the world
and occupy the top positions, and also contribute tosolving social issues in many business areas.

Strengths of Existing Business Model, Differentiation Factors
The Group contributes to resolving customer needs
and social issues through products that have thetechnological strengths of “transmitting, connecting,and storing” “energy, information, and heat.” One of
the Group’s strengths is that it has created adifferentiation factor by optimizing and improving
the quality of products through the establishment of
a value chain within the Group from upstream

materials to downstream Tier 1 products. In addition,
we have won acclaim in the information, energy,
automotive and electronics sectors by achieving
differentiation through the acceleration of design,development and prototyping to meet customer
needs, and the optimization of products together
with the marketing divisions and the research anddevelopment divisions.

Value chain of the Furukawa Electric Group
Broadband Solution
Business
Communications
solutions

FITEL Products

Infrastructure
marketOptical Fiber and Cable Products

Power Cable
Electric Conductors(Magnet Wires)

EnergyInfrastructure
marketIndustrial Cable & Power Cable Accessories

Functional Plastics

Automotive Products
Automotive
marketFURUKAWA ELECTRIC GROUP

Copper andHigh-performance
Material Products

Copper Foil

Electronics
related market
AT

Memory Disk

03

Thermal Management
Solution & Products

Upstream

Downstream (Tier 1)

Markets

Using the value chain mapping of the SDG compass,
we examine whether the Group’s current major
products contribute to the 17 goals and 169 targetsof the SDGs, and we are proceeding to identify the

Optical fiber & cable products

Business Strategy

Communications Solutions

SDGs that the Group should prioritize. Here, wewould like to introduce the results of discussions by
all of our executive officers and senior fellows thathave distinctive effects and impacts.

Increasing positive impacts

Minimizing negative impacts

Increasing positive impacts
Design &development
Raw materials

Prototyping
Production

Distribution

Product use

Product
disposal

Product use

Product
disposal

Suppliers

Minimizing negative impacts

Business Foundation

Optical fiber and cable products willcontribute to the development and expansion of sustainable and robust communication infrastructure, as well as safe andresilient urban development, in light of the
progress of 5G and the further increase incommunication traffic caused by the
COVID-19 crisis.

As we recognize that reducing greenhousegas (GHG) emissions in the manufacturing
process is an important issue, we arepromoting various measures such as energy
saving at manufacturing plants.

Increasing positive impacts
We will contribute to the realization of adecarbonized society by supplying andlaying submarine and underground cables,
which are indispensable for building
interconnections between renewableenergy power sources such as offshore wind
power generation and power grids.

Minimizing negative impacts
In the process of laying submarine cables,
we are taking care to minimize the impact
on the marine environment.

Automotive Products
Aluminum wire harnesses

Increasing positive impacts
Design &development
Raw materials

Prototyping
Production

Distribution

Suppliers

Corporate Information/Data

Submarine transmission cables for offshore wind power generation

Minimizing negative impacts

Electronics Component Materials
Oxygen-free copper wire

Functional Products
Thermal products

Increasing
positive impacts

Increasing
positive impacts

The use of wire harnesses that use aluminum wires, which are lighter than copper,
contributes to the realization of a decarbonized society by reducing the weight ofautomobiles and improving energy consumption through an improvement in fuelefficiency.

Oxygen-free copper wire is used in drive
motors for electric vehicles and hybrid
vehicles. The use of this product improves
the efficiency of clean energy utilization andcontributes to the realization of a decarbonized society.

Thermal products with high-performanceheat dissipation and cooling mechanisms
improve the efficiency of energy consumption and reduce running costs at data
centers. This is one of the applications ofthese products and this positive impact interms of power consumption volume has
attracted worldwide attention. They also
contribute to high-speed and high-capacity
communications.

Minimizing negative impacts

Minimizing negative impacts

Minimizing negative impacts

With regard to energy use in the manufacturing process, we are promoting an
improvement in the ratio of renewableenergy use, in addition to energy saving at
manufacturing plants.

In the manufacturing process, we will
increase the percentage of recycled copperand make effective use of natural resources.

With regard to energy use in the manufacturing process, we are promoting an
improvement in energy saving and the ratioof renewable energy use at manufacturingsubsidiaries.

03

Increasing
positive impacts

INTEGRATED REPORT 2020

Energy Infrastructure

About Furukawa Electric Group

Consideration of SDGs Priority Issues Based on Value Chain MappingCFO Message

CFO
Message

We will increase our cash generation

Akihiro Fukunaga

on growth investments andDirector and Corporate Vice President,
General Manager of the Finance &Global Management Division

capability and improve corporate
value by generating a steady return
improving asset efficiency.

Review of FY2019 Results
We strived hard, targeting solid growth in fiscal 2019,as we approached the upcoming final year of our
mid-term management plan “Furukawa G Plan
2020.” We implemented measures to improve
profitability and enhance our execution capability but
could not increase profit as planned, due tosignificant changes in the external environment. In
particular, the deteriorating supply-demand balancein optical fibers and other products, triggered by
China, and the sluggish markets related to data centersand electronics broadly affected all our businessdomains. In contrast, the long-struggling Power Cable
Division turned profitable, as we had focused on the
renewable energy market, which has growth potential,
and we benefitted from the impact of increased
production aimed at obtaining orders for domestic
submarine and underground cables.

Net sales, Operating income,and Operating margin
Net sales (left)
Operating income (right)
Operating margin(%)(Billions of yen)

1,200

800

874.9

843.3
38.6

(Billions of yen)

60

991.6
967.3
914.4
44.8
40.8

4.6%

4.6%

27.1

4.1%
23.6

400

3.1%

40

20

2.6%

0

0
2015

2016

2017

2018

2019

(FY)

FURUKAWA ELECTRIC GROUP

Creating a Stable and Sound Financial Base04

I believe that a stable financial base is most importantfor sustainable corporate growth, and this requires not
merely an improvement in the balance sheet stemmingfrom business growth and securing profit, but also
strategic reform of the balance sheet.
Optimization of inventory assets is one of theinitiatives we are implementing for that purpose. In
addition to reducing inventories, we are mindful of the
cash conversion cycle (CCC) in seeking an optimal levelof inventory in light of the entire supply chain.
We have also sold some policy-holding shares andreduced the ratio of these shares to net assets from
16% in fiscal 2017 to 8% in fiscal 2019. Moreover,
we sold some idle real estate assets, reduced
interest-bearing debt, and improved the balance
sheet. On the other hand, as we believe that we needto invest in future growth areas and the IT sector, ourcapital investment has been exceeding depreciation
expenses during the current mid-term management
plan but we always make investment decisions while
fully considering investment effects and risks.

About Furukawa Electric Group
Business Foundation

Business Strategy

With the aim of enhancing capital efficiency andimproving financial soundness, we introduced “return on
operating assets” as our unique KPI in FY2016. This is anindicator to measure the profit earned by using operating
assets (inventories + tangible and intangible fixed assets).
Using 10% as the threshold, we have been improving
or withdrawing from low-profit or non-core businesses.
In the case of a business which does not earn sufficientprofit relative to its operating assets or a business
which currently generates profit but should not be
continued on our own, in view of the future market
environment or future investment needs, we moveahead with a sale of that business or pursue some kindof business reorganization, including collaboration withanother company.
In line with this viewpoint, we reorganized thegeneral-use electric cable business for the constructionand electric appliance markets, the heavy magnet wirebusiness, and the copper tube business in fiscal 2019.
The adoption of this KPI has also generated a side
benefit — a change in mind-set within the company.
Previously, we tended to focus on profit and loss inbusiness evaluation. Now, the mind-set that newinvestment cannot be approved unless the assets are
efficiently used and generate cash has been taking root.
“Return on operating assets” is an easy-to-understandindicator for people in business divisions and it wasappropriate to adopt it as an initial measure to makeourselves more conscious of the balance sheet. We are
already thinking about introducing another management
indicator that will help us further pursue capital efficiency
and growth in the next mid-term management plan.

Corporate Information/Data

Aiming to Enhance Asset Efficiency

As we seek to emphasize asset efficiency inmanagement, the basic principle of our capital policy
is to keep a good balance among investments for
future growth, cultivation of new businesses,
improvement of financial health and shareholder
returns. Despite heightened uncertainties in thecurrent business environment, driven by the COVID-19
pandemic, our basic principle remains unchanged.

Net D/E ratio

FY2015FY 2016

FY 2017

FY 2018

FY 2019

5.5%

9.3%

12.9%

12.0%

7.2%

1.2

1.0

0.9

0.8

0.8

11

Return on equity (ROE)

We feel we must continue to review our businessportfolio by such means as concentrated allocation ofmanagement resources, business reorganization, and
M&A activity in order to keep generating stable earnings
and thereby achieve the Furukawa Electric Group Vision
2030. We will remain committed to improving asset
efficiency, increasing our cash generation capability, andimproving corporate value.

INTEGRATED REPORT 2020

Aiming to Achieve the Furukawa Electric Group Vision 2030

Capital Investment/Intellectual Property

CAPEX
Basic Policy Regarding Business Investment
We have so far strengthened growth investment
mainly in the Infrastructure area (Communications/
Energy) and the automotive area in the Furukawa G
Plan 2020. We have also focused on productivity
improvement and rationalization.
Particularly in fiscal 2020, in light of the change inthe demand environment, driven by the COVID-19
impact, we are more thoroughly checking eachproject, such as re-examining the timing and scale ofinvestment for capacity expansion and thespecifications of manufacturing facilities.

Capital investment in FY2016-2020(Billions of yen)

60
50.0
40

53.1
47.0

38.5
31.6

20

0
2016

2017

2018

2019

2020

(FY)

Capital Investment Details
Investments in the Furukawa G Plan 2020 are focusedon increasing production of optical fibers andimproving productivity for optical fibers and cables;
establishing manufacturing capability and improving
productivity for long-length submarine cables; andenhancing the production system in order to expand

FY2020 capital investment (estimate)
Renewal, etc.

23%

Productivity
improvement andrationalization

28%

Increase inproduction
FY2020 (E)47.0billion yen

16%

Response toorders33%

Expansion

49%

production of aluminum wire harnesses.
In fiscal 2020, in particular, our focus is on
responding to orders received mainly for wire
harnesses and power cables, as well as improving
productivity and investing in rationalization,
including IT infrastructure investment.

FY2020 capital investment (estimate) by segment
Infrastructure30%

Services, etc.

19%

Functional
Products

13%

FY2020 (E)47.0billion yen

Electronics
Component Materials

Communication
Solutions
Energy Infrastructure

Automotive Products& Batteries

Electronics &Automotive Systems

FURUKAWA ELECTRIC GROUP

37%

Evaluation Process for Business Investment

00

Concerning major investment candidates, theinvestment committee chaired by the General
Manager of the Finance & Global Management
Division fully considers the potential investment
effects (profitability, recoverability, impacts on
business strategy, etc.) and risks, and determines
whether to approve such candidates or not. The

investment effects of projects we invest in are
regularly followed up and their progress is checked.
Return on operating assets is used as one of thebenchmarks for investment decisions and follow-up
on investment effects. We thus strive to ensure thegeneration of investment effects while considering
asset efficiency.

By positioning intellectual property (IP) as one of the
management resources to be used for business, theFurukawa Electric Group promotes “IP management”,
in which IP is used for the enhancement of businesscompetitiveness. The basic policy is to run an IP cycle
which starts from the IP’s use to its creation andstorage, and protection. We implement the IP strategy
for our differentiated proprietary technology andenhance business by executing IP activities.
This execution of the IP cycle is intended to minimize
our business risks and build and maintain ourcompetitive advantage in business.

About Furukawa Electric Group

Basic Policy Regarding Intellectual Property

Business Strategy

Intellectual Property

Utilization

Open & Closed strategy

Code of Conduct
We do not infringe
third party's IP rights.

We do not use or disclose
confidential information
without a consent.

Protection

We are experiencing tremendous changes in society
and industrial structures, driven by digitalization. In
order to become more competitive and achievesustainable growth, we are promoting an IP landscapewhere IP information is used in devising strategies. By
incorporating IP information in the process of devising

Visualize
knowledge

Invention,
Know-how,
Data

Creation/
Accumulation

various strategies for the achievement of the
Furukawa Electric Group Vision 2030, we areproactively working to enhance our business strategy
as well as our IP strategy.
For details, please see the “Intellectual Property
Report” on Furukawa Electric’s website.
https://www.furukawa.co.jp/rd/ip-report/

Corporate Information/Data

IP rights,
Trade secrets,
IP Prosecution
rightsPrior use rights,
Protect
know-how
Contracts

Business Foundation

Gain competitive
advantage(Only Available in Japanese)

Main Topics in 2020
Received “Derwent Top 100 Global Innovators 2020 Award” (February 26, 2020)

Participation in “Intellectual Property Open COVID-19 Declaration” (June 3, 2020)

00This declaration promotes free access to participants’ intellectual property rights
for activities aimed at ending the global spread of COVID-19. We are decisively
contributing to an early end to the spread of the COVID-19 pandemic byproviding free access to our intellectual property rights in the medical field,
including patents covering fluorescent silica nanoparticles and flow cytometers,
which can be used in the diagnosis of COVID-19 infection.

INTEGRATED REPORT 2020

We were chosen among the “Top 100 Global Innovators 2020” by Clarivate
Analytics, a global information service company. This is the fifth award and thethird-consecutive award from 2018.

Research & Development

Research & Development
R&D Vision
The Furukawa Electric Group will mobilize its abilities and contribute to society with its
material technology based around the theme of “using technology acquired through ourmaterial capabilities to help realize a comfortable, pleasant society for people.”Four Core Technologies
Since its foundation in 1884, the Furukawa ElectricGroup has accumulated material technologies by
expanding from copper smelting and electrical cables
to a wider range of areas. By adding high-frequency
electronics technology to materials technology, wecurrently have four core technologies—metals,
polymers, photonics, and high-frequency. Along withthe development of products and services in the three
Segments of Infrastructure, Electronics & Automotive
Systems and Functional Products, we are committed tocontributing to a sustainable society through new
businesses and new products.

R&D Organization

MetalsPolymers
Four coretechnologies

High-frequency

Photonics

Locations in Japan

With the aim of creating and developing new
businesses via new products and new technologies, theFurukawa Electric Group is actively engaged in R&D
activities through its R&D organization that is centeredon Furukawa Electric’s laboratories in Japan as well as
OFS Laboratories, LLC, Furukawa Electric Institute ofTechnology Ltd. (FETI), SuperPower Inc., Silicon Valley
Innovation Laboratories, and Furukawa Electric (SVIL)
outside Japan.

Yokohama

Hiratsuka

Hiratsuka

Chiba

Nikko

Shiga

Laboratories for Fusion of Core Technologies(Yokohama, Chiba, Nikko and Hiratsuka)
OFS Laboratories (USA)
Advanced photonics
technology

SuperPower Inc. (USA)Superconductivity

FFTI (Hungary)
Advanced basic
technology

Advanced Technologies R&D Laboratories(Yokohama, Nikko and Hiratsuka)

FURUKAWA ELECTRIC GROUP

Automotive Products & Electronics Laboratories(Hiratsuka, Nikko, Shiga and Imaichi)
Telecommunications & Energy Laboratories(Chiba and Hiratsuka)
Superconducting Products Department(Nikko)22

Future Infrastructure Technology Center(Hiratsuka)
SVIL (USA)Open innovation

Digital Innovation Center(Yokohama)14.3%FY2019Functional
Products

21.7

10.1%

Electronics &Automotive Systems

billion yen

Infrastructure

52.3%

Business Strategy

23.3%

R&D Activities Aimed at Achieving Vision 2030
In order to build a sustainable world and makepeople’s lives safe, peaceful and rewarding, theFurukawa Electric Group is engaged in R&D activities
aimed at the creation of social infrastructure thatcombines the areas of information, energy andmobility. We established Fun Lab® as a base for open
innovation in Yokohama Works in 2016. Then, for theachievement of Vision 2030, we opened the Future
Infrastructure Technology Center in 2019 and theDigital Innovation Center in 2020.

Fun Lab®
The Fun Lab is a place to promote open innovation and to create new value via “COMPREHENSION”,“COOPERATION” and “COLLABORATION” with visitors. Through creative, stimulative communication with visitorsfrom industries, government agencies, schools, etc., we want to create innovation and help realize a sustainable
society. Since the renewal in June 2019, the Fun Lab has been continuing efforts to promote open innovation.
For details, please see “Fun Lab, a new space for generating open innovation” on Furukawa Electric’s website.
https://www.furukawa.co.jp/funlab/en/concept/

Fun Lab visitor groups of the first four years by type(As of September 2020)

Internal

Other

67

19

Government agencies

26Group companies
Inside the renovated Fun Lab

44

About Furukawa Electric GroupFor details on R&D activities by segment, please see “R&D
activities” on pages 26-28 of the 198th Securities Report.

Services andDevelopment, etc.

576

Business Foundation

In fiscal 2019, R&D expenses increased by 2.4% fromthe previous year to 21,650 million yen for developing
new products and new businesses in each segment,with the aim of enhancing focused areas and creating
new businesses.

Furukawa Electric Group’s
R&D investment by segment

Corporate Information/Data

R&D Investment

Industries

357

Universities

63
Future Infrastructure Technology Center

For details, please see the “Future Infrastructure Technology Center” on Furukawa Electric’s website.
https://www.furukawa.co.jp/en/rd/profile/infra.html

Digital Innovation Center

For details, please see the “Digital Innovation Center” on Furukawa Electric’s website.
https://www.furukawa.co.jp/en/rd/profile/digital.html

22

The Center serves as a core element of the Furukawa Electric Group in enhancing digital technologies, realizing
unrivaled quality by innovating manufacturing technologies, and creating new businesses for the achievement of
the SDGs and the resolution of social issues.

INTEGRATED REPORT 2020

The Center is working on inventing a ”next-generation infrastructure” that will integrate information, energy, andmobility, be environmentally friendly, and make people’s lives safe, peaceful and rewarding. By collaborating withpartners, the Center is engaged in the development of new technologies and new services.

Progress of the Mid-term Management Plan

Mid-term Management Plan (FY2016 to FY2020)

Furukawa G Plan 2020

Progress of the Mid-term Management Plan

Progress of the Mid-term Management Plan (Outline)
The Furukawa Electric Group has been engaged inbusiness under its Mid-term Management Plan
“Furukawa G Plan 2020,” which spans fiscal 2016 to
fiscal 2020.
Specifically, we have been striving to establish afoundation for the future growth of the entire Groupand to strengthen business mainly by 1) restructuring
the business portfolio via structural reform of low-

margin or non-core businesses, 2) proactively investingin growth businesses, and 3) creating new businesses.
Due to a slowdown in the Communications Solutions
business since the second half of fiscal 2018 and the
COVID-19 impact in fiscal 2020, operating income infiscal 2020 is expected to fall far short of the initial
target. Nevertheless, we have made steady progress interms of improving financial soundness.
2020 Mid-term Management
Plan

FY2015Result

FY2016
Result

FY2017
Result

FY2018Result

FY2019ResultFY2020
Forecast

Operating income

27.1 billion

38.6 billion

44.8 billion

40.8 billion

23.6 billion

50.0 billion

At least 40.0 billion At least 55.0 billion

Net income

At least 20.0 billion At least 30.0 billion

As of May 2016

As of May 201810.0 billion

17.6 billion

28.5 billion

29.1 billion

17.6 billion—

Net D/E ratio

1.19

0.99

0.88

0.81

0.8

—

—

<0.8

Equity ratio

24.5%

27.6%

29.0%

30.3%

30.2%

—

—

>30%

ROE

5.5%

9.3%

12.9%

12.0%

7.2%

—

>8%

>10%

Return on operating assets

9.1%

12.1%

13.1%

11.2%

6.1%

—

At least 10%

At least 10%
As of August 6, 2020

The COVID-19 Impact on Business (Overall)
Depressed operations at overseas group companies,
mainly in the Automotive Products Division(Electronics & Automotive Systems Segment) and thePower Cable Division (Infrastructure Segment), areexpected to adversely affect operating results for the
first half of fiscal 2020. We established a group-wide
emergency response team and the entire Group has
been making efforts to reduce the cost of sales,
expenses, and fixed costs. Nevertheless, we are
expecting to record an operating loss in the first half.
From the second half, we are anticipating a recovery in
the automotive industry, a pick-up in operating rates atoverseas subsidiaries, and some other improvements.

FURUKAWA ELECTRIC GROUP

Initiatives and progress for FY2020,
the Plan’s final year00

The COVID-19 pandemic is expected to greatly affectthe entire company in fiscal 2020 but we will continue
to enhance focused businesses and products, reform
low-margin businesses and products, and makeourselves more resilient to the changing environment
by improving the cost of sales, driven by productivity
enhancement and other measures. We will also looktoward the post-COVID-19 world, and promotebusiness development, R&D activities, and ESG
management for the achievement of the Furukawa
Electric Group Vision 2030.

Operating income forecasts of the company
and each business segment
Company-wide
Infrastructure
Electronics & Automotive Systems
Functional Products

Q1

Q2

Q3

Q4
As of August 6, 2020

Operating income forecasts for FY2020
Implementing all measures, including
reduction in cost and expenses(Billions of yen)

5.0

1.7

5.0

R&D
expenses

FY2020forecasts

1.5

2.5

1.6
4.2

0

-2.5

-5.0

4.0

ReduceBeforeimplement- manufacing measures turing
cost

Reducebusiness
division
expenses

Reducecorporate
expenses

As of August 6, 2020

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(FY)

Group philosophy dissemination
Formulated the Furukawa Electric Group (FEG) Philosophy
Formulated the Core Value
Philosophy system

Formulated the FEG Vision 2030
Formulated the FEG Action Guidelines

Formulated the FEG CSR Code of Conduct
Signed the United Nations
Global Compact

About Furukawa Electric Groupand we have been accelerating the implementation of
initiatives. In line with these themes, we recognize
climate change as a critical managerial issue for thesustainable growth of the Group and have beenstrengthening our response to this issue.

Concerning initiatives to build stronger operating
foundations in the “Furukawa G Plan 2020,” we have
set the dissemination of the Group Philosophy,
corporate governance enhancement, and workstylereform and diversity & inclusion promotion as themes,

Business Strategy

Major Initiatives to Build Stronger Operating Foundations

Corporate governance enhancement
Established the Guideline on Corporate Governance

Basic policy

The Chairman became the Director without the
representative right of the Board of Directors1
Reduced the number of the Directors

2

Increased the number of the Outside Directors

Board of Directors

Increased the number of the Outside Directors to fiveas at present
A female Outside Director was
appointed.

Business Foundation

Introduced the executive officers system

Structured the Audit & Supervisory Board members, to 3 people fromin-house and 3 people from outside.

Audit &
Supervisory Board

A female outside Audit& Supervisory Board
member was appointed.
Started the evaluation of the effectiveness of the Board of
Directors, and the summary of the result was published3.

Evaluation of theeffectiveness of
the Board of
Directors

As a process to evaluate the effectiveness of
the Board of Directors, the Chairman
conducted the interviews.
Established the Compensation
Committee

Established the Nominating/Compensation Committee

Nominating/Compensation
Committee

An outside director became chairman of theNominating/Compensation Committee
Revised the directors’compensation
scheme4

Partially revised the directors’compensation scheme5

Corporate Information/Data

Separation ofsupervision andexecution

Established the Independence Standards for the Outside Officers

Society: Workstyle reform and diversity & inclusion promotion
Workstyle reform;
organizational
execution ability
enhancement

Established the Workstyle
Reform Committee

Established the Organizational
Empowerment Team in theTransformation Division

Introduced the telework system
Appointed a non-Japanese corporate vice president
Appointed a female-Japanese corporate vice president

Diversity &inclusion
promotion

Established the Diversity Promotion Section
Set FY2025 targets to support thesuccess of women in the workplace
FEG Health Management Declaration

Other major
initiatives

Formulated the FEG Vision for Our People
Formulated the FEG Human
Rights Policy

Environment
Formulated the FEG Basic Environmental Policy
Established the FEG Environment Committee
Set the environmental targets 2030
Started to answer to CDP climatechange inquiries

Started to answer to CDP water security inquiries

Climate change;
information
disclosure

Expressed support for therecommendations of the Task
Force on Climate- related
Financial Disclosures (TCFD)

22

1: Aimed for supervising execution by the management, including the President, from a non-executive position
2: Reduced the term of service of the Directors from two years to one year
3: Annually disclosed
4: Consisted of the basic remuneration, short-term performance-linked remuneration, and mid- to long-term performance-linked remuneration
5: Aimed at strengthening incentives
6: Formulated in 1998

Obtained an SBT initiativecertification

INTEGRATED REPORT 2020

Basic policy

Formulated the Furukawa Electric
Basic Environmental Policy6

Infrastructure Segment

Business Overview

Communications
Solutions
Corporate Executive Vice President and General Manager of Communication Solutions Division

Takahide Kimura

Furukawa G Plan 2020 Basic Policy
Expand the global business with an eye on advances in 5G

Business Overview / Introduction of Products
The Communications Solutions Division is made up of the Optical Fiber and Cable products Division, FITEL products
Division and Broadband Solutions Business Division, 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 Cable Products

Main
products

Mainapplications- Low loss fibers forsubmarine power
cable and long
distance- Rollable ribbon cable- Low bending loss
fiber for building/residential applications- Telecommunications- Telecommunications- Video broadcasts- Video broadcasts- Data centers- Data centers

FITEL Products- Variable wavelength
laser modules (ITLA*)- Digital coherent
signal light source- Telecommunications carriers- System vendors- OTT- Transmission device
manufacturers

Main- CATV providers
customers- Industrial lasers- Cutting, welding, etc.

Broadband Solutions Business- FTTH system devices- Network routers- Telecommunications
service- Broadcast service- High speed, highcapacity telecommunications service- Design, installation- Establish VPN- CATV providers- Industrial Processing
manufactures- Municipalities- Telecommunications
providers- Telecommunications
providers- General companies

FURUKAWA ELECTRIC GROUP* ITLA:Integrable Tunable Laser Assembly

Overview of FY2019

03

Both sales and profit decreased from the previous year due to 1) price declines caused by a global supplydemand imbalance for optical fibers that was triggered by China and 2) a delay in improvement in productivity
for optical fibers and cables at the U.S. subsidiary. While we continued to implement measures to improve
productivity for general-purpose fibers and reduce costs, we focused on developing and expanding sales ofhigh-value-added products.
Sales of digital coherent related products increased from the previous year and contributed to profit with theadditional benefit of our cost reduction efforts.

Operating income margin(Billions of yen)

200

150

191.3
168.5 8.4%
14.2

20

179.9

166.4

7.3%
14.0

15

5.5%
100

10

9.8

5

50

1.0%

0

2016

2017

2018

1.6
2019

0

(FY)

Main Topic

Development of the world’s
highest-density small-diameter
optical fiber cable

About Furukawa Electric GroupOperating income (right)

Business Strategy

Net sales (left)(Billions of yen)

Business Foundation

Net sales / Operating income / Operating income margin

Furukawa Electric has developed and successfully commercialized the world’s highest core density* 6912
“rollable ribbon” fiber optic cable. High-capacity optical fiber cables are needed for data centers. As thecable can be installed in a conduit with an inner diameter of 1.25 inches (approximately 32 mm), which is
widely used in existing data centers, data centers can expand capacity without undertaking significant
facility reforms. In addition, a multi-core optical fiber fusion splicer (S124M12), which is most suitable forconnecting small-diameter, high-density cables at high speed, and a high-density batch connector (MTconnector) have also been commercialized. These products have been highly evaluated by customers as adata center optical fiber solution that significantly raises connecting work efficiency, and enables faster,efficient construction of end-to-end optical fiber lines.
* Core density means the number of optical fibers versus the cross-section area of the cable within an optical fiber

Corporate Information/Data

Contributing to the construction of a high-density network

Strengths and Challenges- Global production locations serving growth markets

Initiatives
to address
current
challenges- Differentiation by using highly functional products and technology (optical fibers andcables, digital coherent, network technology, etc.)- Enhancement of cost competitiveness and product differentiation as measures tocounter intensifying competition- Enhancement and accelerated sales expansion of products suitable for data centers- Development of next-generation products aimed at realizing Society 5.0

Business Outlook

03

Amid the ongoing transition to 5G (the 5th generation mobile communication system) and the spread of
AI and IoT, the construction of ultra-high speed, large capacity, low latency communication infrastructurewith simultaneous connection of multiple terminals is required. Further, the COVID-19 pandemic hasforced the world to adapt to the New Normal, boosting further need for a safe, reliable network. The
Communications Solutions Division is committed to developing products and services that respond tothese social needs and provide solutions.

INTEGRATED REPORT 2020

Strengths

Infrastructure Segment

Business Overview

EnergyInfrastructure

Corporate Executive Vice President and General Manager of Energy Infrastructure Division

Takamitsu Kozuka

Furukawa G Plan 2020 Basic Policy

Establish a business foundation that contributes to strengthening interconnections and preparing and toughening power lines in response to distributed
power generation utilizing renewable energy

Business Overview / Introduction of Products
The Energy Infrastructure Division is made up of the Power Cable Division and Industrial Cable & Power Cable
Accessories Division, and it is involved in the manufacture, sale and installation of ultra-high voltage, high voltage
and medium to low voltage power cable and equipment. The Power Cable Division was newly established following
the reorganization in October 2016 and has steadily been developing its business base.
Energy Infrastructure

Main
products

Mainapplications- Ultra high voltage (220kV
and higher) and highvoltage (66kV and higher)
underground transmission
cables, accessories andinstallation- Submarine transmission
cables and installation- Low to medium voltage
power cables- Electric power distribution accessories and overheadtransmission line accessories- Underground power lines
between power plants- Submarine power cablefrom new energy power
stations such as offshore
wind power stations (newbusiness domain)- Indoor wiring in factories,
buildings.

- Electrical materials for distribution lines- Insulation and protection for connectors- Interconnections between
regions and to islands- Wiring of the distribution
board/ control panel forfactory facilities/equipment- Wiring of mobile equipment- substations - large
factories- New energy power station
related (interconnections)- Direct and branch cable connections- Electric power supply to railroad cars

- Solar power systems

FURUKAWA ELECTRIC GROUP- Wiring of ship’s onboard
electrical equipment.

Maincustomers- Electric power (distribution) companies, large
factories.

- New energy source
electric power companies(SPC)- Construction contractors- Electric power companies- Construction contractors- New energy source
electric power companies(SPC)- Electric power (distribution) companies- Electronic appliancemanufacturers- Railroad companies- Railroad companies- Shipbuilding companies

04

Overview of FY2019
The power cable facilities in Chiba Works were forced to temporarily suspend operation due to typhoon No. 15 but
operation was quickly restored. We steadily captured orders for replacement demand in underground power cableprojects in Japan, which contributed to an increase in sales. Our subsidiary in China implemented structural reform
and improved profit, which resulted in the Division’s return to profitability.

Operating income margin(Billions of yen)

15

150

0.2%

95.3

102.1

114.5

108.1

10

0.1%

1.6%
50

5

2.2%
0.1

0

0.1
1.6

50

2016

Main Topic

Contract Awarded for Submarine Power
Cable Project in Republic of Indonesia
In a consortium with PT Wijaya Karya (Persero) Tbk (“WIKA”),
a major Indonesian engineering and construction company,
we have been awarded a full turnkey engineering,procurement, and construction contract for the developmentof the 150 kV Submarine Cable Sumatera-Bangka Project by
PT. PLN (Persero), Indonesia’s state-owned electric utility.
The contract value is equivalent to approximately 11 billion
yen and the delivery and commissioning of the project arescheduled for 2021.

2017

0

2.4
2018

5

2019

(FY)

Business Foundation

100

150 kV
Submarine Cable
Project

Sumatera
IslandAbout Furukawa Electric GroupOperating income (right)

BangkaIslandCorporate Information/Data

Net sales (left)(Billions of yen)

Business Strategy

Net sales / Operating income / Operating income margin

Strengths and Challenges- Abundant experience in delivering submarine and underground cables
Strengths

Initiatives
to address
current
challenges- High technical capability and quality- Increased manufacturing capacity for submarine and other cables for the renewableenergy market, where demand is rapidly growing- Increased installation capability, aimed at securely capturing replacement demand for
power backbone network

Business Outlook

00

Based on the national government policy of “making renewable energy a major source of electric power”, itwill be necessary to prepare and reinforce the power lines and strengthen the interconnections in Japan.
Also, a stable supply of high-quality electric power is needed to support the 5G society, and the division
will contribute to the shift to the future energy mix.

INTEGRATED REPORT 2020

- Sales expansion of lightweight, soft aluminum CV cables, which contribute to labor saving
and efficiency in construction work

Business Overview

Electronics & Automotive Systems Segment

Automotive
Products & Batteries
Corporate Senior Vice President and General Manager of Automotive Products Division

Shigenobu Abe* The batteries business is conducted by a listed subsidiary The Furukawa Battery Co., Ltd.

Furukawa G Plan 2020 Basic Policy
Evolve existing products and create next-generation products in the areas ofweight reduction, energy management, and safe systems, with safety andsecurity as key words.

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

SafetyLightweightElectrificationKey
products
Mainapplications- Quasi-millimeterwave radar- Steering roll connector (SRC)- Lead battery state
detection sensor(BSS)- Products using flatcable

- Aluminum harnesses- Advanced driver-assistance systems(ADAS)- Connector for airbags- Vehicle power source
management- Electricity supply andsignal transmission
for sliding doors andlong slide seats- Reduce the weight ofvehicle wiring (W/H)- Wiring for electricvehicles- Tier 1- Japanese automobile
manufacturers- Automobile manufacturers- Japanese automobile
manufacturers- Japanese automobile
manufacturers

FURUKAWA ELECTRIC GROUP- Japanese automobile
Mainmanufacturers
customers- Corrosion-proof
terminal (α terminal)- High voltage
products

00

Overview of FY2019
We recorded a decline in sales and profit due to 1) a drop in sales of wire harnesses, 2) an increase in depreciation
expenses associated with capital expenditure in response to an order intake of aluminum harnesses for lighterweight vehicles and cost/quality improvement, and 3) an increase in R&D expenses for the future.

(Billions of yen)

400

300

200

5.3%
4.5%

223.4

248.1

20

5.0%

13.2 267.3 13.5 257.6

4.2%
10.9

10.1

15

10

5

100

0

0

2016

2017

2018

2019

(FY)

Main Topic

Increase in production capacity foraluminum wire harnesses in Vietnam
As needs for lighter-weight automotive parts are rising in response tovehicle electrification and environmental regulations, demand foraluminum wire harnesses is increasing and Furukawa Electric’s
production share of its lightweight aluminum wire harnesses to its
total wire harness output is expected to increase from the current
10% to 30-40% in 2022-2023.
We have therefore decided to quadruple our production capacity forlightweight aluminum wire harnesses at Furukawa Automotive Parts (Vietnam) Inc. (FAPV). We will continue
to respond to automotive weight reduction needs by providing aluminum wire harnesses, which combine awide variety of aluminum wires—a strength of Furukawa Electric—with our anticorrosion technology.

About Furukawa Electric GroupOperating income margin

Business Strategy

Operating income (right)

Business Foundation

Net sales (left)(Billions of yen)

Corporate Information/Data

Net sales / Operating income / Operating income margin

Strengths and Challenges
Strengths- Product design and development that captures customer needs and utilizes strength
in materials- Enhancement of global supply chain that can support BCP- Proactive capture of demand for automotive weight reduction in response to Connected,
Autonomous, Shared & Services, and Electric (CASE)- Investment aimed at capacity expansion in Asia at appropriate time, directed at increased
shipments of wire harnesses to North America- Start of mass production of high-function lead battery state detection sensor (BSS)Business Outlook00

By placing safety and reliability as a broader concept, our business objective is to make use of our material
technology and sell products with high-value-added services rather than goods to the automotive industry
in the current once-in-a-century drastically changing era.

INTEGRATED REPORT 2020

Initiatives
to address
current
challenges

Business Overview

Electronics & Automotive Systems Segment

Electronics
Component Materials
Corporate Vice President and General Manager of Electronics Component Materials Division

Masao Terauchi

Furukawa G Plan 2020 Basic Policy
Develop materials with characteristics that match customer needsin the automotive and electronics markets

Business Overview / Introduction of Products
The Electronics Component Materials Division handles electric conductors, magnet wires, 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 (Magnet Wires)- Copper wires,
Main
products aluminum wires- Various cables- Wire harness- Oxygen-free copper
wires- Fine wires- Magnet wires foralternators- Magnet wires for EV
motors

Copper Strips- TEX (Triple insulated
winding wire)- Copper products- Oxygen-free copper- Thin sheets (strips)- GOFC- Mobile phoneinductors- Battery charge formobile phones- Mobile phone terminals- Shielding strips- Relays (general-use, for automobiles)- Transformers for various power supply- Anti-corrosion
terminals for automobiles- Substrates for heatdissipation

Mainapplications

FURUKAWA ELECTRIC GROUP

Main
customers- Semiconductor leadframes- Electrical cablemakers (internal-use)- Electrical wire makers- Motor makers- Electronics component makers- Power source makers- Terminal makers- Transformer makers- Semiconductor
component makers(internal-use)- Heat pipes- Electrical cablemakers- Heat pipe makers(internal-use)

Overview of FY201900

Due to weak demand for smartphones and other electronics products and the impact of the economic slowdown,
caused by the prolonged U.S.-China trade friction, demand was sluggish in the electronics market and sales ofcopper products for connectors and lead frames were weak.
We have decided to sell the Copper Tube Division and reorganize the Magnet Wire Division, in light ofcomprehensive consideration of business synergies with the infrastructure and automotive segments—a focusedarea of the mid-term management plan.

(Billions of yen)

20

400

300

200

285.6
232.1

1.8%

1.2%
5.1

100

15

294.4
2.0%

251.7
10

1.6%
6.0

5

3.9

2.7

0

0

2016

2017

2018

2019

(FY)

Main Topic
Essex Magnet Wire' a leader in magnet wire products andFurukawa Electric, integrated their heavy magnet wirebusinesses, with the aim of supplying Furukawa’s HVWW® andother high-value-added magnet wires to customers worldwide,
given the global expansion of the electrified automobile market.
For details, please see Furukawa Electric’s website.
https://www.furukawa.co.jp/en/release/2019/ele_190926.html
https://www.furukawa.co.jp/en/release/2020/ir_20201002.pdf

Strengths and Challenges
Strengths

About Furukawa Electric GroupOperating income margin

Business Strategy

Operating income (right)

Business Foundation

Net sales (left)(Billions of yen)

Corporate Information/Data

Net sales / Operating income / Operating income margin- Material development in line with customer needs Initiatives to address current challenges- Sales expansion of heat-resistant, oxygen-free copper strips for power semiconductors
and heat dissipation components

Initiatives
to address
current
challenges- Sales expansion of original alloys in response to enhanced functions of electronic
devices- Sales expansion of differentiated wires for 5G telecommunication infrastructure andserver inductors

Business Outlook

00

In the automotive industry, the market for communications devices, sensors, control devices and passive
components has grown following increased opportunities for sharing information and knowledge as aresult of “vehicle electrification,” “autonomous driving technology,” “IoT” and “AI.” Moreover, materials arealso required to have diverse characteristics. We intend to make a wide range of value proposals, byutilizing our material development capability in accordance with customer needs.

INTEGRATED REPORT 2020

- Establishment of a system to steadily capture demand for nickel/titanium alloy
products for medical devices

Business Overview

Functional
Products

Corporate Senior Vice President and General Manager of Functional Products Division

Ryoji Ono

* This segment includes businesses of a listed subsidiary TOTOKU Electric Co., Ltd., etc.

Furukawa G Plan 2020 Basic Policy
Work to co-create with customers and continue to provide solutions

Business Overview / Introduction of Products
The Functional products Division is made up of the AT* & Functional Plastics Division, Thermal Management
Solution & Products Division, Memory Disk Division and Copper Foil Division, and it is involved in the manufactureand sale of functional products made from plastics and nonferrous metals.
* AT : Advanced Technology Tape

AT & Functional Plastics

Main
products- Tape for semiconductor process- Cable protective pipes- Troughs made fromrecycled materials

Thermal Management
Solution & Products

Memory Disk

Copper Foil

- Copper, etc. including
heat sinks and heatpipes

- Aluminum blanks for
HDD- Electrolytic copper
foil for printed wiringboards- Electrolytic copper
foil for batteries- Heat dissipation andcooling of CPUs andpower semiconductors, electronics components, high output
LED lighting, etc.

- HDD for use in data
centers, desk top PCs
and monitoring
cameras- Circuit boards forcommunication
devices and electronic- Negative electrodematerials for lithium
ion batteries used forEVs, mobile phones,
power tools, etc.

- Data center operators telecommu
nications base station
operators- HDD substrate
manufacturers- Circuit board material makers- Insulation materials- Surface protection,
immobilizing, etc.
Mainduring semiconductor
applica- wafer processing

tions- foundry manufacturers

FURUKAWA ELECTRIC GROUP- Troughs for holding
cables- Semiconductor chip
- Insulation for air
stacking in flash memory
conditioning ducts- Semiconductor
manufacturers

Maincustomers- Protective pipes forunderground cable- General construction
companies andsubcontractors- Railroads- Highway public
corporations androad subcontractors- Air conditioning duct
manufacturers- Lithium ion battery makers- Smartphone, PC
manufacturers- Manufacturers of
power conditioners
for railroads and solar
power- Lighting equipment
manufacturers, etc.

Overview of FY2019

00

The AT & Functional Plastics business posted favorable sales of some underground cable duct materials but the
Thermal Management Solution & Products, and the Memory Disk and the Copper Foil business were affected byweaker demand in the electronics market, such as for data centers and smartphones, and by the fire at a copper
foil plant in Taiwan in June 2019, which partially destroyed the facility. As a result, sales and profit in the Segment
decreased from the previous year.

200(Billions of yen)

8.9%

150

100

131.5
11.7

9.2%

9.1%

153.1
14.0

149.3
13.5

20

15

6.4%
115.9

10

7.5
5

50

0

0

2016

2017

2018

2019

(FY)

Main Topic

Furukawa Electric Group’s GREEN TROUGH® contributes to building
safe, peaceful, and rewarding social infrastructure
Contributing to Sanriku Railway’s resumption of full operationin Iwate Prefecture

A quarter of weight of
conventional concrete alternatives[Lightweight]

Protect cables!

Protect
Sanriku Railway in Iwate suspended operation due to the East Japan
workers!
Typhoon in 2019 but resumed full operation in March 2020. Furukawa
Electric Group’s GREEN TROUGH® was adopted for restoration work.
Protect
A labor shortage and aging workers at construction sites havethebeen a problem in social infrastructure development which requires environment!
early restoration. However, GREEN TROUGH®, which is lightweight,
weather and impact resistant, and has excellent workability,
contributed to a significant reduction in the construction period.

Reduces maintenanceand replacement cost

Cable trough made ofenvironmentally-friendly
synthetic resin fromrecycled plastics as amajor raw material

GREEN
TROUGH

About Furukawa Electric GroupOperating income margin

Business Strategy

Operating income (right)[Resistant to weather,corrosion, and frost damage]Withstands 4.9 kN/500 mm[Load bearing]

Easy to handle in transportation andinstallation with high impact resistanceProtects the cable from the blade ofgrass cutters[Impact resistant]

Easy to install thanks to a male-female
structure and a bending function[Joint structure]

Protects the cable from fire and prevents fire spread[Flame resistant with a self-extinguishing property]
Prevents lid movement and raises safety[Secure lid]

Easily processed at the worksite[Processing]

Corporate Information/Data

Net sales (left)(Billions of yen)

Business Foundation

Net sales / Operating income / Operating income margin

Strengths and Challenges

Initiatives
to address
current
challenges- Ability to propose and develop products in line with customer needs- Development of next generation products that will form the foundation of new revenue
mainly in the data center market- Development of new markets and proposals for new applications- Further improvement in productivity and enhancement of the ability to respond tomarket changes

Business Outlook

01

We contribute through a diverse product lineup to the realization of a 5G society with higher speed, higher
capacity communications and to a sustainable society that will support this.
In the electronics market including data centers, while aiming to increase profits through welldifferentiated products with high added value, we provide solutions in line with the changes in the social
environment through product development based on our plastics technology.

INTEGRATED REPORT 2020

Strengths

CSR Management/Risk Management

CSR Management
Basic Policy and CSR Code of Conduct
Each of the companies in the Furukawa Electric Groupis engaged in CSR activities in line with the following
Group basic policy.
In conducting corporate activities based on the
Furukawa Electric Group Philosophy and Core Value,
the CSR Code of Conduct defines fundamental rules of
behavior that Furukawa Electric Group executives andemployees should follow from the perspective ofcorporate social responsibility.

Furukawa Electric Group basic policy on CSR

Furukawa Electric Group Basic Policy on CSR (Revised March, 2011)

Based on the Furukawa Electric Group Corporate
Philosophy,- We will operate our businesses in harmony withsociety and the environment and endeavor to createsocial value through technological innovation,complying with laws, social norms, and ethics as amember of the international community- We will strive to maintain and build sound andfriendly relationships with all of our stakeholders andcontribute to the sustainable development of society.

Basic Approach

The Furukawa Electric Group CSR code of conduct(Revised April, 2019)

In order to contribute to the realization of a sustainable
society, we need to understand the social
responsibilities of Furukawa Electric Group andimplement policies in line with the Basic CSR Policy. We
will promote CSR initiatives alongside our businessactivities so that each and every Group employee is able
to take the lead in putting CSR initiatives into practice.

1 Human rights

6 Fair competition

2 Labor practices

7

Relations with customers,
partners, and society

3 Environment

8Management and preservation of Company assets

4 Products and services

9 Disclosure of information

5

International businessDuties and obligations of senior
10
es and transactions
management and employees
For details please see the “Furukawa Electric GroupCSR Code of Conduct” on Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/123

CSR Promotion Framework
The Furukawa Electric Group has established the CSR
and Risk Management Committee, which comprises
management as members, with the President as chair
and the General Manager of the Administration & CSR
Department as vice chair. The committee is structured
to supervise and promote CSR activities of the Group,

including risk management, internal control,
compliance, and social contribution. The committee
has also established special committees, each of which
focuses on managing high-priority risks, such as quality
control, occupational health and safety, and theenvironment.

Board of Directors
Submit proposals and reports

FURUKAWA ELECTRIC GROUPCSR and Risk Management Committee
Committee chair: President
Vice chair: General Manager, Administration &CSR Division
Organizer: General Manager, CSR Department

33

Furukawa Electric Group
Quality Management Committee

Furukawa Electric Group
Occupational Health and
Safety Committee

Committee chair: President
Committee members: Management
Organizer: General Manager,
Quality Promotion
Department

Committee chair: President
Committee members: Management
Organizers: General Manager,
Safety Environment Promotion
Department,
General Manager,
HR Department

Furukawa Electric Group
Environment Committee
Committee General Manager,
chair: MONOZUKURI
Innovation Division
Committee members: Management
Organizers: General Manager, Safety
Environment Promotion
Department,
General Manager, Facility
Strategy Department,
Production Technology &Engineering Department

Central Disaster Prevention
and Business Continuity Management Promotion Committee
Committee General Manager,
chair: Administration & CSR
Division
Committee General managers of eachmembers: business division, divisional
representatives, etc.
Organizer: General Manager, CSR
Department

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.

Important companywide risks
Compliance

Information security

Quality control

Affiliated company controls

Business-Related Risks
The Furukawa Electric Group’s management
performance is affected by economic conditions invarious markets where we sell our products andprovide services. Our management performance, stock
price and financial position may be affected by therisks summarized in the table on the right, which wereselected at the end of fiscal 2019.

Business-related risks
1

Impact of the COVID-19
pandemic

9

Risks related to intellectual
property rights

2

Fluctuation in prices of raw
materials fuels

10

Risks associated withenvironmental preservation

3 Procurement risks of raw materials 11 Overseas activities
4 Fluctuations in exchange rates 12 Violations of laws and regulations
5 Risks of higher interest rates 13

Deterioration in profitability of
construction works

6 Defective products

14 Information security risks

7 Impairment of assets

15 Natural disaster risks, etc.

8 Risks associated with tax
For details please see the “Business-related risks” on pages 15-18 of
the 198th Securities Report.

The Furukawa Electric Group Vision 2030 and Risk Management
The Furukawa Electric Group has identified risk aspects
of priority management issues (materiality) for theachievement of Vision 2030 as 1) developing businessactivities that take into account climate change; 2)
strengthening human resource and organizational
execution capabilities; and 3) building a governancesystem to strengthen risk management.

Core Value

Vision 2030

At the same time, as priority issues for fulfilling ourcorporate social responsibility (CSR) and strengthening
the relationship with stakeholders in corporate
activities based on the Group Philosophy and the Core
Value, regardless of Vision 2030, occupational healthand safety comes first, followed by quality control,
compliance, and human rights and labor practices.

CSR Code of Conduct
In conducting corporate activities based on the Furukawa ElectricGroup Philosophy and Core Value, the CSR Code of Conduct defines
fundamental rules of behavior for the Group’s executives and employees from theperspective of corporate social responsibility (CSR).
Occupational health and safety; quality control; compliance; human rights andlabor practices, etc.

Materiality of Risks

For details please see “Risk Management” on Furukawa Electric’s website.
https://furukawaelectric.disclosure.site/en/themes/91

Quality control
https://furukawaelectric.disclosure.site/en/themes/94

Occupational health and safety
https://furukawaelectric.disclosure.site/en/themes/76

Compliancehttps://www.furukawa.co.jp/en/company/compliance.html

33

Priority management issues for the achievement of Vision 2030
(risk aspects to be addressed)
Climate change; human capital and organizational execution abilities; governance

INTEGRATED REPORT 2020

Group Philosophy

Business Foundation

Large-scale disasters, such as earthquakes

Corporate Information/Data

The Furukawa Electric Group’s CSR and 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. Throughspecialized committee activities in segment-specificareas—occupational health and safety, quality control,
the environment, and disaster prevention and business
continuity management—we are enhancing our system
to manage risks related to our business activities. In
addition to this system, important decision making is

About Furukawa Electric Group

Overview of Risk Management and System

Business Strategy

Risk Management

Development of Business Activities that Consider Climate Change

FeatureDevelopment of Business Activities
that Consider Climate Change
Furukawa Electric Group Basic Environmental Policy
Basic
Philosophy

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

ActionGuidelines 1

We shall comply with environmental laws and regulations as well as the demands of our customers
and others, setting ever higher 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.

System to Address Climate Change

FURUKAWA ELECTRIC GROUP

The Furukawa Electric Group is working to address
climate change through environmental management. We
have adopted a system to supervise and promote theGroup’s risk management by establishing the CSR and
Risk Management Committee (Chair: President; Vicechair: General Manager of the Administration & CSR
Division). We have also set up special committees foreach risk of high importance under the above Committee.
We have positioned climate-related risk as the mostimportant environmental risk, and we manage it basedon environmental management in the Furukawa ElectricGroup Environmental Committee (Chair: General
Manager of the MONOZUKURI Innovation Division;
Vice-chair: General Manager of the Administration & CSR
Division), which was established as a special committee.
This committee comprises management as members,
including General Managers of divisions that are in chargeof business management.
In addition, to address the risks of natural disasters
caused by climate change, we have established theBoard of Directors
Proposal submission and reporting

CSR and Risk Management Committee
Chair: President
Vice-chair: General Manager, Administration & CSR

Division

Members: Management
Organizer: General Manager, CSR Department

Furukawa Electric Group
Environment Committee
Chair: General Manager, MONOZUKURI

Innovation DivisionVice-chair: General Manager, Administration& CSR Division
Members: Management
Organizers: General Manager, Safety
Environment Promotion Department;
and General Manager, Facility Strategy
Department, Production Technology& Engenering Department

Central Disaster Prevention andBusiness Continuity Management
Promotion Committee
Chair: General Manager, Administra-tion & CSR DivisionVice-chairs: General Manager, the Strategy

Division; and General Manager,
MONOZUKURI Innovation Division

Members: General managers of each businessdivision, divisional representatives, etc.

Organizer: General Manager,

CSR Department

Central Disaster Prevention and Business Continuity
Promotion Committee (Chair: General Manager of the
Administration & CSR Division; Vice-chairs: General
Manager of the MONOZUKURI Innovation Division,
General Manager of the Strategy Division, which is a
special committee, and it is cooperating with business
continuity management (BCM).

Climate Change and Environmental Information Disclosure

04

The Furukawa Electric Group has set targets for
reducing greenhouse gas emissions by 2030 in orderto realize a decarbonized society, which the Paris
Agreement aims to achieve. The greenhouse gases
emitted by the Group are primarily energy-derived
carbon dioxide (CO2) and sulfur hexafluoride (SF6).
The Group has responded to inquiries from CDP,
which represents our institutional investors, about CDP
climate change since fiscal 2008 and on CDP water
security since fiscal 2013. As a response to customers

utilizing the CDP supply chain program, we take part inbriefings and workshops, and in order to maintain andimprove the CDP scores, we will continue to expand
the scope of environmental information disclosure
content and increase its reliability. Further, in January
2020, we endorsed the recommendations of the
Climate-related Financial Information Disclosure Task
Force (TCFD) and also launched an initiative to disclose
information in line with the TCFD.

About Furukawa Electric Group

Contribution to the sound material-cycle society:
Promote of the recycled materials usages aiming at
the sound material-cycle society.

(1) The greenhouse gas emissions in the business activities: Reduce
absolute scope 1 and 2 GHG emissions 26% by FY2030 from a
FY2017 base year.
(2) The greenhouse gas emissions in the value chain: Reduce absolute
scope 3 GHG emissions 20% by FY2030 from a FY2017 base year.

3

Contribution to the circular & ecological spheresociety: Minimize the impact on the ecological systemthrough the provision of the environmental activities
and products / services.

The Furukawa Electric Group set the Environmental Targets 2030 and applied for the Science Based Targets (SBT) in fiscal 2018 andobtained approval in fiscal 2019.

Progress Status of Environmental Targets
In fiscal 2019, the Group set a new 2030 long-term target
for reducing greenhouse gas emissions, with fiscal 2017 as
the base year, and achieved SBT certification. In the case ofmeasures to counter climate change, in fiscal 2019, we
steadily promoted measures such as energy saving, fuelconversion, installation of solar power generation, andconversion of purchased electricity to renewable energy. In
addition, with regard to SF6 emissions, we are proceedingwith the development of test facilities, etc., and owing
partly to a decline in the factory utilization rate caused byexternal influences, total CO2 emissions for the Group in
Japan and overseas decreased significantly by 17.9%
compared to fiscal 2017.

Greenhouse gas emissions(1,000 tons-CO2e)

1,000
800

CO2(Overseas)

CO2(Domestic)

SF6(Furukawa Electric)

0
351

63
357

90
353

49
338

481

461

460

456

Business Strategy

2

32
310

400
200

400

0
2015

2016

2017

2018

2019

(FY)

* For the overseas CO2 emission coefficient, the coefficient for eachcountry according to the IEA (International Energy Agency) is used forpurchased electricity.
* Emissions of greenhouse gases other than CO2 are converted to CO2
equivalent emissions using Global Warming Potential (GWP).

Corporate Information/Data

1

Contribution to the decarbonized society: Aiming for zero
emissions over the long term.

Business Foundation

Environmental Targets 2030

In our efforts to reduce greenhouse gases, we arepromoting energy saving and fuel conversion at ourfactories, installing solar power generation, andswitching to renewable energy for purchased
electricity. In the case of our domestic bases, we havepromoted fuel conversion at the Mie Works, and weswitched from LPG to LNG in January 2019. Furukawa
Nikko Power Generation Inc. in the Furukawa ElectricGroup possesses four power plants and is supplyinghydroelectric power. The Nikko Works entirely uses
electricity generated by hydroelectric power. The
Copper Foil Division also started using solar power
generation equipment in February 2019. Overseas
bases are utilizing solar power in Mexico, China, andIndia while our bases in Europe and The Philippines areusing renewable energy under contract.

Furukawa Nikko Power Generation Inc.’s hydroelectric power
generation (Hosoo Power Plant)

Automotive Products Division:
Solar power panels installed at
Furukawa Mexico S.A. De C.V.
(Mexico)Solar power generation panels
installed at the Copper Foil Division(Nikko, Tochigi Prefecture)

Automotive Products Division:
Furukawa Automotive Systems
Lima Philippines, Inc.
(Philippines) switched to electricity
derived from geothermal power
generation

Future Outlook
in line with the long-term reduction target (SBT) for
greenhouse gas emissions. In 2019, we began
estimating Internal carbon pricing. We will strengthen
our climate change countermeasures by making
carbon prices visible for each division.

00

In fiscal 2020, we will promote the formulation of theEnvironmental Vision 2050. In regard to our climatechange countermeasures, we will formulate a plan to
introduce solar power generation and promote aswitch from purchased electricity to renewable energy

INTEGRATED REPORT 2020

Climate Change Countermeasures

Development of Business Activities that Consider Climate Change

Initiatives in Line with TCFD
Recommendations

FeatureGovernance
The Group recognizes climate-related risks andopportunities as important management issues forachieving the Furukawa Electric Group Vision 2030.
Therefore, in January 2020, we endorsed the TCFD’s
recommendations and we also decided to sign the
United Nations Global Compact.

Risk Management

The CSR and Risk Management Committee holds
meetings regularly every six months to discuss issues
such as risk management, internal control, andcompliance. In addition, the Furukawa Electric Group
Environmental Committee and the Central Disaster
Prevention and Business Continuity Promotion
Committee, which are special committees of the CSR
and Risk Management Committee, hold meetings
regularly every three months. The Furukawa ElectricGroup Environmental Committee deliberates on

Examples of subjects discussed and decided
in relation to climate change
SBT certification application andManagement Committee
formulation of environmental targets meeting in January 2019
TCFD endorsement

Management Committee
meeting in January 2020

Signing of United Nations Global
Compact

Management Committee
meeting in January 2020

climate-related risks and opportunities and refers
matters and reports to the Management.
Committee and the Board of Directors on the status
of monitoring and environmental issues regarding
climate-related risks. The Central Disaster Prevention
and Business Continuity Promotion Committee isestablishing business continuity management (BCM),
identifying business continuity risks, including natural
disasters, and promoting and managing theidentification process.

Strategy

FURUKAWA ELECTRIC GROUP

Recognizing that climate-related risks and opportunities
are important management issues, in fiscal 2019, theGroup participated in the “Climate-related risks andopportunities scenario analysis support program in linewith the TCFD,” implemented by the Ministry of theEnvironment, and conducted scenario analysis in regard
to the two focused areas in the Furukawa G Plan 2020
(optical fiber cables in the Communications Solutions
business and power cables in the Energy Infrastructurebusiness. In the case of scenario analysis, we recognizethat the entire Group, including the supply chain, needs
to be covered, but this scenario analysis was conductedwith a focus only on target businesses and materials
used. For the scenario, we set 2030 and 2050 as thetime axes for consideration, based on a 2°C scenario
and a 4°C scenario.

In the business impact assessment, we examined fourtransition risks, namely, an increase in fiber demand dueto the spread of smart cities (Communications Solutions
business), an increase in power cable demand due tothe enhancement of power grids (Energy Infrastructurebusiness), an increase in copper procurement costs, anda carbon tax. We also examined three physical risks,namely, rising sea levels, drought, and typhoons(intensifying storm and flood damage). We found thatthe degree of impact of increased profits due to the
spread of smart cities and the degree of impact of
decreased profits due to drought would differ greatly
depending on the 2°C and 4°C scenarios. Furthermore,with regard to typhoons (intensification of storm andflood damage,) quantification based on scientificgrounds has become a future issue.

A summary of the results of the scenario analysis has been published in the Ministry of the Environment’s
Practical guide for Scenario Analysis in line with the TCFD recommendations
Source: Ministry of the Environment website https://www.env.go.jp/policy/tcfd.html

Target businesses
Item

Communications Solutions business

Target manufacOptical fiber cables
tured items

00

Glass material (optical fiber)
Materials used

Plastic (fiber & cable coating material, etc.)
Copper (metal communication cable)

Bases

Globally expanding production bases(Asia, North America/South America,
EMEA)

Scope
Energy Infrastructurebusiness
Power cables
Copper (conductive material)
Plastic (cable coating
material, etc.)
Japan, China

Item
Scenarios

2°C Scenario, 4°C Scenario

Targettime axes

2030
But set to 2050 for physical risks

Supplychain

Covers copper only. Copper wire is sourced
from the Electric Conductor Division. Glassmaterials and plastics are not included.

Financial Information Disclosure Task Force (TCFD). At the same time, we participated in the“Climate-related risks and opportunities scenario analysis support program in line with the
TCFD,” implemented by the Ministry of the Environment. In order to realize a sustainable society,we will continue to use TCFD to strengthen our relationships of trust with our stakeholders.

Implementation of Scenario Analysis

In the world of 2°C, low carbon is promoted, and renewableenergy and smart cities spread (tough response)
MiningCities

As low carbon advancesand demand for copperincreases, resourcecompetition intensifies

Government

Carbon tax is
introduced andrecycling
regulations, etc.
are tightened

Urban area

Town area

Escape fromfossil fuels due
to low carbon/
decarbonization

Renewable energy

As renewable energy
spreads, a trunk line of powersystem is strengthened

Factory

Due to diffusion ofrenewable energy (e.g.,
offshore wind power),
demand for submarine
cables increases

Factories stop
operating due torising sea levels(Impact is less than 4°C)

(Impact is less than 4°C)

Low-carbon factories havebeen realized through renewable energy power sources andprivate power generation

Indicators and Targets
The Group’s long-term 2030 target for reducing
greenhouse gas emissions based on fiscal 2017 has
been certified as an SBT (2°C target). In light of the
scenario analysis, we will consider setting a target
ratio for renewable energy use and an ultra-long-term
2050 target.

Submarine cable
Offshore wind
power

Greenhouse gas emissions based on
CDP disclosure(1,000 tons-CO2e)

1,000
800

Scope1
665

570

26%
decrease

200
238
2017
Base year

197
2018

172
2019

2030
Targettarget businesses and deepen and integrate thescenario analysis going forward.
In order to realize a sustainable society, we willcontinue to contribute to the conservation of the
global environment, which we are prioritizing in the
Furukawa Electric Group Vision 2030, through climatechange countermeasures using TCFD, and tostrengthen relationships of trust with all stakeholders
by disclosing information.

00

On this occasion, by participating in the “Climaterelated risks and opportunities scenario analysis
support program in line with the TCFD,” conducted by
the Ministry of the Environment, we embarked on
scenario analysis and disclosed information. However,the scenario analysis is limited to the optical fiber andcable business and the power cable business, so therisks and opportunities we have managed to quantify
are limited. We recognize that we need to expand the646

Scope2400

0Future Response

Sea

INTEGRATED REPORT 2020

Need for recycledmaterials
increases

Fossil fuel-based
power

Corporate Information/Data

Renewable energy-based
power

Fossil fuels

Business Foundation

Penetration of batteries and
EVs promotes integrated
supply and demand(Increased costs due tointroduction of carbon tax)

Impact on factory
operations in areas
with high water stress

About Furukawa Electric Groupmanagement issue, the Furukawa Electric Group declared its endorsement of the Climate-related

Business Strategy

In January 2020, recognizing that climate-related risks and opportunities are an important

Strengthening human resource and organizational execution capabilities

Human Capital Management

Strengthening humancapital management
and organizational
execution abilities

Furukawa Electric Group Vision for Our People
Among the management related philosophy and thepolicy of the Group, as a consistent and basic idea of
the general human resources measures, Furukawa
Electric Group Vision for Our People was formulated.
We will continue to achieve the following three issues
by promoting the concepts which are presented in the
People Vision.

1

Employees, to grow autonomously and develop theircareers

2

Leaders, to be key persons to promote the auto
nomous growth of the diverse human resources

Human resource departments in each affiliate, to
3 continue to promote their human resource measures
based on the People Vision

Furukawa Electric Group Vision for Our People
The people of Furukawa Electric Group are our greatest value.
We recognize that investment in the development of our people will enable sustainable
long term success of our Group.

Role of the Leader

Role of the Individual

Leaders encourage the engagement of all
people while supporting the growth of theindividual.

Each individual proactively andcontinuously develop and deliver
the best of their skills andcompetencies throughengagement and collaboration.

Leaders facilitate the transformation of theindividual’ s skills and competencies todeliver successful organizational
accomplishments.

As a member of both Furukawa ElectricGroup and the global community, eachindividual must work with ethics andintegrity in mind, and put their effort
towards making the world a better place.

Leaders demonstrate behaviors that support
a creative and positive organizational culture
through teamwork and collaboration.

Principles of

Human Resources

By fostering on organizational
culture which value people,
Furukawa Electric Group will
nurture each individual’ s
confidence in the company.

All human resource policies, procedures
and systems will reflect fairness, support
diversity and encourage all of our talent
to proactively challenge and develop
themselves.

Personnel Management Policy
We aim to be a creative and dynamic corporate group by utilizing diverse human resources globally. It isfundamental to human capital management to continuously create personnel who can embody Furukawa Electricgroup philosophy, core value and contribute to strengthening competitiveness.

FURUKAWA ELECTRIC GROUP

Medium-term Policy00

In the 2020 Mid-term Management Plan, we set a
mission of pursuing diversity and initiative in order tocontinue growing in the global markets, improving ourabil i ty to respond to changes in the businessenvironment, and realizing greater creativity andexecution capabilities in our “people” and“organizations”.
We will implement human capital management tosupport Furukawa Electric Group’s growth strategy
through such as enhancement of HR function in
Furukawa Electric Group as a whole throughpenetration of “Furukawa Electric Group Vision for
Our People”, fosterage of employee’s voluntary
initiative on their career development, improvement of
their motivation for competency development.

Main measures contributing to the Group’s
global management
1

Realization of “Successor Training Plan” and strategic
placement in important position within group

Early selection of candidates and systematic
2 development and arrangement, for the training of
the next generation of managers
3

Penetration and establishment of “Furukawa ElectricGroup Vision for Our People”, promotion of careerdevelopment support and improvement of personnel
system for that purpose

Improvement of training curriculum and promotion
4 of human resources exchange, overseas dispatch ofyoung employees
5 Acceleration of diversity management efforts
6

Promotion of productivity improvement and flexible
working way through “work style reform”

Global human resources training system
Training global human resources
SP

GlobalBusiness Leader

Generalmanagers

GBL

Sectionmanagers

GlobalMindset Program

Recommend
key people ineachdepartment
for training as
global humanresources

FY 2013–
Mini MBA
Diversity
Accounting
Global Mind Set
Strategy,
Global Leadershipetc.
Business Situation

GlobalChallenge
Program

GCP(Overseas
dispatching)

GlobalDevelopment
ProgramGDP

GMP

Data Base
Assistantmanagers

FY 2006–2012(For local
employees)
FY 2010–

1 One FURUKAWA course
2 Frontier course (JICA)* NS: abbreviation of “National Staff(Local
employees)”

these various programs to develop human resources
who can play a dynamic role on the global stage.

About Furukawa Electric GroupIn accordance with “Furukawa Electric Group Vision
for Our People”, we are training human resources who
have rich humanity and strong challenge spirit, for thesake of our group development. The state of ourleaders affects corporate culture and reflects in ourbusiness results, which is why we give training at eachlevel to develop leadership, and construct
relationships between people by “dialogue” among all
our employees. We work hard to instill a mind that isinterested in people and respects others.
We started our Global Business Leader (GBL) training
in 2006 in order to develop personnel who will take on
the role of management in the future. Since fiscal 2013
this has been reformed to Global Mindset Program(GMP), with its extra emphasis on global humanresource education. We have also operated a Global
Development Program (GDP) for overseas local
employees since 2010 with the aim of strengthening
links within the Furukawa Electric Group, thecurriculum being partly shared with the GMP.
Furthermore, in fiscal 2014 we launched the Global
Challenge Program (GCP), which dispatches young
employees to foreign countries. We are working to alignBusiness Strategy

Human Resources Development

Business Foundation

Current Initiatives and Progress

Organizational Empowerment Team within theTransformation Division to strengthen initiatives toincrease the organizational capability to complete tasks.
We are also expanding the telework system so that our
diverse people can realize work-life management
autonomously. Looking ahead into the Post-COVID-19
world, we are committed to further developing an ICT
environment that is suitable for teleworking, further
developing remote conferencing and communication,and changing to a management style that suits newwork styles.

Using Diverse Human Resources

Main recent activities
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
We aim for 40% of females in university graduates recruits by

3 fiscal 2025

A summary of our company’s initiatives is available on the Ministry of
Health, Labour and Welfare’s “Enterprise database promoting
women’s success”.
https://positive-ryouritsu.mhlw.go.jp/positivedb/detail?id=529(Only available in Japanese)

Main recent activities- A diversity promotion event, including lectures and a panel
discussion by directors and managers from Furukawa Electric
FY2018
LatAm S.A. (Brazil) and OFS Fitel, LLC (USA), was held based on
the theme of “Working flexibly and globally.”- A workshop for directors was held based on the theme of“Unconscious bias.”- An in-house networking event based on the theme of “Diversion
FY2019& inclusion as a driver for innovation” was held, and a female
outside director of Furukawa Electric and female generalmanagers of group companies participated as panelists.

44

One of our Group’s management philosophies is to“nurture human resources at every level, so that wecan become a more diverse and creative organization”.
It is essential for the progress of our Group’s global
management to create a corporate culture in whichmore diverse personnel can succeed. In April 2014, we
set up a Diversity Promotion Section, and are working
on various measures such as organizational mind
fostering, women’s career formation support,
promotion of autonomous work-life management, etc.,
aiming at building an environment where diverse
human resources can be active.
We regularly hold events, such as lectures by experts,
aimed at promoting understanding on Diversity &Inclusion (D&I), and corporate-wide forums aimed atpromoting women’s empowerment.

INTEGRATED REPORT 2020

We established the Work Style Reform Committee(President as chair and the management as members) in
May 2015 and started work style reform activities with adedicated team in the office. Since fiscal 2018, we haveentered Phase 2 with the slogan “Toward a corporategroup where each and every employee works withexcitement, and collaboration!” We are active in threepillars: “Autonomous work-life management,” “Cultureof Learning and Growing Together,” and “Practice of
Change.” Since May 2019, we have made a change tothe dedicated team system and have established the

Corporate Information/Data

Work Style ReformSupply Chain/Corporate GovernanceSupply Chain
Basic Policy on Procurement
The Furukawa Electric Group contributes to creating
solutions for the new generation of global infrastructure
combining information, energy, and mobility bycollaboration with partners* based on relationships oftrust with them. In accordance with the Furukawa ElectricGroup Procurement Policy, we are fully considerate ofsafety and the environment in our procurement activities
in order to realize a truly rich, sustainable society.
* The Furukawa Electric Group calls those who do business with us“partners” who collaborate with us to create value.

Furukawa Electric Group Procurement Policy
Fairness and Integrity

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

Compliance with Laws and Regulations and
CSR Procurement

2 Toward the realization of a sustainable society, we conduct our

procurement activities considering environment preservationand safe operation in comply with all applicable laws andregulations and we do fulfill our Corporate Social Responsibility.

Partnership

We always value relationships of mutual trust with our business

3 partners to create new values by collaboration.

We pursue to optimize our procurement conditions from theviewpoint of quality, cost, delivery, technological capabilities
and CSR activities.

Promoting CSR in Procurement Activities
Furukawa Electric is promoting CSR procurement thatconsiders the environment and society. Based on the
CSR Deployment Guidelines for Business Partners, we
jointly strive with our existing business partners tothoroughly adhere to laws and regulations and fairtrading, respect human rights and consider safety andthe environment, reduce environmental impact, avoid
the use of conflict minerals, and ensure other mattersin procurement activities. For new business partners,
we request compliance with our CSR Deployment
Guidelines when we start a new business.

Initiatives to Enhance the Supply Chain and the Value Chain

FURUKAWA ELECTRIC GROUP

In relation to our selected partners based on the
procurement amount and the degree of importance,
which represent about 80% of our overall material/
equipment procurement amount (“major partners”
hereafter), we evaluate items such as quality,
technology, pricing, delivery system, social andenvironmental contribution, and credit status. There
were 199 major partners in fiscal 2019. For thesemajor partners, we also conduct surveys in the form of
a questionnaire concerning their initiatives regarding
business continuity management (BCM), andcontinually ask for their cooperation in initiatives
related to business continuity and stable supply.
We regularly hold the Partners’ Meeting, explain our
corporate situation, procurement policy, and CSR
procurement activities, and ask for theirunderstanding. In fiscal 2019, the Partners’ Meeting
was held in June and 59 main partners attended it.

Decision based on the procurement
amount and the importance

Main partners

Partners (suppliers)

5,000

Approx.
companies

Promote CSR in
procurement
activities
Existing partners:
Continue collaborationin CRS procurement,
based on the CSR
Deployment Guideline
New partners:
Ask for compliance to
the CSR Deployment
Guideline when we start
new business199 companies(FY2019)80%

Approx.
ofmaterial/equipment
procurement amount

Initiatives to enhance
the supply chain andthe value chain
Partner evaluation
BCM of the value chain
Partners Meeting

59 companies

participated (FY2019)
Collaboration partners
for CO2 emission
reduction in procurement logistics
24 companies (FY2019)44

Current Initiatives

OutlookIn fiscal 2019, we accelerated our procurement
logistics initiatives. We continued 1) cost reduction
based on optimal means of transportation within thevalue chain, such as efficient use of a return route to
Furukawa Electric; 2) CO2 emission reduction at thetime of procurement; and 3) dealing with the risks ofsoaring logistics costs and of inability to transport. The
number of our collaboration partners engaged in CO2emission reductions in procurement logistics
increased from 18 in fiscal 2018 to 24 in fiscal 2019.

We will continue to provide our partners with aquestionnaire survey on their understanding of the
CSR Promotion Guidelines while seeking tounderstand the current status of our CSR activities inthe value chain and further promoting them. We will
also strive to strengthen the BCM system by asking forour partners’ cooperation based on the questionnaire
and the manufacturing base survey concerning BCM,
with the aim of raising the overall value chain’s
capability to respond to emergencies.

i.

We secure the rights and equal treatment of shareholders.

ii.

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

iii.

We ensure appropriate information disclosure and transparency.

iv.

Given its fiduciary responsibility and accountability to shareholders, the board of directors carries out effective oversightof management from objective standpoint, respecting theindependent directors' role for the oversight.

v.

We engage in constructive dialogue with shareholders who
have investment policies in accordance with interests of midto long-term shareholders.

For details, please see Furukawa Electric’s website.
https://www.furukawa.co.jp/company/pdf/policy.pdf(Only Available for Japanese)

Corporate Governance System
We consider that the effectiveness of the audit on theexecution of the duties by the Directors is secured,
based on the coordination with the accounting auditors
and the internal auditing department, while
maintaining the institutional independence of the Audit& Supervisory Board Members and of the Audit &Supervisory Board from the Board of Directors. We
have therefore adopted the current “Audit &Supervisory Board” type of the corporate governancestructure. In addition, we have a “Nominating/Compensation Committee,” majority members ofwhich are outside directors to complement oversightfunction of the Board.

Corporate governance organization chart

Shareholders’ Meeting
Submits proposals
and reports

CSR and Risk
Management Committee
Monitors

Appoints

Board of Directors

12 Directors(5 members are outside andindependent)
Consults andCommits

Nominating /Compensation
Committee

Business operation

Management
Committee

Submits reports,
attends
meetings andauditsAudit & Supervisory
Board
6 Audit & Supervisory
Board Members(3 members are outside
and independent)- Decision of critical matter
relating to business operation- Supervises business operation

Submits
reports

Accounting
Auditors

Collaboration
between audits

S-creens reports
relating toaccounting-Examines status ofoperations andassets- Screens reports relating
to business- Examines status ofoperations and assets

Appoints

President

Direction - Transformation Div.

Submits reports

Internal Audits(Auditing Department)

Corporate Divisions- Finance & Global Management Div.
- Strategy Div.
- Research & Development Div.
- Administration & CSR Div. - MONOZUKURI Innovation Div.

Operations- Global Marketing
Sales Div.

Provides support and guidanceCommunications Solutions Div.

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

Electronics Component Material Div.
- Copper & High Performance
Material Products Div.

Automotive Products Div.

Energy Infrastructure Div.

- Power Cable Div.
- Industrial Cable & Power Cable
Accessories Div.

Functional Products Div.

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

Subsidiaries andaffiliated companies

44- Electric
Conductor Div.

Appoints

Appoints

Audits account

INTEGRATED REPORT 2020

Monitoring and appoints supervising

About Furukawa Electric Group

Based on the “Basic Views on Corporate Governance,”
we adopted the “Guidelines on Corporate
Governance” as a policy to enhance corporate
governance.

Business Strategy

Guideline on Corporate Governance

Based on the “Furukawa Electric Group Philosophy”,
Furukawa Electric Co., Ltd. and the Furukawa ElectricGroup secure the transparency and fairness and strive
to enhance its performance by promptly responding
to changes in the business environment and themarket through efficient management based on
prompt decision making. At the same time, we ensure
sound management by establishing and strengthening
an internal control system and applying it effectively.
We uphold the basic policy of seeking to expand anddevelop our operations on a sustainable basis and toraise corporate value through these efforts. In
accordance with the following views, we seek tostrengthen and enhance our corporate governance.

Business Foundation

Basic Views on Corporate GovernanceCorporate Information/Data

Corporate Governance

As of June 23, 2020

Board of Directors

Corporate Governance

Board of Directors

Chairman of the Board

Given its fiduciary responsibility and accountability toshareholders, the board is responsible for promoting
sustainable corporate growth and the increase of
corporate value over the mid- to long-term andenhancing earnings capability and capital efficiency.
The board oversights and determines the matterslisted below:
1. Determination of corporate governance-related matters.

- A position of non-executive
without the representative
right.
Chair- - Connect between theOutside Directors and theman
Executive Directors.
Discussion anddecision Supervising

The Executive Directors

Outside Directors

President and other generalmanagers of the major business andcorporate divisions are concurrently
appointed as directors.

All 5 members are independent.

6 members

Establishment and amendment of business strategies and oversight2.
of execution of such strategies and plans by management.

5 members

3. Setting capital allocation policy.
4.

Appointment and dismissal of executives including representative
director and corporate vice president, and determination of thecompensation of them (including delegating these to Nominating/Compensation Committee).

5.

Establishment of an internal control system relating to compliance andfinancial reporting and risk management systems, and oversight of them.

Draw attention Make opinions

Audit & Supervisory Board Members

6 members

6. Decision on important business matters.
7. Others prescribed by the applicable laws and regulations etc.

At present, Furukawa Electric’s Board of Directors
consists of 12 Directors, five of whom are Outside
Directors (all independent officers). The Board is chairedby the Chairman, who is a non-executive director without
the representative right of the Board of Directors.
In fiscal 2019, 16* Board of Directors meetings were
held and the Directors made important decisions on theexecution of operations, checked the progress of the
mid-term management plan and the management goals,
such as the annual budget, and deliberated corporate
governance and other basic management matters.

In-house

OutsideAll 3 members are independent.

Outside Officers- Company manager - Government experience- Technical engineer- Financial, accounting expert- Legal affairs, Risk management expert- Governance expert - Global management experiencer
Variety of human resources with wealth of knowledge and experiencessuch as shown above.
As of June 23, 2020
* Apart from the Board of Directors’ Meetings stated on the left, there were two
occasions of resolution in writing that were deemed resolutions of the Board of
Directors pursuant to Article 370 of Japan’s Companies Act and Article 24, Item 2of the Company’s Articles of Incorporation.

Audit & Supervisory Board
Audit & Supervisory Board and each its member
auditor collect information about management understatutory investigation authority and report andexpress their views to the board meetings and the
management from an independent and objective
standpoint as a fiduciary to shareholders.
Auditors ensure coordination with internal audit
department through regular meetings, and report thepolicy, plan and result of auditing to the board
regularly. Full-time auditors attend the meetings such

as Management Committee which decides major
business matters, and they report information obtained
from these audit activities to the part-time and outside
auditors. We strengthen our audit function byappointing an assistant staff to the auditors who isdependent of management. At present, the Audit &Supervisory Board consists of 6 members (3 members
are outside and independent).
In fiscal 2019, eight Audit & Supervisory Board
meetings were held.

FURUKAWA ELECTRIC GROUP

Nominating/Compensation Committee

44

The Nominating/Compensation Committee consists offive or more members selected from among the
Directors by the Board of Directors, with a majority ofthe members being Outside Directors. The committee
deliberates succession plans for officers and thepresident/CEO, officer compensation and other matters,
aiming to ensure objectivity and transparency regardingthese matters and to enhance corporate governance.
At present, the Nominating/Compensation
Committee consists of seven members, five of whom,
including the Committee Chair, are Outside Directors.
In fiscal 2019, ten Nominating/Compensation
Committee meetings were held. Apart fromdeliberation concerning the next management teamand directors’ compensation,
the committee members
checked an update of thesuccession plan for the CEO
and the development of thenext generation of managers,and deliberated suchmatters as the selection ofcandidates for the next
generation of managers andthe effectiveness of theirdevelopment process.

Nomination/
Compensation
Committee 7 directors

Chairman:
Outside Director

In-house

OutsideAs of June 23, 2020

of gender and international experience, contribute to
the Group’s global business operations andappropriate oversight/auditing. Based on thisperception, the Company selects candidates for board
members as follows:- Candidates for Outside Director: The Group should select a well-balanced mix of people with various
skills and backgrounds, such as persons with experience in corporate management and public policy,
engineers with technological expertise, and experts in law, accounting, or other areas.
- 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 and experience so that they will contribute to improving
the Furukawa Electric Group’s corporate value

About Furukawa Electric Group

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

Business Strategy

View Concerning Candidates for Members of the Board of Directors

Name

Sumitaka
FujitaOsamu
TsukamotoOutsideDirector

Akira
Nakamoto
YoshiroMiyokawa
YukikoYabu

OutsideAudit &
Supervisory
Board
Members

○

○

○

○

○

Attendance to Board of Directors
Meeting (FY2019)
Board ofDirectors—

10/10(100%)

Mr. Fujita has served for many years in a key positions on the
management such as a Chef Financial Officer (CFO) and has a wealthof knowledge and experience on general business management
including financial accounting. He also has a high perception of thecorporate governance.

—

10/10
(100%)

Mr. Tsukamoto has a long experience of involvement in the industrial
policy at the Ministry of Economy, Trade and Industry, and has a highperception on the technologies and the development of the new
businesses.

—

10/10
(100%)

Mr. Nakamoto has served for long years in key positions such as
President and Chairman of a major precision equipment manufacturer,
and has an extensive knowledge and experience in the corporate
management in general.

—

10/10
(100%)Mr. Miyokawa has served for long years in key positions such as
Director & Vice President at a large pharmaceutical company, and an
extensive knowledge and experience in corporate management,compliance, and corporate governance.

10/10(100%)

Ms. Yabu has served as outside officer of several listed companies,
and has a wealth of experience and advanced knowledge of customer-oriented marketing and product development based on her
experience with a leading electrical appliance manufacturer.

7

15/16
(93.8%)

4

16/16(100%)

1

12/12(100%)

1

12/12(100%)—

8/8(100%)—

Mr. Tsukamoto has served for many years in key positions such as
Chairman and a director in charge of finance in a financial institution
and has an extensive knowledge and experience in overall corporate
management, including financial accounting.

8/8(100%)—

Mr. Sakai has a high perception in fields such as: the corporate
governance, the legal risk associated with management and its
compliance to regulations, capitalizing his long experience as a legal
professional including its foreign one.

—

Ms. Sumida is an expert on financial statement auditing and internal
control auditing based on her long experience as a Certified Public
Accountant. Furthermore, she has served as an Executive Board
Member of the Japanese Institute of Certified Public Accountants andas a Business Accounting Council Member under the Financial Services
Agency. She has in-depth insights on financial matters and accounting.

○3

Kunihiko
Sakai

○

2

16/16
(100%)

—

—

—

44

12

16/16
(100%)○

Expertise, etc.

16/16
(100%)

Takashi
Tsukamoto

SayakaSumidaAudit &
Nominating/
Supervisory Compensation
Board
Committee

Corporate Information/Data

Classification

Indepen- Term
dentofOfficer office

The Outside Officers’ meetings are regularly conducted sothat Outside Officers can exchange opinions while
establishing a shared understanding of the Company froman 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 and the chair of the meetingis selected from among Independent Outside Directors.

INTEGRATED REPORT 2020

Outside Directors have extensive experience atfinancial institutions, trading companies, or operatingcompanies, and expert knowledge/experience
regarding laws, financials, accounting, industrial
policies, and other areas. The Board of Directors makes
decisions by respecting Outside Directors’ opinions andcomments from diverse perspectives based on theirextensive experiences.

Business Foundation

Outside Directors’ Expertise and Principal Activities

Corporate Governance

Implementation Procedure for the Evaluationof 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 toimprove issues or further reinforce strengths reported
through the verification of the suitability of the Boardof Directors’ functions.
Since fiscal 2017, in addition to having aquestionnaire filled in by all members of the Board of
Directors and the Audit & Supervisory Board Members,
an individual interview has been conducted by the
Chair of the Board (an interview with the Chairman isconducted by an Outside Officer other than the Chair),for the purpose of providing a deeper understanding of
the responses to the questionnaires. More substantive
analysis and evaluation have thus been implemented.

FY2019
Questionnaire
Implementation of theanonymousquestionnaire

Evaluation items on the effectiveness of theBoard of Directors
Effectiveness of the Board of Directors
Management of the Board of Directors
System related to support and cooperation with the Outside
Officers
Roles and expectation for the Audit & Supervisory Board
Members
Relationship with the shareholders and other stakeholders
Others(The Board of Directors in general, individual and peer
evaluation, responsibility of the Board of Directors)

Flow of the Board of Directors effectiveness evaluation.
Individualquestionnairesby the Chairman
Implemented from FY
2017, aiming at a
deeper understandingof the responses to thequestionnaire

Outside officers
Meeting
Compilation of theopinions on the resultsof the questionnaire.

Multiple Discussions by the Boardof Directors
Confirmation of thestatus of ensuring theeffectiveness of theBoard of Directors.

Next FY
Completion of theanalysis andevaluation

Publish the analysis
and evaluation results.

The Businessexecution and the
management of
the Board of
Directors based on
the actions.

Results of the Evaluation of the Effectivenessof the Board Of Directors and Future Initiatives

FURUKAWA ELECTRIC GROUP

Given the results of the effectiveness evaluation of the previous year, the Board of Directors continued to
implement measures to further improve its effectiveness and worked on analyzing and evaluating it again in fiscal
2019. As a result of discussion with due consideration to many proposals and opinions from Directors and Audit &Supervisory Board Members, we have decided to make further improvements regarding the following items.
Item

Future initiatives, based on the results of analysis and evaluation in fiscal 2020

Review of the mid-term management plan and the businessportfolio

Make further improvements in analysis of market trends and the competitive landscape, and enhance strategic discussion in order to achieve the current mid-term management plan’s targets. Concerning discussion of
the next mid-term management plan, enrich discussion regarding the business portfolio in order to achieve
the Furukawa Electric Group Vision 2030, besides the continual review of the business portfolio.

Group’s global management(group companies’ management,
development of next-generation
managers, risk management, etc.)

Promote adoption of a system to monitor the financial status of group companies. Aim at establishing the Group’s
integrated governance system and promote discussion on the status of listed subsidiaries. Regarding the development of next-generation managers, the Board of Directors and the Nominating/Compensation Committee are to
deepen deliberation on the succession plan for the CEO and the development of next-generation managers.
Regarding risk management, enhance the corporate system that enables risk prevention in the entire Group.

Management of the Board of
Directors

Continue deliberation on how to allocate business execution authority to the Board of Directors and thebusiness execution side, in order to enhance the monitoring function of the Board of Directors and securesufficient time for deliberation on important agenda items.

ESG and SDGs

Continue to strengthen initiatives aimed at establishing ESG management, mainly by the division in charge,
established in April 2019. Also enhance opportunities for deliberation at the Board.

Dialogue with stakeholders

Continue to engage in dialogue with shareholders and investors and report on it to the Board of Directors. Also
report on opinions of employees and other stakeholders other than shareholders, and deepen deliberation.

44

For details of the results of the evaluation of the effectiveness of the Board of Directors, disclosed on December 24, 2019,
please see “Corporate Governance” on the corporate website.
https://www.furukawa.co.jp/company/governance.html(Only Available in Japanese)About Furukawa Electric Group

Design of Programs for Directors’ and Officers’ Remuneration
Policy for Directors’ and Officers’ remuneration
The Company has the following policy for the directors and officers remuneration, which is determined by the
Nomination/Compensation Committee
The remuneration of directors and officers shall be determined in a way that encourages each officer 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.

The remuneration of the Company’s directors andofficers is comprised of basic remuneration, short-term
performance-linked remuneration and mid-to-longterm performance-linked remuneration. The
performance-linked remuneration is paid to directors
except an outside director and non-director officers andsenior fellows. The performance-linked remuneration
will account for approximately 30% to 50% of total
remuneration, while the percentage for each eligible
person will vary depending on its position. A summaryof each type of remuneration is shown below.
Recipients
Directors,
excludingOutsideDirectors

OutsideDirectors

Executive Officers
and Senior Fellows
who are not
Directors5

Audit &
Supervisory
Board
Members

Basic remuneration is paid in cash in a fixed amount every month. The amount paid toeach person differs depending on their role, i.e., management supervision role orbusiness execution role, and position.

○

○

○

○

This remuneration is paid to each officer. The remuneration amount for each person is determined by the Nominating/Compensation Committee after evaluating their actual performanceversus the business plan1 of the division in charge and the progress of implementing measuresduring the previous fiscal year. The determined amount is paid in cash every month.

○

―

○

―

The remuneration amount, which is paid in cash once a year, is determined by the
Nominating/Compensation Committee, using consolidated operating income as thebase2 for evaluation.

○

―

○

―

This remuneration is under the stock remuneration program (“the Program” in thiscolumn). Under the Program, the Company’s stocks, funded by the Company andacquired through the Trust, are granted3.
In the Program, three fiscal years constitute a performance period (the current period is from
April 1, 2019 to March 31, 2022), and the Company contributes funds up to a maximum
amount of 450 million yen per performance period to the Trust as remuneration for Directors
and Officers. Directors and Officers are granted a pre-determined number of points depending on their titles/positions every year as the basis of their rights to receive the Company’s
stocks4. After the end of each performance period, the number of points qualifying Directors
and Officers to receive the Company’s stocks are finalized after an adjustment for certain
cases, according to the criteria for comparing changes in the Company’s stock price with thatof the TOPIX during the period. If any Directors and Officers retire from their positions during
the period, an adjustment is to be made in a similar manner.
In principle, upon their retirement, Directors and Officers receive the Company’s stocks
from the Trust, and the number of such stocks corresponds to the number of points
finalized during their term of office.

○

―

○

―

Remuneration item

Summary

Basic remuneration
Short-term
performance-linked
remuneration(individual)

Short-term
performance-linked
remuneration(entire Company)

Mid- to long-term
performance-linked
remuneration

Corporate Information/Data

Outline of the Directors and Officers Remuneration

Business Foundation

Business Strategy

Based on the policy, the committee confirms validity, effectiveness and appropriateness of plan design and level of
remuneration every year, by means of outside survey that is comparing the Company’s remuneration level withthose of other similar size 30 manufacturing companies.

1: Actual performance is evaluated by using key performance indicators defined in accordance with the Mid-term Management Plan. However, for Chairman, President, and Directors/
Officers in charge of Head Office divisions, the performance is evaluated by using indicators linked to the performance of the Company.
2* Consolidated operating income (23,565 million yen in fiscal 2019) is used as the indicator, so that the Company’s performance in a relevant fiscal year is appropriately and clearly reflected.
3: Overseas residents are excluded from the scope of the Program. Instead, they will be paid in cash for the amount equivalent to the remuneration under the Program upon their retirement.
4: The maximum number of total points granted to Directors and Officers per performance period is 180,000 points, where 1 point corresponds to 1 common stock of the Company.
5: A Senior Fellow is a person recognized as having superior, internationally viable expertise, proposing creative, innovative visions and mid- to long-term directions in his/her specialized
sector, passing down his/her expertise, and nurturing younger people. This is a specialist position with similar treatment to Executive Officers.

Remuneration in Fiscal 2019
Officer classification
Directors (excluding outside directors)

Number of
subject officers1(persons)

Total remuneration by type (millions of yen)
Basic
Short-term perforShort-term perforremu- mance-linked remuneration mance-linked remuneration
neration(individual)(the entire Company)

Mid- to long-term
performance-linked
remuneration2

Total remuneration(millions of yen)

267

77

24

63

432

4

91

―

―

―

91

Outside Officers

10

111

―

―

―

111

Outside Directors

7

75

―

―

―

75

Outside Audit & Supervisory Board Members

3

36

―

―

―

36

(excluding outside Audit & Supervisory Board Members)

1: The amount and the number of subject officers in the above table include four Directors and one Audit & Supervisory Board Member who retired in fiscal 2019.
2: The amount of mid- to long-term performance-linked remuneration is calculated by considering the number of stock shares equivalent to the points granted for the relevant fiscal year
under the stock remuneration program.

44

9

Audit & Supervisory Board Members

INTEGRATED REPORT 2020

Remuneration for Directors and Audit & Supervisory Board Members

Corporate GovernanceDirector

Mitsuyoshi Shibata

Keiichi Kobayashi

Sumitaka Fujita

Hiroyuki Ogiwara

Osamu Kuroda

Satoshi Miyamoto

Chairman of the Board
Director

Directors andAudit & Supervisory
Board Members(as of June 23, 2020)

Representative Director
Corporate Senior Executive Vice
President
Chief of Transformation Division

President
Representative Director

Director
Corporate Senior Vice President
General Manager, Global
Marketing Sales Division

Director (Outside, part-time)

Director
Corporate Senior Vice President
General Manager, Administration& CSR Division

Audit & Supervisory Board Member

Nozomu Amano

Takahiro Kashiwagi

Yoshiaki Mizota

Takashi Tsukamoto

Kunihiko Sakai

Sayaka Sumida

Audit & Supervisory Board
Member (Full-time)

Audit & Supervisory Board
Member (Full-time)

FURUKAWA ELECTRIC GROUP

Audit & Supervisory Board
Member (Full-time)

10

Audit & Supervisory Board
Member (Outside, part-time)

Audit & Supervisory Board
Member (Outside, part-time)

Audit & Supervisory Board
Member (Outside, part-time)About Furukawa Electric Group

Akira Nakamoto

Ken MakiAkihiro Fukunaga

Director (Outside, part-time)

Yoshiro Miyokawa
Director (Outside, part-time)

Yukiko Yabu

Director (Outside, part-time)

Director
Corporate Vice President
General Manager, Strategy
Division

Director
Corporate Vice President
General Manager, Finance &Global Management DivisionCorporate Vice Presidents

Corporate SeniorVice Presidents

Vice Presidents

Takamitsu Kozuka

General Manager, Energy Infrastructure Division

Takahide Kimura

General Manager, Communications Solutions Division

Foad Shaikhzadeh

President, Furukawa Electric LatAm S.A (Brazil)

Tetsuro Ijichi

General Manager, Research & Development Division

Ryoji Ono

General Manager, Functional Products Division

Shigenobu Abe

General Manager, Automotive Products Division

Masako Tanaka

Deputy General Manager, Strategy Division

Jun Goto

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

Jozsef Takacs

CEO, Trocellen GmbH (Germany)

Gyula Besztercey

President, Furukawa Electric Institute of Technology Ltd. (Hungary)

Masao Terauchi

General Manager, Electronics Component Material Division

Tomoyuki Yamai

Deputy General Manager, Automotive Products Division

Takashi Fukuda

General Manager, ICT Strategy Planning Department, Strategy Division

Takatoshi Kamimura General Manager, MONOZUKURI Innovation Division
CEO, SuperPower Inc. (US)Kiyotoshi Nagai

Executive Vice President, OFS Fitel, LLC

Keiichiro Urakami

General Manager, Chubu Branch, Global Marketing Sales Division

Teruyoshi Uchida

General Manager, Planning & Administration Department, MONOZUKURI Innovation Division

Michihiro Shimada

General Manager, Future Infrastructure Technology Center, Research & Development Division

Toshio Yanagi

General Manager, Copper Foil Division, Functional Products Division

Hideya Moridaira

General Manager, Optical Fiber and Cable Products Division, Communications Solutions Division

Yoshio Masutani

General Manager, Marketing Initiatives & Business Development Department, Global Marketing Sales Division

Senior Fellow
Senior Fellow

Akihiko Kasukawa

Senior Fellow, Telecommunications & Energy Laboratories, Research & Development Division

10

Toru Fukushima

INTEGRATED REPORT 2020

Corporate
Executives Vice
Presidents

Corporate Information/Data

Business Foundation

Director (Outside, part-time)

Business Strategy

Osamu Tsukamoto

Financial and Non-Financial Data

Financial and Non-Financial Data
Mid-termmanagement plan

Innovation09

Financial position(at the end of fiscal
year)

Cash flows(fiscal year)

Per share data*2

Ratios

FY2009FY2010FY2011FY2012809,693925,754

918,808

924,717

Operating income

20,32135,144

15,947

17,763

Ordinary income

19,34731,422

12,872

17,612

9,704

12,213

11,123

3,576

Capital investments (CAPEX)

25,43327,94733,58147,772

Depreciation

42,46140,396

39,21635,347

Research and development expenses

17,27018,296

18,94920,210Net assets

208,928

215,904

197,569

222,843

Total assets

835,819

826,944790,114819,702

Equity Capital

163,416

165,968

144,694

165,739

Operating Assets *1

397,512389,193

370,989

396,951

Balance of inventory assets

87,034

99,907

94,888104,249

Cash flows from operating activities

36,66837,121

30,77454,947

Cash flows from investing activities

25,113

21,382

20,252

44,939Cash flows from financing activities

23,582

18,317

22,845

11,402

Net income per share (Yen)

13.80

17.30

15.75

5.07

Net asset per share (Yen)

231.4

235.1

204.9

234.7

Operating income margin on sales (%)

2.51

3.80

1.74

1.92

Equity capital ratio (%)

19.6

20.1

18.3

20.2

9.0
7.4

4.3

4.5

ROE (%)

5.1
6.3

7.2

2.3

ROA (%)

2.3

3.8

1.6

2.2

0.97

1.11

1.14

1.15

Net sales

Operating results(fiscal year)

New Frontier 2012

Net income attributable to owners of
the parent company

Return on operating assets (%)*3

Total asset turnover ratio (times)

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.

Environmental data

Unit

FURUKAWA ELECTRIC GROUP

Furukawa Electric+
Domestic groupcompanies

FY2016FY2017FY2018FY201910 t-CO2e

83.2

88.1

90.3

84.3

74.2

Total electric power consumption

GWh

1,266

1,323

1,387

1,379

1,293

Renewable energy

GWh

87

105

110

123

142

%

6.8

7.9

7.9

8.9

11.0

Greenhouse gas emissions

Furukawa Electric+
Domestic andoverseas groupcompanies

FY2015

Renewable energy ratio to electric
power consumption

4

Energy consumption

1,000 kℓ

411

412

419

424

396

Water usage

1,000 m13,336

12,86813,014

13,14012,535

Total amount of waste generated

1,000 tons

52

51

47

47

49

Greenhouse gas emissions

104 t-CO2e

35.1

42.0

44.3

38.7

34.2

Total electric power consumption

GWh

583

619

644

643

613

Renewable energy

GWh

87

105

110

109

113

%

14.9

17.0

17.1

17.0

18.5

Renewable energy ratio to electric
power consumption

3

55

Energy consumption

1,000 kℓ

188

192

198

198

191

Water usage

1,000 m3

10,715

10,28910,362

10,516

9,912

Total amount of waste generated

1,000 tons

34

33

30

31

30

Number of domestic patents held

patents

4,478

4,619

4,644

4,605

4,523

Number of overseas patents held

patents

2,247

2,289

2,507

2,712

2,910

Intellectual property data
Furukawa ElectricFY2016

FY2017FY2018FY2019931,781

867,817874,879

843,344967,333

991,590

914,439

25,456

17,873

27,116

38,62344,80440,842

23,56525,532

18,59818,71036,02446,90839,07822,771

5,608

7,355

10,007

17,57028,547

29,10817,63937,43630,67425,68731,58438,53950,03653,144

28,10622,50823,23523,307

25,10626,271

29,423

17,461

16,59916,845

17,454

19,533

21,141

21,650199,733

214,743

198,587

237,051

272,071

279,911

273,030

714,845734,125

705,725

750,126

808,632

818,021794,616

177,237

190,741

173,163

206,712236,518

247,659

240,280

294,333

307,688298,228

319,588341,825

364,456

386,176

93,66899,443

93,167104,355

113,792

122,890

115,862

18,912

41,48938,42946,46041,942

23,533

41,5691,947

40,40240,29036,361

34,31931,042

33,11929,917

15,537

20,942

10,378

1,943

19,414

171

7.94

10.42

14.17

249.17405.05412.98250.20

251.0

270.2

245.3

2,933.2

3,355.8

3,513.6

3,408.9

2.73

2.06

3.10

4.58

4.63

4.12

2.58

24.8

26.0

24.5

27.6

29.2

30.3

30.2

8.6

5.8

9.1

12.1

13.1

11.2

6.1

3.3

4.0

5.5

9.3

12.9

12.0

7.2

3.3

2.6

2.6

4.9

6.0

4.8

2.8

1.21

1.20

1.22

1.16

1.24

1.21

1.13

*1 Operating Assets are the total of inventory and tangible and intangible fixed assets. *2 We conducted a one-for-ten reverse stock split of our company’scommon shares effective October 1, 2016. *3 Return on operating assets is the ratio of the operating income over operating Assets.

Human resources data
Consol

FY2015FY2016FY2017FY2018FY2019FY2020

Employees in total

Persons 49,826

52,25451,92552,21550,232-

Employees in total

Persons

3,251

3,651

3,685

3,816

3,925

-

%

8.5

8.6

9.1

9.2

9.6

-

Persons

36

60

107

150

161

174

Share of women in employees
Furukawa
Electric

New hires in total*4

Unit

22

25

29

21

20

20

Years

19.9

20.2

20.1

19.7

20.8

-

Female employees’ average length ofservice

Years

18.4

19.7

18.9

18.4

18.2

-

Furukawa
Electric

Managers in total

Persons

867

937

936

960

940

-

Share of women in managers

%

2.7

2.8

3.3

3.2

3.4

-

Furukawa
Electric

Female executive officers*4

Persons

1

1

1

1

1

1

Foreign executive officers*4

Persons

2

4

4

4

3

3

Directors*5

Persons

12

12

12

12

12

12

Outside directors

Persons

4

5

5

5

5

5

Independent directors

Persons

2

3

3

3

5

5

Female directors

Persons

0

0

0

0

1

1

Audit & Supervisory Board members*5 Persons

6

6

6

6

6

6

Outside members

Persons

3

3

3

3

3

3

Independent members

Persons

3

3

3

3

3

3

Female members

Persons

0

0

0

0

0

1

Furukawa
Electric

Furukawa
Electric

Human resources data are as of the end of fiscal year. *4: Numbers of new hires and executive officers are as of April 1.
*5: Numbers of directors and Audit & Supervisory Board members for fiscal 2020 are as of June 23.

55%

Male employees’ average length of service

Share of women in new hires

About Furukawa Electric GroupFY2015Business Strategy

FY2014

Business Foundation

FY2013

Corporate Information/Data

Furukawa G Plan 2020

INTEGRATED REPORT 2020

Furukawa G Plan 2015

Consolidated Financial Statements

Consolidated Financial Statements
Consolidated Balance Sheet (Millions of yen)
Assets

As of March 31, As of March 31,
2019
2020

Cash and deposits

44,62854,357

Notes and accounts
receivable-trade219,347

192,513

2,371

899

Merchandise andfinished goods

40,16934,550Work in process

36,95633,849Raw materials andsupplies

45,76447,462Other

32,36523,801

Allowance for doubtful
accounts

1,090

1,254

420,513

386,179

Total; Current assets
Non-current assets
Property, plant andequipment
Buildings and structures

216,932

229,611

Machinery and delivery
equipment

467,247

475,766

Tools, furniture andfixtures71,977

74,798

Land

36,77736,354

Leased assets

3,444

1,261

Construction in progress

36,44434,529

Accumulated depreciation

603,463

609,037

229,360

254,219

Total; Property, plantand equipment
Intangible assets
Goodwill

2,751

2,072

Other

9,453

14,022

12,20416,095

Total; Intangible assets
Investments and otherassetsFURUKAWA ELECTRIC GROUP

As of March 31, As of March 31,
2019
2020

Current liabilities

Current assets

Securities

Liabilities

Investment securities

119,188

100,933

Investments in capital

6,199

6,466

Deferred tax assets

13,644

14,726

Net defined benefit asset

5,633

5,899

Other

12,448

11,162

Allowance for doubtful
accounts

1,172

1,065

Total; Investments andother assets

155,942

138,122

Total; Non-current assets

397,508

408,436

Total assets

818,021794,616

Notes and accounts
payable - trade131,422

111,586

Short-term debt

106,710

110,515

Current portion of bonds—

15,000

Income taxes payable

3,893

2,785

Provision for productdefect compensation

28,40017,711

Other

61,19362,048331,621319,647

Bonds payable

20,00030,000Long-term debt

119,298

95,573

Deferred tax liabilities

1,547

391

Provision for environmental
measures10,691

10,396

Net defined benefit liability

47,73153,460Asset retirement obligations

1,246

1,304

Other

5,972

10,811

Total; Non-current liabilities

206,488

201,937

Total liabilities

538,109521,585

Capital stock

69,39569,395

Other capital surplus

22,53522,787Retained earnings

151,744

165,101

600

598

243,074

256,685

Valuation difference on
available-for-sale securities

21,788

10,950

Deferred gains or losses onhedges124

1,691

Foreign currency translation
adjustment

8,937

12,853Remeasurements ofdefined benefit plans

8,391

12,8104,584

16,405

Total; Current liabilities
Non-current liabilities

Net assets
Shareholders’ equity

Treasury shares
Total shareholders’ equity
Total accumulated othercomprehensive income

Total; Total accumulated
other comprehensive income

32,25232,750Total net assets

Non-controlling interests

279,911

273,030

Total liabilities and net
assets818,021794,61655

914,439

Cash flows from operating activities

824,481764,200

Profit/Loss before income taxes

35,75730,751Gross profit
SG&A
Selling expenses
G&A expenses

167,108150,239

Depreciation

26,271

29,423

1,685

2,458

40,04486,22138,752
87,921

4,954

7,462

Total; SG&A

126,266

126,674

168

1,102

Operating income
Non-operating income
Interest income
Dividend income
Profit in equity method affiliates
Other
Total; Non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total; Non-operating expenses
Ordinary income
Extraordinary income
Gain on disposal of non-current
assetsGain on sales of investment securities
Other
Total; Extraordinary income
Extraordinary losses
Loss on disposal of non-current
assetsImpairment loss
Provision for product defectcompensation
Provision for loss on litigation

40,842

23,565

607
2,765
1,685
1,796
6,855

584
2,067
2,458
2,335
7,446

Loss (Profit; ) in equity method affiliates
Loss (gain; ) in sales of marketablesecurities and investment securities
Loss (Gain; ) on valuation of investment securities
Loss (gain; ) on disposal of non-current assets
Impairment loss

Other

4,075
1,100
3,443
8,619
39,078

4,326
1,014
2,900
8,240
22,771

3,779

5,848

4,952
1,154
9,887

7,494
1,590
14,934

2,779

798

2,627

623

6,364

958

—

388

1,436

2,652
6,953
30,751
7,793

Loss on disaster

1,000

5,050

2,627

623

—

958

Loss on valuation of inventories

1,366

388

Interest and dividend income

3,373

2,652

Interest expenses

4,075

4,326

111

591

Foreign exchange losses (gains; )Decrease (increase; ) in notes andaccounts receivable - trade
Decrease (increase; ) in inventories
Increase (decrease; ) in notes andaccounts payable - trade
Increase (decrease; ) in liability for
retirement benefits
Increase (decrease; ) in provision for
product defect compensation
Other

1,196

23,49911,479

4,071

6,009

17,252

2,165

387

5,785

10,667

7,549

1,873

Subtotal

55,271

51,273

Interest and dividend income received

4,732

4,682

Interest expenses paid

4,152

4,344

Income taxes (paid; ) refund
Loss on disaster paid

9,390
—

8,952

Cash flows from operating activities

46,46041,942

717

Cash flows from investing activities
Decrease (increase; ) in time deposits
Purchase of investment securities
Proceeds from sales and redemption of
investment securities
Proceeds from sales of investments in
subsidiaries resulting in change in scopeof consolidation
Purchase of property, plant and equipment
Purchase of intangible assets

767

39

2,924

1,543

9,051

10,916

1,829—

43,05347,312

3,997

6,550

Total; Extraordinary losses
Profit before income taxes
Income taxes - current

13,20835,757
8,811

Income taxes - deferred

5,500
3,310
32,446

11,75418,997

3,338

1,357

Proceeds from sales of non-current assets

5,515

6,789

17,639Decrease (increase;loans receivable
Other

2,182

4,950

Total; Income taxes
Net income
Net income attributable tonon-controlling interests
Net income attributable to ownersof the parent company

29,1083,960

Consolidated Statement
As of March 31, As of March 31,
of Comprehensive income
2019
2020
(Millions of yen)
Net income

32,44618,997

Other comprehensive income) in short-term

Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease; ) in short-termloans payable

8,055

10,119Deferred gains or losses on hedges

733

1,604

Foreign currency translation
adjustment

2,792

3,905

Remeasurements of defined
benefit plans, net of tax

1,787

3,942

1,408

1,485

Total; Other comprehensive income

13,30921,058Comprehensive income

19,1372,060

Comprehensive income attributable to owners of parent

16,194

3,272

Comprehensive income attributable to non-controlling interests

2,943

1,211

33,119

4,140

1,735

—

15,00026,186

8,935

Repayments of long-term loans payable

31,421

27,390—10,00010,000
—

—

728

1

1

Proceeds from issuance of bonds
Proceeds from non-controlling shareholders
Payment for purchase of common
treasury stock
Payment for purchase of common
treasury stock by subsidiaries
Cash dividends paid
Cash dividends paid to non-controllingshareholders
Other
Cash flows from financing activities
Effect of exchange rate change on cash
and cash equivalents
Net increase (decrease; ) in cash andcash equivalents
Cash and cash equivalents at beginning of the year

8

151

5,647

5,998

2,291

1,379

372

1,649

19,414

171

853

928

3,142

7,722

49,75846,838

Increase in cash and cash equivalents fromnewly consolidated subsidiary

223

494

Cash and cash equivalents at end of the year

46,83855,05555

Share of other comprehensive
income of entities accounted forusing equity method

408

31,042

Net increase (decrease; ) in commercial paper
Proceeds from long-term loans payable

Redemption of bonds

Valuation difference on availablefor-sale securities

412

About Furukawa Electric Group

991,590

Cost of sales

Business Strategy

Net sales

Business Foundation

As of March 31, As of March 31,
2019
2020

Corporate Information/Data

Consolidated Statement of Cash Flows (Millions of yen)

Consolidated Statement As of March 31, As of March 31,
2019
2020
of income(Millions of yen)

INTEGRATED REPORT 2020

Consolidated Statement of income andConsolidated Statement of Comprehensive Income

Furukawa Electric Group Outline

Furukawa Electric Group Outline

Furukawa
Electric
Group

North andCentral America
Employees in total

7,843

Companies in total

12

Consolidated net sales

78.3

Group employees in totalbillion yen

50,232

U.S.A.

(As of March 31, 2020)

MexicoColumbia

Group companies in total

BrazilArgentine126*(As of March 31, 2020)

South America,
Europeand others

Employees in total

3,012

Companies in total

17

Consolidated net sales

914.4

Consolidated net sales

82.4

billion yen

billion yen(Fiscal year ended March 31, 2020)

FURUKAWA ELECTRIC GROUP* Combined total for parent company, consolidated
subsidiaries and equity-method affiliates

Main Overseas Group Companies

13

Name

LocationName

OFS Fitel, LLC

U.S.A.

Thai Furukawa Unicomm Engineering Co., Ltd. Thailand

American Furukawa Inc.

U.S.A.

Furukawa Automotive Parts (Vietnam) Inc.

VietnamFurukawa Electric LatAm S.A.

Brazil

P.T. Tembaga Mulia Semanan, Tbk.

Indonesia

Shenyang Furukawa Cable Co., Ltd.

China

Furukawa Electric Singapore Pte. Ltd.

Singapore

Furukawa Circuit Foil Taiwan Corporation

TaiwanTrocellen GmbHGermany

Furukawa Electric Copper Foil Taiwan Co., Ltd. Taiwan

Location

About Furukawa Electric Group

Employees in total

5,054

Companies in total

18

Consolidated net sales

75.1

billion yen

China

India

South Korea
Japan

Japan

Business Strategy

China

Employees in total

Companies in total

44

Philippines

Malaysia

Consolidated net sales

Singapore

495.7

billion yen

Indonesia
Denmark

RussiaGermany
Czech
Hungary

Spain

Asia

Italy

(ex. Japan and China)

MoroccoEmployees in total

23,219Companies in total

Corporate Information/Data

U.K.

Business Foundation

VietnamThailand

11,113

Taiwan35

Consolidated net sales

183.0

billion yen

Main Domestic Group Companies
Location of head office/factory

Name

Location of head office/factory

TOTOKU Electric Co., Ltd.

Minato-ku, Tokyo/Ueda, Nagano Pref.

Yokohama, Kanagawa Pref./Nagai, Yamagata Pref.

The Furukawa Battery Co., Ltd.

Yokohama, Kanagawa Pref./Nikko,
Tochigi Pref. & Iwaki, Fukushima Pref.

Furukawa Electric Power
Systems Co., Ltd.
Furukawa Logistics Corp.

Chiyoda-ku, Tokyo

Furukawa Automotive
Systems Inc.

Inukami, Shiga Pref./ Inukami,
Shiga Pref. & Kameyama, Mie Pref.

Furukawa Elecom Co., Ltd.

Chiyoda-ku, Tokyo

Furukawa Magnet Wire Co.,Ltd

Chiyoda-ku, Tokyo/
Niigata, Niigata Pref.

Furukawa Sangyo Kaisha, Ltd. Minato-ku, Tokyo
Okano Cable Co., Ltd.

Yamato, Kanagawa Pref./Yamato, Kanagawa Pref.

Furukawa Electric Industrial
Cable Co., Ltd.

Arakawa-ku, Tokyo/
Hiratsuka, Kanagawa Pref.

13

Name

INTEGRATED REPORT 2020

* The number of group companies in Japan includes the parent
company.
* Net sales by region are based on the location of customers and areclassified by country or region.

Company Profile and Stock / Dividends Information

Company Profile and Stock / Dividends Information
Furukawa Electric Co., Ltd.
Organization Chart (As of Apr.1, 2020)

Company Profile

Auditing Dept.

Company name

Furukawa Electric Co., Ltd.

President

Keiichi Kobayashi

Founded1884

Chairman

Established

1896

President

Paid-in capital

Transformation
Div.

Business Transformation Team

Strategy Div.

Secretary Office
Corporate Planning Dept.
ICT Strategy Planning Dept.

¥69,395 million(As of March 31, 2020)¥914,439 million (consol.)(Years ended March 31, 2020) ¥440,675 million (non-consol.)

OneF Automotive Business
Development TeamNet sales

Number of employees 50,232 (consol.)(As of March 31, 2020)
3,925 (non-consol.)
Head office

Marunouchi Nakadori Bldg., 2-3,
Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8322, JapanTEL.

+81-3-3286-3001

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

Consol. subsidiaries(As of March 31, 2020)

Equity-method
affiliates(As of March 31, 2020)

Organizational Empowerment TeamHR Dept.

Administration& CSR Div.

Corporate Sustainability Office
Legal Dept.
Administration Dept.
CSR Dept.
International Trade Control Dept.
Chiba Works
Nikko Works
Hiratsuka Works
Mie Works

112

Yokohama Works

Finance & Global
Management Div.

13

Finance & Accounting Dept.
Investor & Public Relations Dept.
Global Management Office

Domestic Locations (Furukawa Electric Co., Ltd.)

Research &Development Div.

Planning Dept.
Laboratories for Fusion of CoreTechnologies
Advanced Technologies R&D Laboratories

As of July 2020

Automotive Products & Electronics
Laboratories
Telecommunications & Energy Laboratories
Superconductor Products Dept.
Future Infrastructure Technology Center
Digital Innovation Center
Intellectual Property Dept.

Hokkaido Branch

MONOZUKURI
Innovation Div.

Planning & Administration Dept.
Production Technology & Enginieering
Dept.
Procurement Dept.
NF Production System Dept.
Quality Promotion Dept.

Okinawa Sub
BranchSafety & Environment Promotion Dept.

Global Marketing
Sales Div.

Tohoku BranchMarketing Initiatives & Business
Development Dept.
Business Promotion Dept.
Infrastructure Sales Dept.
Electronics Sales Dept.
Kansai Branch

Nikko Works
Copper Foil Division

Chubu Branch
Kyusyu Branch

Head Office
Chubu Branch
Chugoku Branch

FURUKAWA ELECTRIC GROUP

KyushuBranchMie Works

Hokkaido Branch

Chiba Works

Chugoku Branch

Haneda Office
Yokohama Works

Kansai Branch

Shikoku
Sub Branch

Tohoku Branch

Okinawa Sub
BranchShikoku Sub
BranchCommunications Solutions Div.
Optical Fiber and Cable Products Div.
FITEL Products Div.
Broadband Solutions Business Div.

Hiratsuka Works

Energy Infrastructure Div.
Power Cable Div.
Industrial Cable & Power Cable Accessories Div.

Electronics Component Material Div.
Electric Conductor Div.
Copper & High Performance Material Products Div.

Functional Products Div.

55

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

Automotive Products Div.

Stock code on the Tokyo
Stock Exchange

5801

Stock exchange listings

Tokyo Stock Exchange, First Section

Number of sharesauthorizedCommon Stock 250,000,000 shares

Common stock issued

Common Stock 70,666,917 shares

Minimum trading units

100 shares

Number of shareholders

Common Stock 49,411 persons

Shareholder register
agent

2-1 Yaesu 1-chome, Chuo-ku, Tokyo, Japan
Mizuho Trust & Banking Co., Ltd.

Fiscal year

From April 1 to March 31

Shareholders’ meeting

June each year

Accounting auditor

Deloitte Touch Tohmatsu LLC

Main stock indicesemployed

Treasury stock

Individuals, others

0.1%
49,493 shares

28.2%
19,894,843 shares

Total number ofshares issued andoutstanding

70,666,917

Financial Institutions
37.8%
26,702,807 shares

Securities
companies

6.0%
4,239,036 shares

Nikkei Index 225; JPX-Nikkei Index 400

About Furukawa Electric Group(As of March 31, 2020)

Business Strategy

Distribution of Ordinary Stock Among Shareholders(As of March 31, 2020)

Domestic companies,
othersForeign corporations

7.3%
5,175,972 shares

20.7%
14,604,766 shares

Major Top 10 Shareholders of The Company and the Company’s Capital Contributions to Such Shareholders
Name of major shareholders

Number ofsharesShareholding
ratio

The Master Trust Bank of Japan, Ltd. (Trust Account)

5,524,300

7.82%

Japan Trustee Services Bank, Ltd. (Trust Account)

3,458,200

4.90%

Japan Trustee Services Bank, Ltd. (Trust Account 4)2,496,300

3.53%

Trust & Custody Services Bank, 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%Japan Trustee Services Bank, Ltd. (Trust Account 5)

1,250,000

1.77%

Fuji Electric Co., Ltd.

1,100,000

1.56%

Trust & Custody Services Bank, Ltd.
(Mizuho Trust & Banking; Employee Retirement Benefit Trust, FURUKAWA CO., LTD. Account)

1,091,900

1.55%

Trust & Custody Services Bank, Ltd.
(Mizuho Trust & Banking; Employee Retirement Benefit Trust, Asahi Mutual Life Insurance Company Account)

1,050,000

1.49%

Corporate Information/Data(As of March 31, 2020)

Business Foundation

General Stock Information(note) 1. Shareholding ratio is calculated with the number which deducted 48,957 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. Trust & Custody Services Bank, Ltd. has been dissolved due to absorption-type merger and merged to Japan Trustee Services Bank, Ltd. as asurviving company as of July 27, 2020.
4. Japan Trustee Services Bank, Ltd. has changed its corporate name to Custody Bank of Japan, Ltd. on July 27, 2020.

Cash Dividends per Common Share
Fisical year

2015

2016

2017

2018

2019

Interim dividend (yen)

0

0

0

0

0

Year-end dividend (yen)

4.0

55*

80*

85*

85*

Total dividend (yen)

4.0

55*

80*

85*

85*

note) We have carried out a reverse stock split at a ratio of 1 share for every 10 ordinary shares with an effective date of October 1, 2016. The amounts if
the reverse stock split is not conducted will be, respectively: change 55 yen to 5.5 yen, change 80 yen to 8.0 yen, and change 85 yen to 8.5 yen.

(yen, points)

Trading volume

8,000

Closing price(millions of shares)

TOPIX

20
15

4,000

10

2,000

5

0

0
2015/4/1

2016/4/1

2017/4/3

2018/4/2

2019/4/1

note) We have carried out a reverse stock split at a ratio of 1 share for every 10 ordinary shares with an effective date of October 1, 2016. In addition, thenumber of shares in unit of the company’s ordinary shares has changed from 1,000 shares to 100 shares. Because of this, in the graph, thepre-September 2016 stock prices are shown as 10 times, and the trading volume is shown as 1/10.

55

6,000

INTEGRATED REPORT 2020

Stock Price and Trading Volume

External Evaluation and Participation in Initiatives

Electric became a constituent of the following ESG-related indices and received external
External Evaluation Furukawa
evaluation and certifications as follows during a period from April 1, 2019 to July 31, 2020.

ESG Indices

ESG evaluation and certifications

SBT (Science Based Targets)

FTSE4Good Index Series/
FTSE Blossom Japan Index

Furukawa Electric was selected as a constituent of the
FTSE4Good Index Series and the FTSE Blossom Japan Index of
FTSE Russell for the first time (June 2020).
FTSE4Good Index Series
https://www.ftserussell.com/products/indices/ftse4good
FTSE Blossom Japan Index
https://www.ftserussell.com/products/indices/blossom-japan

CDP

MSCI Japan Empowering Women Index (WIN)Furukawa Electric received a “B: Management Level”
evaluation for “Climate Change” and “Water Security” of the
CDP in 2019, and was also selected as a “Supplier
Engagement Leader” in the CDP Supplier Engagement Rating(SER) (February 2020).

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 NAMESAND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITSAFFILIATES.

Furukawa Electric was selected as a Nadeshiko Brand company
by the Japanese Ministry of Economy, Trade and Industry and
the Tokyo Stock Exchange (March 2020).

S&P/JPX Carbon Efficient Index

White 500 under the “Health & Productivity
Management Organization Program”

Furukawa Electric was selected as a constituent of the MSCIJapan Empowering Women Index (WIN) (June 2020).

Furukawa Electric was selected as a constituent of the S&P/
JPX Carbon Efficient Index, within the “Capital Goods”
industry group, with decile classification 7 and carbon
disclosure status as “disclosed” (June 2020).

Furukawa Electric was selected as a constituent of the SOMPO
Sustainability Index by Sompo Asset Management (June 2020).

Participation in initiatives

Nadeshiko Brand

Furukawa Electric was certified as White 500 (large company
category) under the “Health & Productivity Management
Organization Program” for a fourth consecutive year (March 2020).

SOMPO Sustainability Index

FURUKAWA ELECTRIC GROUP

The Furukawa Electric Group’s targets for reducing greenhouse gas emissions by 2030 were certified by the Science
Based Targets (SBT) Initiative (August 2019).

Derwent Top 100
Global Innovator 2020

Furukawa Electric was awarded the “Derwent Top 100 Global
Innovator 2020” by the Clarivate Analytics plc. (February 2020).

Furukawa Electric participates in the following ESG-related initiatives.

66

United Nations Global Compact

Task Force on Climate-related
Financial Disclosures

Furukawa Electric signed the “United Nations Global
Compact” global framework for the realization of sustainablegrowth on February 24, 2020.

Furukawa Electric expressed approval of the recommendations
by the Task Force on Climate-related Financial Disclosures(TCFD) in January 2020.

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

About Furukawa Electric Group
Business Strategy

change, organizational empowerment innovation, andcorporate governance. Concerning climate change, inparticular, we expressed our approval of therecommendations by the Task Force on Climate-related
Financial Disclosures (TCFD) and have just started
scenario analysis and initiatives aimed at information
disclosure in line with the TCFD recommendations.
Furukawa Electric’s Corporate Sustainability Office in
the Administration & CSR Division and the Investor &Public Relations Department in the Finance & Global
Management Division have played a leading role in the
preparation of our first Furukawa Electric Group Integrated
Report 2020. They paid attention to conformity andconsistency regarding data and information in various
other disclosed media and materials.
We hope that the Furukawa Electric Group Integrated
Report 2020 will help our shareholders, investors, andother stakeholders better understand our Group andbe useful in constructive dialogues. We are committed
to further improving the quality of integrated reports,
enhancing information disclosure and transparency,
and promoting dialogue with stakeholders. We would
appreciate hearing your unrestrained comments orrequests in this regard.

Business Foundation

I would like to say a few words on this occasion of
issuing the Furukawa Electric Group Integrated Report.
Since fiscal 2012 we had issued the Furukawa ElectricGroup Sustainability Report each year as a tool toconvey information to our stakeholders. This year,
however, we have decided to issue our first Furukawa
Electric Group Integrated Report in order to makeourselves better understood in areas of mid- to longterm value creation in particular.
In this new report, we present the Furukawa ElectricGroup’s various initiatives, aimed at improving our
mid- to long-term corporate value, such as 1) the
background to developing the Furukawa Electric Group
Vision 2030, which was disclosed in fiscal 2019 andshows what we want to be; 2) identification ofimportant management issues (materiality) to beachieved by the Vision 2030 and the identification
process; and 3) SDG Compass-based value chain
mapping, using our Group’s main products.
In fiscal 2019, we signed the “United Nations Global
Compact” global framework for contributing to therealization of Sustainable Development Goals (SDGs)
and established a solid base for ESG management. At
the same time, we have been accelerating various ESG
priority measures, mainly in the areas of climate

Corporate Information/Data

About Issuing the Furukawa Electric Group
Integrated Report 2020

October 2020

Satoshi Miyamoto
Director, Corporate Senior Vice President,

Editing and Publication

Investor & Public Relations Department
Finance & Global Management Division
Furukawa Electric Co., Ltd.
2-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo
100-8322, Japan

Corporate Sustainability Office

Inquiry form
https://www.furukawa.co.jp/srm/form/index.php?id=enir

Administration & CSR Division
Furukawa Electric Co., Ltd.

66

For inquiries

INTEGRATED REPORT 2020

and General Manager, Administration & CSR Divisionhttps://www.furukawa.co.jp/en/