INTEGRATEDREPORT
2023

Together we innovate,challenge and explore
the frontiers of the future

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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About this Integrated Report

Contents
Introduction

Financial Strategy

Overview of the Mitsubishi HC Capital Group ・・・・・・ 5

Message from the CFO・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 49

The Vision of the Mitsubishi HC Capital Group ・・・・・ 7
Our 10-year Vision ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 9Strategy to Enhance Non-financial Capital
Environmental Initiatives・・・・・・・・・・・・・・・・・・・・・・・・・・・53

Message from the President & CEO
Message from the President & CEO・・・・・・・・・・・・・・・・ 11

Human Rights Initiatives・・・・・・・・・・・・・・・・・・・・・・・・・・・57
Human Capital Initiatives・・・・・・・・・・・・・・・・・・・・・・・・・・59
Message from the Head of Human Resources &General Affairs Division・・・・・・・・・・・・・・・・・・・・・・・・・・・・63

Value Creation Story

GovernancePositions of Value Creation Process andMedium-term Management Plan・・・・・・・・・・・・・・・・・・・19

Message from the Chairman of the Board・・・・・・・・・・65

Value Creation Process・・・・・・・・・・・・・・・・・・・・・・・・・・・・21

We are working to solve social issues and create new value by developing global and advanced asset
businesses.
This Report combines both financial and non-financial information, including an overview of
medium-to-long-term value creation, management strategies, financial results, and ESG information, sothat our shareholders, investors, and all other stakeholders may become better acquainted with the
Mitsubishi HC Capital Groupʼs efforts to sustainably improve our corporate value.

Dialogue with Independent Outside Directors ・・・・・・66
Directors and Executive Officers・・・・・・・・・・・・・・・・・・・71

Explanation of Each Part of theValue Creation Process・・・・・・・・・・・・・・・・・・・・・・・・・・・・23

Corporate Governance・・・・・・・・・・・・・・・・・・・・・・・・・・・・73

2025 MTMP Financial Targets ・・・・・・・・・・・・・・・・・・・・・27

Risk Management・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・83

2025 MTMP Non-Financial Targets ・・・・・・・・・・・・・・・・28

Compliance・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・85

Representative Director, President & CEO

Editorial Policy
This report has been compiled for the benefit of a wide range of readers, including shareholders and investors, and isdesigned to easily convey and promote a deeper understanding of the business activities, corporate value, and the
medium- to long-term vision of the Mitsubishi HC Capital Group, in both financial and non-financial terms. The 2023
edition describes the Groupʼs newly arranged value creation process and presents the 2025 Medium-term Management
Plan that it guides. Also note that in editing the report, we referenced the International Integrated Reporting Framework
recommended by the International Integrated Reporting Council and the Guidance for Collaborative Value Creation
advocated by the Ministry of Economy, Trade and Industry.

■ Forward-looking Statements■ Guidelines Referenced

The strategies, plans, results, and other information presented inthis report contain future projections and forecasts. Suchforward-looking statements reflect assessments made by theGroup based on the information available at the time of thisreportʼs preparation. Please note that actual results are influenced
by a wide range of significant factors and may therefore differ
considerably from the content of these statements.

International Integrated Reporting Framework,
issued by the International Integrated Reporting
Council
Guidance for Collaborative Value Creation, issued
by the Ministry of Economy, Trade and Industry■ Reporting Period

Fiscal Year Ended March 31, 2023 (April 2022 to March 2023)(Some sections include information on activities before and after
the reporting period.)■ Reporting Scope

The Company and its subsidiaries and affiliates■ Contact

Mitsubishi HC Capital Inc.
Corporate Communications Department
5-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo, 100-6525, Japan
TEL: +81-3-6865-3002▶Corporate Website

Business Strategies

Data Section

Customer Solutions・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・29

Financial Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・87

Global Business・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・31

Corporate Information・・・・・・・・・・・・・・・・・・・・・・・・・・・・・89

Aviation・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・33

https://www.mitsubishi-hc-capital.com/english/■ Information DisclosureThis report combines and discloses important financial and non-financial information to help readers better understand the Company.
https://www.mitsubishi-hc-capital.com/english/

Financial Information●●

Logistics・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 35
Environment & Energy・・・・・・・・・・・・・・・・・・・・・・・・・・・・・37

Non-Financial Information●●

Investor Relations section of our website
Annual Securities Report
Sustainability section of our website
Corporate Governance Report●●●

Consolidated Financial Highlights
Summaries of Financial Results
ESG Data

Real Estate ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・39
Mobility・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・41

Integrated Report (print, PDF)

Key Themes to Be Addressed across Segments・・・・43
Initiatives for Digital Strategies・・・・・・・・・・・・・・・・・・・・・ 47

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

The Integrated Report (print, PDF) can be downloaded here:
https://www.mitsubishi-hc-capital.com/english/investors2/library/various-reports/index.html

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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Introduction

Introduction

Overview of the Mitsubishi HC Capital Group
Figures are for FYE3/2023 or as of March 31, 2023.

Message from the
President & CEO

9,632.9 billion yen

Segment
assets*1

Real Estate447.2 billion yen
Logistics

Revenues

Net Income

Segment Assets

1,896.2

116.2

9,632.9billion yen

billion yen

billion yen

8,648 people
20

More thancountries and regions

Payout Ratio

33 yen5

40.8%Japan Credit Rating
Agency, Ltd. (JCR)

Rating and Investment
Information, Inc. (R&I)

AA

AA-

External
CreditRatings

Moodyʼs

S&P

A3

A-

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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Data Section

116.2 billion yen

Mobility 3.7 billion yen
RealEstatebillion yen

3,227.7

Logistics
15.3 billion yen

billion yen

Aviation

GovernanceAchieving record-high profit (FYE3/2023)

Customer
Solutions

1,640.2

Customer
Solutions

38.1

billion yen

billion yen
Aviation

6.2 billion yen

Global Business*2

Global Business*2

2,644.2 billion yen

29.0

Environment & Energy
11.6 billion yen

billion yen

Domestic 44%*3*1 Segment assets = operating assets + equity method investments + goodwill + investment securities, etc.
*2 Profits and operating assets in the Global Business segment do not include overseas profits and assets belonging to other segments such as Aviation and Logistics.
*3 Approximate ratios are shown by counting the Customer Solutions, Environment & Energy, Real Estate, and Mobility segments as domestic, and the Global
Business, Aviation, and Logistics segments as overseas, but some segments include both domestic and overseas assets and actual ratios differ from the above.
*4 Net income includes negative 600 million yen in adjustments.

Please refer to pages 29 to 48 for details on business strategy.

Leveraging a wealth of accumulated knowledge,
we maximize the potential of assets while
expanding business globally. The Mitsubishi HC
Capital Group is committed to creating newvalue as a partner that supports customers intheir challenges.

Shareholder Return

Increased
dividends forstraight fiscal periods

Net
income*4(as of March 31, 2023)

12.6

billion yen

Segment Overview

Global Network

Strategy to EnhanceNon-financial Capital

Mobility 41.4 billion yen
Adjustments
105.8 billion yen

Overseas 56%*3

Number of Employees

Financial Strategy

1,092.9

Environment &Energy433.2 billion yen

Dividend per Share

Value Creation Story Business Strategies

Customer
Solutions

In Japan, our operations are focused on
the Customer Business, which provides
leasing and other finance solutions forcompanies and government agencies,
and the Vendor Business, which provides
finance functions supporting the sales ofaffiliated vendors (manufacturers, distributors, and so on).

We provide services to meet thediverse needs of airlines and aircraft
maintenance companies around theworld, from aircraft and aircraft engine
leasing to engine parts sales* 6.

Aviation
We provide customers with assets that
support logistics globally, such as marine
containers and railway freight cars,
through leasing and finance services.

Logistics
We offer real estate financing, investment, asset management, and otherservices for a wide range of asset
types, from office buildings andhomes to commercial properties,
hotels, and logistics facilities.

In Europe, the Americas, China, and
the ASEAN region, we offer a range offinance solutions, including leasing andsales finance, based on the social andcustomer needs of each country andregion.

Real Estate

Global Business

Environment &EnergyIn Japan and abroad, we are rolling out solar,
wind, and other renewable energy businesses
along with environmental finance businesses.
The Groupʼs net capacity of renewable energy isat the top level domestically at 1.2 GW (as of theend of March 2023). We also work on solar corporate power purchase agreements (corporate
PPAs)*5 in collaboration with partner companies.

Mobility

With the widespread adoption of electric vehicles (EVs) picking up speed and new services such as car sharing and autonomous
driving on the rise, the mobility industry
faces a major turning point, and we are at
the forefront, working with partners aroundthe world providing high value-added automotive leasing and mobility services.

*5 Power Purchase Agreement: A mechanism that allows us to install power-generating facilities on facility rooftops or unused land owned by a company ormunicipality free of charge and then sell the electricity generated to that same company or municipality*6 A business that involves purchasing aircraft engines nearing retirement, dismantling them, and selling each of the repaired parts to maintenance companies and airlines

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

The Vision of the Mitsubishi HC Capital Group
Basic Management Policy
Our Mission–Our long-term goal–

Contribute to a prosperous and sustainable future by creatingsocial value through maximizing the potential of assets.

Our Vision

Materiality (Material Issues)
Against a backdrop of megatrends such as climatechange driven by global warming, population growth,urbanization, and scarcity of resources, not only our
personal lives but also social environments have been
drastically changing worldwide. Under such circumstances, companies are expected to make efforts tosolve numerous issues, such as promoting a decarbonized society and building a circular economy.
Mitsubishi HC Capital has identified the following six
materiality (material issues) as priority key challenges
that must be addressed to achieve sustainable development of the Mitsubishi HC Capital Group. We identified

materiality through the following three processes: (1)Developed a comprehensive list of ESG challenges
based on ISO 26000, the Sustainable Development
Goals) SDGs and related international guidelines andprinciples, and identified candidates based on theirimportance in terms of both opportunities and risks to
the Companyʼs business, (2) Confirmed the expectations
and requirements of external stakeholders, including key
customers and shareholders, to narrow down the candidates, and (3) Identified materiality after discussions of
the Sustainability Committee, Executive Committee andthe Board of Directors.

Please refer to our website for details.
https://www.mitsubishi-hc-capital.com/english/sustainability/materiality.html–Objectives to achieve our long-term goal–▶ Solve social issues by developing unique and progressive businesses with consideration for the global

Materiality

Why the Group Treats as Highly Material Challenges

Promote a
DecarbonizedSociety

Efforts to realize a decarbonized society have been globally recognized as anurgent issue and the Group can significantly contribute to solving this challenge through its services and solutions, such as renewable energy investment and EV promotion. It is quite a few impact on but is significant for theGroup to distinct its business from the business not solving social issues.

Realize the Circular
Economy

The Group aims to contribute to creating a circular economy by reducing
waste, not only in the Group but also within society through maximizing thepotential of assets as a leading company in the leasing industry. The Group
treats this challenge as material. The Group can also contribute to realizing asustainable and prosperous society through strengthening the collaboration
between partners.

Establish Resilient
Social Infrastructure

Large parts of the infrastructure within Japan needs to be repaired. The Groupalso recognizes the business has huge potential opportunities to support thedevelopment of infrastructure in overseas countries with active collaboration
between various partners and create a smart city. The Group will contribute to
the business being diversified, enhanced and efficient through establishing
the system and providing services for supporting the collaboration of various
companies.

Realize HealthyLifestyles that
Promote Positive
Wellbeing

It is vital for its stakeholders that the Group recognizes the importance of
health, safety, mental and physical wellbeing for realizing the prosperous
future. Valuable human resources are key. Personal development and attraction and retention of talent is significant for the Group members.

Create Businesses
Utilizing the Latest
Technologies

Both financing for the purpose of digital transformation of customers andproviding solution by internal and external digital technologies urge todevelop new business models. Including establishing supply chain withutilizing with new alternative energies, the Group identifies material one as theopportunity.

Collaborate with
Partners Locally andGloballySocial issues differ by countries and regions. It is significant that the Groupaims to solve these issues by collaborating with local partners to ensure theGroup is meeting individual needs through local community-based communication. The Group can realize mutual benefits in developing society by utilizing the integrated capability in the Group.

Relationto SDGs

environment.
▶ Aim for sustainable growth through value co-creation with diverse stakeholders across the globe.
▶ Enhance corporate value by evolving our business model through utilizing digital technology and data.
▶ Foster an “open, creative and engaging” corporate culture that shapes each and every employeeʼs

motivation and pride.
▶ Aim to be a trusted company by complying with laws and regulations, as well as implementing ethicalcorporate management.

Action Principles–“Values and mindset to be held” and“actions to be taken” by each and every employee–

7

Challenge

Challenge ourselves to look forward to the future with a sense of responsibility
and commitment.

DigitalDrive digital innovation and expertise.

Communication

Communicate openly and honestly to build mutual understanding and trust.

Diversity

Embrace diversity and respect each other.

Sustainability

Act in harmony with people, society and the earth to create a sustainable world.

Integrity

Maintain the highest standards of ethics and integrity.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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Introduction

Message from the
President & CEO

Our 10-year Vision

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Our 10-year Vision

As a milestone to our long-term aspirations, we have

Together we innovate, challenge andexplore the frontiers of the future

formulated a 10-year Vision.
The vision functions as a compass showing the way torealizing our mission by achieving three medium-term
management plans representing the “hop,” “step,” and“jump” phases.

To achieve our mission, continue

Anticipate the changes in society and the businessto be an “innovator (who ventures

environment including changes in global industrial

into unexplored fields and creates

structures, accelerating digitalization and increasing

innovation)” who challenges theimportance of sustainability, and continue addressing social

frontiers of the future without

issues that can be solved only by us through approaches

being bound by precedents.

such as SX (sustainability transformation) and DX (digitaltransformation) with customers and partners.

FYE3/2022

FYE3/2024 Forecast

FYE3/2026 Target

billion yen

billion yen

116.2

120 billion yen

160 billion yen

ROA*

1.0%

1.1%

1.1%

approx. 1.5%

ROE*

8.0%

8.2%

7.8%

approx. 10%

Payout ratio

40.4%

40.8%

44.3%

(for the duration of the 2025 Medium-term Management Plan)

Financialsoundness

A rating

A rating

Net income
attributable toowners of parent

99.4

FYE3/2023

At least 40%
Maintain A ratings(for the duration of the 2025 Medium-term Management Plan)*ROA and ROE are based on net income

Jump

Please refer to pages 19 to 28 to learn
about our value creation story to realize
the 10-year Vision, and pages 49 to 52 tolearn about the financial strategies underthe 2025 Medium-term Management Plan.

Hop

2031 Medium-term Management Plan

Step
2028 Medium-term Management Plan

2025 Medium-termManagement Plan

FYE3/2030 to FYE3/2032

FYE3/2027 to FYE3/2029

FYE3/2024 to FYE3/2026

FYE3/2024
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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

FYE3/2026

FYE3/2029

FYE3/2032
MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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Message from the President & CEO

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Becoming an Innovator That Opens Up
the Future of the Asset Business and
Co-Creates Value
Bringing out the capabilities of all employees to the fullest to attain 2025 MTMP
I am Taiju Hisai, and I assumed the duties ofRepresentative Director, President & CEO of Mitsubishi
HC Capital Inc. on April 1, 2023.
During the previous two years, I was involved in theoverall management of Mitsubishi HC Capital as a
Deputy President. In that sense, although I have taken
the reins as President & CEO since this past April, my
actual job duties will not change significantly. Even so, I
keenly feel the heavy weight of my responsibilities as the
final decision-maker at Mitsubishi HC Capital.
In April 2023, Mitsubishi HC Capital launched its
Medium-Term Management Plan for FY2023 - FY2025(2025 MTMP), which runs for three years. Having
assumed the role of President & CEO at the same timeas the start of 2025 MTMP, my greatest responsibility is
to ensure that we attain the objectives of 2025 MTMP
through the strategies and measures set forth in theplan. My chief role is to stand at the forefront and leadthe Mitsubishi HC Capital Group, a large organizationconsisting of approximately 9,000 employees, and bringout the full capabilities of these employees. In my previous professional career, I spent many years overseas inmanagerial positions in such countries as the UnitedStates, the United Kingdom, and India. During this time, I
focused my efforts on how I could motivate my teammembers who were from different countries with different languages and cultures, and spur them to work
toward attaining shared goals.
I think one of the reasons I was selected as
President & CEO was so that I could leverage this experience to exercise my leadership to unite Mitsubishi HC
Capital Group employees worldwide and surmount thehigh hurdles we face.

Completion of the business integration process together with
our employees and transitioning to a new stage of growth

Representative Director,
President & CEO
ProfileIn 1985, he joined Mitsubishi Bank (currently
MUFG Bank). Since then, he served in various
managerial positions globally, in Japan, theU.S., Europe and India.
In June 2021, he became a Deputy President
and Executive Officer of Mitsubishi HC Capitaland from April 2023, he became Representative Director, President & CEO.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Mitsubishi HC Capital was born in April 2021 through the
integration of Mitsubishi UFJ Lease & Finance andHitachi Capital, both prominent leasing companies inJapan. The prevailing notion at that time was that the
Mitsubishi Group was a “Lord” and the Hitachi Group a“Nobushi,” or a lordless samurai. In fact, we often heardthat integrating these two companies, which had different systems, rules, and corporate cultures, would likely
be no easy task. Thanks to the hard work of each
employee, who occasionally set aside conflicting opinions, we accomplished all the tasks set at the outset ofthe merger within two years as originally planned as we
aim to create something new and achieve synergistic
coactions.
Having experienced the challenges of two major
corporate mergers during my previous career, I consider
our successful business integration nothing short of atruly miraculous accomplishment. Although we faced
differences because Mitsubishi UFJ Lease & Finance
had a background in banking and trading house businesses, while Hitachi Capitalʼs background was in manufacturing businesses, the temperaments of theemployees of both companies proved to be more similar
than I anticipated. This affinity between the cultures of
the two predecessor companies was a huge factor
underpinning our successful completion of our PMI.
Over long years, Mitsubishi UFJ Lease & Financebuilt close partnerships with the Mitsubishi UFJ Financial
Group and Mitsubishi Corporation, while Hitachi Capitalforged similar ties with Hitachi, Ltd. and other HitachiGroup companies. These strong networks of our forerunners have been firmly inherited by Mitsubishi HC Capital.
The integration of the two companies, which possessed
different competitive advantages, enables us to mutually

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

12

Introduction

expand our business fields, geographically diversify ourportfolio, and create a full lineup of products and services, as well as build an extensive and strong customer
base and network that leads the global market.
Mitsubishi HC Capital Group currently undertakes business in more than 20 countries and regions. With overseas business accounting for over 50% of the segmentsʼ
asset balance in FYE3/2023, Mitsubishi HC CapitalGroup is building a geographically diversified portfolio
and demonstrating its presence globally. For example,
one of our focus regions is the Americas, where thescale of our U.S.-based Group companies as a whole*1
ranks among the top in the U.S. non-banking industry*2.
Building on this solid track record, Mitsubishi HC CapitalGroup will continue to march toward a new growth stage
that maximizes synergies.

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Group-wide global discussions are held to maximize synergies
on a regular basis.
*1 Total U.S.-based Group companies in the Global Business, Aviation, andLogistics segments.
*2 Company internal survey.

Transforming ourselves to realize Our 10-Year Vision
Work on formulating 2025 MTMP began immediately
after I became Deputy President. At first, we held
repeated discussions led mainly by Seiji Kawabe,
Chairman, Takahiro Yanai, President & CEO and the three
Deputy Presidents including myself (all at that time).
Despite numerous twists and turns, everyone unanimously focused on the type of corporate group theCompany aspired to become over the long term.
Additionally, during these discussions, one of our crucial
themes was promoting initiatives to raise corporate value
over the medium to long term and to realize aprice-to-book ratio (PBR) exceeding 1x as a quantitative
benchmark of this increased corporate value.
Society and the economy are currently in a time ofhistoric structural change. Given this, perhaps ten years
from now people might even say, “By the way, there wasonce an industry called leasing.” To ensure that
Mitsubishi HC Capital Group can maintain its presence
as one of Japanʼs premier corporate groups amid thischange, in the coming years, we must take on new
challenges that go beyond the framework of a leasing

company. With this in mind, we all started our discussions with a shared recognition of the importance oftransforming ourselves. In envisioning our future, webegan our discussion with a completely blank slate,asking ourselves, “What type of company does
Mitsubishi HC Capital Group seek to become when it
transcends the framework of a leasing company?”
The manifestation of these discussions was Our
10-Year Vision, “Together we innovate, challenge andexplore the frontiers of the future.” This Vision embodies
our fervent desire to become a company that takes onchallenges in yet unexplored domains and continuously
takes on challenges not by ourselves but also together
with our customers, partners, and various stakeholders.
We will boldly tackle the challenge of achieving things
that nobody has ever accomplished before. Although wewill naturally experience failures along the way, we mustnever fear failure. We need to continuously act as areformer and challenger that creates new things motivated by these failures. I believe this attitude will behighly acclaimed by our customers and partners.

phase. During this phase, the entire Group will work inunison in “sowing seeds” and “gaining a foothold” toenable us to leap ahead to the subsequent Skip andJump phases. Specifically, in “sowing seeds” with aneye to the future, we will focus on promoting DX strategies and developing, securing, and utilizing humancapital such as global human resources and digitaltalent. For “gaining a foothold,” we will promote issues
for sustainable growth, such as the next-generation
system structures, including the integration of coresystems, and building a talent portfolio strategy thataligns with our management strategy.
Our business portfolio consists of a variety of businesses ranging from traditional core businesses to new
businesses with high growth potential and profitability.
This portfolio is widely dispersed globally and is becoming a stable and reliable profit foundation based on oursolid leasing business with a wide range of customers.

For example, even though our Aviation Business was
significantly affected, albeit temporarily, during theperiod of COVID-19, we were able to secure increased
profits on a Group-wide basis thanks to the contributionof the marine container leasing business on the back ofgrowing stay-at-home demand.
Additionally, we must work to transform our business portfolio while accurately responding to the needs
and trends of the times to ensure our continued growth
as a corporate group. To this end, we will shift focus
toward high profitability on a project basis, as well as inbusiness regions and business models. Moreover, byharnessing the knowledge and resources of each organization within the Group, we will implement a policy offocusing across all segments on the four Key Themes ofHydrogen, EVs, Logistics, and Decarbonization
Solutions, which will also help solve social issues both
domestically and globally.

Realizing CX through the value creation process
We will focus on “sowing seeds” and “gaining a foothold” to achieve sustainablegrowth during the three years of 2025 MTMP
Mitsubishi HC Capital Group regards the 10-year period
for achieving Our 10-Year Vision as consisting of three

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

phases, Hop, Step, and Jump. We have positioned thecurrent three-year period of 2025 MTMP as the Hop

To realize Our 10-Year Vision, and ultimately achievesustainable increases in corporate value, we must fully
utilize both financial capital and non-financial capital.
Accordingly, in formulating this plan, we first set up the“value creation process” that will serve as our guideline.
After redefining our capital, which includes financial

Please see pages 21-22 for the value creation process.

capital, human capital, and intellectual capital, etc., wesummarized the flow of capital accumulation and value
creation via business activities into our own unique story.
Furthermore, in addition to financial targets, 2025 MTMP
sets non-financial targets to confirm that non-financial
capital is accumulated through our value-creation

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

14

Introduction

process. By properly executing this value creation process, we can achieve CX (Corporate Transformation)
through SX (Sustainability Transformation), DX (Digital
Transformation), and Business Portfolio Transformation.
The SX we advocate is a concept that involves
creating businesses that contribute to the sustainabilityof the Company and its stakeholders while responding to
the SDGs and contributing to the sustainability of theenvironment and society. In Japan, there is a saying,“Sampo Yoshi,” which means benefits for all three sides.
Any zero-sum relationship whereby when one party
makes a profit and the other party loses is not sustainable over time. Mindful of this, we will pursue ways ofbusiness that enable customers, society, and the Groupto co-create and share the fruits of these efforts in
keeping with the notion of benefits for all three sides.
DX is now probably a prerequisite for a companyʼs
ongoing existence. By utilizing digital technology, we aim
to generate profits, improve the efficiency of our businessand operations, and pave the way for taking on challenges in new fields. We consider promoting DX to be an
essential initiative for companies of today.
In executing “Business Portfolio Transformation,”
we will extensively review the way we do business froma medium- to long-term perspective with an awarenessof the cost of capital. The key to achieving this will be
the Evolution and Layering of Business Models, which I
will explain next.

Diversification of revenue sources and sophistication of business models
through Evolution and Layering of Business Models
Within 2025 MTMP, we have positioned the Evolution
and Layering of Business Models as the core of ourbusiness strategy. In view of changes in the businessenvironment over the medium to long term, we will
pursue business operations and service developmentthat maximize the use of tangible and intangible assets.
In doing so, we have visualized this process of Evolution
and Layering. Specifically, we have categorized ourbusiness into five business models. Using the customer
base and profit bases of our founding business of

Customer Finance and Asset Finance as a foundation,
we will shift these existing businesses into high-value-added services, namely Finance + Services, Data
Utilization Platform Services, and Asset Utilization
Business.
In our core Customer Finance and Asset Financebusinesses, we will secure stable and continuous
income gains from lease income, interest, and commissions and will replace low-profitability assets withhigh-profitability assets to achieve higher profitability

Message from the
President & CEO

Value Creation Story Business Strategies

overall. With regard to Finance + Services, our policy will
be to focus on developing high-value-added services
such as subscription services. In the Data Utilization
Platform Service, we will utilize data accumulated within
the Group that has yet to be effectively utilized to create
new services such as inventory optimization and sharing.
In the Asset Utilization Business, we will engage inbusiness that leverages the value of assets, such as realestate development and the aggregation business which
integrates and manages renewable energy.
Mitsubishi HC Capital Groupʼs “Evolution andLayering of Business Models” is an innovative attempt toFinancial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

evolve and layer formats into middle-risk, middle-return
businesses to increase the profitability and added valueof our core Customer Finance and Asset Finance businesses, including the new business of Finance +Services, as well as securing service revenue and business revenue. In particular, over the coming three years,
we will strengthen the business foundations of Data
Utilization Platform Services and Asset Utilization
Business to establish a system that can consistently
generate profits at the Step or Jump phases.

Pursuing new forms of asset businesses that sometimes compete andsometimes collaborate
We undertake asset businesses globally utilizing bothtangible and intangible assets. Among these, we are
currently focusing on the leasing business, and our maincompetitors are naturally domestic and overseas leasing
companies. However, competitive relationships are
becoming increasingly complex as business fields andbusiness models diversify. Various types of non-leasing
companies are now also our competitors, as well as ourpartners.
For example, the Mitsubishi HC Capital Group is
working on projects for revitalizing urban functions andregional revitalization. This includes wide-ranging
involvement in large-scale development projects, whichwere once the exclusive domain of general contractors,
trading companies, and major real estate companies. We
are also carrying out such renewable energy businesses
as solar power and wind power businesses. We are evenpromoting some businesses in which we go beyond theframework of a lease provider and serve as a business
operator. General contractors and home builders in thereal estate development business and general trading
companies in the renewable energy business are allstrong competitors. Meanwhile, these companies arealso our partners with which we sometimes work
together to build and operate business schemes.
Furthermore, it is important to build win-win relationships in which all parties involved in the business,
including customers, can mutually utilize their respectivefunctions and strengths and enjoy equal benefits. I
expect that Mitsubishi HC Capital Group will play a role
as a comprehensive financial service provider or project
operator and so our business opportunities are expanding more than ever before. The days when Mitsubishi HC
Capital Group focused solely on providing leasing functions are in the past. This is precisely why we must workon Evolving and Layering Business Models.

Four initiatives to improve the sophistication of our management foundation
To improve the sophistication of our management foundation, we have set four strategies consisting of fostering and securing human resources, bolstering thefinancial base and internal organizational base, strengthening the corporate governance framework, andenhancing stakeholder engagement.
I believe the key to Mitsubishi HC Capital Groupʼsfurther growth over the next ten years will be to effectively allocate and utilize our human resources, which

15

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

represent our greatest asset. Formed through the business integration of Mitsubishi UFJ Lease & Finance andHitachi Capital, which were two companies with different
backgrounds, Mitsubishi HC Capital Group possesses
human resources in Japan and overseas who are wellversed in financial businesses centered on leasing in
addition to a large number of employees with specialized
knowledge in specific assets and fields that include
environmental & energy, aviation, marine containers, andMITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

16

Introduction

railway freight car leasing businesses.
Mitsubishi HC Capital Group has positioned humanresources as the driving force behind this growth. As
such, Mitsubishi HC Capital Group works to further
expand and enhance its human resources by bothquantitatively securing diverse human resources that
include new graduate hires and mid-career hires as wellas members who join the Group through M&A and thenqualitatively transforming these resources througheducation and training programs.
In bolstering the financial base and internal organizational base, Mitsubishi HC Capital Group will implement financial strategies that take into accountwell-balanced growth potential, return on capital, andfinancial soundness. At the same time, we will work to
rebuild our credit screening and management frameworkin accordance with our business portfolio transformation.
Regarding corporate governance, Mitsubishi HC
Capital Group will focus on establishing an effective
consolidated management framework and sophisticating
its integrated risk management, which is the foundationfor our business promotion. Through the business integration, Mitsubishi HC Capital Group has become a
global group of companies with bases in more than 20
countries worldwide.
To pursue growth for the entire Group, all employees must share a vision for the future in implementing

strategies and measures based on common goals. A key
point in doing so is balancing our centrifugal and centripetal forces. Instead of individually optimizing eachbusiness site, we aim for overall optimization as a Group.
We will strive to establish effective global governancebased on our Consolidated Management Philosophy,
which advocates the disciplined growth of the Group.
For stakeholder engagement, we aim to further
deepen ESG management through initiatives that
address climate change and human rights. Concurrently,
we will strive to forge even closer relationships with our
stakeholders by disseminating financial andnon-financial information in a timely and accurate
manner. Recently, we have been receiving an increasing
number of questions about our risk management fromshareholders and investors in Europe and the UnitedStates. Promoting the Evolution and Layering ofBusiness Models is synonymous with increasing risk
tolerance. Therefore, we must quantify the risk factors
faced by the Group and manage these appropriately
through detailed analysis and effective countermeasures.
We will continuously strive to minimize volatility in ourmanagement and business by smoothly operating a
multi-layered risk management framework that includes
adopting individual risk measures, ensuring compliance,
and implementing internal controls.

Balance sheet optimization is our most important financial theme
Now, I would like to explain the quantitative indicators ofthe 2025 MTMP.
Mitsubishi HC Capital Group has established financial targets of 160 billion yen in net income, ROA (netincome on total assets) of approximately 1.5%, and ROE(net income on equity) of approximately 10% for FYE
3/2026. During the period of 2025 MTMP, we have also
set the goal of maintaining a dividend payout ratio of
40% or higher and an “A” credit rating. To attain thesehigh financial targets, we consider one of our mostimportant themes to be optimizing our balance sheet
based on well-balanced growth potential, return on
capital, and financial soundness.
Mitsubishi HC Capital Group has total assets
exceeding 10 trillion yen. We believe we can continue tosecure stable funding because we maintain steady
performance and a sound financial position through ourdiversified business portfolio. On the other hand, I do notbelieve it prudent to increase total assets without limit
from the perspective of ensuring sufficient resilience

17

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

against sudden changes in the external environment,such as the Lehman Shock in 2008. We recognize that it
is essential to improve the quality of our portfolio throughthe Evolution and Layering of Business Models andthereby raise ROA and ROE.
Furthermore, I believe that improving our pricebook-value ratio (PBR) is an urgent management issueeven though we have not set a specific numerical target.
PBR serves as a benchmark for achieving our plans andis also watched closely by the market. Mitsubishi HC
Capital Groupʼs PBR is hovering around 0.8x as ofNovember 2023. I believe we should raise this to 1x as
quickly as possible from the perspective of shareholder
value. We will make our best efforts to gain even greater
understanding and empathy for the Group by accumulating profits through the steady progress of 2025 MTMP
and by disseminating the details and results of ourinitiatives to capital markets and society in a timely
manner.

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Becoming a company with satisfied employees that is respected by society
Mitsubishi HC Capitalʼs history spans over half a century
counting the founding dates of our two predecessor
companies. During this time, we have continuously
achieved steady growth by providing a variety of leasing
services to industry and society. We are deeply gratefulto all our stakeholders for their support that made thisgrowth possible.
We now stand at a major turning point in history.
The business environment for companies remains
clouded by factors that include rising geopolitical risks
such as regional conflicts worldwide, supply chain
disruptions, soaring resource and energy prices, ongoinginflation, and volatile fluctuations in exchange rates.
Furthermore, AI and DX are reshaping the structure of
economic society while there are also strong calls forcorporate management to contribute to environmental
and social sustainability. To respond appropriately tothese issues and contribute to the realization of safe andsecure lifestyles, we must create environmental, social,and economic value unique to Mitsubishi HC CapitalGroup.
Only people can lead and realize the transformationand development of a company. I am confident thatrealizing the happiness of every employee who supports
Mitsubishi HC Capital Groupʼs value creation will allow
us to contribute to society through our business andservices. Our goal is to continue being a company where
all employees are satisfied and happy with their workand talk with pride to their families and friends about ourGroup. We will strive to earn the trust of society and be arespected corporate group by making steady progresswith 2025 MTMP and by realizing Our 10-year Vision,“Together we innovate, challenge and explore thefrontiers of the future.”
Mitsubishi HC Capital Group has achieved continuous development thanks to the support of numerous
stakeholders, including its customers, shareholders andinvestors, business partners, and the local communities
where Group companies have operating bases. We
believe that by continuing to further deepen our relationships of trust with our stakeholders, we will be able toachieve healthier and fairer Group management. We
would like to ask all our stakeholders for their continued
understanding and support of the Group.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

18

Value Creation Story

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Positions of Value Creation Process andMedium-term Management Plan
We have defined the Basic Management Policy as our long-term goal and medium- to long-term management direction, setting out what we aim to do to achieve Our 10-year Vision.
We have refined the Value Creation Process as a summary of how we create value for our stakeholders and then formulated the Medium-term Management Plan for FY2023 to FY2025 (“2025 MTMP”) by referring to the Value Creation Process as guidelines.

To achieve Our 10-year Vision, we will promote CX by organically combining SX and DX implemented with measures such as initiatives on our
Materiality, the use of data and digital technologies, etc., and Business Portfolio Transformation aimed at realizing an optimal portfolio.

Value Creation Process

SX

Our Mission

DX

Business Portfolio
Transformation

CX(CX: Corporate Transformation)

Business Portfolio Transformation

SX / DXSX（Sustainability Transformation）

Our Vision

Achieve co-existence and co-prosperity with environmental andsocial value and sustainable growth through initiatives forMateriality (priority key challenges) and solid corporate functions.

(1) Business strategies based on Materiality(2) Strategies to reinforce the corporate functions to makeit more resilient and able to support sustainable growth(3) Building a relationship of trust with stakeholders(improving engagement)

DX（Digital Transformation）
Achieve creation and qualitative improvement of customer value
by utilizing data and digital technologies and making strategic
investments in a customer-oriented, future-oriented manner.

Action Principles(1) Developing and acquiring DX talent(2) Developing a base for DX frameworks(3) Building frameworks for aggressive DX(4) Developing new businesses
For details, please see “Digital Strategy Initiatives” on pages 47-48.

*1 Established on April 1, 2021, Revised on May 16, 2022

Portfolio Management
Withdraw decisively from businesses that will not contribute toenhancing corporate value in the future and optimize thebusiness portfolio, thus achieving sustainable growth andenhancing medium- to long-term corporate value.
Review what our businesses should be like from a medium- tolong-term perspective and promote new investments throughstrategic allocation of management resources.
● Evolve management with recognition of capital cost to create
medium- to long-term returns.
● Pursue capital efficiency through balance sheet optimization with
an awareness of the finite nature of management resources(including capital, funds, and talent).

InputsOur 10-year Vision “Together we innovate, challenge, and explore the frontiers of the future”

Outcomes

Medium to Long-term Management Direction*2

Business activities &Corporate functions

Basic Management Policy*1

Create value through capital input and businessactivities, thus achieving the accumulation of
non-financial capital and the increase of futurefinancial capital

Medium-term Management Plan●

Evolution and layering of business models
Ⅰ Develop new businesses
Ⅱ

Shift existing businesses tohigh value-added services

Enhance profitability and efficiency ofⅢexisting businesses

Jump
2031 Medium-term Management Plan(FYE3/2030 to FYE3/2032)

Step
2028 Medium-term Management Plan(FYE3/2027 to FYE3/2029)

Hop
2025 Medium-term Management Plan(FYE3/2024 to FYE3/2026)*2 Announced on May 16, 2022

Please refer to our website for details.
Basic Management Policy
https://www.mitsubishi-hc-capital.com/english/corporate/idea/index.html

19

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

20

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Value Creation Process
Our value creation process shows the flow, that is, injecting capital and creating value forstakeholders through business activities, thus achieving CX and solving issues as
Materiality while accumulating non-financial capital and eventually expanding financial
capital.

Solve materiality issues

Inputs Details on page 23
FinancialBusiness activities Details on pages 23-24, 29-48

HumanCapital●●Intellectual
Capital●●●Accumulation of business/
operational know-how

Capabilities to provide
services and create
solutions④Data utilization
platform services

Employee

NaturalCapital②Asset financeDiverse assets
Accumulation ofvarious data
Diverse industries,
global customer base,network●Business
Partner

Asset base/External relationship

Diversification/
deepening of network①Customer finance

Shareholder,
Investor,
Financial
Institution

Strong collaborationbase

Details on page 26

Intellectual
CapitalImprove know-how andskills and secure
diverse talent
Rewarding work
environment andorganizational culture
Encourage innovation
Use data and digitaltechnologies

Manufacturing
CapitalNaturalCapitalSocial and
Relation Capital●●

Corporate Functions

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023●●

③Finance + services

Reformation of asset baseEnvironment/
Society21

HumanCapitalCustomer●Social and
Relation Capital●

Non-Financial

Diverse talent

Manufacturing
CapitalOutcomes Details on pages 25, 27, 28

Five Business Models⑤Asset utilization business

Talent base/know-how

Details on pages 19-20

Value creation

B

Three Elements

Non-Financial

Financial
CapitalFinancial Soundness and Stability

A

CX

●

Shift to sustainable andresilient assets
Improve reputation withstakeholders
Deepen and diversify
our network

C

Financial

Financial
CapitalHigh-level and stable profitability and funding capacity

DX

Business portfoliotransformation

Expansion of financial capital through the accumulation of non-financial capital

SX

D

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

22

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Explanation of Each Part of the Value Creation Process
A

InputsWe have organized the major factors of our important management resources, which have been injected into businessactivities, by categorizing them into financial capital and nonfinancial capital, respectively.

Financial Capital
A profit base that realizes stable growth and a sound, stable

have thus achieved stable, sustainable growth. In addition, ourfinancial foundation based on our ability to raise funds in Japan

consolidated total equity, as of March 31, 2023, amounted toand other countries are among our most important management

1,551.0 billion yen, with an equity ratio of 14.3%. We have therefore

resources. Net income for FY2022 stood at 116.2 billion yen, andsecured the equity needed to firmly maintain financial soundness

since the business integration in April 2021, our consolidated net(credit rating of A).

Five Business Models
We have classified our business models into five ones:(1) customer finance, (2) asset finance, (3) finance +services, (4) data utilization platform services, and (5)asset utilization business. We will advance the evolution
and layering of business models toward the achievementof the business portfolio transformation.

As major targets, we have set enhancing the profitability and efficiency of existing businesses, shifting
existing businesses to high value-added services, anddeveloping new businesses. We will advance the evolution and layering of business models by simultaneously
driving these three measures.

income has continued to reach a new record high every year. We

Human Capital, Intellectual Capital

capital include our initiatives for achieving decarbonization.

These types of capital are core elements of the source of our competitive

We position these as important management resources among

advantage and the engine for the sustainable enhancement of corporate

our company-wide sustainability initiatives. We have numerous

value. In terms of human capital, we have 8,648 people (consolidated/ascustomer bases in Japan and other countries, have built portfolios

of March 31, 2023) with diverse backgrounds who have extensive(consolidated total assets: 10,726.1 billion yen as of March 31,

knowledge of specialized assets, including manufacturing equipment,

2023), which are dispersed in terms of both business and region

real estate, and aircraft, and knowledge that enables us to operate

and have accumulated data related to customers, business oper-

leasing and finance related to such assets, as well as service and otherations, and assets. We have an equity-owned power generation

businesses.

capacity of 1.2 GW (as of March 31, 2023) in Japan and otherin integrated risk management, credit examination, and ALM (total

solar power, wind power, and other renewable energy sources.

management of assets and liabilities) related to leasing, investment,

We also have strong business partnerships with Mitsubishi UFJ

lending, and assets, among others, in addition to knowledge of each

Financial Group, Inc., Mitsubishi Corporation, and Hitachi, Ltd.,

asset and business domain.

in addition to our global network within the Mitsubishi HC CapitalGroup, which operates in more than 20 countries. They constitute

Manufacturing Capital, Natural Capital, Social and Relation Capital①Customer finance②Asset finance③Finance+services

Acquiring income
gains from leases,
etc., consistently
and continuouslywith leases andlending based on
customer credit

Investment andlending mainly in
specific marketable
general-purpose
assets backed by
the value ofbusiness assets.
Gains on sales ofowned assets aswell as income gain
can be acquired

Add maintenanceservices, AM *1,
etc., mainly to asset
finance, and acquire
service revenue aswell as income gain
and capital gain

countries through renewable energy generation business using

a source of our competitive advantage.

ExamplesConcerning intellectual capital, we have accumulated expertise

Business
Characteristics

Non-Financial Capital

Finance leases
Vendor leases● Installment sales● Lending
●

●

●

●

Operating leases
Real estate
securitization④Data utilization⑤Asset utilization

Utilize data todevelop platformbusinesses andmainly acquire
service revenue

Promote business
investment utilizing
assets, aiming tomaximize revenue
from those businesses

platform services*1 AM: Asset Management

Operating leases
with maintenanceservices● Service solutions
such as asset
management●

Inventory
optimization
services utilizing
data● Sharing services
utilizing data●

Important matters that are closely related to these types of

B

Business Activities

Vision of the Evolution and Layering of Business Models

Three Elements(1) Accumulation of business/operational know-how

which are sustainable and resilient enough to withstand medium- to

We will strive to enhance our business know-how and acquirelong-term changes in the operating environment. Further, we will build

operational know-how to identify changing customer needs. Fora database and work to develop a digital solution system, which will

example, for new business development or investments, we will

enable efficiency improvement and the sophistication of operations,enhance the overall Groupʼs capabilities of creating and operating

and we will make full use of data.

businesses by making use of the skills and experience of our business
management human resources, which are our strengths. In addition, to(3) Diversification/deepening of network

provide value-added services, we will enhance our operational

We will build a network with diverse domestic and overseas partners,

know-how to meet the customer needs for services peripheral toincluding Mitsubishi UFJ Financial Group, Inc., Mitsubishi Corporation, andassets, such as maintenance, rental, and subscription services.

Hitachi, Ltd., to cover the entire supply chain. At the same time, we will provide services in areas that are peripheral to assets rather than only offering

23(2) Reformation of asset basefinance solutions. We will thus endeavor to deepen our relationship with

We will identify assets with low profitability and reduce, withdraw from,

customers. We will also deepen our network with customers multilaterally

and rebuild such assets. At the same time, we will shift to highly

as a data platform provider that possesses and utilizes abundant data. We

profitable assets that are expected to be sought by customers. In

will also aim to evolve into a business partner that solves customersʼ issues

addition, throughout the entire supply chain, we will remake our assets

through business operations and investments related to new markets andinto those that consider environmental impact and human rights andneeds, which existing players have yet to cover.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Developnew businesses

Evolution and layering of business models

We have set up the initiatives we need to pursue to overcome our weaknesses while utilizing and enhancing our management resources and strengths as the three elements.

⑤④

Non-FIT renewable energy
businesses● Real estate
revitalization anddevelopment
investment●●Vision of asset composition ratio
④ ⑤
④⑤
③

③

①

①

③

②

Shift existing
businesses to highvalue-added
services②

Current②
Customer baseEnhance profitability
and efficiency of
existing businesses*2

2025●Vision of profit composition ratio
⑤
④

⑤

④

①
Current

business③①②

Current

①
③
②

2025

*2 Includes restructuring and withdrawal. Actively accumulate high-profitability assets while selling and reducing low-profitability assets. Evolve into O&D business.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

24

Introduction

C

OutcomesD

Message from the
President & CEO

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Corporate Functions

Expansion of Financial Capital through the Accumulation of Non-Financial Capital

Corporate Functions Strategies

We have set themes that we should aim to address inthe future concerning five types of nonfinancial capital(human capital, intellectual capital, manufacturing capital, natural capital, and social and relation capital) so thatour value creation process will function, and the accumulation of nonfinancial capital will lead steadily to the
expansion of financial capital.

We will focus mainly on the following four corporate function strategies to support the evolution and layering of business models.

We will accumulate nonfinancial capital by implementing these initiatives, aiming to achieve an expansionof financial capital and, ultimately, the sustainableenhancement of our corporate value.

Theme to Be Addressed (Accumulation of Non-Financial Capital)

Expansion of Financial Capital through the
Accumulation of Non-Financial Capital

Improve know-how and skills
and secure diverse talent

By accumulating know-how peripheral to assets
through the realization of an ideal talent portfolio,
grow our businesses and increase profitability.

Rewarding work environmentand organizational culture

Improve productivity, create new businesses that
adapt to changing external environments, andrealize a company that continues to be chosen byinternal and external talent through the continuous
improvement of employee engagement.

Human Capital

Encourage innovation

Improve profitability and accelerate growth bydeveloping a framework to encourage innovationand continuing to create new businesses.

Use data anddigital technologies

Steadily execute DX strategies to provide highvalue-added services and improve productivity, inorder to achieve our goal of expanding DX-related
new businesses and products.

Manufacturing
CapitalShift to sustainable andresilient assets

Replace with assets whose value is maintained
over the medium to long term and improve ROA to
increase the value of assets and reduce risks ofvalue being harmed.

Natural Capital

Improve reputation
with stakeholders

Improve the reputation with and trust of our
stakeholders through appropriate information
disclosure and engagement, and reduce capital
cost.

Deepen anddiversify our network

Provide high value-added services to ourcustomers and increase profitability by
diversifying and deepening our network.

Intellectual CapitalSocial and
Relation Capital

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Enhance employee engagement by utilizing surveys, etc.
Develop a talent portfolio contributing to the achievement of management
strategies (increase the number of talent and qualitatively transform theirabilities)● Strategically disclose human capital (set goals in line with the HR strategy andcommunicate goals)●●

Fostering andsecuring talent

Procure stable and competitive funds, expand funding capacity, and enhance
the ALM framework● Redevelop frameworks for credit examination and management in response tobusiness portfolio transformation● Develop optimal IT systems responding to new businesses and business models●

Bolstering the financialbase and internalorganizational basePromote Group-wide unified management by strengthening the consolidated
management framework● Enhance integrated risk management in response to business evolution andchanges● Develop a framework for unified management of internal auditing on a global basis●

Strengthening thecorporate governanceframework

Enhance financial and non-financial information to be disclosed and diversify
means to dispatch information● Enhance communication with external stakeholders● Promote and strengthen efforts for sustainability (promote efforts for climatechange and human rights, enhance and communicate ESG-related information)●

Enhancing stakeholder
engagement

Frameworks to Promote Transformation
To implement awareness reform aimed at transformation, we will eliminate obstacles to achieving the transformationand speedily promote various initiatives from new perspectives and not simply stay on conventional paths.

(1)“Lay” the foundationof transformation(2)“Create”
transformation(3)“Promote”
transformation

25

Value Creation Story Business Strategies

Foster all employeesʼ awareness of transformation.
●

Awareness reform through the dissemination of information from the management
to all levels of employees as well as face to face communication between them

Develop frameworks so that efforts contributing to transformation
can be actively launched.
Full-fledged start of a program to seek business ideas and the intra-entrepreneurship program, which is an initiative to promote in-house venture business● Introduction of a new organizational evaluation system that encourages
transformation●

Develop an agile discussion framework and promotetransformation by advancing efficient decision-making processes
and the delegation of authority that comes with responsibility, etc.
Promotion of investment in R&D (establishment of the Innovation Investment
Fund, 10.0 billion yen)
● Promotion of the delegation of authority to front offices (decentralization)●

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

26

Introduction

2025 MTMP Financial Targets

ROA*2 :

160.0Bn

Financial Targets(CAGR*1 vs. FY2022: +11.2%)

Payout ratio:●

40％

Dividend Policy(2025 MTMP period)●or higher

CapitalROE*2 :

1.5%

JPY

（end of FY2025）

Value Creation Story Business Strategies

Financial Strategy

10%

Approx.

Approx.

(vs. FY2022: Approx. +0.4pts)(vs. FY2022: Approx. +1.8pts)

As a general rule, return profits to shareholders bypaying dividends

KPI

Maintain

A ratings(2025 MTMP period)(FY2022) USD1=JPY131.43, GBP1=JPY163.15(FY2025) USD1=JPY130, GBP1=JPY160

Exchange rates:●●

Formulate the talent portfolio framework andResults of the employee engagement survey

Refine the survey content and enhance analysis

Number of new DX-related
businesses and products
Operational efficiency

Manufacturing
CapitalMaintain current stand-alone ratings

Natural CapitalSocial and
Relation Capital*1 CAGR: Compound Annual Growth Rate
*2 Net income attributable to owners of parent is used for the calculation of ROA and ROE

200 (Billion yen)10（%）

160.0 Bn

150

ROE

9.4

ROA

Approx. 10%

9.2

116.2

20% or more

Rate of annual paid holidays
taken by employees*1

70% or more

68.7

Energy consumption (domestic)visualize Scope 3 emissions-55% in FY2030 vs. FY2019 and net zero in FY2050-1% YoY continually

Ratio of Female Managers*1

Rate of Annual Paid Holidays Taken by Employees*1

20% or more

20（%）

80（%）

14.0

14.0

68.7

70% or more

2022

2025 (FY)
Target

60

10

40

5

20

4

70.7

2

0

1.0

1.0

2018

2019

0.9

1.0

1.1

2020

2021

2022

Approx. 1.5%02019

GHG emissions amount (Scope 1, 2)

Analyze the categories that have a major impact and

6

55.3

2018

GHG*2 emissions amount (Scope 3)

14 hours or less100％

*1 Figures are for the company only. *2 GHG: Green House Gas

15

99.4

50

(develop and acquire DX talent, system investment, etc.)

63.7

7.0

100

Develop a base for DX frameworks

8.2

8.0

8

visualize the level of fulfillment

Ratio of female managers*1

Monthly average overtime hours*1

Establish both a sound financial base and an active
investment strategy

ROA, ROE

Data Section

Level of fulfillment of a talent portfolio
in line with our management strategies

Human CapitalIntellectual
CapitalIncrease the total amount of dividend payment
through profit growth

Net Income

GovernanceTargets (2025 MTMP)

Ratio of taking childcare and maternity leave*1

Financial
Soundness

Strategy to EnhanceNon-financial Capital

2025 MTMP Non-Financial Targets

We have set financial and nonfinancial targets under 2025 MTMP based on businessstrategies, corporate functions strategies, and frameworks to promote transformation.
Net income:Message from the
President & CEO

2020

2021

2022

2025 (FY)
Target02025 (FY)
Target02021

2025 (FY)
Target2022

2021

Ratio of Taking Childcare and Maternity Leave*1
Payout Ratio

External Evaluations

50（%）
41.1

40
30

30.4

40.4

40.8

40% or higher

31.5

20

Japan Credit Rating
Agency, Ltd. (JCR)

Monthly Average Overtime Hours*
Long-term

Short-term

AA

J-1+

AA-

a-1+

Moodyʼs

A3

−

10

S&P

0
2018

2019

2020

2021

2022

2025 (FY)
TargetA-

A-2(As of March 31, 2023)

Ratio of women taking childcare and maternity leave
100（%）

25 (Hours)
20

20.7

19.4

15

Rating and Investment
Information, Inc. (R&I)

1

100.0

80

14 hours
or less

100.0

100%

97.1

100%

2022

2025 (FY)
Target

79.0
60

10

40

5

20

0

Ratio of men taking childcare and maternity leave

0
2021

2022

2025 (FY)
Target2021* Mitsubishi UFJ Lease & Finance results from FY2018 to FY2020

27

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

28

Business Strategies

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Customer Solutions
Contributing to society at a broader level with the provision of a new combination offinance + services as well as data utilization platform services based on our solid andexpansive customer base
Segment profit(FYE3/2023)

Segment assets(end of March 2023)

38.1billion yen

3,227.7 billion yen

Group total
116.2 billion yen

Group total

9,632.9 billion yen

Customer Solutions

Main business

Customer Solutions

32.8%

Core strategies in the 2025 MTMP
To further reinforce our solid customer base, we will enhance the functions provided to customers through ourfinance solutions while also accelerating the creation of collaborative businesses that combine customersʼ
services with our functions as a business partner recognized by customers● We will provide new services leading to the evolution and layering of business models● We will pursue efficiency through the establishment of a new sales process that utilizes data and digital technologies●

Business Characteristics and Our Strengths in the Market

29

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

*1 A service that manages PCs across the series of stages in their lifecycle fromselection and installation through to disposal.
*2 A method for using private sector funding, management capabilities, and technicalcapabilities for the construction, maintenance, operation, etc., of public facilities
and other locations.
*3 A service to perform maintenance or other work on used machinery that has beenpurchased, and to then transport it to and install it at a sale destination. The service
also involves the one-stop provision of work related to the relocation of multiple

33.5%

Finance solutions business for companies and government agencies, energy-saving solution business, sales financebusiness provided through collaboration with vendors, real estate leasing business, and financial service business

The Unit operates a customer finance business that provides
finance solutions such as leasing and installment sales primarily
to Japanese corporations and government agencies, and avendor business that provides support for the sales activities ofaffiliated vendors (manufacturers, distributors, and so on)
through our finance functions. The unit also provides a wide
range of high value-added services that help solve customer
issues, including PC lifecycle management services*1, Public
Private Partnerships (PPPs) and Private Finance Initiatives(PFIs)*2, sales of used assets with included engineering
services*3, and the dismantlement and removal of plants andequipment. From the development of these businesses, wehave established a strong industry market share in the leasingof industrial and production machinery for the manufacturingsector and the leasing of commercial, and information andcommunications equipment for the retail and distributionsectors.
We also maintain and strengthen business partner relationships with leading companies in each industry, including the
Mitsubishi UFJ Financial Group, Mitsubishi Corporation, andHitachi, Ltd. At the same time, by combining the myriad functions of both former companies, we strive to expand andachieve greater depth in the services we provide to customers
while also creating new services.
The market size of the leasing industry has gradually
shrunk from its peak of around nine trillion yen, and, in responseto the changes to lease accounting standards in 2008 and theprofessionals with specialized expertise. This voluntary collaborative project enables representatives at sales branches to thinkup and implement promising measures on their own. We aim todevelop a vibrant workplace through exchanges between
personnel that transcend organizational boundaries andhierarchies.

COVID-19 pandemic that developed in 2020, the market further
declined in size, but it is today worth around five trillion yen,underscoring the solid need for leasing as a means of funding
to support the sustainable economic activities of companies.
To differentiate from other companies in this intenselycompetitive environment, we must quickly gain a grasp of social
issues and the management issues faced by customers andprovide the services to help solve them. In particular, against
the backdrop of global megatrends such as climate change,
population growth, and scarcity of resources, corporations are
expected to make such efforts as promoting a decarbonizedsociety and building a circular economy. As one example of an
initiative to support the needs of these companies, Mitsubishi
HC Capital has utilized a transition loan with MUFG Bank*4 toenter into a lease agreement with a domestic operating company to support the companyʼs domestic solar power
generation project.
Going forward, a sustainable society and customer value
will be our starting points as we work to integrate finance withbusiness services by combining an extensive customer baserepresenting the strengths of our banking and trading housebackground with strategic partner solutions cultivated throughour manufacturer affiliations. In doing so, we will develop andprovide high-value-added services that contribute to society
and help solve customer issues.
We also run a “Field Leader Project” that aims to build astrong and enthusiastic sales organization and form a group ofplants and equipment of customers, covering the series of steps from removal anddismantlement to transportation, rebuilding, and precision restoration.
*4 A finance method aimed at supporting companies engaged in initiatives to steadily
reduce greenhouse gas emissions based on a long-term strategy to realize adecarbonized society.

A lively exchange of opinions underway as part of the Field Leader Project.

Medium-to-Long-Term Initiatives
In the medium-to-long term, the leasing industry is expected toundergo changes in the social and business environment on a
global basis, such as changes to the industry structure, theacceleration of digitalization, the growing importance ofsustainability, and other developments.
Shifting away from its current business portfolio centeredon customer finance, such as leasing and installment sales,
Mitsubishi HC Capital will develop new services that matchcustomer needs and solve social issues while utilizing data,and provide these new services combined with conventional
finance. Regarding those assets in which we have particularstrengths, we aim to provide functions and services covering

every stage of their lives. Additionally, to solidify the customer
base that has expanded through integration, we will revamp
the sales support system and customer data management
systems that streamline sales activities while establishing adivision of operations between inside sales (non-visit sales)utilizing digital marketing, telephone calls, and email and fieldsales (visit-based sales). By having these activities seamlessly
coordinated, we will raise their efficiency.
In conjunction with these efforts, we will work to improve
the profitability of customer finance by strengthening our ability
to secure new projects from customers while pursuing an O&D
business that combines the sale of existing loans to investors.

Leverage Strengths as a Core Business of Mitsubishi HC Capital to Create
Customer-Oriented and Attractive New Businesses and Services
The Customer Solutions Unit, hereinafter “CSU,” is a core business of the Company that accounts for roughly one-third of its
consolidated net income, primarily through its traditional leasing
business. Groupwide, the unit has done business with around570,000 companies across a wide range of industries. Moreover,to date, a number of businesses have emerged from the bases
provided by the CSU, including real estate, environmental, andused asset-related businesses that have grown into their respective business segments today.
Recently, issues faced by customers have undergone dramatic change, from the global restructuring of business environments to the growing importance of sustainability and theacceleration of digitalization. To further reinforce the businessbases of the CSU amid these changes, in the 2025 MTMP, we will
tackle social issues such as logistics, decarbonization, the circular
economy (effective use of assets), and the utilization of data anddigital technologies. At the same time, we will learn even more
about customer industries, business activities, products, management policies, and other aspects, and emphasize dialogue withcustomers. In this way, we will respond to customer expectations
by developing new and highly attractive businesses and services,such as methods and services to provide valuable assets that help
solve issues fundamentally in a customer-oriented manner.

Katsuya Kitahara
Managing Executive Officer
Head of Business Promotion & Strategic Planning Division
Customer Solutions Unit

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

30

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Global BusinessContribute to solving social issues in each country and region by strategically allocating
management resources to reflect regional characteristics
Segment profit(FYE3/2023)

Segment assets(end of March 2023)

29.0 billion yen

2,644.2 billion yen
Group total

Group total
116.2 billion yen

9,632.9 billion yen

Global Business

25.0%

Global Business

27.5%

Main business

Offer finance solutions in Europe, the Americas, China, and ASEAN, as well as sales finance and other services incollaboration with vendors.
Core strategies in the 2025 MTMP
Provide community-based solutions to social issues and needs in each country and region in collaboration withlocal partners● Increase added value by digitalizing business processes and providing digital platforms to vendors and customers● Increase profitability by enhancing decarbonization businesses such as EVs, charging stations, and solar power
generation●

Business Characteristics and Our Strengths in the Market
The unit employs more than 4,000 people in four regions(Europe, the Americas, China, and ASEAN). It provides
customer-oriented leasing and vendor finance in collaboration with vendors and other finance solutions tailoredto the characteristics of each country and region, basedon accurate insights into local social issues and customer needs. In addition to finance leases and installment sales, we seek to improve customer satisfaction byadding other services, such as operating leases andvehicle management services with maintenance, andusing digital tools to build platforms for customers.
Following the April 2021 merger of Mitsubishi UFJ
Lease & Finance and Hitachi Capital, the businesses ofthe former two companies have been integrated andlinked to extend the range of products, services, andassets as well as the operating regions. In addition, we
have been trying to create greater synergies such asenhancing business efficiency by reorganizing andconsolidating offices in the same county. Specifically, we
have begun building the foundations to create a consistent platform and brand by integrating two group companies in Hong Kong in July 2022 and three groupcompanies in the U.S. in April 2023.
Through this integration, we are pursuing efficiency
while at the same time transforming our business portfolio by adding higher value to our core businesses andmoving ahead with the downsizing and convergence of

31

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

non-core or low-profit businesses. By region, we willconcentrate our management resources in Europe andthe Americas, where the business environment is highly
transparent, and accelerate the growth of the Americas
business, which has particularly high growth potential.
We will continue to work proactively for a decarbonized society, a growing global need, by accurately identifying the needs of each country and region. We willcontribute to solving the issues facing society and ourcustomers by establishing a high-value-added modelthat leverages renewable energy, EV businesses, data,
and assets.

Scene from a global conference where executives from groupcompanies overseas gather to engage in open discussion.

Medium-to-Long-Term Initiatives
Under “Our 10-year Vision,” the unit aspires to play a
key role in the Groupʼs growth in both qualitative andquantitative terms. In doing so, it aims to become known
as the Companyʼs strength, while developing unique,progressive, and distinctive businesses and working incollaboration with the Customer Solutions Unit.
Looking at the business environment going forward,
we believe that sustainability demand will increase
globally, electric vehicle and hydrogen-related businesses will become more prevalent as part of decarbonization efforts, and demand for digital technologies andother advances in the service sector will rise.
By continuing to transform our business portfolio
through the strategic allocation of management
resources that capture the essence of each business, we
aim to increase earnings and improve ROA while controlling asset growth. While strategies vary depending on
the country and region, we will achieve corporate transformation (CX) by adding value to our products,
strengthening sustainability-related and decarbonization
businesses, and digitizing our operations. We will also
look to work together with other business divisions, forinstance, in the exchange of personnel, while leveraging
the breadth of our business domain and regions ofoperation.

Continually increase competitiveness in the Americas
Merged three group companies in the U.S.

On April 1, 2023, three group companies in the
U.S. integrated their operations to become
Mitsubishi HC Capital America, Inc. We will combine the financial services expertise each company
cultivated, bolster business management systems
that contribute to the creation of customer value,and boost earnings through business expansion.

Craig S. Weinewuth
President & CEO
Mitsubishi HC Capital
America, Inc.
The newly integrated Mitsubishi HC Capital America(MHCA) is excited to expand the financial strength,
innovation, and capabilities of MHC Group throughout
North America as one platform, one brand, and one
team. The North American market is the largest economy in the world and MHCA is determined to deliver
exponential change consistent with the 2025 MTMP
and 10-year vision. To support these redefining efforts
and to become a driving force for growth, MHCA will
also: (1) Enhance MHCʼs brand throughout North
America and (2) Realize shared services and synergies
with other MHC Group companies.

Leveraging Management Resources Gained through Integration and
Collaboration to Achieve Coexistence with Customers Around the GlobeThe Global Business Unit, which accounts for roughly
one-quarter of the Group in terms of assets and revenues,
works together with the Customer Solutions Unit and otherbusiness divisions to deliver finance solutions and sales
finance in collaboration with vendors across a broad range
of geographic areas.
In the 2025 MTMP, the unit will continue promoting thetransformation of the business portfolio through the strategic allocation of management resources. In doing so, it willseek to increase earnings and improve ROA. In April of thisyear, we merged three group companies in the U.S. At
present, we are taking steps to bolster profitability byeffectively deploying management resources to better
streamline operations, integrating the accumulated financial service know-how that each company possesses, andexpanding businesses.
Meanwhile, we will create customer value by addressing social issues in each region through strengthening oursustainability-related and decarbonization businesses,
achieving CX through digitalization, and collaborating with
our partners.

Yasuyuki Hirota
Managing Executive Officer
Head of Global Business Promotion Division and Head ofChina Division
Global Business Unit
Director Chairman of Mitsubishi HC Capital Management(China) Limited
Director Chairman of Mitsubishi HC Capital (Hong Kong) Limited
MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

32

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

AviationContributing to decarbonization in the aviation industry through collaboration withcustomers across a wide range of services, including the leasing of aircraft and engine
leasing, and Japanese operating leases

Segment profit(FYE3/2023)

Segment assets(end of March 2023)

6.2 billion yen
Group total
116.2 billion yen

1,640.2 billion yen
Aviation

5.3%

Group total

9,632.9 billion yen

Aviation

17.0%

Main businessAircraft leasing business and aircraft engine leasing businessCore strategies in the 2025 MTMP
Sustainably grow and expand a high-quality industry-leading business portfolio through sales and leaseback
for aircraft and aircraft engines provided to the leading airlines around the world● Strongly address changing industry dynamics and customer needs and enhance risk management capabilities by capitalizing synergies within the Mitsubishi HC Capital Group● Capitalize market intelligence through our strong stakeholders network, and study the prospects for developing new businesses such as sustainable aviation fuel (SAF) and next-generation aviation technologies
compatible with our future vision in a decarbonized society and our aviation franchise●

Business Characteristics and Our Strengths in the Market
We provide high value-added products and services,such as aircraft leasing, aircraft engine leasing, andengine parts outs (purchasing and re-selling used engine
parts), as well as Japanese operating leases*1, to meetthe diverse needs of aviation industry customers.
In the aircraft operating lease business, Jackson
Square Aviation (JSA), contributes to the aircraft procurement and management activities of major full-service carriers (FSCs) and leading low-cost carriers (LCCs)
around the world, with a focus on sale and leaseback(SLB)*2 for new aircraft. The company currently leases
over 200 aircraft to around 60 airlines in some 30 countries. Additionally, in the aircraft engine operating leasebusiness, Engine Lease Finance (ELF), leases spareengines*3 to airlines and engine maintenance companies
around the world. The Groupʼs Aviation Business mainly
owns narrow-body aircraft*4 and its engines, which are inhigh demand in the market, in order for us to maintain ahigh quality portfolio that is highly liquid and welldiversified.
Our ownership of highly fuel-efficient new-generation aircraft with low CO2 emissions in our portfolio isamong the highest in the industry based on the numberof aircraft and we aim to contribute to the decarbonization of the aviation industry by focusing on new-generation engines. To keep abreast of new technology trends

33

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

from the perspective of future decarbonization, we havea small investment in a US-based start-up (Universal
Hydrogen Co.*5) and also engage in research and development of sustainable aviation fuel (SAF) and otheradvancements.
*1 An investment product for Japanese corporations to invest in aircraft
operating leases for airlines through a partnership agreement (“Tokumei
Kumiai Agreement”).
*2 A transaction where a customer sells the asset it owns to a leasing
company, and the asset is then immediately leased back to the customer.
This approach provides benefits to customers, such as raising funds andensuring flexibility in fleet management strategies.
*3 As engines require regular maintenance, airlines need to maintain a certain
number of spare engines to ensure that aircraft operations are notinterrupted during those maintenance periods, and leasing is one of theoptions used to procure them.
*4 Single-aisle aircraft mainly used for domestic and short-distance flights.
*5 In October 2021, the Company invested in a start-up working on thedevelopment of hydrogen storage capsules and hydrogen powertrains forhydrogen-powered aircraft.

Medium-to-Long-Term Initiatives
In the aviation industry, passenger demand is rapidly
recovering worldwide due to the easing of activity
restrictions after the COVID-19 pandemic, despite thenegative impact of aircraft part supply chain and labor
availability issues combined with rising interest rates andother factors. As a result, business results are alsosteadily improving for airlines. In terms of the medium-to-long-term outlook for the aviation industry, passenger demand and the number of aircraft are expected
to continually rise in line with the growth of the global
economy and global population. Additionally, in the
future, aircraft manufacturers are expected to take aleading role in advancing the development of next-generation aircraft that facilitate decarbonization.
The Mitsubishi HC Capital Group will leverage thediverse and solid operating platform of its aircraft leasing, aircraft engine leasing, and related operations to
expand its business globally. By capitalizing on the
post-COVID recovery in passenger demand and furtheraligning our service offering in our franchise, we will
create further group synergy. We will also pursue
research and development into new businesses along
the themes of next-generation aviation technologies anddecarbonization to develop future business.

As part of our vision for the Aviation Business as laidout in our 10-year Vision, we have set the goal of “contributing to solve problems of customers and society throughglobal one team spirit in Japan and overseas, and theprovision of high-quality products and services in anticipation of a decarbonized society.” In the 2025 MTMP, we willstrongly restore and improve further the profitability of theaircraft and engine operating lease businesses whilepursuing research and development into new businesses
in greater depth, and also further strengthen the management structure of the business overall by enhancing
human resources and driving the development of DX anddigitalization.

ELF is working to increase the ownership of new engines withgood fuel efficiency in its portfolio.

Becoming a Growth Driver by Restoring Profitability while Identifying the
Future Direction of Business Portfolio Transformation in Aviation
A decade has passed since Mitsubishi HC Capital strategically started to build the aviation business platform. Overthe past years, the industry has undergone significant changes, from the major impact of the COVID-19 pandemic
that emerged at the end of 2019, to accelerating efforts to realize a decarbonized society. Even during these tumultuous ten years, we have managed the aviation business with its sights firmly set on solid and continuous businessexpansion and growth. As a result, despite a temporary decline in business results during the pandemic, we managed to minimize the impact, and the recovery now underway in the aviation industry has been accompanied bysteady improvements to our business results.
At the same time, we are pursuing initiatives aimed atrealizing a decarbonized society. In the short term, we aremaking progress in shifting our portfolio to highly fuel-efficient aircraft and engines, and our subsidiary JSA has thehighest ratios of new generation aircraft among its competitors. Meanwhile, ELF is strengthening collaboration
with engine manufacturers and increasing the ratio of newengines in its portfolio. In the medium-to-long term, we
will be contributing to building a decarbonized society
through investment and alliances supporting new technologies such as next-generation aircraft and SAF.
Osamu Muramoto
In our 2025 MTMP, we aim to be a growth driver by restorManaging Executive Officer
ing profitability while identifying the future direction of business
Head of Aviation Business Division
portfolio transformation in Aviation.
Chairman of JSA International Holdings, L.P.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

34

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Logistics
Constantly seeking to provide value to customers, aiming to evolve into an operatingcompany with a global presence in the area of logistics
Segment profit(FYE3/2023)

Logistics

13.2%

15.3 billion yen
Group total
116.2 billion yen

Segment assets(end of March 2023)

Logistics

11.4%

1,092.9 billion yen
Group total

9,632.9 billion yen

Main business
Marine container leasing business, railway freight car leasing businessCore strategies in the 2025 MTMP
Further strengthen the marine container business base through the utilization of digital technologies andother measures leveraging our world-class position in the industry and enhancing not only our leasing but
also our container trading functions● Improve the profitability of the railway freight car leasing business by creating income and capital gains
through the shift to the asset O&D model, which combines the optimization of the ratios of owned railway
freight cars by type, the sale of some of the assets we hold, and new investments● Create new growth opportunities that contribute to realizing a decarbonized and circular society●

Business Characteristics and Our Strengths in the Market
In this business, we lease and finance transportation equipment such as marine containers and railway freight cars.
In the marine container leasing business, we now
provide containers to approx. 300 corporate customers,
including major shipping companies, thus deliveringvalue that supports their supply chains. To operate thebusiness globally, we need to allocate the necessary
volume of containers to the locations desired by customers. We have, therefore, secured container yards for
returning, repairing, storing, and lending containers at
ports around the world, and built a global network thatenables us to respond promptly to customer needs. In
addition, to supply containers promptly, we have ourown fleet of containers and offer short-term leasing
services, such as leases for periods of less than one
year, in addition to services provided through long-term
leasing contracts.
A benefit of the use of leasing services for the shipping companies that are our customers is that they can
not only reduce financial burdens but also adjust thevolume of containers flexibly in accordance with thefluctuation of cargo movements. Supported by thiscustomer demand, about half of the marine containers
used around the world are supplied through leasing. In
addition, the marine container leasing market is anoligopoly, where the top five leasing companies have an

35

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

approximately 80% market share. Thus, there are highbarriers to entry into this business.
While the industry has these characteristics, CAI
International, our Group company and one of the major
leasing companies, is ranked fourth in the world*1 interms of CEU.*2 It will continue to develop this businessin line with the development of global trade.
In the railway freight car leasing business, PNW
Railcars, our Group company, has now grown into one of
the top 10 leasing companies in North America, leasing
approximately 22,000 freight cars to cargo owners,
mainly railway companies and major enterprises.
Leasing is a dominant means of procurement for railway
companies, which need to make many capital investments, including in rails and locomotives.
Railway freight cars are used for up to about 40
years. The length of a single lease period is three to five
years. Typically, the lease is continually renewed throughthe extension of the lease period or a change of lessee.
In this business, we are contributing to the growth of
the North American economy as an entity supporting thevalue created by railway infrastructure, which has a low
environmental impact.
*1 Source: Drewry, “Container Census & Leasing Annual Report 2023/24”*2 CEU: Cost Equivalent Unit. Conversion unit for various container volumes,
calculated on the basis of 1 CEU = average historical price of a newly built
20-foot dry container

Medium-to-Long-Term Initiatives
Toward the achievement of Our 10-year Vision, we haveset our vision for this business as “Constantly seeking toprovide customer value, aiming to evolve into an operating company with a global presence.” We will detectchanges in the market and provide solutions taking
advantage of advanced knowledge, digital technologies,
and other new technologies and the Groupʼs comprehensive strengths ahead of other companies. We willthus help customers around the world create value andcontribute to stable consolidated income.
Specifically, we will set the priority task of solvingsocial issues in the area of logistics by reinforcing thebases of existing businesses and developing new businesses. In the marine container leasing business, we willtake advantage of our supply capacity, which is based on
our world-leading position in the industry, to meet customer demand stably, not only in leasing but also in related
businesses such as container trading. We will also reinforce
the business base further through the utilization of digitaltechnologies and strengthening internal cooperation within
the Group. In the railway freight car leasing business, wewill work to improve profitability through portfolio optimization, which is done by replacing freight cars with cars ofdifferent types and repairing them, the improvement of theutilization rate, and posting profits on sales made byshifting to the asset O&D model, in which we sell some of

the assets we own and replace them with new ones while
keeping the portfolio optimized. Further, we will create new
growth opportunities that will contribute to realizing adecarbonized and circular society in new areas as well.

The merger of two Group companies engaged in themarine container leasing business is completed, marking
the launch of the business under a new structure

Katherine McCabe
President
CAI International, Inc.
The merger of CAI International and Beacon
Intermodal was completed in January 2023, andthe operational integration is complete. We
relaunched CAI, the worldʼs 4th largest container
lessor, under new executive leadership but havecontinued to offer unparalleled service and product quality. Our market strategy is focused on
cultivating market intelligence and data analytics
to provide innovative and competitive leasing
structures to our customers. CAIʼs mission is to
set the standard for industry excellence.

Taking on Challenges to Develop New Services and Business Models while
Supporting the Global Economy Every Day
The marine containers and railway freight cars that we deal in are essential assets for transportation with low CO2
emissions. While the world aims to realize a low-carbon/decarbonized society, demand for containers and freight cars
has been growing in proportion to the increase in the transportation volume reflecting the growth of the global economy.
Department members and related people from the operatingcompanies cooperate closely in their efforts every day to
improve our services so that customers can use the necessary
volume of containers and freight cars when and where they needthem, in accordance with their needs. We also operate reliable IT
systems because the utilization of digital technologies is essential for the management of a large number of leased assets.
On the other hand, it is also necessary to develop newservices and business models to realize better operations in
response to customer needs and needs on business sites. In
our division, we will continue to take on challenges by always
Hisashi Ishimaki
thinking about the creation of an open organization with a highManaging Executive Officer
Head of Mobility Business Divisionlevel of psychological safety, where we respect each other andHead of Logistics Business Division
can have unrestricted discussions about anything with anyone
Chairman of CAI International, Inc.
Chairman of PNW Railcars, Inc.
so that many ideas unrestricted by precedent will be created.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

36

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Environment & Energy
As one of Japanʼs leading renewable energy business companies, we contribute to thedecarbonization of the world while boldly taking on the challenge of building new
businesses and developing functions

Segment profit(FYE3/2023)

Segment assets(end of March 2023)

11.6 billion yen

433.2 billion yen

Group total
116.2 billion yen

Group total

9,632.9 billion yen

Environment & Energy
10.0%

Environment &Energy4.5%

Main business
Renewable energy businessCore strategies in the 2025 MTMP
Stable supply of electricity through renewable energy generation and strengthened revenue base through the
expansion of power plants● Improving the added value of in-house power plants through efforts to develop new businesses, such as abattery storage business and generation-side aggregation through renewable energy● In Europe and the United States, accelerating business expansion through improving development functions
in renewable energy generation business●Business Characteristics and Our Strengths in the Market
In response to the global trend towards decarbonization,changes in the business environment and customer
needs are occurring. We are globally expanding renewable energy and environmental finance solution businesses.
In Japan, we focus on solar power and onshore
wind power generation. In solar power generation, ourbusiness to supply electric power directly to customers,has gotten into full swing primarily through corporate
PPA*1 programs. One such example is a virtual PPA*2
agreement signed between our Group company,
Mitsubishi HC Capital Energy, and Tokyo Metro Co., Ltd.
in March 2023 to contribute to Tokyo Metroʼs reductionof CO2 emissions.
In onshore wind power generation, we have transitioned from a feed-in tariff (FIT) scheme, in which purchase prices for renewable energy are fixed, to a feed-in
premium (FIP) scheme that is linked to electricity sales
prices and adds certain subsidy amounts. We have also
started an aggregation business*3 that provides electric
power and non-fossil value*4 through forecasting renewable energy generating and supplying plans. Specifically,
our Group company, HSE will switch six plants /100MW-class wind power plants in total in the Tohoku
region from the FIT system to the FIP system, and provides renewable power and non-fossil certificates as anaggregation business operator. This is part of our efforts
to supply customers with stable electric power in termsof both price and supply capabilities.
Overseas, in Europe, the United States, and otherareas seeing progress with decarbonization, we will
tackle renewable energy generation businesses andenhance our development capabilities.
The renewable energy sources owned by the Groupin Japan amount to 1.2GW (net capacity in operation, asof the end of March 2023), one of the highest among
Japanese power companies, and we intend to maintainthis provision in the future. The Group believes it has a
key mission to not only create renewable energy but also
provide customers with non-fossil value. As renewableenergy can easily be affected by environmental factors
when it is generated, we will pursue the development of
a new business aimed at stably supplying electricity by
utilizing electricity demand and supply, weather andother data combined with storage batteries, electricity
retailing, and aggregation.

Medium-to-Long-Term Initiatives
Looking from a medium-to-long-term perspective, we
believe that renewable energy will become even more
important globally. We also predict that business will
expand in the electricity value chain, driven by technological innovations.
To achieve Our 10-year Vision under those circumstances, the division has set the goal of “continuous
contribution to decarbonized society while building asustainable revenue base.”
In Japan, we will strive to achieve market growthwith a focus on solar and onshore wind power. Ten years
from now, we will have secured around 2.5GW in generating capacity, developed a solid operating based under
an environment of rising renewable energy value, and will
be maintaining our position as one of the leading renewable energy generation business operators. We will alsoestablish an electricity service business by accurately
identifying changes in electricity systems and maximizing the power generating assets we possess.
Overseas, mainly in Europe and the United States,
we will expand our renewable energy business fromdevelopment to operation by collaborating with local

renewable energy companies with development capabilities and develop a scalable and value-added electricity
business.

Manyo-no-Sato Wind Power Plant (Fukushima Prefecture)*1 A mechanism that allows companies to purchase electricity derived fromrenewable energy generating facilities from retail electric suppliers or power
generation companies over the long term at fixed prices*2 An agreement to transfer non-fossil certificates related to renewableenergy-derived electricity*3 Businesses that manage the supply of electricity generated at power plants
and control supply-demand balance, and operators of such businesses.
*4 Non-fossil value refers to the value of electricity generated using methods
that do not emit CO2. Non-fossil certificates are issued for the environmental
value of electricity generated using non-fossil fuels such as renewableenergy.

Contributions to Solve Global Environmental Issues as an Industry Leader inAchieving Transformation
The division helps to promote a decarbonized society through its renewable energy business. We maintained power
plants with a combined capacity of 1.3 GW in Japan and overseas, mainly solar and onshore wind power, and weare expanding as one of the leading operators in Japan.
The trend toward decarbonization is proceeding at a rapid and irreversible pace, bringing significant changes
to customer needs and the business environment that surrounds us. The division views these “changes” as“opportunities,” and the divisionʼs entire workforce iscommitted to the evolution and layering of our businessmodels. Specifically, we have led other companies inshifting from the FIT scheme to the FIP scheme in Japan,
and we are already making use of the FIP scheme in theoperation of wind power plants with around 100 MW ofcapacity. In addition, we are actively working on the development of new functions and expansion into new areas,
including an “aggregation business” that utilizes generation capacity prediction functions, “a corporate PPA business” to directly supply green electricity to customers, anda “battery storage business” needed to ensure the stable
power supply, as part of our drive to become an industry
leader in achieving transformation. We will also participate
in business in European and US markets where progress is
Takuji Narusebeing made on decarbonization, in an effort to help solve
Managing Executive Officer
global environmental issues.
Head of Environment & Energy Business Division

37

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38

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Real Estate
Contributing to building sustainable social infrastructure by maximizing the potential ofreal estate and creating and providing social and economic value
Segment profit(FYE3/2023)

Segment assets(end of March 2023)

Real Estate

10.9%

12.6 billion yen

Real Estate

4.6%

447.2 billion yen

Group total
116.2 billion yen

Group total

9,632.9 billion yen

Main business
Real estate financing business, real estate investment business, real estate asset management businessCore strategies in the 2025 MTMP
Create business opportunities by increasing capabilities to enhance value through investment and lending
and strengthening development of eco and society-friendly assets● Enhance investment in logistics facilities development by increasing sourcing and leasing pipelines● Differentiate our asset classes and address investors ʼ needs related to ESG, etc., aiming to enhance andexpand the asset management business●Business Characteristics and Our Strengths in the Market
We are working to expand this business based on thethree core businesses of real estate financing, real estate
investment, and real estate asset management, with afocus on the domestic market.
In the real estate financing business, we source
deals from senior lenders,*1 which mainly includes megabanks, Japanese and foreign-affiliated sponsors*2, andasset management companies and provide mezzanine
loans*3 for many projects.
In the real estate investment and real estate asset
management businesses, we began real estate revitalization investments leveraging the expertise we havecultivated by turning around projects where construction
had been suspended mid-way in the aftermath of the2008 global financial crisis and having revitalized andenhanced the value of problematic projects involving
issues such as difficulties in acquiring tenants.

In 2016, we established Mitsubishi HC Capital
Realty, which engages in real estate development andrevitalization investment, and Mitsubishi HC Capital
Realty Advisers, which engages in real estate asset
management, including the management of private
REITs (real estate investment trusts). We have since been
expanding our business field by integrating finance,
investment, and asset management.
In the hotel sector of the real estate investment business, a specialized team consisting of former hotel management company employees works closely with operators toincrease the value of assets by implementing measures toimprove the sales price and occupancy rate of hotel rooms.
In the area of industrial, we are expanding the industrial development investment by incorporating an asset
management company specializing in the industrial realestate field into the MHC group. We have also imple-

Overview of the Real Estate Business
Create business opportunities by increasing
the ability to enhance value through thestrengthening of development● Enhance investment in industrial
development by expanding sourcing andleasing pipelines●●

Real estate investment

Invest in and finance eco- andsociety-friendly assets

Real estate financing*Initiatives in39

Differentiate our asset classes to enhanceand expand the asset managementbusiness● Address investorsʼ needs related to ESG,
etc.
●

Contribute tobuilding
sustainable social
infrastructure

Real estate asset management

mented pioneering initiatives, including the developmentof large-scale industrial and cold warehouses for
multi-tenants. For example, in 2018, we took a stake inCenterPoint Development (which became a wholly-owned subsidiary in April 2023) and established Logi
Flag Development with our business partner.
In this way, we now operate businesses with business models in which we work to generate income andcapital gains through three core businesses, focusing on
office, residence, retail, hotel, and industrial.
The strengths of our group lie in our ability to continue
and operate our businesses in any environment by devel-

oping these three businesses in a well-balanced manner.
Further, we will contribute to the promotion of a decarbonized society and the establishment of resilient social
infrastructure by implementing initiatives for eco-friendly
real estate and BCP*4-conscious real estate for its tenants.
*1 A senior lender is a lender who provides a senior loan that has priority in therepayment over other credits. A senior creditor who provides a mezzanine
loan.
*2 A sponsor is a party who leads a project, such as the largest investor.
*3 A mezzanine loan is a loan whose repayment is a lower priority than othercredit obligations. In return for the high risk, such as the acceptance of therescheduling of principal and interest repayments, a high-interest rate that iscommensurate with the risk is set.
*4 BCP stands for business continuity plan. It is a plan under which themeasures for continuing important operations even in critical circumstances,such as terrorism, disaster, or system failure, are stipulated.

Medium- to Long-term Initiatives
In the medium to long term, the position of real estate as
an investment asset will remain unchanged, and both
domestic and overseas real estate markets are expected
to continue growing.
In this background, in the real estate business, wewill concentrate our resources on the three core businesses, building a framework that enables us to create
new business opportunities and realize the transformationof our business portfolio, and at the same time, demonstrating a significant presence in the real estate market
and further promoting the improvement of our ROA.

We will also strengthen investment in and the development of eco- and society-friendly assets, focusing mainly
on offices and industrial, to add value to our portfolio.
In order to realize our vision of where we would liketo be in 10 years, in this business we will create andmaximize the social and economic value of real estate as
infrastructure for daily life and industry, thereby providing
convenience, safety, and comfort to the global society,local communities, and people and contributing to build
sustainable social infrastructure.

Contributing to Building Sustainable Social Infrastructure by Creatingand Maximizing the Social and Economic Value of Real Estate
Our 10-year Vision at the Real Estate Business Division is to be a player who can create and maximize the socialand economic value of real estate and contribute to building sustainable social infrastructure.
In the investment business, we engage in not only real estate development but also eco- and society-friendly real estate revitalization investment, in which existing properties are renovated and used effectively
instead of being demolished. In the financing business, we
also attach importance to the ESG perspective whenproviding financing.
In the asset management business, we will expand
assets under management through existing private REIT
businesses and the new funds to meet investor needs,
among other initiatives, to contribute to building sustainable social infrastructure through long-term asset
management.
In addition, we are enhancing SX and DX initiatives ineach business. For example, we are proactively cooperating with a hospitality-related DX operator to improve theoperational efficiency of hotels in which we invest, as wellas considering the automated operation of cold warehouses with unfavorable labor conditions, thus playing a
Katsuji Okamotopart in efforts to resolve the material issues that we face.
Managing Executive Officer
Head of Real Estate Business Division

are core strategies.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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40

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Data Section

Conceptual rendering of an integrated service that can provide the extensive range of functions
necessary for introducing and operating EVs

Mobility
Providing domestic and overseas customers with the integrated services needed to
introduce and operate EVs, thus contributing to their decarbonization effortsPower
retailingPowerstorage

Charging
facilities

EV leasing
Batteryassessment

Powertransmission

Segment profit(FYE3/2023)

Governance

Mobility

3.3%

3.7 billion yen
Group total
116.2 billion yen

Segment assets(end of March 2023)

Mobility

0.4%

41.4 billion yen
Group totalPower
generation

Mitsubishi HC Capital Inc.
Lease
Environment &＆ Infrastructure ＆ Finance ＆ Mobility ＆Energy＆…

Participating and benefitting from growth in across-sectoral manner+

9,632.9 billion yen
Cooperation withpartners, including
shareholders

Main business

RealEstateSecondaryuse ofbatteries

Mitsubishi Corporation
Mitsubishi UFJ Financial Group, Inc.
Hitachi, Ltd., etc.

Mobility-related businesses focused on auto leasing and fleet management services

Medium-to-Long-Term Initiatives

Core strategies in the 2025 MTMP
Develop and commercialize integrated services that can extensively provide functions necessary for introducing and operating EVs, such as constructing charging facilities networks, reusing automotive batteries,and supplying renewable energies● Smoothly create synergy through the merger of two automotive leasing companies in Japan● Expand our mobility business base by collaborating with strategic partners in the ASEAN region, etc.
●

Business Characteristics and Our Strengths in the Market
In this business, we provide total services related tovehicle management operations, including maintenanceand insurance, beyond the framework of finance, suchas leasing and installment sales. We provide services inwhich we handle tasks on customersʼ behalf, such as
taking automobile-related procedures, thus supporting
the movement of people and goods and playing a role in
the automotive industry.
In Japan, Mitsubishi Auto Leasing and Mitsubishi
HC Capital Auto-Lease merged in April 2023. We thus
integrated the two companiesʼ solid customer bases,
extensive experience, expertise, and other resources.
We are working to produce synergies and strengthen thebusiness further. In addition, to expand the business in
the ASEAN region, we are also building a platform in
Malaysia and Thailand with Ayvens (formerly ALD
Automotive/LeasePlan), a leading global sustainablemobility player in the auto leasing industry, as our strategic partner. Meanwhile, in Indonesia, we engage in awide range of operations, not only auto leasing but also
used car auction business.
The business environment surrounding mobility is ata major turning point, including the expansion of newservices such as CASE*1 and MaaS*2. Under thesecircumstances, we are working intensively on EV-related
business under 2025 MTMP. We have built and are
striving to commercialize an integrated service thatmakes it possible to extensively provide the functions
necessary for introducing and operating EVs, such as

41

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

constructing charging facility networks and supplying
renewable energies.
We will play a central role in building an urban
infrastructure platform that provides one-stop energy
management and mobility services, by working together
with the relevant internal departments and leveraging
alliances with our partner companies, including ourmajor shareholders. In doing so, we will harness our
track record and experience in support of environmental
contributions that we have developed, such as support
for the introduction of eco-friendly vehicles and CO2
reduction.
*1 CASE: An acronym for Connected (internet connection function),
Autonomous (autonomous driving), Shared & Service (car sharing), andElectric (electrification), which expresses what next-generation automobiles
should be like
*2 MaaS (Mobility as a Service): Services that make mobility more convenient
for people by using IT to seamlessly combine all means of transportation

The popularization of EVs has made great progress in Japan,
as in the United States, Europe, and China. The number of
new EVs registered in Japan, which is currently around
30,000, is expected to increase to 1,540,000 by 2035.
In this background, we provide customers who havebeen using ICE (Internal combustion engine) vehicles or
hybrid vehicles with a service that facilitates the smooth shift
to EVs. We aim to provide integrated services as a packageof EV-related services by demonstrating the Groupʼs comprehensive strength through collaborations with theEnvironment & Energy Business Division, which drives therenewable energy business, the Real Estate Business
Division, with which we can cooperate in installing charging

facilities, and the Customer Solutions Unit, among others.
We also expect progress to be made in the intensification of competition in new services, reflecting the
emergence of new competitors and progress in digitaltechnologies, and moreover, the acceleration of entries
from different industries and the commercialization of
new business models in CASE overall, among otherdevelopments. Aiming for an efficient mobility businessthat supports the movement of people and goods globally with a low environmental impact, we will advancedemonstration projects with partners with a view to thecommercialization of the business while pursuing otherinitiatives to help address social issues.

Contributing to Realizing a Decarbonized Society through Auto Leasing,
Aiming to Build an Ecosystem for Next-Generation Mobility
We aim to help realize a decarbonized society through auto leasing. We are working to build an integrated services,
one that provides the extensive range of functions necessary for introducing and operating EVs, in accordance withcustomer needs, instead of only leasing EVs as vehicles.
While this requires cooperation and sharing and thejoint use of data and information with other internal divisions and external partners, we will make further use of
information and digital technologies because EVs are, by
nature, highly compatible with digital technologies. In
addition, because the level of progress in the shift to EVs
differs considerably among countries and regions, weinvestigate and study advanced examples from overseas
countries and apply them to our business.
New and unprecedented ideas are required to realize
an ecosystem for next-generation mobility, including
energy management. At our division, we will continue totake on challenges to create new business models by
Hisashi Ishimaki
always keeping in mind the creation of an open organizaManaging Executive Officer
tion with a high level of psychological safety, where we
Head of Mobility Business Divisionrespect each other and can have unrestricted discussions
Head of Logistics Business Division
Chairman of CAI International, Inc.
about anything with anyone.
Chairman of PNW Railcars, Inc.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

42

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Key Themes to Be Addressed across Segments
At the Mitsubishi HC Capital Group, we have defined and discussed key themes to be addressed withconcerted efforts across segments to facilitate the evolution and layering of business models, which is
aimed at achieving Our 10-year Vision.
We came up with this approach while we were looking for a way to overcome silo thinking and working
and instead produce a vision for the future that transcends boundaries between divisions.
Specifically, we have identified four areas: hydrogen, EVs, logistics, and decarbonization solutions. We
will work to address the social issues associated with these themes and create social value with partnercompanies, rather than by the Group working alone, helping to realize a prosperous and sustainable future.

HydrogenAs a leading holder of renewable energy power sources in Japan and an asset businesscompany with a diverse customer base, we will contribute to building a hydrogen supply
chain with green hydrogen at the core.
The hydrogen market is set to expand from 2030
onward. As a leading holder of renewable energy
power sources in Japan, in order to contribute to thedevelopment of a hydrogen supply chain, we willconsider manufacturing green hydrogen by leveraging
our experience in renewable energy generation businesses
and the assets we possess to support customersʼ
use of hydrogen by leasing and financing hydrogen-related equipment. We will create business opportunities
while exploring the possibility of cooperation with key
players in the supply chain, where hydrogen is produced, transported, and used.

As a first step toward realizing this goal, we arefocusing on a business model of local production for
local consumption, in which hydrogen is manufactured inplaces close to where it is needed. We will consider
participation in demonstration projects with partnercompanies, among other measures, aiming to accumulate know-how in the business.
We will also look at expanding the business toaddress social issues faced by our customers, focusing
on the fact that the number of assets that use hydrogen
will increase in various areas.

Support for introduction, including financing for hydrogen-related equipment
Renewable energy
Hydrogen filling
power sources
infrastructure
Green hydrogen

Assets that usehydrogenHydrogen consumers
Manufacturers
Airlines and airports
Logistics operators, etc.

Leasing and financing
Manufacturing and supply ofgreen hydrogen
Providing support by supplying green hydrogen from renewable energy power sources
as well as leasing and financing hydrogen-related equipment

EV Related BusinessWe will provide integrated EV services that can extensively provide the functions
necessary for introducing and operating EVs, such as building charging infrastructure,reusing automotive batteries, and supplying renewable energy, beyond only leasing EVs.
Given the possibility of developing businesses stemmingfrom EVs, we will start by focusing on EV-related businesses, including charging facilities and batteries,
strengthening cooperation within the Group and withexternal partners. We also envisage the development ofa unique new service and business model that connects
and combines different industrial fields through datacollection and analysis that leverage digital technologies.

Aiming to achieve the Mitsubishi HC Capital Group Materiality through the mobility
solutions businessCurrent auto
leasing andmobilitybusinesses- Global expansion- Strengthening
horizontal
cooperation- EV
eco-management- Reuse of batteries- Sharing business- DX-related
businesses- Building logistics
infrastructure- Logistics DX- Participation insmart city business- Multimodal businessPriority areas

As part of this initiative, in Japan, we are enhancing
functions for the eight constituents in the fan-shaped
conceptual rendering of the integrated EV service(“Conceptual rendering of an integrated service that can
extensively provide the functions necessary for introducing and operating EVs” on page 42) and developing
services by using the Groupʼs project to replace company-owned vehicles with EVs as an opportunity for ademonstration experiment.
We will continue to develop charging solutions
adapted to parking spaces in a range of specifications
and forms, which is the largest obstacle to customersʼ
shift to EVs at present, and advance initiatives to extend
the lifetime cycle of automotive batteries, including

monitoring their health conditions and maintenance andmanagement of battery life. We will also address thediverse needs and issues faced by customers by combining functions held by the Group and cooperating withexternal partner companies to enhance our services,such as supplying renewable energy using the in-house
power plants of Mitsubishi HC Capital Energy.
In addition, with respect to initiatives to realize thefan-shaped conceptual rendering, we are conducting
studies for a demonstration experiment in Europe, aregion that is leading the way with the introduction ofEVs, in collaboration with partner companies. We hope
to expand to other overseas regions in the future.

Example of initiatives
In September 2023, in the switching of company
vehicles used at our Chushikoku Branch to EVs,
Mitsubishi Auto Leasing and Mitsubishi HC Capital
Energy, which are Group companies, began toprovide an integrated one-stop service that permits
customers to introduce EVs and renewable energy

without bearing the initial cost. With this service,
Mitsubishi Auto Leasing provides EV leasing andfleet management services, while Mitsubishi HC
Capital Energy supplies power with non-fossil value
together with charging infrastructure.

In October 2021, we invested in Universal Hydrogen Co., a US
company developing hydrogen storage capsules and engines(power trains) for hydrogen-powered aircraft.

43

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

44

配賦リスク資本の決定

使用リスク資本（リスク量）の確認

追加配賦可能なリスク資本

配
賦
リ
ス
ク
資
本

信用リスク
アセットリスク
投資リスク
市場リスク
オペレーショナルリスク

Introduction

信用リスク
使
用
アセットリスク
リ
投資リスク
ス
ク
市場リスク
資
本 オペレーショナルリスク

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Logistics

Decarbonization Solutions

We will build and provide optimal logistics solutions based on customer needs.

We will offer diverse solutions as a total service provider in the decarbonized society.

The 2024 problem will emerge due to new regulations to
be imposed under the Act on the Arrangement ofRelated Acts to Promote Work Style Reform. This willpose a wide range of issues to the logistics industry,including a decline in transportation capacity and theneed to reform cargo owner companiesʼ logistics structure and revise their forms of transportation. At the
Mitsubishi HC Capital Group, we will help customers
maximize logistics efficiency and improve productivity by
starting with the following solutions.

While moves toward decarbonization are rapidly changing from a social issue to a compelling business challenge, we believe that a key mission of the Mitsubishi HC
Capital Group is to provide optimal decarbonization
solutions to our stakeholders. To fulfill this mission, we
will cooperate with partner companies to further(1) Systematization of transportation: Providing solutions
for improving the efficiency of transportation anddelivery operations, sharing the operations, andreducing waiting time for loading(2) Logistics DX and standardization: Labor saving forlogistics facilities/equipment or shifting to unmanned
operation using robotics, etc.
(3) Building a logistics network: Developing solutions aimed
at providing high value-added logistics services by
establishing, consolidating, and closing logistics bases

Mitsubishi HC Capital Group customer base

Challenge (1)Improving the efficiencyof means of delivery

Accumulation, analysis, and utilization of data
related to companiesʼ decarbonization

Mitsubishi HC Capital Group
Customer base (cargo owners and partners)
Challenge (2)Challenge (3)Reforming cargo ownersʼ logistics
structure

Improving the efficiencyof work in warehouses

Enhancing the value of solutions

Provision of decarbonization solutions

Possession of assets, charging, data utilization

Example of initiatives
As part of initiatives for the systematization of transportation and logistics DX, LOGISTEED Auto
Service, Ltd., which is jointly funded by LOGISTEED,Ltd. and Mitsubishi HC Capital, provides
SSCV-Safety*1 as a subscription service. Aimed atbuilding an accident-free society, this service visualizes driversʼ physical conditions and the travel oftrucks by using IoT and AI. We thus support labor atenhance our existing services and accelerate the development of new services. We will create new value by
integrating data and solutions, which we have cultivatedover many years, to co-create businesses with partnercompanies, enhance our lineup of solutions for customers, and provide them as one-stop services.

logistics work sites with many analog operations aswell as traffic control operations, such as the allocation of vehicles, from the viewpoint of DX.
*1 SSCV-Safety (Smart & Safety Connected Vehicle): SSCV-Safety is thecore function of the transportation digital platform of LOGISTEED, Ltd.
This service is provided in combination with Hitachi Digital Solution for
Logistics, a logistics solution from Hitachi, Ltd. We are responsible formanaging the process from the procurement of devices needed toprovide the service to their installation, maintenance, and replacement,
and collecting service fees related to the money flow.

Calculating CO2 emissions
and formulating plans

Reducing energy consumption and CO2 emissions

Generating and using
renewable energy

Carbon offsetting withenvironmental value(visualizing CO2 emissions and supportingthe creation of a reduction roadmap)(replacement/control of facilities,
electrification, etc.)(using solar power, wind power, andenergy storage technologies)(supporting the procurement orcreation of credits and certificates)

At the Mitsubishi HC Capital Group, we provide solutions
tailored to customer needs in terms of both supply andconsumption in the energy value chain by cooperatingwith various partner companies. We thus help customers
solve their decarbonization issues.
We have now launched the development of aone-stop service, including proposals for facility replacement and the introduction of renewable energy, which
will be given by introducing systems for monitoring,
managing, and controlling energy and facilities andanalyzing data. It will be a service in which we manage

customersʼ energy and facilities in an integrated mannerto contribute to further reductions in CO2 emissions.
We are also supporting renewable energy supply
and customersʼ initiatives to contribute to carbon neutrality through the Jikotaku Support Service (“Jikotaku
Support,” self-consignment support) *2 from Godo
Kaisha RenetS, which we established through a joint
investment with REZIL Inc. (formerly Chuo ElectricPower Co., Ltd.), among other services, in addition to a
PPA scheme with Mitsubishi HC Capital Energy.
*2 See the example of the initiative below for details of Jikotaku Support.

Targets
Logistics
operators

Companies that deliver goods on their own, suchas manufacturers and retailers

Bus
operators

Local governments,
etc.

Other commercial
vehicles, etc.

LOGISTEED Auto Service
Development and provision of
applications filled with expertise inlogistics

Providing IoT equipment and data
management platforms byleveraging track record in products,
OT, and IT
Dashboard camera (newly
developed)
Data management cloudcomputing
Hitachi Digital Solution for Logistics

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Commercialization of a
subscription service covering
procurement, mounting, andmaintenance of equipment
Procuring devices and keeping them in stock
Mounting/installing IoT equipment
Service desk
Cooperation in sales expansion

Example of initiatives
While demand for renewable energy is growing,companies are facing issues such as a lack of spacefor installing renewable energy power plants on theirpremises or roofs and a lack of know-how in
self-consignment for supplying electric power generated in remote locations to their own facilities(supplying power generated at their own facilities tofacilities, etc. in another area via a power transmission and distribution network possessed by anelectricity transmission and distribution operator).
In response, we established Godo Kaisha
RenetS through a joint investment with REZIL Inc.

and began to provide Jikotaku Support, a one-stop
service supporting the self-consignment of low-voltage electricity from solar power with a low environmental impact.
With this service, we provide one-stop support,
from the development, maintenance, and management of a power plant to operations needed for
self-consignment, such as procedures with a generalelectricity transmission and distribution operator, aleasing agreement on the power plant, calculation of
its predicted power output, and submission of apower generation plan.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

46

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Initiatives for Digital Strategies
DX that the Mitsubishi HC Capital Group Aims to Achieve

Examples of Businesses Utilizing DX

At the Mitsubishi HC Capital Group, we aim to achieve
the creation and qualitative improvement of customer
value by utilizing data and digital technologies in order torealize Our 10-year Vision. With the key points being
human capital, the ability to provide customer value, andParticipation in a business aimed at DX of
the warehousing industry

productivity, under the 2025 MTMP, we will strive todevelop and acquire DX talent and develop a base forthe DX framework to build the foundation, thus generating results from building an aggressive DX frameworkand developing new business.

The definition of DX
at the MHC GroupAt MHC, DX means the creation and qualitative improvement of customer value by utilizing data and digital technologies from customerand future-oriented perspectives in order to realize our goal amid theever-changing external environment of the Group.

Our vision: what are theaims of DX at MHC?

Through DX, we aim to realize the happiness and growth of our employees, maximize the potential of our assets, and provide our customers
with emotion and joy.

Continuously improve the uniqueness and superiority of our three strengths by
combining data and digital technologies with seven elements
Human
resources
Solutions
Human capital
Ability to provide
customer value
Productivity

Management

We have signed a capital and business alliance with
Connected Robotics Inc. We provide companies introducing robots developed by Connected Robotics withcomprehensive services needed to build a robot-friendly
environment and make effective use of the robots, thus
working to popularize robots and help improve productivity in the domestic food industry.
Meanwhile, we are focusing efforts on robot-related
projects subsidized by the Ministry of Economy, Tradeand Industry, such as driving research and development
for building a robot-friendly environment in indoor facilities and participating in a demonstration for automating
the process of placing prepared food on plates in foodfactories. Under this alliance, we will build service
models tailored to customer needs by leveraging ourstrength, namely our ability to build solutions.

*The investor is 31VENTURES Global Innovation Fund II (corporate venture
capital of Mitsui Fudosan)

Customers

Partners

We participate in a business aimed at DX of the warehousing industry jointly with Mitsubishi Corporation,
Mitsubishi Corporation LT, Inc., U Tokyo Innovation
Platform Co., Ltd., Prologis, Inc., Mitsui Fudosan Co.,
Ltd.*, and Mitsubishi Estate Co., Ltd.
Gaussy, which operates the business, addresses
issues faced by the logistics industry, such as labor
shortages and the dependence on individual skills, with
Roboware, a subscription service that enables anyone touse robots easily for warehousing operations, andWareX, a sharing service that permits anyone to use
vacant warehouse spaces easily. We provide functions
including financing and asset possession and management, which we have cultivated over many years, thus
delivering efficient, highly convenient services tailored tocustomer needs and tackling issues faced by the logistics industry, such as the effective utilization of
resources.

Conclusion of a capital and businessalliance with a company engaged mainly inthe research and development of robot
services for the food industry

Businesses

Measures to Promote Understanding of DX Internally
Metaverse Experience Session, a side
project of the DX community

Initiatives for supporting corporatetransformation through DX

We experienced Metaverse, an emerging technology,
firsthand, to generate ideas on new business without
being constrained by daily operations.

We implement a number of measures for corporatetransformation through DX driven by management, suchas holding an interactive workshop with external experts.

Systems

DX strategies under 2025 MTMP
(1) Developing andacquiring DX talent

Buildinga foundation (2) Developing abase for the DX
framework

Generating
results

47(3) Building an
aggressive DX
framework(4) Developing new
business

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

●
●
●

●
●
●

Company-wide DX talent development (raise the baseline for DX literacy)
Develop and acquire DX experts
Support DX talentsʼ activities and initiatives, providing output opportunities
Aggressive investment in DX
Build a framework that supports DX
Save time by dramatically improving operational efficiency

Improve sales efficiency and strengthen customer base
Provide new customer value by leveraging our customer base and data
● Strengthen frontline capabilities to generate and propagate seeds●

Measures for Promoting DX Initiatives
Introduction of a DX point program●

Strengthen the development framework for new businesses and products
Strengthen DX partnership and network● Promote business and product development through data utilization●●

We grant points, which can be exchanged for employee
welfare benefits, for DX initiatives by employees. We
have also established a program under which a certain
percentage of the total granted points are appropriatedby the Company for donations as a social contribution,
thereby driving DX initiatives.

Development of a budget system for
driving DX strategies
To facilitate quick and agile DX initiatives in each division, we have developed a budget system under whichauthority to approve a budget up to a certain amount istransferred to each division, thus facilitating DX initiatives
across the company.
MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

48

Financial Strategy

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Message from the CFO
Financial strategies for achieving the targets set in 2025 MTMP

Pursuing Healthy andSustainable Growth with
Disciplined Financial
Strategies andStrengthened Group
GovernanceHaruhiko Sato
Director, Managing Executive Officer
Head of Corporate & Strategic Planning Division
CFO

Following the two-year period of our PMI process, weformulated the 2025 MTMP that runs through FYE
3/2026, and we announced this plan in May 2023.
Within the 2025 MTMP, we have set high financial
targets and believe that improving ROA is essential forachieving these targets. Improving ROA is no easy featfor a company that undertakes the asset business.
Therefore, we have made the evolution and layering ofbusiness models the centerpiece of its business strategy in the 2025 MTMP. While building on the strong
customer base and revenue base of our core businesses of corporate finance and asset finance, we willcontinue our business portfolio transformation byfocusing on “strengthening and increasing the efficiencyof existing businesses,ʼʼ “shifting existing businesses tohigh-value-added services,ʼʼ and “developing new
businesses.” In doing so, we will increase the weightingof our businesses away from traditional low-risk, low-return businesses toward middle-risk, middle-return
business areas.
As a financial strategy for this purpose, appropriately balancing financial soundness, return on capital,
and growth potential will be important.
First of all, regarding our financial soundness, werecognize that financing is the lifeline for Mitsubishi HC
Capital, which undertakes an asset business thatutilizes a variety of tangible and intangible assets

exceeding 10 trillion yen. To take on the challenge of
middle-risk, middle-return businesses, I believe it isextremely important that we preserve our financial
soundness, including maintaining an A rating, which isone of the financial targets of the 2025 MTMP.
Although we need to appropriately expand capitalto promote the evolution and layering of businessmodels while maintaining financial soundness, simultaneously pursuing return on capital (ROE) is also essential. In other words, this means we must raise the overall
return on capital by ensuring improvements in profitability that exceed our expansion of capital. To do so,“management with an awareness of cost of capital” iscrucial. Although the company has been putting this
into practice in the past, we will continue efforts toimprove our company-wide return on capital by aiming
to achieve profitability that exceeds the cost of capitalset for each department and business.
On the other hand, just pursuing a balance between
financial soundness and return on capital could fall into
diminishing equilibrium. Mindful of this, maintaining
growth potential by allocating capital after paying dividends to growth investments is also important.
In this way, we will continue emphasizing a balanceamong financial soundness, return on capital, andgrowth potential and will strive to optimize its balance
sheet as it aims to maximize corporate value.

Achievements and challenges during the two years following our business integration
Over two years have passed since Mitsubishi HC
Capitalʼs business integration. One of our majorachievements during this period was the successful
completion of the post-merger integration (PMI) process exactly on schedule. The smooth progress in
integrating our sales and corporate departments has
enabled us to strengthen both our offensive and defensive capabilities. The two-year PMI process and theformulation of our first Medium-term Management Plan
(2025 MTMP) after the business integration proceededin tandem. During this time, we held active discussions
at various levels ranging from top management toemployees, and I believe this dialogue contributed
tremendously to fostering a sense of unity within the
MHC Group.
Furthermore, during this period, we encounteredand overcame various domestic and overseas headwinds. We worked to strengthen our existing businesses while focusing on quickly achieving profitability

49

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

of a large-scale M&A project and reducing credit costs.
Thanks to the success of these strategies and measures, we achieved a record-high profit in FYE 3/2023,
as we posted strong financial results that clearly underscore the effectiveness of our responses. Even during
the COVID-19 pandemic, when markets stagnated, we
persisted with our earnest efforts to evolve our business model and I believe our excellent business results
were the fruition of this hard work.
Meanwhile, our business integration has significantly expanded the scale of the consolidated Group,
including its business portfolio and regions. This meansthat strengthening group governance is also an important issue in achieving sustainable growth. We previously formulated a Consolidated Management
Philosophy that incorporates various policies, such asemphasizing financial discipline on a consolidated
basis. We will now work to further permeate this on a
global basis.

Balance between the Three Perspectives
Concept of cash allocation

Growthpotential

Maximization of
corporate value

Financialsoundness

Actively invest cash flows after paying dividends inhigh value-added businesses, including thedevelopment of new businesses.
● Pursue the generation of ongoing expected returns
and an increase in absolute revenue by transforming
the business portfolio and the quality of assets in themedium to long term, with an awareness of the costof shareholder equity.
●

Return on
capitalAchievement of an optimal balance sheet tomaximize our corporate value
Optimize our capital/debt structure according tochanges in asset risks, in the course of transforming
the quality of assets in the medium to long term by
the evolution and layering of business models.
● Give consideration to both financial soundness(maintain A ratings) required for stable funding andreturn on capital(ROE).
●

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

50

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Maintaining financial discipline and realizing stable financing
As I mentioned, we recognize that financing is thelifeline for the company, which carries out the asset
business. Therefore, to ensure we maintain financial
soundness, we have established a system that allows it
to appropriately respond to changes in the external
environment, such as rising interest rates and exchange
rate fluctuations, through ALM (comprehensive asset
and liability management) based on financial discipline
on a consolidated basis. Moreover, we have establisheda system that allows us to maintain business withoutmajor impact, even in the event of a crisis. This system
includes implementing thoroughgoing “predictive management" using two analytical approaches consisting ofrisk scenario analysis for the future and analysis of thecurrent situation based on past market trends while
always having contingency plans in place in the event ofan emergency.
On the basis of this financial soundness, we continue to aim for stable and competitive financing and an
expansion of our financing capacity. For these purposes, our policy is to maintain a balance between
direct financing from the market and indirect financing
from financial institutions, while also working to diversify
financing methods, financing regions (domestic andoverseas), and financing sources.

Our approach to increasing PBROne of Mitsubishi HC Capitalʼs important managementtasks is to increase PBR to more than 1x as quickly as
possible. We asked ourselves what we must do toincrease PBR. I believe the answer is to increase corporate value by fully utilizing our financial and non-financial capital.
Regarding financial capital, I believe it is importantto sustainably improve ROE along with growth in absolute revenue and to foster growth expectations through“management with an awareness of the cost of shareholdersʼ equity.” In this sense, we have no current plans
to implement share buybacks to improve ROE in the
short term. With abundant investment opportunities for
growth at present, our policy is to allocate capital after
dividend payments to growth investments, which willlead to sustainable improvements in ROE.

At the same time, by accumulating non-financial
capital, we will raise expectations for the companyʼs
growth potential and lower our cost of capital to raise
our PER and improve our PBR. Therefore, in ourrecently announced 2025 MTMP, we position our“value creation process” as a guideline for the three
medium-term management plans and express how thecompany will accumulate non-financial capital whilesetting non-financial targets to measure the degree ofcapital accumulation.
We expect that the accumulation of financial capitaland non-financial capital through the promotion of these
initiatives will lead to value creation and this will ultimately enable an increase in our share price and PBR.

Basic policy for shareholder returns and strengthening relationships with stakeholders
Our basic policy is to return profits to shareholders by
distributing dividends. Furthermore, we are aware thatthe market has high expectations that we will increase
returns, so we have set a target dividend payout ratio of
40% or higher during the 2025 MTMP as a level thatenables us to both accumulate capital and raise shareholder returns.

In strengthening relationships with shareholders andother stakeholders, we will respect the interests ofminority shareholders while seeking to fully utilize ourcollaboration in finance, customers, and business with
our major shareholders, Mitsubishi UFJ Financial Group,
Inc. and Mitsubishi Corporation, as well as our business
partner, Hitachi, Ltd., to increase corporate value.

Aiming to evolve our business model
The environment surrounding us will likely remain difficult in the foreseeable future. Even so, I believe thatcompleting our PMI provides us with a golden opportu-

51

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

nity at present in the sense that the conditions are ripe
for further transformation and taking on challenges. So
we asked ourselves what is needed to spread themomentum for change throughout Mitsubishi HC
Capital and further energize the Company. The result ofserious discussions of this question is “Frameworks to
Promote Transformation” advocated in the 2025 MTMP,
which encompasses initiatives such as the “Innovation
Investment Fund” and the “In-house Entrepreneurship
Program”.
The “Innovation Investment Fund” is based on ourconviction that new mechanisms are needed to quickly
incorporate the know-how and business models ofstartup companies to the evolution and layering ofbusiness models. The “In-house Entrepreneurship
Program” provides a “stage” where each employee canconsider and take on new challenges as his or her own
business. Each of these initiatives serves as the stage
for verifying and materializing the future businesshypotheses and future asset business envisioned by thegroup. We have expectations that these initiatives will
become an important piece in transforming our groupʼsbusiness.

In conclusion
We will maintain a healthy balance sheet with discipline
while boldly promoting transformation. To maintain thatbalance, I place great importance on being fair.
Occasionally conflicts arise between maintaining
financial discipline and driving transformation. To
achieve common goals that transcend the standpointsof both sides, I will continue initiatives without forgetting fairness.
When attending financial results briefings and participating in various IR activities, I have received com-ments from shareholders, investors, and many othermarket participants expressing their expectations ofMitsubishi HC Capital in the future. As a Director in
charge of corporate and financial strategy, I am determined to devote all my efforts to promoting transformation aimed at achieving the groupʼs sound andsustainable growth and maximizing corporate value
based on solid ALM and a risk management system. I
would like to ask all of our stakeholders for their continued support.

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52

Strategy to Enhance Non-financial Capital
Efforts toward sustainability̶among them, protecting the global environment, respecting
human rights, developing human resources, and embracing diversity̶are essential
responsibilities to society that corporations should fulfill.
As demonstrated in its value creation process, through its business activities, theMitsubishi HC Capital Group works to strengthen and accumulate non-financial capital, suchas human capital including human resources, natural capital including the global environment,
and social and relation capital including human rights, and by extension, to expand its financial
capital. We believe this approach is important to enhancing corporate value.
The section highlights the efforts of the Group to enhance non-financial capital to help
shape a prosperous and sustainable future society together with stakeholders, and continue toachieve long-term growth.

Environmental Initiatives

Message from the
President & CEO

Value Creation Story Business Strategies

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Information Disclosure According to Four Disclosure Items Suggested by TCFD Recommendations
1. Governance
The Group will promote efforts to identify andmanage the impact of climate change on business andreinforce its governance.

The Sustainability Committee was established in April
2021 with the launch of the Group to better contribute to
the realization of a sustainable and prosperous future.
This Committee is considered one of the advisory bodies
to the Executive Committee and meets to discuss theclimate change issue and other key challenges related tosustainability. The results of the deliberations are reported
to the Executive Committee and the Board of Directors.

The Mitsubishi HC Capital Groupʼs Sustainability Promotion Framework
Board of Directors

Committees

Instruction/
Supervision

Environmental Policy

ute to the creation of a society that can conserve the global environment and achieve sustainable development.

Environmental Action Guidelines

1. We will provide innovative solutions to society and promote collaboration with stakeholders to solve environmental
issues. Additionally, we will comply with relevant laws and regulations to conduct responsible corporate activities thatCompliance Committee

ReportingExecutive
Committee
President & CEO

Basic Philosophy

Risk Management Committee

Proposals/Reporting

Mitsubishi HC Capital shall conduct business activities in harmony with the environment and society in order to contrib●

Financial Strategy

Supervision of the Board of Directors and the Roles of Top Management

The Mitsubishi HC Capital Group has declared its goal to “contribute to a prosperous and sustainable future by creatingsocial value through maximizing the potential of assets.” To achieve this goal, we have established an Environmental
Policy and pursue initiatives to tackle environmental issues.

●

Introduction

ALM Committee
Disclosure Committee

Consultation
Instruction/
Supervision

Sustainability Committee

Proposals/Reporting

Sustainability Committee Administrative Office
Corporate & Strategic Planning Division(Corporate & Strategic Planning Department)

consider people and the global environment.

IT Committee

Reporting

Units and Business Divisions
Customer Solutions Unit

Cooperate

2. We will pursue services and solutions that contribute to the reduction of environmental impact and the development ofsociety, properly recognize the effects and impacts of these services and solutions on the environment and society,and endeavor to utilize environmentally friendly goods and services.

Corporate Center
Risk Management Division
Other corporate center functions

Global Business Unit
Cooperate

Business Divisions* Related subsidiaries are also involved as appropriate

3. With the aim of becoming a society that is decarbonized and highly recycling-oriented as well as one that is in harmony
with nature and contributes to the conservation of biodiversity, we will endeavor to reduce CO2 emissions through thevalue chain, improve the efficiency of the use of water, resources, and energy, and minimize the impact on natural capital.
4. In order to build a relationship of trust with the local communities in Japan and overseas where we conduct business,

Organizational Entities and Roles in the Sustainability Promotion Framework
Organizational Entities

we will work together with society to solve problems and create a society that can balance conservation of the global
environment and sustainable development. If an issue should arise in our business activities, we will make it public in a

Board of Directors

The Board of Directors oversees measures that relate to Company-wide management, including response policies, action plans,
and progress on the Groupʼs Materiality and environmental issues in response to reports on the matters deliberated over andresolved by the Executive Committee and reflects those details when determining important matters such as Company strategy.

Executive Committee

The Executive Committee engages in specific deliberations and resolutions concerning measures that relate toCompany-wide management, including response policies, action plans, and progress on the Groupʼs Materiality andenvironmental issues. Important matters are reported to the Board of Directors.

Risk Management
Committee

The Risk Management Committee is chaired by the Head of the Risk Management Division, and its members comprise thePresident & CEO, Deputy Presidents, Head of the Corporate & Strategic Planning Division, Head of the Treasury &Accounting Division, Head of the Credit Division, Head of the IT & Operations Division, and directors in charge of auditing.
The committee manages risks related to overall management in comprehensive and systematic ways. The overall impact
of climate change risks, human rights risks, etc. on other major risks is reported to the Executive Committee.
In principle, the committee meets quarterly.

Sustainability
Committee

The Sustainability Committee is chaired by the Head of the Corporate & Strategic Planning Division, and its members
comprise the President & CEO, Deputy Presidents, Head of the Treasury & Accounting Division, Head of the Human
Resources Division, Head of the Risk Management Division, Head of the Credit Division, and Head of the IT & Operations
Division. The committee formulates long-term plans related to the Groupʼs sustainability promotion, including Materiality
and environmental issues, as well as goals and plans concerning non-financial KPIs. The committee also monitors the
progress of each business division and reports important matters to the Executive Committee.
In principle, the committee meets twice a year.

Sustainability
Committee Office(Corporate & Strategic
Planning Department,
Corporate & Strategic
Planning Division)

The Administrative Office is responsible for drafting and driving the implementation of plans for Company-wide strategy
based on the Groupʼs Basic Sustainability Policy. It gathers knowledge from Japan and overseas in the Groupʼs areas ofsustainability and reports to the Sustainability Committee and other bodies along with policies and strategies.

timely and appropriate manner and promptly take measures to prevent recurrence.
5. As a good corporate citizen, we will raise awareness of environmental and social issues and promote environmental
conservation activities as well as community/social contribution activities.
Established: April 1, 2021 Revised: May 13, 2022

Efforts to Solve Materiality

Promote a Decarbonized Society

In December 2021, Mitsubishi HC Capital identified
Materiality (Material Issues) as priority key challenges
which must be addressed to achieve sustainable development of the Mitsubishi HC Capital Group.

Climate change is a major challenge that needs to beresolved in order for a sustainable society to become areality. The Group believes that for any company tosurvive moving forward, it must work to solve this problem through its business activities. Furthermore, theGroup is aware of the importance of earning the trust of
stakeholders through proper disclosure of informationand supports the recommendations of the Task Force on
Climate-Related Financial Disclosures (TCFD).

Please refer to page 6 for details.

As materiality related to the environment, we have established “Promote a decarbonized society” and “Realize theCircular Economy.” We aim to reduce our environmental impact
across the entire supply chain and work with stakeholders tosolve environmental issues through corporate activities.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Roles

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54

Introduction

2. Risk Management
Regulatory changes, technological innovation, shifts in businessmodels in line with the transition to a decarbonized society or
extreme weather, etc. stemming from global warming may
affect our operating results and financial condition in the form ofbusiness failure of business partners due to earnings deterioration and other factors, decline in value of assets owned by theGroup, and others. The Group recognizes climate change risk
as one of the critical risks in company-wide risk management
and will promote efforts to properly identify and manage it.
Risk Management System Overview
The Group uses the “integrated risk management” framework
to comprehensively manage risks that could have a substantial
impact on investorsʼ decisions.
The important risks managed within the integrated risk
management framework include, but are not limited to, credit
risks, asset risks, investment risks, market risks, liquidity risks,and operational risks.
To manage envisaged risk factors, the departments overseeing specific risks monitor issues arising from developmentsin the external environment or other changes, regularly consider
measures to address such risks, and then report and deliberatethem at meetings of each committee including the Risk
Management Committee. In addition, we operate a risk management system in which important matters are reported to anddiscussed by the Executive Committee and Board of Directors.
Please refer to page 85 for details on the
Risk Management section.

Classification and Examples of Impacts of Climate
Change Risks
Climate change risks consist of transition risks associated withclimate-related regulation tightening and technological innovation, etc. and physical risks associated with extreme weather andchanges in climates. The TCFD recommendations classify theserisks into the subcategories of policy and legal/technology/market/reputation, and acute/ chronic. The Company recognizes that
impacts of climate change risks occur in various time framessuch as short, medium and long term through broad transmission
routes including existing risks like credit risks, asset risks andinvestment risks. Furthermore, in addition to direct impacts on
the Companyʼs business activities, the onset of indirect impacts
through the Companyʼs customers is also possible.
Based on such risk characteristics and details of the TCFD
recommendations, the Company sorts out examples of impactsof climate change risks for each of its major risks, also taking into
account its risk management framework. Under the integrated
risk management system, the Company is also advancing theestablishment of a system to identify/ assess and manage
climate change risks in light of relations with other major risks.
Going forward, the Company will review the risk classification and examples of impacts according to changes in theexternal environment, and deepen analysis and assessment ofclimate change risks.
Status of Integration into Overall Risk Management
Comprehensive impacts of climate change risks on other majorrisks are reported to and discussed by the Risk Management
Committee. We will advance reflection of such risks, including
risks identified through scenario analysis, in overall risk management by establishing a monitoring system and othermeans. In addition, the development of targets and plans
related to climate change and details of monitoring arereported to and discussed by the Sustainability Committee.
Details of discussions of both committees are reflected in the
Companyʼs management strategies under the system ofmonitoring by the Board of Directors so that we can appropriately address the risks from both the perspectives of overallrisk management and individual risks.

3. Strategy for Action on Climate Change
The Company identifies risks and opportunities brought by
future climate change to the Group, and conducts scenario
analysis on “transition risks” and “physical risks” for the
purpose of appropriately disclosing information and considering future measures.
The scenario analysis is carried out based on limited
information and data available at present. We will strive toreflect the analysis in appropriate disclosure by carefullyinterpreting the results of this analysis, obtaining more information and relevant data through dialogues with stakeholders,and promoting refinement of analysis methods and expansionof businesses to be analyzed.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Results of the Scenario Analysis
We have discussed the impacts on our business and confirmed
consistency between the results of the scenario analysis andthe existing strategic policy.
The Group endeavors to minimize risks and maximize
opportunities by taking short- and long-term measures as for risks
and opportunities related to climate change. As a result of thetransition risk analysis, we recognize the need to appropriately
handle risks and opportunities associated with the expansion ofrenewable energy (Environment & Energy), shift to low mileageaircraft/engines and low-carbon fuels such as SAF and hydrogen(Aviation), growing demand for low-carbon buildings (Real Estate),

Message from the
President & CEO

Value Creation Story Business Strategies

etc. Furthermore, as a result of the physical risk analysis, we
anticipate risks including damage caused by disasters to power
stations and deterioration of power generating facilities such as
solar panels (Environment & Energy), loss in value of real estate
due to intensification of natural disasters and increases in construction/operation expenses and renovation costs (Real Estate),
damage caused by disasters to the Groupʼs offices, and increases
in operating expenses and insurance costs.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

While appropriate countermeasures for climate changerisks have been developed, the acquisition of business opportunities has been incorporated into strategies for opportunities
brought by climate change. Going forward, we will reflect KPIs
related to climate change in the process of implementing the
Medium-term Management Plan, and establish a system toregularly monitor relevant trends in Japan and abroad, and thestatus of initiatives of the Group.

4. Metrics and Targets
Based on the recognition that efforts to realize a decarbonizedsociety are an urgent issue, we will set the Groupʼs greenhousegas reduction targets pursuant to the Paris Agreement, and we
see the transition to a decarbonized society as an “opportunity”
and actively promote the transition. In the case where greenhousegas emissions increase significantly in the future due to efforts for

new businesses, or where numerical value changes while calculation of greenhouse gas emissions of the entire Group including
supply chains are sophisticated, and other cases, the establishedtargets may be reviewed appropriately, but we plan to set thetargets so that any targets are in line with the level of the Paris
Agreement, just like the targets established this time.

The Groupʼs Targets for Reduction of Greenhouse Gas Emissions
Scope 1 and Scope 2

Short Term (Every Year)

Medium Term (to Fiscal 2030)

Long Term (to Fiscal 2050)

Energy usage in Japan: (1)%compared to the prior fiscal year(55)% compared to fiscal 2019

Net zero

Future Efforts
For Category 11 (Use of sold products), Category 13(Downstream leased assets) and Category 15 (Investments) of
Scope 3, which are expected to comprise a majority of theGroupʼs greenhouse gas emissions, we also consider the measurement method and conduct discussions toward disclosure.

Going forward, we will consider the reduction of greenhousegas emissions of the entire Group including supply chains,through visualization of the status of greenhouse gas emissions
related to business transactions, formulation of the policy for
sectors with high greenhouse gas emissions and the transaction
plan, and other means.

Realize the Circular Economy
Leveraging an extensive track record cultivated in the usedmarket over many years, the Group buys and sells a variety of
pre-owned machinery and equipment for semiconductor
manufacturing, and pharmaceuticals and medical devices. We
also provide services to accurately determine the value of idle
equipment and propose its effective utilization and to effectively utilize office equipment (purchase, data erasure, re-sale).
The used market has also benefited from technologicaladvances that facilitate the distribution of good quality equipment and facilities, and a growing number of customers arelooking to adopt used equipment from a cost-cutting perspective. However, with the speed of new product development
accelerating, the production side is facing issues with cachingsurplus equipment and reducing the costs of installing new
equipment, and, at the same time, companies are facing
growing demands to reduce waste generation.
The Mitsubishi HC Capital Group uses its nationwide
information network to propose the effective utilization ofused equipment and facilities in ways that properly reflectmarket value, contributing to the reduction of waste andworking to realize a circular economy that fully utilizes the

new value of assets.
We are also working on the circulation of plastic
resources to comply with the Act on Promotion of Resources
Circulation for Plastics, which went into effect in April 2022.
Meanwhile, we are working to reduce food loss and CO2
emissions in Japan by providing sales support, financing for
installation, and operational support for unattended vending
machines known as “Fuubo Food Loss Reduction Boxes”
provided by ZERO Co., Ltd.

U-MACHINEʼs Resource Center helps make a circular economy
a reality by servicing end-of-lease properties.

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Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Human Rights Initiatives
Mitsubishi HC Capital Group recognizes that human rights and labor practices
are important issues for achieving its mission and expanding its businessfootprint globally. We strive to carry out business activities while respecting thehuman rights of all people.

Please refer to our website for details.
Human Rights Initiatives
https://www.mitsubishi-hc-capital.com/english/
sustainability/social/index.html

Respect for Human Rights as a Critical Issue
Our Code of Ethics and Conduct includes sections on“Respect for Human Rights and the Environment,” and theCode of Conduct states, under “Human rights” that
“Consistent with the fundamental spirit of respect forhumanity, no employee engages in any discriminatory action
or human rights violation on grounds of gender, sexual
orientation, age, nationality, race, ethnicity, political opinion,
beliefs, religion, social status, lineage, illness, or disability.”
The Groupʼs compliance manual states, under“Respect for human rights and the prohibition of discrimination,” that “All Group employees must respect basic
human rights and must not engage in any discriminatory
action or human rights violation on the ground of gender,
sexual orientation, age, nationality, race, ethnicity, politi-

cal opinion, beliefs, religion, social status, lineage, illness,or disability.” Within this section, under “Eliminatingharassment,” it further states, “All Group employees
should respect one another as professional partners andmust work to eliminate all forms of harassment, including
sexual harassment, harassment related to pregnancy,
and abuse of power.” In September 2022, we formulated
our Human Rights Policy based on the United Nations
Guiding Principles on Business and Human Rights.
Aiming to realize a society that respects human rights,
we are proactively and continuously engaged in businessactivities that consider internationally recognized standards
for human rights to fulfill our responsibilities with respect tohuman rights, as is expected of global companies.

Human Rights Due Diligence
In recent years, many countries have rapidly advanced
human rights legislation that imposes a duty of respectfor human rights on corporations. The Guidelines on
Respecting Human Rights in Responsible Supply Chainsissued by the Ministry of Economy, Trade and Industry in
September 2022 require companies to (1) formulate ahuman rights policy, (2) undertake human rights due
diligence, and (3) build a relief or complaint mechanism
as the pillars of efforts to respond to human rights.
As mentioned above, the Group has addressed
these three human rights issues by formulating andpublishing its Human Rights Policy. With regard tohuman rights due diligence, our Human Rights Project
has designed a system that started operating inNovember 2023.
In terms of efforts to address human rights due
diligence, we have, as a prerequisite, identified the areasof critical risk* listed below. The system design incorporates the two elements listed on the right.

Human Rights Policy (Opening statement)
We at the Mitsubishi HC Capital Group recognize that conducting business with the utmost respect for humanrights is a major challenge, and we will fulfill our responsibilities in this matter across all our business activities.
Through dialogue and collaboration with relevant stakeholders, we will exclude exploitative labor practices,such as modern slavery, forced labor, human trafficking, and child labor, from the businesses and supply
chains of the Mitsubishi HC Capital Group.
We will address human rights risks relevant to our businesses earnestly and appropriately to fulfil our obligations torespect human rights in a manner expected of global companies, aiming to realize a society that respects human rights.
We will realize a flexible working style, respect a diversity of values, and strive to create a comfortable working
environment in which every individual can demonstrate their maximum potential.

1. Screening business partners based on information
regarding concerns about human rights violations.
We have established a mechanism for identifying clients,
suppliers, and other business partners where information
exists regarding concerns about human rights violations
in areas of critical risk.
2. Eliminating the risk of human rights violations
through dialogue with business partners(engagement)
Where concerns have been identified through screening,
we open a dialogue (engagement) with the business
partners and, by confirming the actual situation and their
responses, we encourage them to respect human rights
initiatives.
The main objective of human rights due diligence isto prevent and reduce human rights risk in our corporate
activities by using dialogue to improve and enhance
human rights awareness at our business partners.
Through repeated dialogue with business partners, wegain experience in how to handle human rights due diligence and enhance its effectiveness.

* Identifying areas of critical risk
There are various types of human rights issues. Since it is important for our Group to identify the risks and to respondeffectively, we have determined that the following areas present serious risk to the Group in light of the principles andrecommendations of the United Nations Global Compact principles.

Industrial
health andsafetyForced labor andhumantrafficking

Child labor

Discriminationand gender

Impact on
surroundingareas

Please refer to our website for details.
https://www.mitsubishi-hc-capital.com/pdf/english/sustainability/various_policies/human_rights_policy.pdf

Message from the Human Rights Project Members
Human Rights Training and Raising Awareness
The Group educates and raises awareness among all employees
about human rights and also provides training on human rights asthey relate to certain jobs and business operations. We ensure
respect for human rights through these efforts. Specifically, we
provide e-learning sessions (twice a year) for all employees including
those from Group companies to raise awareness about humanrights, and also integrate human rights training into new employee
training, rank-based training, and specialization-based training suchas credit screening and A/R management training. In fiscal 2022, thee-learning course covered themes such as human rights issues for
women, foreigners, and people with disabilities and harassment in
the workplace. In Japan, 5,647 employees undertook the courses.

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Response to the Modern
Slavery Act in the UK
Based on the Modern Slavery Act enacted in
the UK in 2015, Mitsubishi HC Capital UK PLC,
our Group company in the UK has publishedan Anti-Slavery and Human Trafficking
Statement on its website about efforts toprevent slave labor, human trafficking, andsimilar human rights violations.
Please refer to our website for details. (English only)
https://www.mitsubishihccapital.co.uk/media/mfddmxxa/2023-m
hcuk-anti-slavery-statement.pdf

To design a system for human rights due diligence,
the Human Rights Project holds regular discussions
with staff at each department involved in operating
the system and strives to formulate more sophisticated responses. To ensure respect for humanrights across the entire Group, we are preparing to
improve and strengthen our systems, including
fact-finding surveys at Group companies in Japanand overseas. We are also devising measures forhuman rights education and awareness-raising aswell as internal publicity to support employees todeepen their understanding of human rights.

Members of the Human Rights Project discussing human rights
responses in our Group.

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Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Human Capital Initiatives
The Company recognizes that accumulating and utilizing human capital is an important issue to improve corporate
value through the realization of its Basic Management Policy and the medium- to long-term management direction. In
particular, to realize the SX/DX and business portfolio transformation shown in the medium- to long-term management
direction and achieve performance indicators targeted by the Group, the Company will secure and utilize necessary
human capital in terms of both quality and quantity. In fiscal 2022, we started visualizing human capital and beganconsidering the gap between the human resources needed to achieve SX/DX and business portfolio transformation andthe status of our human resources, in terms of both quality and quantity.

Human Capital Strategy
Themes that we want to accomplish
In securing and utilizing human capital (qualitative shift in
human resources and securing the quantity of human

What we want to accomplish (a)Fulfillment of a talent portfolio
Develop and secure human resources
contributing to the Companyʼs realization ofstrategies (quality and quantity)

What we want to accomplish (b)Improvement in employee engagement
Create an environment where employees
work together to promote value creation

resources) we uphold two themes to be accomplished in
the medium to long term.

We define the quality and quantity of human resources necessary to realize the mediumto long-term management direction and visualize a talent portfolio.
We understand the disparities between our necessary human resources and current
human resources in terms of quality and quantity and implement measures for filling themto supplement necessary human resources.
The Company creates an environment where employees take pride in their work andmake discretionary efforts to work, there is a comfortable working environment where
employees can utilize their capacities, and diverse employees are respected to enable
employees to work together to promote value creation.
We clarify issues to achieve and promote measures to continuously realize the status ofhigh employee engagement.

Details of Initiatives
With regard to the above themes to be accomplished,
we will give priority to working on the two matters of thehuman resource management base and the creation of asystem for improvement in engagement. We will produce

a qualitative shift in human resources by reconstructing
our human resource management base, and maintainhigh levels of employee engagement by creating asystem for improvement in engagement. Thus, we willsecure the quantity of human resources we require.
Details of Initiatives

Reconstructionof the Human
Resource
Management
Base

The Company has collected/accumulated information on human resources and used it for utilization of human resources(allocation and development) to date.
Going forward, for “What we want to accomplish (a) fulfillment of a talent portfolio,” we will reconstruct the humanresource management base, define types of human resources necessary to realize the medium- to long-term management direction, and then further understand human resources and conduct the human resource development that
contributes to a qualitative shift.
In understanding human resources, we handle qualitative factors such as experience, knowledge, skills, and competency
in addition to the quantitative perspective, including the number of employees. In human resource development(qualitative shift), we identify qualitative issues to fulfill a talent portfolio and take measures for capacity development.
Moreover, we will improve the accuracy of matching between human resources and jobs by systematically organizing information
on jobs, in addition to information on human resources, to further ensure that the right people are placed in the right jobs.

Creation of a
System for
Improvement inEngagement

The Group has identified current issue areas by conducting an engagement survey and implemented improvement
activities to date.
Going forward, with KPIs set as indicators for engagement surveys, we will actively set challenges by establishing andutilizing a system to manage results, causes, and processes and promote measures.
We will continuously realize the status of high engagement as the entire Group, ultimately securing the quantity ofhuman resources.

Indicators and Targets
To achieve the target themes, we will formulate a talent
portfolio framework, visualize the degree of fulfillment,
and refine the content of engagement surveys todevelop a more sophisticated analysis.

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Developing and Securing Human Resources to Fulfill the Human Resource Portfolio
With our Basic Management Policy as a guide, we areconstantly developing human resources to realize strategies, such as business development that goes beyond
leasing and finance. The basic framework of our training
system consists of rank-based training in conjunction
with global, DX, and diversity training.
In rank-based training, we conduct various forms of
training tailored to junior, mid-level, and management-level employees to develop their knowledge andimprove their capabilities. At the same time, we conduct
training along the lines of multiple themes related to
global operations, DX, and diversity. We are committed
to continually revising and further advancing the training
system in the interest of producing a qualitative shift in
our human resources.
Furthermore, to support career advancement, wehave a system that allows employees to change career
tracks, and an in-house job posting program throughwhich employees can apply for the jobs they want to do.
We also offer a career development program that helps
employeesʼ self-directed efforts to develop their skills
through training open to all employees and self-development support.
As the abilities and expertise required by each areaof business become more diverse, we have put in place
the necessary company-wide interpersonal skills training
programs and conceptual skills training programs
needed for organization and project management. In
addition, each business division has introduced its own
customized technical skills training and training rotationplans through which employees can systematically gain
experience within their divisions. Further, we operatemeetings where these initiatives are discussed andexamined to share and refine human resource development and succession plans (the cultivation of successors
to top management positions), ensuring that our various
training programs are accompanied by measuresdesigned to enhance training outcomes.
Additionally, training based on common Groupwide
themes and certain training tailored to junior employees(compliance-related training, new employee training,communication training, and so on) is run on a Groupbasis, including for the employees of Group companies
who wish to take part.

Global talent development
As a global company with firm roots in each country inwhich it operates, the Mitsubishi HC Capital Groupfocuses on developing global talent to support its operations. In Japan, we provide not only training to acquire
language skills but also cross-cultural training to build anunderstanding of different cultural backgrounds aroundthe world and promote smooth collaboration with
employees at overseas offices and local partners. We areworking to enhance a training system that ties directly toemployeesʼ daily work.
In addition, we encourage junior employees tocultivate a global perspective through training that fosters interest in working overseas. We have an ongoingoverseas trainee program that dispatches junior staff toother countries every year, which creates opportunities
for them to come into direct contact with overseas
businesses.
Through this system, junior employees gain practicalexperience overseas while we develop and expand our
future global core talent base.
For employees at overseas offices, we provide training to promote understanding of Mitsubishi HC Capitalʼs
Basic Management Policy, including Our Mission, and toachieve better engagement with the Mitsubishi HC CapitalGroup. We also provide training that brings together local
employees from various countries and regions to nurture
camaraderie across the Group.
Digital talent development
The promotion of DX and the development of digitaltalent is important if we are to realize Our 10-year Vision.
To develop digital talent, we assess all employees
and officers yearly to visualize their level of DX and thenprovide e-learning and ability-based training to enhancetheir DX literacy. We also encourage employees toacquire various qualifications.
We also select DX experts with high-level expertiseand a reform-oriented mindset from among employeeswith a high level of corresponding skill and background,regardless of seniority or position, and place them inmore practical training programs in terms of both offensive and defensive approaches to operations to further
accelerate the development of related talent.

Specifically, we will monitor outcome measures by
setting outcome-indicating KPIs and cause/process-indicating KPIs, while also identifying key causes and processes and implementing effective measures to meettargets.

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Introduction

Recruiting and developing professional talent
To advance the evolution and layering of our businessmodel, in mid-career recruitment we seek talent irrespective of gender, nationality, or other factors, hiringexperienced professionals from each industry in which
the Group operates. We also engage in recruitment
activities that cast a wider net to attract potential talent.
As measures to enhance our recruitment framework,
we have developed schemes for referral-based recruitment in response to employee introductions and alumni
recruitment to re-hire employees who have resigned in
the past as part of efforts to recruit from a diverse poolof talent and secure sufficient quantities.

On the development front, we train generalist humanresources geared to function in various departments, but
we also develop and cultivate professionals to leadbusiness areas. As our business has grown more sophisticated and globalized in recent years, we have focusedon the enhancement of advanced specialized skills thatare required in each area.
We believe a recruitment and development plan for
professionals from a medium- to long-term perspective isessential and hold meetings with various business divisions operating in key areas to promote discussions on (1)a training system that includes a predetermined job rotation and (2) strategic and proactive external recruitment.

Diversity and Inclusion Aimed at Enhancing Employee Engagement
We position the promotion of diversity and inclusion as
an important management strategy for the further expansion of the Groupʼs business domains and global operations, with our basic policy to foster a vibrantorganizational culture that can create new value by
bringing together a diverse group of human resources
who can leverage one anotherʼs strengths and bring out
the most of each personʼs motivation and talents.
One of our action principles is “Diversity: Embrace
diversity and respect each other.” With this as the foundation, we aim to realize a vibrant organization that cancreate new value by bringing together a diverse group ofhuman resources who represent a broad range of individual attributes such as nationality, age, and gender;and differences in life stage, experience, and values; andwho can leverage one anotherʼs strengths and bring out
the most out of each personʼs motivation and talents.
Promoting womenʼs participation and advancement
We have formulated an action plan based on the Act on
Promotion of Womenʼs Participation and Advancement in
the Workplace and strive to promote womenʼs success.
We have introduced systems that encourage thelong-term employment of women and support their careerdevelopment through rank-based training, dispatch toexternal training, and other opportunities. As a numericaltarget, the Company has set the goal of raising womenʼs
representation in management positions (section manager
or above) to 20% or more by the end of fiscal 2025.
“Eruboshi” markMitsubishi HC Capital was awarded the second-level“Eruboshi” mark from the Minister of Health, Labour andWelfare in recognition of its excellence in the implementationof initiatives to promote womenʼs active participation andadvancement in the workplace, which fulfill the certification
standards established under the Act on Promotion of
Womenʼs Participation and Advancement in the Workplace.

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Employing people with disabilities
We position the employment of people with disabilities
as part of ensuring the success of diverse humanresources. We have established the Business Associate
Employment System that provides a pathway for contract employees who have worked for the Company forat least one year to become permanent employees. We
offer career paths after becoming permanent employees,
fair evaluation and employment conditions under a goal
management system, regular consultations and continuous education and training. We provide a workplace
where employees can work at ease in an active role, as
we develop human resources able to contribute toenhancing corporate value.
In addition, by conducting education and training for
managers who work with and supervise employees withdisabilities, with a focus on correct knowledge of, understanding of, and support for employees with disabilities,
we are embedding inclusive work practices among
teams of employees with and without disabilities.
Work-life Balance
Aiming to reduce long working hours and control the total
number of hours worked, the Company has set numericaltargets for the rate of annual paid holidays taken by
employees and monthly average overtime hours, and areworking to realize work-life balance. In addition, we pursue
initiatives to improve work efficiency, including systems thatenable flexible working styles such as flex-time working
hours, work from home, and telecommuting. As a systemthat allows employees to work based on their individual
circumstances, we have also developed schemes forvolunteer leave, as well as child and family care leave.
In April 2023, we introduced health promotion leaveand further enhanced the programs we offer to support
and advance individual employee health.

Message from the
President & CEO

Value Creation Story Business Strategies

Support for balancing work and childcare
We are working to expand the support system andcreate a workplace environment that enables employees
to balance work and childcare.
Employees taking childcare leave are provided witha tablet device with access to the Company intranet andcan participate in roundtable discussions with others
also on childcare leave. This enables them to return towork more seamlessly after their period of leave. In
addition, the Human Resources Department holds careerinterviews for returnees aimed at supporting proactive
career development while maintaining a balance
between work and childcare.
We also actively work to encourage men to participate in childcare through initiatives including the setup ofa childcare leave consultation desk and publication of achildcare leave guidebook targeting male employees,
and have set the goal of having 100% of eligible male
employees use childcare leave by the end of fiscal 2025.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Certified as a Health & Productivity Management Outstanding Organization (Large Enterprise Category)In 2023, we were certified as a Health & Productivity
Management Outstanding Organization in the large
enterprise category for the fifth consecutive year. The
Certified Health & Productivity Management
Organization Recognition Program recognizes large
enterprises, SMEs, and other businesses engaged inparticularly outstanding health and productivity management practices to take action based on health issues
and implement initiatives to advance health as advocated by the Nippon Kenko Kaigi organization.
We have also met the standards for all evaluation
items, including initiatives to achieve appropriate workstyles, such as a healthy work-life balance, and the
involvement of industrial physicians and public healthnurses to maintain and advance employee health.

Platinum “Kurumin” Mark
Mitsubishi HC Capital was awarded the Platinum“Kurumin” mark by the Minister of Health, Labour andWelfare in recognition of having fulfilled the required
standards under the Act on Advancement of Measures
to Support Raising Next-Generation Children. Goingforward, we will enable our employees to choose fromdiverse working styles according to their individual life
stage and environment, such as the need to balance
work and child raising. By doing so, we will promote thedevelopment of structures and a corporate culture inwhich they can perform to the best of their abilities andachieve professional success.
Please refer to our website for details.
https://www.mitsubishi-hc-capital.com/english/sustainability/social/employees_and_families.html

Message from the Diversity Promotion Office
To realize a workplace environment in which each employee can flourish
The Company positions diversity and inclusion as one of its key
management strategies and is making every effort to develop an
environment in which each employee can maximize their individual
motivation and talents.
With measures to champion the success of women in the workplace, along with improvements to systems that help employees
balance work with home life and the introduction of telecommuting
and flextime systems, we are working to develop a work environmentthat enables efficient work.
To realize a work environment in which every employee, eachboasting a diverse array of attributes, values, and backgrounds, canflourish, we will continue to promote diversity and inclusion in the future.

Members of the Diversity Promotion Office

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Introduction

Message from the Head of Human Resources &General Affairs Division
Aiming to Become an Organization that
Encourages Challenge and Growth andEnables Each Individual to Play an Active RoleIn April 2023, the Mitsubishi HC Capital Group integrated the humanresources systems of its two predecessor companies and launched
a new human resources system. This system aims to build frameworks to promote transformation as advocated in the 2025 MTMP
toward realizing Our 10-year Vision, “Together we innovate, challenge and explore the frontiers of the future.” As a chief feature, thisnew system supports each employee in taking on challenges andachieving growth based on the concept of realizing innovators.

Takashi Yamaguchi
Managing Executive Officer
Head of Human Resources & General Affairs Division
Deputy Head of Risk Management Division

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Mitsubishi HC Capital formulated the Basic Management
Policy in April 2021 and added the Action Principles in
May 2022. This prescribes the values and mindset to beheld and actions to be taken by each and every
employee of the Company.
Accordingly, in keeping with the Action Principles,the Human Resources Department has defined thehuman resources we desire based on five perspectives,
consisting of Customer-oriented, Professionalism,
Creation and Transformation, Leadership, and Human
Resource Development.
To acquire and develop human resources based onthese five perspectives prescribed in the Action
Principles, the new human resources system strengthens
the elements of merit-based appointments and compensation based on job standards. As our business domains

expand and job content diversifies due to our recent
business integration, we are moving from a system centered on “job functions” toward one that emphasizes “jobduties” to shift to a compensation system that reduces
seniority-related factors.
By establishing this new system, I hope to encourage every employee to take on challenges and achieve
growth within the Company and increase their independence. In the future, we will position the Action Principles
as a set of values and a mindset that each employee
should possess and work to foster a common awarenessthroughout the Group, including overseas Group companies, as we aim to be an organization where employeesof different backgrounds, such as in gender, nationality,
and age, can mutually respect each other and play activeroles.

Action Principles

Data Section

Identify disparities in quantity and quality aspects and enhance our human resources
As a specific measure, we are starting out by identifying
disparities between the human resources we desire andour current human resources in terms of both quantity(recruitment) and quality (development).
Regarding quantity, we are undertaking mid-career
recruitment activities that extend beyond work-readyhuman resources to identifying those with potential, in
addition to strengthening new graduate recruitment. We arealso focusing on employee retention by working to create
an environment where employees can work more comfortably. Specifically, besides improving employee engagement, we are implementing measures to maintain andimprove the motivation of senior employees and introduce
a rehiring system to encourage the re-employment of
employees who have unavoidably left the Company due tofamily and other circumstances. By broadening our business domains through business integration, the domains inwhich our employees can take on challenges have also
expanded. To support all employees as they take on challenges and strive for personal growth, we will establish asystem to evaluate employees from multiple perspectives.

In terms of quality, we will gather job information as
well as information on our employees such as their experience, knowledge, skills, competencies, and personalities,
and arrange this information into a database. By doing so,
we can better match people and job duties (the right personin the right place) and will develop education and training
programs based on the characteristics of employees.
Moreover, through a program to seek business ideas
and the intra-entrepreneurship program, we are creating
environments in which employees can take on new challenges on their own in new fields. This includes establishing opportunities to support the creation of businessmodels that go beyond leasing and finance. Furthermore,
we are reorganizing our training system by verifying ideal
human resource development based on hierarchical levels
for our young, mid-career, and management-level employees from the perspectives of DX, globalization, and diversity. I recognize that it is our responsibility as the Human
Resources Department to enhance the mindsets towardchange and the ability of employees to identify various
issues through these efforts.

The Career Inventory, which is implemented once a year,
is a system in which employees report on their envisioned
careers so that we can support them in realizing suchcareers. Under this system, employees report on matterssuch as what they aim to become, how they perceive
their own characteristics and aptitudes, what kind ofenvironment they seek for attaining growth, and theirenvisioned career path to achieve this. The system aims
to raise the level of fulfilment of a talent portfolio in linewith our management strategies, one of theNon-Financial Targets of the 2025 MTMP. By undertaking
this process, we hope to provide opportunities for

employees to reconsider their future visions, of which
they are usually unaware. The information we receive is
put into a database and used for resource allocation.
In striving to improve work efficiency through DX, wemust transform peopleʼs creativity so that it can beadapted to a variety of jobs. To realize a qualitative transformation that enables every employee to demonstrate
their value, a major challenge is to transform the mindsetof the entire Group and permeate the Vision. To do so,
the Human Resources Department will strive for goodcommunication with employees.

Establishing an environment to increase employee engagement
Under the 2025 MTMP, we have set KPIs of establishingan environment to increase employee engagement, raise
the ratio of female managers, increase the rate of annual
paid holidays taken by employees, and reduce monthly
average overtime hours. We will work to permeate thisthroughout the Company by quantifying the results of the

KPIs and increasing the target values. These initiatives
embody a message about achieving results throughbalanced work styles from the perspectives of work-lifebalance and health management. I believe this is an
important initiative that companies should pursue inpromoting sustainable management.

Challenge

Challenge ourselves to look forward to the future with a sense of responsibility and commitment.

Aiming for a workplace where everyone can work in active roles

DigitalDrive digital innovation and expertise.

Communication

Communicate openly and honestly to build mutual understanding and trust.

Diversity

Embrace diversity and respect each other.

Sustainability

Act in harmony with people, society and the earth to create a sustainable world.

Integrity

Maintain the highest standards of ethics and integrity.

President & CEO Hisai has declared both internally andexternally that Mitsubishi HC Capital aims to be a company where each employee is positive and happy, acompany that is respected by society, and a company
that employees can take pride in with their family andfriends. I also feel that President & CEO Hisaiʼs blog,
which he publishes internally, is very meaningful in reducing the distance between top management and employ-

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Governance

Building a talent portfolio in line with our management strategies

A new human resources system for acquiring and developing the human resources we desire

63

Message from the
President & CEO

ees. As the Head of Human Resources & General Affairs
Division, I would like to increase the number of contact
points with each office and maintain close communications. By establishing a friendly atmosphere in which
employees can easily call out to each other, we will strive
to create a work environment where everyone can feel
comfortable expressing and discussing their opinions andideas and where everyone can work in active roles.

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GovernanceIntroduction

Message from the Chairman of the Board
We will deepen discussions with the executive
team in both “offensive” and “defensive” areas forincreasing corporate value over the medium term.
Drawing on my experience as president in implementing the business integration, including the Post Merger Integration (“PMI”), as the non-executive Chairman of the Board, I will
strive for the smooth operation of the Board of Directors and the Governance Committee
as an advisory body as well as the Nomination Committee and the Compensation
Committee as consultative bodies. We will also ensure that the Board of Directors reliably
fulfills this role to attain the objectives of the Medium-Term Management Plan for
FY2023-FY2025 (“2025 MTMP”) and ultimately achieve Our Mission.

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Dialogue with Independent Outside Directors
Toward further raising the effectiveness of the Board of Directors
and advancing governance
We held a roundtable discussion with five independent Outside Directors, who exchanged wide-ranging opinions on
various topics. These ranged from their assessment of the process for formulating the Medium-term Management Plan
for FY2023 - FY2025 (“2025 MTMP”) to the key points of governance, the future expectations of Mitsubishi HC Capital,
and the ideal business model that transcends the framework of the leasing business.

Takahiro Yanai
Director, Chairman(Chairman of the Board)

Mitsubishi HC Capital designated the first two years after the business integration in April 2021 as the period for the PMI. One of ourpriority issues during this stage was to deepen mutual understanding
between the two predecessor companies. At the same time, theBoard of Directors also ascertained the overall picture of the integrated company from a variety of perspectives by discussing numerous proposals based on conservative and broad-based standards foritems to be submitted to the Board of Directors. Through this process,each member of the Board of Directors has gained a deeper understanding of the Company. In FYE3/2023, the second year of theintegration, active discussions were held when formulating the
Medium-Term Management Plan. In this manner, along with ourdefensive-oriented discussions focused on risk management, wehave gradually deepened “offensive” discussions that contribute toour strategy formulation.
Regarding the governance system design of Mitsubishi HC
Capital, the Company has established the Governance Committee as
an advisory body as well as the Nomination Committee and theCompensation Committee as consultative bodies to the Board of
Directors. These are voluntary committees, with the majority of theNomination Committee and Compensation Committee composed ofIndependent Outside Directors, however, by stipulating that the Boardof Directors shall attach high importance to resolutions by eachcommittee, we have established a system under which the opinionsof Independent Outside Directors are firmly reflected in the
Companyʼs important decision-making.
In FYE3/2023, the Nomination Committee discussed theselection of a successor in the event of a change in the president,
while the Compensation Committee discussed re-evaluating theexecutive compensation system from the perspective of stakeholders.
The Board of Directors reached conclusions in line with the results ofeach resolution. The Governance Committee serves as an advisory
body to the Board of Directors and primarily evaluates the effectiveness of the Board of Directors and discusses improvement measures

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

based on this evaluation. For example, we have received feedback
regarding the operational aspects of the Board of Directors, such asproviding better explanations prior to deliberating on important
proposals, and we are taking improvement actions to enhance theeffectiveness of the Board of Directors. Based on these evaluations ofeffectiveness, we plan to review the standards for items to be submitted to the Board of Directors in the second half of FYE3/2024,
delegate as many matters as possible to the executive team, andensure that the Board of Directors spends sufficient time on deliberating themes of higher importance in terms of governance and strategy.
Meanwhile, to steadily execute the role of the Board of
Directors, Outside Directors are actively implementing on-site inspections. We will deepen discussions at board meetings by observing
business sites in Japan and overseas and listening directly to group
executives and employees, including the management teams ofoverseas subsidiaries. In the future, we will continue to increase
opportunities for on-site inspections, including those for ourselves.
The 2025 MTMP features the major theme of “transformation”
toward exploring the frontiers of the future without being bound by
precedents while considering significant changes in the external
environment. To realize this “transformation,” we aim to create a
corporate culture that does not fear failure.
Taking on this challenge naturally involves risks. With this inmind, the Board of Directors needs to strengthen its defensivefunctions to appropriately monitor risks. Concurrently, each director
should leverage his or her own specialized knowledge to provide
appropriate advice to the executive team, and I believe that ouroffensive functions that support the implementation of this strategy
will assume an even greater degree of importance.
As the Chairman of the Board of Directors, I will make myutmost efforts to ensure the smooth operation of the Board of
Directors to enable the Board of Directors to engage in both offensive- and defensive-oriented discussions and implement governancethat meets the expectations of various stakeholders.

Hiroyasu Nakata

Yuri Sasaki

Director(Independent Outside
Director)

Director(Independent
Outside Director)

Koichiro Hiraiwa

Hiroko Kaneko

Masayuki Saito

Director, Audit & Supervisory
Committee Member(Independent Outside Director)

Director, Audit & Supervisory
Committee Member(Independent Outside Director)

Director, Audit & Supervisory
Committee Member(Independent Outside Director)

Post Merger Integration (“PMI”) is a cornerstone of growth

Q

During these past two years following the merger,
you have successfully completed the PMI as
originally planned. What are your thoughts about
the issues that lie ahead?

Saito Under the new system created through the mergerof the former Mitsubishi UFJ Lease & Finance and theformer Hitachi Capital, our pro-forma rule-making hasnearly been completed, and we are about to enter a maturation process. As we do so, first of all, everybody must
thoroughly acquaint themselves with each other in Japanand at the overseas companies we have acquired. We alsoneed to respect each companyʼs corporate culture while
management must clearly present and implement sharedvalues. This process should enable optimal integration andresult in the creation of “one team.” The management teamhas a solid understanding of our current position, and in
the future, it will likely advance steadily in the present
direction. I will continue to fully contribute to this process
by providing my advice and support.

Hiraiwa Generally speaking, it is said that it takes 30 years
to truly unify a company through integration after a merger.
To put this into better perspective, this is the same amountof time for a new employee to eventually become an executive. While this might very well be true, I also feel that wecannot spend such a long time on our integration process.
2025 MTMP has been formulated based on the solid foundation of Our Mission. I am sure all employees agree withthis thinking. This is precisely why I believe 2025 MTMP has
great significance and originality. To realize Mitsubishi HC
Capitalʼs Our Mission, it is important to embed the respective corporate cultures and traditions cultivated by eachcompany into the new management structure.
Saito Mitsubishi HC Capital now has great potential
because it laid the cornerstone for significant growth during
the past two years of PMI. Mitsubishi HC Capital will firmly“sowing seeds” and “gaining a solid foothold” as set forthin 2025 MTMP over the next three years, which is designated as the planʼs “Hop” phase, so that it can transitionsmoothly to the successive “Step” and “Jump” phases.

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Frank discussions in formulating 2025 MTMP thatstrongly promotes Our Mission
Q

How do you assess the details and formulation
process for 2025 MTMP?

Saito In discussing 2025 MTMP, we first drew an imageof our 10-Year Vision and then backcasted from there to
identify what we need to do now. I learned about thisconcept of backcasting from then-President & CEO
Yanai. I think this plan serves as a suitable management
strategy that is aligned with the times. Within the plan, I
am focusing particularly on synergies generated throughthe integration of the two predecessor companies. I think
the most important point will be to leverage thestrengths of both companies and deploy synergies,
especially in overseas operations.
Kaneko The plan was repeatedly discussed at meetings of the Board of Directors and careful considerations
were made internally in advance. We held various discussions from the dual perspectives of fostering a senseof solidarity and solidifying our foothold through the
integration of the two companies.
Hiraiwa Medium-term management plans generally
tend to be associated with setting and attaining numerical targets. Certainly, Mitsubishi HC Capital has also set
several numerical targets, such as net income. However,when I look at 2025 MTMP, I am focusing on a more
abstract aspect in that Our Mission is being firmly positioned at the forefront of the plan. The 10-Year Vision,“Together we innovate, challenge and explore the frontiers of the future,” emphasizes fortifying the corporate
structure. This will enable Mitsubishi HC Capital to withstand shifts in the environment and continuously move
forward regardless of how dramatically the times change.
I was also deeply impressed when I listened to
executives tell me they seek to create a corporate culture
where there is no fear of failure. Of course, this is easier
said than done. Nonetheless, setting a goal of not fearing
failure is a tremendous objective considering that theCompany is still feeling its way around in the short timesince the integration. This reaffirmed our strong sense

What points are you focusing on whenmonitoring the progress of 2025 MTMP?

Sasaki A fundamental point is checking to ensure we
do not create something only within the company that is
not visible from the outside. Here, a third-party perspective is particularly important for governance. I always

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Value Creation Story Business Strategies

auditing firms and various partners. The most important
aspect of monitoring is to consider the situation atbusiness sites or matters close to actual circumstances.
Kaneko Speaking from my own experience in accounting auditing and observing the internal control andgovernance of companies for nearly 30 years, I can say

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Sectionthat internal control and governance in overseas divisions is particularly difficult. I get the impression that allcompanies face difficulties with internal controls overseas owing to differences in business cultures.
Additionally, changing our employee engagement is also
important for realizing 2025 MTMP.

Creating a well-balanced Board of Directors andadvisory committees where it is easy to express opinions
Q

that we too must help create such a corporate culture.
Sasaki In formulating 2025 MTMP, all Outside Directors
openly made comments such as, “I donʼt understand the
explanation using this terminology” and “I need clearer
explanations.” I, of course, expressed my opinions too
and through various exchanges, our understanding
deepened significantly.
The plan formulation proceeded under an excellent
format as the executive team created content that could
withstand exhaustive discussion while the Outside Directors
also voiced their opinions from an objective standpoint.
Nakata The fact that the formulation process proceededin stages is tremendously beneficial. Immediately after
the merger in April 2021, we established our BasicManagement Policy, and the following year we crafted
the 10-Year Vision. This year, we announced 2025 MTMP.
Over this time, the Board of Directors has convened eighttimes and held ongoing discussions. After consolidating
the main points of these internal discussions, the committee submitted the results to the Board of Directors,
which engaged in exchanging differing opinions that
included the participation of Outside Directors. In
response to this, we have continuously repeated thecycle of re-examining issues within the Company.
Through this process, each of our Internal Directors andOutside Directors began thinking more deeply about
what kind of company we wish to become and the ways
we can contribute to realizing such a company.

Continuous monitoring from a third-party perspective
Q

Message from the
President & CEO

make my utmost efforts to point out anything I noticethat could be problematic for the Company.
Hiraiwa Visiting business sites and then thinking basedon my observations of these sites is important. Somethings cannot be explained by numbers alone. For thisreason, I hope to visit all actual business sites, including
those overseas, and listen carefully to the opinions ofWhat are your thoughts on the composition andoperation of the Board of Directors and advisorycommittees?

Nakata Board members are rich in diversity and possessa variety of specialties and skills. This Board composition
was the result of meticulous selection that emphasizes
each individualʼs characteristics and talents rather than
imposing formal criteria such as being male, female, or aforeign national. Although we currently have no foreign
nationals serving on the Board of Directors or advisorycommittees, clarifying the skills required of any suchforeign nationals with an eye to the future is important.
Additionally, Mitsubishi HC Capital is a company
with an Audit & Supervisory Committee. As such, some
Directors are members of the Audit and Supervisory
Committee while other Directors are not. This structure
can be visualized by imagining two concentric circles
centered around the Company. Audit and Supervisory
Committee members belong to the inner circle closest to
the Company, and these members proactively visit
actual business sites from time to time to perform audits.
Directors like me who are not Audit and Supervisory
Committee members belong to the outer circle and ourrole is to point out any issues we become aware of froma third-party perspective. I think it is greatly beneficial
that Mitsubishi HC Capital has these two types of directors who concurrently look at the same matters while
maintaining a healthy distance from each other.
Sasaki We asked Mitsubishi HC Capital for slightlyQ

more advanced explanations so that we can be better
prepared to undertake more in-depth discussions. The
Company responded and now always provides us withprior explanations regarding key matters. This allows us
to ask questions and hold discussions before attending
the Board of Directorsʼ meetings. Initially, there weremany directors and I worried about whether we could all
express our opinions within the allotted time. Fortunately,
improvements have been made and the meetings areoperated smoothly under current conditions.
Hiraiwa Mitsubishi HC Capitalʼs Board of Directors isbalanced and there is an atmosphere in which we can
express anything on our minds. Individual directors havea wide variety of opinions and ways of thinking. This is
an ideal composition for the Board of Directors and is
especially effective because each director has a different
background. The Board is well-balanced, and it is easy
for us to express our opinions because members maketremendous efforts to listen to and learn from each other.

What do you notice during your on-site
inspections?

Kaneko Recently, the COVID-19 pandemic has subsided, and so there are increased opportunities foron-site inspections, which have opened my understanding of the Companyʼs business. I hope to continue
utilizing my observations at these on-site inspections fordiscussions with the committee.
Saito The Audit and Supervisory Committee had me
make inspection visits to domestic business sites, and in

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Introduction

early 2023, I engaged in direct discussions with the top
management of a recently acquired U.S. marine container leasing company. These inspections were meaningful because I gained an understanding of the thinking
and qualifications of local managers as well as their formof governance and degree of loyalty to their company.
The results of a company naturally reflect whether
local management only has a matter-of-fact attitude ofgive and take or whether they undertake management asa member of the group with a deep sense of affiliation

with their company. I feel that all the managers I met
understood our company and had a mindset of desiring
to work together. Furthermore, I also realized that they
undertook management with a sense of unity with thelocally dispatched Japanese staff.
It is highly commendable that the executive teamprovides the Audit and Supervisory Committee with suchopportunities. This opportunity renewed my strong
desire to contribute to the Company.

Recently we hear the term “offensive and defensive governance” as a function expected of
Outside Directors. What types of matters do you
pay close attention to from this perspective?

Hiraiwa In my role as an Audit and Supervisory
Committee member, I believe my primary responsibility
is defensive governance. Information regarding guidanceand support from the head office is also important for
on-site inspections. I look at whether the Companyʼsgoals are being permeated and promoted in the workplace and whether necessary communications andreports are properly sent to the head office. I believe thatchecking on these matters is also a key role of the Audit
and Supervisory Committee members.
Japanese companies still probably have some weaknesses in offensive-oriented governance. This is why I was
so surprised when our executive team talked about “creating a corporate culture that does not fear failure.” Thatsaid, I fully support this idea and will make my utmost
efforts to encourage this. Everybody will combine theirstrengths to protect Our Mission. I believe this will help
foster offensive-oriented governance at the Company.
Nakata I spend considerable time reading the materials
provided by the Company before each board meeting. In
examining these materials, I sometimes run into ambiguous areas that I do not understand. This makes me think

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What are your thoughts about the role of Outside
Directors as representatives of stakeholders andshareholders?

Nakata To reiterate, on behalf of shareholders, I pointout matters that appear odd from a third partyʼs perspective and areas that would be considered normal inother organizations.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Hiraiwa In particular, although Outside Directors ofcourse make their best efforts for the interests ofminority shareholders, we must never lose sight ofmatters that benefit all stakeholders, including employees and partner companies.
Saito Considering ways to maximize a companyʼssustainability will ultimately lead to rational discussions
for both minority shareholders and employees.

Toward being a leasing business that creates new value without fear of failure

Implementing offensive and defensive governance
Q

Q

Message from the
President & CEO

something might be occurring that the Company isunaware of and it is my job to point this out. I am notsure whether my method is an offensive or defensive
approach.
Sasaki There are times when matters arise internallythat are difficult to speak out about within the Company
or to tell the President & CEO. Offensive-oriented governance involves being aware of such matters as much as
possible and pointing these out when necessary.
Kaneko I think there are two aspects of offensive-oriented governance. The first is to properly confirm aprocess when managers take an offensive approach. A
primary role is to ascertain whether any matter has been
overlooked and, ultimately, provide sound support foroffensive-oriented management. The second aspect is toclosely examine how risk management is undertaken. If
the risk management system is properly functioning after
assuming a risk, a system is in place for going on to thenext offensive. Mitsubishi HC Capital has strong
bank-related elements and undertakes extremely sophisticated risk management, so we have created an environment in which we can easily provide support.
Saito Our inherent duty is to strengthen our defense
against any situations that could damage corporate
value. Alternatively, I believe we have a duty to contribute as much as possible to the “offensive” mission ofincreasing corporate value.

Q

Lastly, please tell us your expectations about the
future of the Company.

Saito Mitsubishi HC Capital has formulated 2025
MTMP and has drawn an overall picture toward realizing
its 10-Year Vision. However, there are some areas where
the head has moved out in front and the body is unable
to catch up. This makes it essential to quickly create amanagement system that firmly manages these aspects.
Sasaki There are features of the leasing business thatare generally difficult to understand. Nonetheless, theleasing business holds the potential to do various thingsand can create diverse value while incorporating societyʼs needs. Generating synergies between the twocompanies will, of course, not be simple. Even so, I
expect that Mitsubishi HC Capital will successively
create new value without fear of failure.
Nakata I highly acclaim Our Mission, “Contribute to aprosperous and sustainable future by creating social value
through maximizing the potential of assets,” which wasannounced at the time of the merger in April 2021. This isbecause Our Mission embodies a variety of possibilities.
The word “asset” can conjure images of tangible
things as well as intangible concepts such as businessand know-how. The term “leasing business” mentioned
by Director Sasaki can be applied not only in its classicalmeaning but also to broader concepts. For example, one
future possibility for Mitsubishi HC Capital is to expand
its leasing business while concurrently moving beyond
the leasing business into different domains.

Although the two former companies before themerger differed in terms of culture and tradition, the determination to change while working together toward thefuture is embedded in Our Mission. This is very appealing.
Hiraiwa Looking at the current situation, full integration
has been completed, and 2025 MTMP has just gotten
underway. Despite many disagreements during theprocess, we have forged a consensus and are now off
and running in the same direction as the new company.
In other words, we all share a common awareness andthis will serve as a strength for the future. I hope
Mitsubishi HC Capital can realize a new business modelthat will change Japan, where there is a strong sense ofstagnation. Furthermore, I would also like to see
Mitsubishi HC Capital provide venues where young
people can work freely. Mitsubishi HC Capital has thecourage and foundation to continuously tackle newchallenges even if it occasionally experiences failures. I
hope Mitsubishi HC Capital will not overthink small
matters in its day-to-day operations and will continue tomove towards a big future.
Kaneko An extremely large benefit of the integration isthat it created a stable base of tangible and intangible
assets and diversified our portfolio. I have great expectations for the ways these assets will be deployed tocreate new value. Mitsubishi HC Capital as a whole isvibrant and young. Mitsubishi HC Capital also has aculture of encouraging young people to take on challenges and providing them with a variety of experiences.
I would like to see Mitsubishi HC Capital develop humanresources who can globally play active roles.

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Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Directors and Executive Officers (As of June 27, 2023)
Directors
Takahiro Yanai

Taiju Hisai

Akira Hamamoto

Koichiro Hiraiwa

Director, Chairman

Representative Director, President & CEO

Director, Audit & Supervisory Committee Member

Born: May 4, 1958
Number of Companyʼs Shares Owned (Shares): 21,600

Born: April 27, 1962
Number of Companyʼs Shares Owned (Shares): 3,700

Born: May 19, 1960
Number of Companyʼs Shares Owned (Shares): 3,400

Director, Audit & Supervisory Committee Member(Independent Outside Director)
Born: January 2, 1950
Number of Companyʼs Shares Owned (Shares): 10,200

April 1982 Joined The Mitsubishi Bank, Ltd. (currently MUFG Bank, Ltd.)May 2012 Managing Executive Officer of The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU)In charge of CIB (Corporate Investment Banking) and Secondarily in charge of Market Sales Division
Managing Officer, Deputy Group Head, Integrated Trust Assets Business Group,
Deputy Group Head, Integrated Corporate Banking Business Group, and Head of the Corporate &Investment Banking Planning Division of Mitsubishi UFJ Financial Group, Inc. (MUFG)
June 2015 Managing Director, Chief Executive, Retail Banking Business Unit of BTMUManaging Executive Officer, Group Head, Integrated Retail Banking Business Group of MUFG
May 2016 Senior Managing Executive Officer, Group Head, Transaction Banking Group of BTMU
June 2017 President & CEO of Mitsubishi UFJ Lease & Finance Company Limited (MUL) (currently the Company)
Concurrently served as Executive Officer of MULApril 2021 Representative Director, President & CEO of the Company
Concurrently served as Executive Officer of the Company
April 2023 Director, Chairman of the Company (incumbent)

Kanji Nishiura

Kazumi Anei

Representative Director, Deputy President,
Overall Operation

Director, Deputy President,
Customer Solutions Unit

Born: February 11, 1958
Number of Companyʼs Shares Owned (Shares): 4,000

Born: September 18, 1960
Number of Companyʼs Shares Owned (Shares): 51,300

April 1980 Joined Mitsubishi Corporation
June 1986 Resident in Saudi Arabia (al-Khobar) (until September 1989)
July 1993 Mitsubishi Corporation (UK) Plc (based in London) (until August 1999)
Jan. 2003 Seconded to Metal One Corporation
April 2009 General Manager, Metals Group CEO Office of Mitsubishi Corporation
April 2010 Senior Vice President and General Manager, Metals Group CEO Office of Mitsubishi Corporation
April 2011 Senior Vice President and Division COO, Non-Ferrous Metals Division of Mitsubishi Corporation
April 2013 Senior Vice President, Division COO, Mineral Resources Investment Div., and General Manager, MDP
Department of Mitsubishi Corporation
April 2015 Executive Vice President and Group COO, Metals Group of Mitsubishi Corporation
April 2016 Executive Vice President and Group CEO, Metals Group of Mitsubishi Corporation
April 2018 Executive Vice President, Corporate Functional Officer, Global Strategy & Coordination, Global Research,
International Economic Cooperation, Logistics Management, (Concurrently) Regional CEO, Asia &Oceania of Mitsubishi Corporation
June 2018 Representative Director, Executive Vice President, Corporate Functional Officer, Global Strategy &Coordination, Global Research, International Economic Cooperation, Logistics Management,(Concurrently) Regional CEO, Asia & Oceania of Mitsubishi Corporation
April 2019 Representative Director, Executive Vice President, Corporate Functional Officer, Global Strategy of
Mitsubishi Corporation
April 2020 Member of the Board of Mitsubishi Corporation
June 2020 Corporate Advisor of Mitsubishi Corporation
April 2021 Representative Director, Deputy President of the Company (incumbent)
Concurrently serves as Executive Officer of the Company (incumbent)
June 2023 Director of Sumitomo Metal Mining Co., Ltd. (incumbent)

April 1985 Joined Hitachi Leasing Corp. (currently the Company)
April 2003 General Manager of Sales Dept. II, Kansai Corporate Sales Branch, Kansai Sales Division of Hitachi
Capital Corporation (Hitachi Capital)
April 2005 Head of Kansai Corporate Sales Branch, Kansai Sales Division of Hitachi Capital
April 2010 Head of Kanagawa Sales Division of Hitachi Capital
April 2011 Head of Tokyo Sales Division III, Corporate Business Division of Hitachi Capital
Oct. 2011 Co-Head of Corporate Business Division of Hitachi Capital
April 2014 Corporate Officer, Head of Corporate Business Division, and Co-Head of Account Sales Promotion
Division of Hitachi Capital
April 2015 Corporate Officer and Head of Corporate Business Division, Corporate Sales & Marketing Group of Hitachi Capital
April 2016 Executive Officer, Head of Corporate Business Division, Corporate Sales & Marketing Group, and Headof Service Business Division of Hitachi Capital
April 2017 Executive Officer, Corporate Sales & Marketing Group, in charge of Japan, and Head of Customer E&E
Business Division of Hitachi Capital
April 2018 Vice President and Executive Officer, Co-Head of Corporate Sales & Marketing Group, in charge ofJapan, and Head of Environment and Energy Business, Corporate Business Division, Customer E&E
Business Division of Hitachi Capital
April 2019 Vice President and Executive Officer, Co-Head of Corporate Sales & Marketing Group, and Chief
Executive for Japan, Corporate Sales & Marketing Group of Hitachi Capital
April 2020 Senior Vice President and Executive Officer, Chief Marketing Officer, and Head of Business
Enhancement Division (in charge of Europe and the Americas) of Hitachi Capital
April 2021 Director, Senior Managing Executive Officer of the Company
May 2021 Director, Deputy President of the Company (incumbent)
Concurrently serves as Executive Officer of the Company (incumbent)

Haruhiko Sato

Hiroyasu Nakata

Director, Managing Executive Officer,
Head of Corporate & Strategic Planning Division, CFO

Director (Independent Outside Director)

Born: June 19, 1965
Number of Companyʼs Shares Owned (Shares): 0
April 1989 Joined Mitsubishi Corporation
Nov. 2002 Mitsubishi International GmbH
Jan. 2007 Moscow Office of Mitsubishi Corporation
April 2009 Treasurer Office of Mitsubishi Corporation
Mar. 2014 Senior Vice President, Corporate Staff Section and CFO of Mitsubishi Corporation (Americas)
April 2019 General Manager, Power Solution Administration Department of Mitsubishi Corporation
April 2021 Director, Managing Executive Officer of the Company (incumbent)

Born: August 29, 1951
Number of Companyʼs Shares Owned (Shares): 1,300

Takuya Kuga

Director (Independent Outside Director)

Director (Outside Director)

Born: May 26, 1967
Number of Companyʼs Shares Owned (Shares): 1,100

Born: December 5, 1963
Number of Companyʼs Shares Owned (Shares): 300

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

April 1983 Joined The Tokai Bank, Ltd. (currently MUFG Bank, Ltd.)
June 2010 Executive Officer and General Manager, Internal Audit Division of Mitsubishi UFJ Financial Group, Inc. (MUFG)
May 2011 Executive Officer, and Deputy General Manager, Global Compliance Division,
concurrently served as Deputy General Manager, Corporate Risk Management Division of MUFG
Executive Officer, and General Manager, Global Compliance Division of The Bank of Tokyo-Mitsubishi
UFJ, Ltd. (BTMU)
concurrently served as Senior Manager, Information Security Management Office,concurrently served as Senior Manager, Information Systems Planning Office, Information Systems
Division of BTMUMay 2013 Managing Executive Officer, and General Manager, Corporate Banking Division No.2 of BTMU
June 2015 Managing Corporate Executive, and Group CCO,
concurrently served as Group CLO of MUFG Managing Director and CCO,
concurrently served as CLO of BTMUMay 2017 Senior Managing Corporate Executive, and Group CCO,
concurrently served as Group CLO of MUFG
Senior Managing Director, and CCO,
concurrently served as CLO of BTMU
June 2019 Member of the Board of Directors and Full-time Member of the Audit & Supervisory Committee of MUFG Bank, Ltd.
June 2021 Senior Managing Executive Officer of the Company
June 2022 Director, Audit & Supervisory Committee Member of the Company (incumbent)

April 1986 Joined Mitsubishi Corporation
Dec. 1997 Seconded to MC Realty, Inc. (Vice President) (Dallas, Los Angeles from June 1999) (until February 2003)
April 2008 Seconded to Diamond Realty Management Inc.
May 2008 President & Representative Director of Diamond Realty Management Inc.
July 2009 Seconded to Mitsubishi Corp.- UBS Realty Inc.
Oct. 2009 President & Chief Executive Officer, Mitsubishi Corp.- UBS Realty Inc.
July 2013 General Manager, Strategic Planning Office, Real Estate Development & Construction Div. of Mitsubishi Corporation
April 2015 General Manager, Urban Development
Dept., Real Estate Development & Construction Div. of Mitsubishi Corporation
April 2016 Division COO, Real Estate Development & Construction Div. of Mitsubishi Corporation (Concurrently)
General Manager, North America Real Estate Development Dept. of Mitsubishi Corporation
Oct. 2016 Division COO, Real Estate Business Div. of Mitsubishi Corporation (Concurrently) General Manager, North
America Real Estate Development Dept. of Mitsubishi Corporation
Jan. 2017 Division COO, Real Estate Business Div., Mitsubishi Corporation
April 2017 Senior Vice President, Division COO, Real Estate Business Div. of Mitsubishi Corporation
April 2019 Senior Vice President, Division COO, Urban Infrastructure Div. of Mitsubishi Corporation
Nov. 2019 Senior Vice President, General Manager, Urban Development Group CEO Office, Mitsubishi Corporation
April 2022 Executive Vice President, Group CEO, Urban Development Group of Mitsubishi Corporation (incumbent)
June 2022 Director of the Company (incumbent)

April 1974 Joined Bank of JapanMay 1997 General Manager of Okayama Branch, Bank of Japan
Jan. 2002 General Manager of Kyoto Branch, Bank of Japan
April 2004 Head of Business Planning Department, Financial Business Division, NTT DATA Corporation
June 2005 Head of Financial Strategy Business Promoting Office, Financial Business Division, NTT DATA
Corporation
July 2008 Head of Financial Business Planning Office, Financial Business Planning and Administration Department,
NTT DATA Corporation
Mar. 2009 President & Representative Director, the Kyoto Hotel, Ltd.
Mar. 2015 Director, Allied Telesis Holdings K.K.
Representative Director, Apua Consulting Inc.
June 2015 Director, Hitachi Capital Corporation (currently the Company)
Dec. 2017 Representative Director, Dream Estate Tokyo Inc. (incumbent)
June 2019 Chairman of the Board of Directors, Hitachi Capital Corporation
April 2021 Director, Audit & Supervisory Committee Member of the Company (incumbent)

Hiroko Kaneko

Masayuki Saito

Director, Audit & Supervisory Committee Member(Independent Outside Director)
Born: March 28, 1958
Number of Companyʼs Shares Owned (Shares): 1,300

Director, Audit & Supervisory Committee Member(Independent Outside Director)
Born: November 8, 1954
Number of Companyʼs Shares Owned (Shares): 1,300

April 1980 Joined The Sapporo Television Broadcasting Co., Ltd.
Oct. 1989 Joined Ota Showa Audit Corporation (currently Ernst & Young ShinNihon LLC)
Feb. 1993 Registered as certified public accountant
May 2007 Partner, ERNST & YOUNG SHINNIHON (currently Ernst & Young ShinNihon LLC)
July 2010 Senior Partner, Ernst & Young ShinNihon LLC
April 2018 Professor at Waseda Graduate School of Accountancy
June 2018 Audit & Supervisory Board Member, The Shoko Chukin Bank, Ltd.
June 2019 Director, Kanagawa Chuo Kotsu Co., Ltd.
June 2020 Audit & Supervisory Board Member of Mitsubishi UFJ Lease & Finance Company Limited (currently theCompany)
Feb. 2021 Member of Business Accounting Council, Financial Services Agency (incumbent)
April 2021 Director, Audit & Supervisory Committee Member of the Company (incumbent)
Mar. 2022 Member of the Board, The Yokohama Rubber Co., Ltd. (incumbent)
June 2022 Director (Audit and Supervisory Committee Member), Kanagawa Chuo Kotsu Co., Ltd. (incumbent)

April 1977 Joined Dainippon Ink and Chemicals, Incorporated (currently DIC Corporation)
April 2008 Executive Officer, in Charge of Finance & Accounting Div. of DIC Corporation Head of Finance &Accounting Div. of DIC Corporation
June 2010 Director, Executive Officer, in Charge of Finance & Accounting Div. of DIC Corporation
April 2011 Director, Managing Executive Officer, in charge of Finance and Accounting Div. of DIC Corporation
April 2012 Representative Director, Senior Managing Executive Officer, Assistant to President and CEO, and in
Charge of Finance & Accounting Div. of DIC Corporation
April 2013 Representative Director, Senior Managing Executive Officer, Assistant to President and CEO, and in
charge of Finance and Accounting Div. of DIC Corporation
Chairman of the Supervisory Board, Sun Chemical Group Coöperatief U.A.
Jan. 2016 Representative Director, Executive Vice President, CFO, and Assistant to President and CEO of DIC
Corporation
Chairman of the Supervisory Board, Sun Chemical Group Coöperatief U.A.
Jan. 2020 Representative Director, Executive Vice President, and Assistant to President and CEO of DIC
Corporation
Chairman of the Supervisory Board, Sun Chemical Group Coöperatief U.A.
Jan. 2021 Chairman of the Board of Directors of DIC Corporation (incumbent)
Chairman of the Supervisory Board, Sun Chemical Group Coöperatief U.A. (incumbent)
June 2022 Director, Audit & Supervisory Committee member of the Company (incumbent)

Executive Officers (*indicate additional post of Director and Corporate Executive Officer)■President & CEO
Taiju Hisai*■Deputy Presidents
April 1977 Completed the legal apprentice course at the Legal Training and Research Institute of the Supreme Court of Japan
Admitted to the bar (Daini Tokyo Bar Association) (until March 1990)
April 1990 Associate Professor at Faculty of Law and Economics, Chiba University
June 1993 Professor at Faculty of Law and Economics, Chiba University
April 1995 Professor at Faculty of Law, Hitotsubashi University
April 1999 Professor of Graduate School of Law, Hitotsubashi University
April 2003 Trustee of Hitotsubashi University
April 2008 Professor at The University of Tokyo Graduate Schools for Law and Politics and The University of Tokyo Faculty of Law
April 2015 Emeritus Professor of Hitotsubashi University
April 2017 Professor at Waseda Law School
June 2017 Emeritus Professor of The University of Tokyo
June 2018 Audit & Supervisory Board Member of Mitsubishi UFJ Lease & Finance Company Limited (currently the Company)
April 2021 Director of the Company (incumbent)

Yuri Sasaki

April 1995 Assistant at Hitotsubashi University (Faculty of Commerce and Management)
April 1998 Assistant Professor of Faculty of Commerce,
Takachiho University of Commerce (current Takachiho University)
April 2001 Assistant Professor of Faculty of Economics, Meiji Gakuin University
April 2006 Visiting Scholar at University of Washington
April 2007 Professor of Faculty of Economics, Meiji Gakuin University (incumbent)
June 2014 Director of JBA TIBOR Administration
Jan. 2015 Expert Committee Member of Financial System Council of Financial Services Agency (incumbent)
Nov. 2015 Visiting Scholar at University of Washington
June 2018 Director of Hitachi Capital Corporation (currently the Company)
April 2020 Dean of Faculty of Economics, Meiji Gakuin University
April 2021 Director of the Company (incumbent)
July 2022 Director of Meiji Yasuda Life Insurance Company (incumbent)

71

April 1985 Joined The Mitsubishi Bank, Ltd. (currently MUFG Bank, Ltd.)
July 2012 General Manager, Corporate Banking Division for Europe, Middle East and Africa, Headquarters for
Europe, Middle East and Africa of The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU)
Concurrently assigned to BTMU (Europe) Limited
June 2014 Executive Officer and General Manager, Corporate Banking Division for Europe, Middle East and Africa,
Headquarters for Europe, Middle East and Africa of BTMU
Concurrently assigned to BTMU (Europe) Limited
Sep. 2014 Executive Officer Regional Executive for India
concurrently served as Deputy General Manager, Corporate Banking Division for Asia and Oceania,
Headquarters for Asia and Oceania of BTMUMay 2016 Managing Executive Officer in charge of Credit of BTMU
April 2018 Managing Executive Officer and Group Head, Corporate Banking Group No. 1 of MUFG Bank, Ltd. (MUFG Bank)
April 2019 Senior Managing Executive Officer and Group Head, Corporate Banking Group No. 1 of MUFG Bank
June 2021 Deputy President of the Company
Concurrently served as Executive Officer of the Company
June 2022 Director, Deputy President of the Company
Concurrently served as Executive Officer of the Company
April 2023 Representative Director, President & CEO of the Company (incumbent)
Concurrently serves as Executive Officer of the Company (incumbent)

Kanji Nishiura*
Kazumi Anei*

Overall Operation
Customer Solutions Unit

■Senior Managing Executive Officer
Masashi Takeda

Head of ASEAN Division, Global Business Unit
Director of Mitsubishi HC Capital Asia Pacific Pte. Ltd.

■Managing Executive Officers
Yoshikazu Ohashi
Osamu Muramoto

Head of Europe Division, Global Business Unit
Head of Aviation Business Division
Chairman of JSA International Holdings, L.P.
Kazuhiko Takeuchi Commissioned as General Manager of Corporate & Strategic
Planning Department
Shinji Tanaka
Head of IT & Operations Division
Takeo Nakai
Head of East Japan Area Business Division
Deputy Head of Industrial Machinery Business Division,
Customer Solutions Unit
Kazunori Hamazaki Internal Audit Department
Yasuyuki Hirota
Head of Global Business Promotion Division and Head of China
Division, Global Business Unit
Director Chairman of Mitsubishi HC Capital Management (China)
LimitedDirector Chairman of Mitsubishi HC Capital (Hong Kong) Limited
Head of West Japan Area Business Division, Customer Solutions Unit
Yukio Maruyama
Junji Ogiuchi
Head of Sector Business Division, Customer Solutions Unit
Haruhiko Sato*
Head of Corporate & Strategic Planning Division
CFO

Nozomu Naruse
Hiroshi Ikebe

Head of Hitachi Business Division, Customer Solutions Unit
Head of Credit Division
Head of Risk Management Division
CCMO*2, CCO*3, CISO*4
Hisashi Ishimaki
Head of Mobility Business Division
Head of Logistics Business Division
Chairman of CAI International, Inc.
Chairman of PNW Railcars, Inc.
Katsuya Kitahara Head of Business Promotion & Strategic Planning Division,
Customer Solutions Unit
Makoto Sawada
Head of Vendor Solutions Business Division,
Customer Solutions Unit
Representative Director of Mitsubishi HC Business Lease
Corporation
Yuji Suzuki
Head of Central Japan Area Business Division, Customer
Solutions Unit
Masahiko Tanimura Head of Americas Division, Global Business Unit
Chairman of Mitsubishi HC Capital America, Inc.
Katsuji Okamoto
Head of Real Estate Business Division
Yasuhiro Sato
Head of Industrial Machinery Business Division, Customer
Solutions Unit
Takuji Naruse
Head of Environment & Energy Business Division
Toru Fukuyama
General Manager of Audit and Supervisory Committee Office
Takashi Yamaguchi Head of Human Resources & General Affairs Division
Deputy Head of Risk Management Division*1 CMO: Chief Marketing Officer*2 CCMO: Chief Crisis Management Officer*3 CCO: Chief Compliance Officer*4 CISO: Chief Information Security Officer

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

72

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Corporate Governance
Basic Views on Corporate Governance
MHC recognizes that one of its social responsibilities is to ensure transparent and sound management while emphasizing
initiatives to achieve sustainable corporate growth and a medium- to long-term improvement in corporate value. Respecting
the rights and interests of all of its stakeholders, including shareholders, customers, local communities, and employees MHC
works to fulfill the trust they place in us and aspires to contribute to a more prosperous society.
To fulfill these social responsibilities, it engages in continuous initiatives to enhance corporate governance by boosting the activity of the Board of Directors, reinforcing the Audit & Supervisory Committee and the internal audit system,
ensuring timely and appropriate disclosures of information, improving investor relations (IR), and related activities.
Basic policies
Appropriate collaboration with all stakeholders
In accordance with MHCʼs “Vision,” which guides all ofMHCʼs activities, and the “Mitsubishi HC Capital Group
Code of Ethics and Code of Conduct,” which serves as
the standard for the decisions and behaviors of all
employees, MHC strives to ensure appropriate collaboration with its various stakeholders, including shareholders, customers, local communities, and employees.
In addition, MHC strives to foster a corporate culture that encourages respect for the diversity of its
stakeholders, their rights and perspectives, and soundcorporate ethics.
Appropriate information disclosure andensuring transparency
MHC strives to conduct proactive and continuous information disclosure in order to be trusted and properly
evaluated by each of its stakeholders. It also establishes
and appropriately operates internal systems to facilitate
the swift and impartial disclosure of accurate information
regarding its management policies, business strategies,
business activities, financial condition, etc.
In addition to the items it is required to disclose
pursuant to laws and regulations, it actively and voluntarily discloses non-financial information deemed useful
to its stakeholders.

tively, including furnishing the necessary environment for
the exercise of such rights, and gives consideration to
the fair treatment of all shareholders, including minority
shareholders and foreign shareholders.
Dialogue with shareholders
Through events such as financial results briefings andother domestic and overseas investor relations (IR)events, MHC pursues proactive and constructive dialogue with shareholders. It thereby seeks to gain anunderstanding from shareholders regarding matters suchas its business strategies while responding to the shareholders in an appropriate manner based on an understanding of their perspectives.
Responsibilities of the Board of Directors
All members of the Board of Directors, including Outside
Directors, call upon their experience and insight as they
engage in free and open discussions, contributing toactive proceedings of the meetings of the Board of
Directors. In this manner, they adequately fulfill theirduties and responsibilities to achieve the sustainablegrowth of MHC, medium- to long-term improvement of
its corporate value, and enhancement of its earnings
capacity and capital efficiency in an environment that
supports appropriate risk-taking.

Ensuring the rights and equality of shareholders
MHC takes appropriate steps to ensure that the rights ofshareholders are secured and can be exercised effec-

Corporate Governance Systems (As of October 1, 2023)
General Meeting of Shareholders
Appointment/Dismissal

Important
DecisionMaking Audit &Supervisory
Function

Corporate Governance System and Its Characteristics

73

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Matters concerning execution of duty
As a company with an audit & supervisory committee,
MHC delegates many execution of duty decisions to the
Executive Committee, a body that will deliberate anddecide on important management matters, and expedites the decision-making process, with the aim ofstrengthening the supervisory functions of the Board of
Directors. In addition, MHC has adopted an executive
officer system, in order to further enhance and invigorate
the functions of the Board of Directors by clarifying the
responsibilities related to the execution of duty.
The Executive Committee, a body that will deliberate and decide on important management matters, iscomposed of the President & CEO, Deputy President,
and Executive Officers separately specified by the
President & CEO. The Committee will hold deliberations
and make decisions on important matters, including thebusiness management of the Group, in addition to
conducting preliminary considerations of matters thatare to be submitted to the Board of Directors to facilitate
decision-making by the Board of Directors.

Governance Committee, Nomination Committee, andCompensation Committee
The Governance Committee widely exchanges opinions on
enhancing the effectiveness of the Board of Directors andother matters concerning the Board of Directors and continues working to enhance the soundness, transparency, andfairness of the Companyʼs management.
The Nomination Committee discusses the appointment of Directors, the succession plan for the
Representative Director, President & CEO, knowledge,
experience, skills, etc. that the Directors should have,and other matters.
The Compensation Committee regularly monitors
the Directorsʼ remuneration system of MHC in comparison with the market standard by using an external specialized agency and discusses policies concerning theGovernanceCommittee
Nomination
Committee
Compensation
Committee

AdviceBoard ofDirectors

ReportingConsultation
ReportingAppointment/Dismissal
Audit/
Supervising

Audit &
Supervisory
Committee

Directors

Appointment/Dismissal

ReportingAccounting
AuditorDirectors who are Audit & Supervisory Committee Members

Consultation

Appointment/Dismissal; Delegation and Supervision of Execution of Duty

The Company transitioned into a company with an audit & supervisory committee to enhance the fairness and transparency of management, strengthen the supervisory functions of the Board of Directors, and enhance corporate governance. The Board of Directors is chaired by a non-executive Chairman. In addition, to further enhance its corporate
governance, the Company has established the Nomination Committee and the Compensation Committee, of which
Independent Outside Directors comprise the majority, as advisory bodies to the Board of Directors related to the nomination of the President, remuneration for Directors, and other matters. The Company has also established theGovernance Committee, which consists of Outside Directors, Representative Directors, and others, as an organizationthat gives the Board of Directors advice related to matters including improvement of its effectiveness.

systems, standards, etc., for Directorsʼ remuneration.
The members and the chairperson of the Nomination
Committee and Compensation Committee shall beselected by the Board of Directors, and items discussed in
the committees shall be resolved by a majority of committee members in attendance. It is stipulated in internal rulesthat the Board of Directors shall make decisions in recognition of to decisions made by the committees.

Board of Directors and Audit & Supervisory Committee
The Company implements a system to manage andoperate business in line with the basic policy decided by
the Board of Directors. Each Outside Director has qualities appropriate for their position, giving the Board of
Directors a set of diversified and sufficient skills.
The Audit & Supervisory Committee consists of one
Full-time Audit & Supervisory Committee Member andthree Part-time (outside) Audit & Supervisory Committee
Members. The Companyʼs Audit & Supervisory
Committee Members have extensive knowledge offinancial business, and a system is in place to ensure thefull effectiveness of accounting audits.

Proposal/ReportingInstruction

Reporting

Cooperation

Accounting Audit

Risk Management Committee
Compliance Committee
ALM Committee

Execution of
Duty
Function

Disclosure Committee

Executive
Committee

Reporting

ReportingPresident & CEO

Consultation

Instruction/
Supervising

Sustainability Committee
IT Committee

Internal
Audit Division

Instruction/
Supervising

Proposal/Reporting

Audit

Execution of Duty Division
MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

74

Introduction

Composition of the Board of Directors
Views on the appropriate balance of knowledge,
experience and skills, diversity, and size of the Boardof Directors as a whole
MHC assumes that the Board of Directors shall possess
skills in “general corporate management”, “financing”,“treasury accounting”, “legal, compliance and risk management”, “international business”, and other areas, inview of the business lineup. MHC recognizes that diversityof Directors is important for the purposes of strengthening
the function of the Board of Directors and that gender,
nationality, and race are factors that should be considered.
On the other hand, MHC believes that it is not necessarily desirable, for purposes of strengthening the functionsof the Board of Directors, to elect a Director with a certain
attribute merely to comply with formal and external diversity
requirements even when they lack the qualities and abilities
that are required for the role. Therefore, MHC believes, as adesirable way of achieving diversity within MHC, that it isnecessary to consider whether such a Director is expected
to perform the necessary skills and possesses the ability inlight of the respective management environment as a toppriority and electing a desirable person without restrictions
on gender, nationality, race, age, career, etc. Based on sucha view, MHC will continue to determine the appropriatecomposition of the Board of Directors.
Currently, it assumes that MHCʼs Board of Directors
consists of Directors from a variety of business categories and industries and has an appropriate number ofmembers to ensure a balanced composition of appropriate skills and diversity.
MHC has currently elected two female Directors
while no foreign Directors have been elected. However,
MHC acknowledges that the Board of Directors has
been performing a sufficient supervisory function, as it
has elected several Directors who possess a wealth ofinternational business experience and has received
valuable opinions on global business development.

Ratio ofnon-executive directors

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Composition of the Board of Directors and Reasons for Appointment and Expertise of Each Director
Training Policy for Directors and Audit & Supervisory
Committee Members
The Company explains its corporate philosophy, financial conditions, matters related to corporate governance,and other matters to newly appointed Outside Directors
upon their appointment. In addition, after they take officeas Directors, the Company provides them with information on training opportunities, including seminars held byexternal organizations on the latest trends in corporate
governance, DX, sustainability, and other topics.
Further, Outside Directors cooperate by exchanging
and sharing various information via the GovernanceCommittee, which is an advisory body to the Board of
Directors, and opinion exchange sessions, in which only
Outside Directors participate.
The Company bears the full cost related to thetraining of Directors.

Candidateʼs
Name

Takahiro Yanai

Taiju Hisai

Kanji Nishiura

Kazumi Anei

Haruhiko Sato

Hiroyasu Nakata

Ratio of outside directors

42%

Areas of Expertise (Note)
Title

Yuri Sasaki

Reasons for Appointment and Expected RoleManagement Finance Treasury Legal Global

Director, Chairman

Since 2017, Mr. Takahiro Yanai has served as the President & CEO of Mitsubishi UFJ
Lease & Finance Company Limited based on a wealth of management experience at amajor Japanese financial institution. He has a wealth of management experience as thechief of execution of duty leading the management of the Company as it expands globally.
By using deep knowledge based on his experience, he has been in charge of supervisionof management as a non-Executive Director, Chairman since April 2023. We have deemed
him to be the best candidate to aim for further improvement of the soundness of the
management of the Company and enhancement of corporate value over the medium tolong term. We are therefore reappointing him as a candidate for Director.

Representative
Director,
President & CEO

Since 2021, Mr. Taiju Hisai has served as the Deputy President and an Executive Officer of
the Company and has led the overall business of the Company based on a wealth ofmanagement experience at a major Japanese financial institution. He has served as theRepresentative Director, President & CEO, and an Executive Officer acting as the chief ofexecution of duty since April 2023. He has sufficient experience and knowledge toassume business management of the Company as it expands globally. We have deemed
him to be the best candidate to take command of business as the Representative
Director, President & CEO, and an Executive Officer and to aim for the Companyʼssustainable growth and improvement of corporate value over the medium to long term.
We are therefore reappointing him as a candidate for Director.

Representative
Director, Deputy
President

Since 2021, Mr. Kanji Nishiura has served as the Representative Director, Deputy
President, and Executive Officer of the Company. With his wealth of management
experience at a major Japanese general trading company, he has managed the overall
operations to assist the President. He has sufficient experience and knowledge to assume
business management of the Company as it expands globally. We expect him tocontribute to the Companyʼs sustainable growth and improvement of corporate value overthe medium to long term as an Executive Director and are therefore reappointing him as a
candidate for Director.

Director, Deputy
President

Mr. Kazumi Anei has served as an Executive Officer and the Chief Marketing Officer ofHitachi Capital Corporation since 2016 and 2020, respectively, and since 2021, he has led
the overall business of the Company as the Director, Deputy President, and an Executive
Officer of the Company. He has sufficient experience and knowledge to assume business
management of the Company as it expands globally. We expect him to contribute to theCompanyʼs sustainable growth and improvement of corporate value over the medium tolong term as an Executive Director and are therefore reappointing him as a candidate for
Director.

Director, Managing
Executive Officer

Mr. Haruhiko Sato currently assumes the positions of the Head of the Corporate &Strategic Planning Division and CFO, serving as the Director, Managing Executive Officerof the Company. He has a wealth of experience at a major Japanese general trading
company, as well as experience and knowledge in the corporate division, which he has
cultivated while engaged in the business management of the Company as it expands
globally. We expect him to utilize this background and contribute to the Companyʼssustainable growth and improvement of corporate value over the medium to long term as
an Executive Director. We are therefore reappointing him as a candidate for Director.

Director(Outside Director)(Independent
Director)

Mr. Hiroyasu Nakata has deep knowledge as a legal expert. He had contributed toappropriate decision making and supervision of overall management by the Board of
Directors as an independent Outside Director. We are therefore reappointing him as a
candidate for Director. We expect him to use his knowledge to contribute to appropriate
decision making and supervision of overall management by the Board of Directors as anindependent Outside Director from an objective perspective independent of executive
management responsible for the execution of duty and to contribute to the improvement of
the soundness, transparency, and fairness of the management of the Company as a memberof the Governance Committee, Nomination Committee and Compensation Committee.

Director(Outside Director)(Independent
Director)

Ms. Yuri Sasaki has academic knowledge as a university professor, as well as outstanding
insight and a wealth of experience as an international finance researcher. She contributed toappropriate decision making and supervision of overall management by the Board of
Directors as an independent Outside Director. We are therefore reappointing her as a
candidate for Director.
We expect her to use her knowledge and experience to contribute to appropriate decision
making and supervision of overall management by the Board of Directors as an independent
Outside Director from an objective perspective independent of executive management
responsible for the execution of duty and to contribute to the improvement of the soundness,transparency, and fairness of the management of the Company as a member of theGovernance Committee, Nomination Committee and Compensation Committee.

Ratio of female directors

17%
67%

Message from the
President & CEO(Note) The respective terms for the areas of expertise have the following meanings: “Management” for general corporate management; “Finance” for treasury;“Treasury” for finance and accounting; “Legal” for legal, compliance, and risk management, and; “Global” for global business.

75

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

76

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Status of Activities of the Board of Directors and each Committee
Candidateʼs
Name

Takuya Kuga

Areas of Expertise (Note)
Title

Reasons for Appointment and Expected RoleManagement Finance Treasury Legal Global

Director(Outside Director)

Mr. Takuya Kuga has a wealth of management experience at a major Japanese general
trading company, as well as a deep knowledge of Japanese and international businesses.
He has used his experience and knowledge from a practical perspective to contribute toappropriate decision making and supervision of overall management by the Board of Directors
as an Outside Director. We are therefore reappointing him as a candidate for Director.
As Mr. Kuga concurrently serves as the Executive Vice President of Mitsubishi
Corporation, a major shareholder of the Company, he is not designated as an
Independent Director. Mitsubishi Corporation is an important business partner for theCompany to work together with to aim for the improvement of corporate value.
Among other positions, including overseas assignments in the U.S., he had served as
Division COO, Real Estate Business Division and Division COO, Urban Infrastructure
Division. Currently, he assumes the position of the Group CEO, Urban Development
Group. We expect to utilize Mr. Kugaʼs management experience and extensive knowledgeof overall Japanese and international businesses for the Companyʼs management andeffectively utilize advice from him, who has served as a chief of business areas ofcollaboration between Mitsubishi Corporation and the Company. We deem that this willlead to the improvement of the Companyʼs corporate value and contribute to theenhancement of the interests of all shareholders, including minority shareholders.
Mr. Kuga has indicated his intention to perform his duties as a Director for the benefit of theCompany and not for any specific shareholder. If any item of business posing a conflict ofinterest between Mitsubishi Corporation and the Company is submitted to the Companyʼs
Board of Directors, he will participate in neither the resolutions nor the deliberations.
We expect him to use his knowledge to contribute to appropriate decision making andsupervision of overall management by the Board of Directors as an Outside Director andto contribute to the improvement of the soundness, transparency, and fairness of the
management of the Company as a member of the Governance Committee, Nomination
Committee and Compensation Committee.

Akira Hamamoto

Director,
Audit &
Supervisory
Committee
MemberBased on his extensive management experience and experience as a Full-time Member ofthe Audit & Supervisory Committee of Japanʼs leading financial institution, he wasappointed as Senior Managing Executive Officer of the Company in 2021 and contributed toensuring the soundness of the Companyʼs management as the Director in charge of theInternal Audit Department. He was reappointed as a Director with the expectation that, by
taking advantage of his knowledge, he would contribute to ensuring the sound management of the Company as a Director who is also an Audit & Supervisory Committee Member.

Koichiro Hiraiwa

Director,
Audit &
Supervisory
Committee
Member(Outside Director)(Independent
Director)

Based on his experience at the central bank of Japan and Japanʼs leading telecommunication company, as well as the extensive knowledge he has acquired through management ofa major hotel, he has contributed to the Board of Directorsʼ appropriate decision-making
and overall management supervision as an Independent Outside Director, and to neutral
and objective audits, and has therefore been reappointed as a Director.
We expect that he will contribute to ensuring the sound management of the Company asan Independent Outside Director and contribute to improving the soundness, transparency, and fairness of management as a member of the Governance Committee, theNomination Committee, and the Compensation Committee, based on the above
knowledge and from an objective perspective independent from the management teamthat executes duty.

Hiroko Kaneko

Director,
Audit &
Supervisory
Committee
Member(Outside Director)(Independent
Director)

Based on her extensive experience at major audit firms and as a university professor, as wellas her in-depth knowledge as an accounting expert, she has contributed to the Board of
Directorsʼ appropriate decision-making and overall management supervision as an
Independent Outside Director and to neutral and objective audits and has therefore beenreappointed as a Director.
We expect that she will contribute to ensuring the sound management of the Company as an
Independent Outside Director, and contribute to improving the soundness, transparency, andfairness of management as a member of the Governance Committee, the Nomination
Committee, and the Compensation Committee, based on the above knowledge and from an
objective perspective independent from the management team that executes duty.

Masayuki Saito

Director,
Audit &
Supervisory
Committee
Member(Outside Director)(Independent
Director)

Based on his extensive management experience at Japanʼs leading manufacturer and his
extensive knowledge in the finance and accounting fields, we expect that he will contribute to
the Board of Directorsʼ appropriate decision-making, overall management supervision, andneutral and objective audits as an Independent Outside Director and has therefore beenreappointed as a Director.
We expect that he will contribute to ensuring the sound management of the Company as an
Independent Outside Director and contribute to improving the soundness, transparency, andfairness of management as a member of the Governance Committee, the Nomination
Committee, and the Compensation Committee, based on the above knowledge and from an
objective perspective independent from the management team that executes duty.

(Note) The respective terms the areas of expertise indicate are the following: “Management” for general corporate management; “Finance” for treasury; “Treasury” forfinance and accounting; “Legal” for legal, compliance, and risk management, and; “Global” for global business.

77

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Status of activities of the Board of Directors
The Board of Directors meetings are held every month, in principle. The meetings were held 14 times in FY2022, where important management matters such as the next Medium-termManagement Plan, HR strategies, major investment projects,
business strategies of each business division, and IR activities
were deliberated and decided. In addition, the significance ofstrategic shareholdings was verified, and details of deliberationsin the advisory bodies to the Executive Committee, such as risk
management, compliance, sustainability, and digitalization,
were regularly reported to the Board of Directors. Then, theBoard of Directors deliberated the important policies for eacharea. Furthermore, the status of audits is reported by the Audit& Supervisory Committee in every meeting.
Attendance at the Board of Directors meetings by Directors
and Audit & Supervisory Committee Members in FY2022 was
as shown on the right.

14/14 times (100%)

Seiji Kawabe, Takahiro Yanai,
Kanji Nishiura, Kazumi Anei,
Haruhiko Sato, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

11/11 times (100%)

Taiju Hisai, Takuya Kuga,
Akira Hamamoto

10/11 times (91%)

Masayuki Saito(Note) Regarding Taiju Hisai, Takuya Kuga, Akira Hamamoto, andMasayuki Saito, attendance at the Board of Directors meetings
held later than June 28, 2022, is provided as they were newly
appointed as Directors in the General Meeting of Shareholders
held on June 28, 2022.

Status of activities of each committee
Governance Committee
The committee meetings were held three times in FY2022 andconducted PDCA for effectiveness assessment by deliberating
the manner of effectiveness assessment for the Board of
Directors and the analysis of the assessment results.
Attendance by Directors was as shown on the right.

Nomination Committee
The committee meetings were held five times in FY2022 anddeliberated the selection of Director candidates, skills that the
Directors should have (skill matrix), selection/dismissal standards, and independence standards for Directors. Furthermore,
the committee discussed the expertise, quality, etc. required for
MHCʼs President & CEO as a part of the succession plan for the
President & CEO and deliberated on the next President & CEO
based on the candidate list.
Attendance by Directors was as shown on the right.
Compensation Committee
The committee meetings were held eight times in FY2022 anddeliberated the Directorsʼ remuneration scheme and standards,
verified the amount paid as performance-based compensation,and deliberated the adoption of a performance-based stockcompensation plan.
Attendance by Directors was as shown on the right.

3/3 times (100%)

Seiji Kawabe, Takahiro Yanai,
Kanji Nishiura, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

2/2 times (100%)

Takuya Kuga, Akira Hamamoto,
Masayuki Saito

5/5 times (100%)

Seiji Kawabe, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

4/4 times (100%)

Takuya Kuga, Masayuki Saito

8/8 times (100%)

Takahiro Yanai, Hiroyasu Nakata,
Yuri Sasaki, Go Watanabe,
Koichiro Hiraiwa, Hiroko Kaneko

7/7 times (100%)

Takuya Kuga, Masayuki Saito(Note) Regarding Takuya Kuga, Akira Hamamoto, and Masayuki Saito,
attendance at the committee meetings held later than June 28,2022, is provided as they have been members since June 28,
2022.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

78

Introduction

Value Creation Story Business Strategies

Evaluation of the Effectiveness of the Board of Directors

Selection and Dismissal of Directors

Policies for effectiveness assessment of the Board of
Directors
MHC has continued efforts to further improve the effectiveness of the activities of the Board of Directors basedon the review and assessment by all of the Directors on
their activities throughout the year for the purpose ofmaintaining and improving the function of the Board of
Directors.

The Board of Directors resolves the appointment ofcandidates to serve as Directors after the Nomination
Committee, of which Independent Outside Directors
comprise the majority, holds discussions in advancebased on the selection standards described below. The
Board of Directors also resolves the appointment ofcandidates to serve as Directors who are also Audit &Supervisory Committee Members after the Nomination
Committee discusses it and the Audit & Supervisory
Committee agrees to it.
In addition, if a Director is found to meet the dismissal standards described below, their dismissal isdeliberated by the Nomination Committee in a timely
manner and decided by the Board of Directors.
See pages 76-77 for reasons for the appointment
and expected role of each Director.

Assessment manner for FY2022
Having confirmed the validity of the self-assessment
manner used for FY2022, MHC decided to conduct asurvey of all the Directors for FY2023 as well.
In the survey for FY2022, questions on the topics to
be entrusted to business execution and the standards
for items to be submitted to the Board of Directors, inaddition to the questions on themes that should be
discussed by the Board of Directors, in order to further
stimulate discussions at the Board of Directors. MHC
also added questions on the effectiveness of theGovernance Committee, Nomination Committee, andCompensation Committee, in addition to the Board of
Directors.
Based on the results of the survey, the Board of
Directors held in May 2023 assessed the effectiveness of
the Board of Directors, etc., taking into account thediscussion at the Governance Committee held in April
2023.

Results of effectiveness assessment
The major results of the assessment above are shown on
the left.
① It was determined that the Board of Directors, etc. of
MHC are sufficiently performing their roles.
● Because sufficient prior explanations of important
agenda items mainly focusing on key topics such as
the medium- to long-term management direction andthe new Medium-term Management Plan had been
provided to Directors, understanding of the agenda
items was deepened and the efficiency of the Board of
Directors improved. In addition, measures to solve theissues recognized in the previous effectiveness assessment have been steadily implemented, and the operation of the Board of Directors has been improved. For
instance, communication and mutual understanding
among the Directors has significantly improved.
● Each Committee meeting was carried out in a timely
and appropriate manner and had highly-transparent
and fair discussions on the replacement of the
President & CEO and the remuneration of the Directors.
② Meanwhile, issues that should be addressed to further

enhance the effectiveness of the Board of Directors, etc.
have been recognized.
● It is necessary to allocate time for deliberation according to the significance of the agenda items and tofurther improve prior explanations on key agenda items
in order to secure enough time for deliberation.
● There is a need for efforts to further promote Outside
Directorsʼ understanding of the overall global businessof MHC.
Initiatives for FY2023
MHC will strive to further enhance corporate governanceand improve the effectiveness of its Board of Directors,
etc., by implementing measures to solve each issue
specified above.

79

Message from the
President & CEO

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Selection Standards
1. Directors and Audit & Supervisory Committee
Members should have the mental and physicalsoundness sufficient to execute duty.
2. Directors and Audit & Supervisory Committee
Members should be persons who are wellrespected, possess excellent integrity, and holdthemselves to high ethical standards.
3. Directors and Audit & Supervisory Committee
Members should have a law-abiding mentality.
4. Directors and Audit & Supervisory Committee
Members should be expected to make objective
judgments regarding management and haveexcellent insight and perspicacity.
5. It is reasonable to consider that the candidates
will help strengthen the functions of the Board of
Directors, in view of their knowledge, experience, capabilities, and similar factors.
6. In addition to 1. to 5. above, candidates for
Outside Directors should (i) have experience,achievements, and knowledge in their fields ofspecialization, (ii) be able to contribute to theimplementation of appropriate decision making
and management supervision of the Board of
Directors, and (iii) be expected to secure thetime necessary to fulfill their duties.
7. Candidates for reappointment should have
performed roles expected of them during eachof their previous assignments.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Dismissal Standards
1. The Director significantly damaged the value of
the Company by neglecting their duties.
2. The Director violated laws, Articles ofIncorporation, or other regulations/rules of theCompany or conducted an act against publicorder and/or morals, which caused serious
damage to the Company or hindrance to thebusiness of the Company as a result.
3. The Director is deemed to not meet the selection
standards for Directors.

Process of Replacement of the President in April 2023
MHC discussed a succession plan for appointing thenext President & CEO in the Nomination Committee,
which was established in April 2022.
The Nomination Committee first specified selection
standards for President & CEO, such as “strategic intelligence”, “leadership”, and “ability to make decisions.” In
addition, the committee discussed and identified expertise specifically required for the President & CEO of MHC
and defined evaluation criteria for candidates for the
President & CEO, taking into account “attributes andability”, “expertise and skills”, “global management
experience”, etc.
With these in mind, a series of Nomination
Committee meetings discussed the selection of the
President & CEO by creating a long list of presidential
candidates and then making a short list based on thelong list. As a result, they concluded that Mr. Taiju Hisaiis the most suitable person to be the next President &CEO, and this was resolved at the Board of Directors
meeting.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

80

Basic policy
MHCʼs officersʼ remuneration is determined by also taking into account officersʼ incentives to increase corporate value
through the execution of business strategies.
● The level of remuneration is appropriate with respect to the roles and responsibilities of each officer and is also based on market
levels, from the viewpoints of increasing medium- to long-term corporate value and improving short-term business performance.
●

Remuneration system
In principle, Executive Directorsʼ remuneration, etc., consists of base remuneration (fixed remuneration), annual incentive compensation (performance-based monetary compensation), and medium- to long-term incentive compensation(performance-based stock compensation). As annual incentive compensation, cash is paid as a bonus, while mediumto long-term incentive compensation is paid as a provision of MHCʼs shares, etc., in a trust framework.
MHC has established a payment ratio for performance-based compensation and non-performance-based compensation to maintain a sound performance-based ratio. In addition, MHC has also established appropriate short-term
and medium- to long-term incentive ratios under this remuneration system to enhance not only short-term businessperformance but also medium-to long-term corporate value.
Specifically, the ratio of non-performance-based compensation (base remuneration) to performance-based compensation (bonus and stock compensation) is generally set at 1:0.6 (the ratio of base remuneration to bonus to stockcompensation is generally set at 1:0.3:0.3). Using this as the base case, the ratio is determined by taking into accountthe roles, responsibilities, and other factors with regard to each Director on a comprehensive basis.

Fixed

Type of
Remuneration
Basic
Remuneration

62.5％
1

18.75％
0.3

Floating

Bonus(short-term
incentive)
Performancebased

Remuneration
Ratio

Stock
Compensation(Medium-to
Long-Term
Incentive)
Performancebased

18.75％
0.3

Details of Remuneration

1. The amount determined according to title is paid monthly.

1. The amount paid to each individual is determined based on the
consolidated business performance of the previous year, etc.
2. The financial indicators, etc., emphasized in the management strategy
as indicators representing the Companyʼs growth are set as the KPI
for evaluating company-wide performance, and the targets are set
according to the Companyʼs numerical targets (net income
attributable to owners of the parent, ROA, ROE, OHR).
3. The achievement of the executive officers, excluding Representative
Directors in their duties is evaluated using a standard evaluation
sheet, from the perspective of performance and the level ofcontribution regarding the duties.
1. From the perspective of increasing corporate value over the medium
to long term, indicators set as numerical targets, etc., under the
Medium-term Management Plan (net income attributable to owners ofparent, ROA, ROE, and TSR against TOPIX growth rate) were set as
key performance indicators (KPIs).
2. Using a trust framework, points are offered in accordance with the title
and term in office in accordance with the regulations for share delivery.
In the fiscal year following the final fiscal year of the Medium-termManagement Plan, a portion of shares corresponding to the number ofaccumulated points is converted into cash value, and compensation isprovided in the form of Company shares and cash at a ratio of 50:50.

Evaluation Method/
Ratio

Range Based on KPI
Achievement−−[Representative Director]
Company-wide
performance evaluation:
100%[Executive Director](Other than Representative
Director)
Company-wide performance
evaluation: 70%
Evaluation of responsible
duties: 30%

Company-wide
performance
evaluation: 100%

0-150％

0-150％(Note) In addition, in the event that it becomes necessary to reside in an area away from home, an appropriate property shall be provided as company housing.

For non-Executive Directors, including Outside Directors (excluding Directors who are Audit & Supervisory Committee
Members), from the standpoint of ensuring the effectiveness of the supervisory function, bonuses and stock compensation, which are incentive compensation, shall not be paid. Remuneration shall be limited to basic remuneration only.

Fixed

Type of
Remuneration

81

Basic
Remuneration

Remuneration
Ratio

Details of Remuneration

100％

1. For Internal Directors who do not concurrently serve as Executive Officers (excluding those who are Audit & Supervisory
Committee Members) and Outside Directors (excluding those who are Audit & Supervisory Committee Members), fromthe standpoint of ensuring the effectiveness of the supervisory function, bonuses and stock compensation, which are
incentive compensation, shall not be paid. Remuneration shall be limited to basic remuneration only.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Value Creation Story Business Strategies

Performance-based compensation
With respect to bonuses and stock compensation, financial
indicators, which are emphasized as indicators of MHCʼs
growth from the perspective of management strategy are set
as indicators (key performance indicators, or “KPIs”) for thecompany-wide performance evaluation to clarify the relationship between business performance and remuneration.
Bonuses
The net income attributable to owners of the parent, ROA, andROE, which have been set as MHCʼs numerical goals, are set
as KPIs for the company-wide performance evaluation.
The bonus of Representative Directors is fully linked tothe company-wide performance evaluation, with theamount to be paid determined within the range of 0% to150% of the standard amount, based on the level ofachievement of the projection for the key performanceindicators (KPIs) for company-wide performance evaluation.
The bonus of Executive Directors, excluding
Representative Directors, is based 70% on the company-wide performance evaluation and 30% on the evaluationof the duties for which each individual is responsible. The
amount to be paid based on each evaluation is determinedwithin the range of 0% to 150% of the standard amount.
For the portion based on the responsible duties, quantitative and qualitative evaluations are conducted by the President,
using a standard evaluation sheet, from the perspective ofperformance and the level of contribution regarding the duties
handled by the relevant Executive Director. The purpose is toenhance the incentive of each Director by appropriately evaluating not only the level of achievement of performance targets
but also results, such as the level of contributions, whichcannot be evaluated by quantitative means alone.
Stock compensation
From the perspective of increasing its medium- tolong-term corporate value, (1) net income attributable toowners of the parent, (2) ROA, (3) ROE, and (4) TSR
against TOPIX growth rate, which MHC has set as numerical goals, etc. in the Medium-term Management Plan, areset as indicators (KPIs) for the performance evaluation.
By using a trust framework, MHCʼs shares, etc. corresponding to share conversion points, which are calculated

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

using the following formula, are provided. Specifically, one
share of MHC or a corresponding amount of cash per point
is delivered. In principle, the portion of MHCʼs shares possessed in the trust is converted into cash value therein, andcompensation is provided in the form of Company sharesand cash at a percentage of 50:50.
The number of points granted corresponding to the position
and the number of months in office of the relevant person(the aggregate number of points during the three-year periodof the Medium-term Management Plan)＝

Remuneration for Directors

Message from the
President & CEO

Shareconversion
pointsIntroduction

×The performance-linked factor based on the level ofachievement of KPIs (ranging from 0 to 150%)

Non-performance-based compensation
When it is necessary for Directors (excluding Outside
Directors and those who are Audit & Supervisory Committee
Members) to reside in an area away from home due to atransfer resulting from a change of duties or base, MHC
provides such Directors with appropriate company housing.
The company housing shall be properties of a generaland standard level, and the upper limit of rent by title andregion shall be established beforehand. The company
housing rent to be calculated based on the predetermined
rate (when the total rent exceeds the limit, all of theexcess amount is added to the amount for collection)
shall be collected from Directors as their own expenses.
Remuneration determination policy
In order to ensure transparency and objectiveness in determining officersʼ remuneration, etc., MHC decides details of
the remuneration, etc., determination policy, and other relevant matters at a meeting of the Board of Directors after theCompensation Committee, the majority of which consists ofIndependent Outside Directors deliberates those matters. In
addition, the Compensation Committee deliberates thevalidity of the amount and composition of remuneration every
year based on the remuneration-related data provided by an
external specialized institution. The members and chairperson of the Compensation Committee are selected by the
Board of Directors, and the committee makes decisions by amajority of committee members attending. It is stipulated ininternal rules that the Board of Directors shall make decisions
in recognition of the decisions made by the committee.

KPIs and Evaluation Ratio of Performance-based Compensation
Evaluation Ratio
KPI

Company-wide Net income attributable to owners of the parent
ROA
performance
BonusesROE
evaluation
Evaluation of
Evaluatedindividually
Responsible Duties
Net income attributable to owners of the parent
Company-wide
ROA
Stock
performance
ROE
Compensation
evaluation
TSR against TOPIX growth rate

Framework for KPI achievement
rate and payment coefficient incompany-wide performance
Payment
evaluation

Representative
Director

Executive Director
Other than the
Representative Director

100%

70%

−

30%

100％

100%

100%

30％
0％

coefficient150％

Achievement
rate

50％

100％ 135％

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

82

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Risk Management
Risk Management System Overview

Managing Risk Capital to Ensure Soundness

Overview of Risk Management Framework
Improve corporate value, achieve sustainable growth, resolve social issues

Management targets
Basicstrategy

Proper portfolio management
Improve profitability

Maintain soundness&

Integrated risk management
Control of risks and returns

Portfolio
optimization
Businessmanagement

ProfitgrowthProper evaluation of risks and returns
Asset allocation

Risk capital
allocation

Monitoring of risks
and returns

Stress testing

Pricing, credit rating

Predictive asset
management

Observe risk
capitalmanagement
policyMaintaincapitaladequacy&

Ensure liquidity

ALM
Asset liability management

Liquidity risk management
Interest-rate risk management

Operational risk management Maintain the stability of operational systems that underpin growth strategies

Integrated Risk Management
The Group engages in business operations that incorporate the framework of integrated risk management inorder to work toward sustainable growth by balancing
the maintenance of management soundness withimproving profitability. The major risks managed within
the framework of integrated risk management include
credit risk, asset risk, investment risk, market risk, liquidity risk, and operational risk. Risk management is conducted on a consolidated basis. Specifically, risk capitalis allocated to the respective risk category based on the
Companyʼs risk capital management policy after quantifying each risk using risk assessment methods tailoredto the characteristics of the asset or business.

83

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Reasonable risk-taking is then carried out within thescope of risk tolerance.
Within this risk management framework, regularmonitoring is undertaken of the utilization of risk capitaland the status of portfolios, the results of which arereported to and discussed by the Risk Management
Committee, the Executive Committee, and the Board of
Directors. In this way, efforts are made to ensure appropriate response measures and to promote effective
internal communication about risk. Arrangements are inplace to ensure that the Board of Directors is fully
informed of the risk management system and risk management status and that it maintains oversight thereof.

Risk capital allocation (initial)
Determine risk capital
available for allocation

Determine risk capital“Significance”
Ensures stability of business
continuation●Preparing for investment ingrowth●Response to unforeseen risks●

Determine risk capital to allocate

Confirm risk capital usage(level of risk)

Additional risk capital
available for allocation

CapitalReserved

Risk capital

Monitoring (throughout the fiscal year)

Risk capital
available forallocation

Credit risk
Asset risk
Investment risk
Market risk
Operational risk

Allocated risk capitalsider appropriate measures to address those risks, andreports promptly to the Executive Committee, a consultativeand decision-making body that controls the execution ofbusiness. Specifically, the Risk Management Committee,
which undertakes the comprehensive and systematic management of risks affecting all operational areas, meetsquarterly or as necessary primarily to discuss and consider
policies for reporting and responding to the status of risks.
The issues surrounding individual risks and the measures toaddress them are discussed by the Asset Liability
Management (ALM) Committee, Compliance Committee,
Disclosure Committee on J-SOX, and other committees.
Additionally, important matters at each committee arereported to and discussed by the Board of Directors.

Allocated risk capitalOf the business and other related risks of the Mitsubishi HC
Capital Group, the main items with potential for important
impact on investorsʼ decisions are managed comprehensively in the framework set out below under “1. Integrated
Risk Management.” An outline of the risk and a specificstatement of the main efforts to address it are given under“2. Major Risks Managed within Framework of Integrated
Risk Management.” The Group has established an appropriate system to manage these risks and strives to prevent
them from emerging or to minimize their impact if they occur.
To manage potential risk factors, we operate a system
whereby the division responsible for each category of risks
identifies issues arising from changes in the external environment and other factors, holds regular discussions to con-Credit risk
Asset risk
Investment risk
Market risk
Operational risk

Adjust equity capital to calculate

Major Risks Managed within Frameworkof Integrated Risk Management
The Mitsubishi HC Capital Group conducts businessactivities globally. The Group provides capital investments and services necessary for customer businesses
through leases and other means. The assets it holds forleases and related transactions are diversified, ranging
from general movable property, such as office equipment
and production equipment, to assets, such as aircraft,that are used in particular industries. Demand for capital
investment can decline considerably if a customerʼsbusiness environment deteriorates with a deceleration or
slowdown in business at home or abroad. In that case, adecline in leases and other transactions could impact theGroupʼs business results and financial position.
Additionally, losses arising from inadequacy of internal
processes, personnel, or systems or their failure tofunction, or exogenous events could impact the Groupʼsbusiness results and financial position.
The major items among these envisioned risks aremanaged within the framework set out under Integrated
Risk management.
Please refer to our website for details.
https://www.mitsubishi-hc-capital.com/english/sustainability/governance/
risk_management.html

Other Major Risks
In addition to risk addressed in the framework of integrated risk management, the Group recognizes the majorrisks listed below. These risks are managed within the
integrated risk management framework, including individual impact and combined impacts across multiple risk

items, according to their individual characteristics andstatus. The Group explores a unified response and formulates a response policy as necessary and additionallyconducts scenario analysis appropriate to the situation aspart of a multi-faceted verification of risk resilience.
1. Risk Related to Expansion of Operating Base,
Strategic Partnerships, and M&As
2. Global Pandemic Risk
3. Climate Change Risk
4. Human Rights Violation Risk
5. Risk associated with Expansion of Business Domains
6. Intensifying Competition
7. Risk related to Personnel Recruitment
8. Risk related to Labor and Employment Management

Stress Tests
In the execution of management strategy, the Groupmakes efforts to gauge the degree of impact of stressperiods caused by various risk events with potential
impact on its business, such as deterioration in market
conditions, including economic downturns and market
fluctuation. Specifically, the Group has posited a numberof potential high-stress scenarios, ranging from a deterioration in the overall world economy to market fluctuation, deterioration in credit, and the emergence oflarge-scale concentrations of risk in individual businessfields. Based on these scenarios, it has undertaken
analysis and verification of the potential degree of
impact of stress conditions on profitability and equity ineach fiscal period.
These multifaceted verifications enable the Group to
confirm its risk resilience and to ensure that the risk-return balance of management plans does not exceed
tolerable levels.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

84

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

ComplianceTo ensure that our common values and ethics regarding compliance are recognized and shared among
all Group employees, the Mitsubishi HC Capital Group has established the Mitsubishi HC CapitalGroup Code of Ethics and Code of Conduct as basic guidelines for all Group employees. To ensurecompliance with this Code of Ethics and Code of Conduct, we have made our Compliance Manual
available on the Company intranet so that all Group employees can review it at any time.

Compliance Management Structure and System
At Mitsubishi HC Capital, the Chief Compliance Officer (CCO) supervises a company-wide compliance management
structure and system. Under the leadership of the CCO, the Legal & Compliance Department plans and manages
internal structures and systems and provides guidance and supervision to each division and Group company, as well as
guidance on the correction of compliance violations.
Please refer to our website for details.
Code of Ethics
https://www.mitsubishi-hc-capital.com/english/sustainability/governance/compliance.html

Board of Directors
Executive Committee
President & CEO

Audit &
Supervisory
Committee

Compliance Committees
President & CEO, Deputy Presidents, Head of Risk
Management Division, Head of Human Resources and General
Affairs Division, Head of Credit Division, Head of IT &Operations Division, Directors in charge of auditing

Chair of Committee

Relateddepartments
and offices

Chief Compliance Officer

Legal & Compliance Department(Compliance officer)

Support, guidance and education

Whistleblowing System

Principles for Money-Laundering Prevention

The Mitsubishi HC Capital Group has set up a compliance hotline system as a whistleblowing system forofficers and employees to report and consult about
misconduct and related issues, including corruption (anyreal or suspected violations of laws, regulations, internal
rules, or the Code of Ethics by officers, employees, etc.).
The compliance hotline system comprises (1) aLegal & Compliance Department contact and (2) a
Full-time Audit & Supervisory Committee Member contact as internal points of contact, and (3) an outside
attorney and (4) an external consultation desk as external points of contact. These all serve as contact points
for officers and employees(including those already
retired) to be able to report or consult without hesitation.
The external consultation desk also accepts anonymous
reports and consultations.
In the event that a compliance violation is brought tolight through a hotline or other means, our basic
response policy is for the Legal & ComplianceDepartment to ensure prompt reporting to management,
the fulfillment of corporate social responsibility, and theprevention of further harm and recurrences. Dependingon the nature of the compliance violation, a third-party
organization may be involved in the investigation. We
strive to investigate the cause of such incidents, formulate and implement measures to prevent recurrences,and further educate employees to raise awareness ofcompliance.

The Mitsubishi HC Capital Group (“Group”) is striving toenhance our structure and system to prevent money-laundering and terrorist financing (collectively,“Money-Laundering”) and eliminate any trade relationship with persons (individuals and entities) subject tosanctions, which violates economic sanctions of theUnited Nations, international organizations, andindividual countries.
1. We shall comply with all applicable laws and regulations for preventing Money-Laundering in and outside
the country.
2. Recognizing Money-Laundering prevention as one of
our critical challenges, the top management of eachcompany of the Group shall proactively and aggressively tackle this issue.
3. With regard to persons subject to sanctions identified
under the UN Security Councilʼs resolution and by
OFAC or other regulatory authorities, we shall checkand screen every contemplated transaction appropriately according to applicable laws and regulations.
4. Taking the risk-based approach, we shall appropriately manage customers and transactions to address
the risks in the Money-Laundering.
5. We shall monitor all transactions continuingly, and if
any of them is suspected of being involved in
Money-Laundering, we shall report it to relevant
authorities as required.
6. We shall provide training programs continuously tomaintain and improve awareness about
Money-Laundering prevention of the officers andemployees of the Group and their capability to deal
with those transactions.
7. We shall ensure the appropriate business operation for
Money-Laundering prevention by conducting regularinternal audits and other processes.

Reporting on compliance

What can be consulted or reported
Compliance promotion managers(Heads of departments and offices)

Compliance promotion officers

Internal
Audit
Department

Group companies inJapan and overseas

Any acts engaged in by officers and employees in violation or suspected of being in violation of laws, regulations, internal rules, or the Code of Ethics can be
consulted or reported.
●

Acts affecting the protection of customer interests●

Acts impacting the protection of the environment●

Acts affecting fair competition, such as violations ofantitrust laws●

Acts related to provision of bribes or other illegal
benefits to government officials and the like both inJapan and overseas

Other inappropriate acts in violation of laws, regulations, rules, or social justice
Officers and employees who report or consult shallreceive no disadvantageous treatment whatsoever due
to such reporting or consulting.

●85

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

86

Data Section

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Financial Information
Share Price History

FYE3/2022

FYE3/2023

Revenues (Millions of yen)

1,765,559

1,896,231

Gross profit (Millions of yen)334,661

357,327

Operating income (Millions of yen)

114,092

138,727

Recurring income (Millions of yen)

117,239

146,076

Net income attributable to owners of the parent(Millions of yen)

99,401

116,241

Total assets (Millions of yen)

10,328,872

10,726,196

Segment assets (Millions of yen)

9,345,376

9,632,966

Interest-bearing debt (Millions of yen)

8,066,082

8,236,106

Total equity (Millions of yen)

1,333,467

1,551,029

Operating activities

195,845

46,752

Investing activities(107,879)(127,322)

Financing activities(192,157)(8,948)520,083

460,486

Equity ratio (%)

12.7

14.3

ROE（%）

8.0

8.2

50

ROA（%）

1.0

1.1

40

2,507.8

2,640.6

Cash flows (Millions of yen)

Cash and cash equivalents at the end of the year
(Millions of yen)

(JPY)

Trading volume (right axis)(Thousand shares)

Ap
ril
20
23

O
ct
ob
er
20
22

Ap
ril
20
21

Ap
ril
20
20

Ap
ril
20
22

0

O
ct
ob
er
20
21

0

O
ct
ob
er
20
20

100,000

O
ct
ob
er
20
19

300

Ap
ril
20
19

200,000

O
ct
ob
er
20
18

600

Ap
ril
20
18

300,000

O
ct
ob
er
20
17

900

Ap
ril
20
17

400,000

TSR (Total Shareholder Return)
TSR (%)*(Comparative index:
TOPIX including dividends) (%)

FYE3/2019

FYE3/2020

FYE3/2021

FYE3/2022

FYE3/2023

94.2

93.0

118.9

107.7

131.3

（95.0）（85.9）（122.1）（124.6）（131.8）Change in Dividends and Dividend Payout Ratio(JPY)

New transactions volume (Billions of yen)

Share price (left axis)

1,200

Dividend per share* (left axis)

Payout ratio* (right axis)

(%)
50

41.1
30.4

40.4

40.8

44.3
40

31.5

30

30

Per-share indicators
20

Earnings (yen)

69.24

80.95
10

87

Equity (yen)912.191,064.46

Dividend (yen)

28.0

33.0

Payout ratio (%)

40.4

40.8

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

0

23.5

25.0

25.5

FYE3/2019

FYE3/2020

FYE3/2021

28.0

33.0

37.0

20

10

FYE3/2022

FYE3/2023

FYE3/2024 (forecast)0* Mitsubishi UFJ Lease & Finance results from FYE3/2019to FYE3/2021

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

88

Introduction

Message from the
President & CEO

Value Creation Story Business Strategies

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Corporate Information
Corporate Profile (As of April 1, 2023)

External Evaluations (As of March 31, 2023)
External Credit Ratings
Company name

Mitsubishi HC Capital Inc.

Head Office

5-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, 100-6525, Japan

Representative

Representative Director, President & CEO
Taiju Hisai

Number of Employees

Consolidated: 8,648;
Non-consolidated 2,182 (as of March 31, 2023)

Euro MTN Program: AA

Main Business
Activities

ActivitiesLeasing, installment sales,
various types of financing, etc.

Long-term issuer rating: AA-

Stock Listings

Tokyo Stock Exchange (TSE) Prime Market
Nagoya Stock Exchange (NSE) Premier Market

Paid-in Capital¥33,196 million

Rating Agency

Long-term

Short-termLong-term issuer rating: AA

Japan Credit
RatingAgency, Ltd. (JCR)

Issued registered bond preliminary rating: AA

Commercial papers

Planned issuance amount: 600 billion yen
Planned issuance period: 2 years from September 1, 2023

Issuance limit: 1,300 billion yen
Rating: J-1+

Issuance limit: Equivalent of US$6 billion

Rating andInvestment
Information, Inc. (R&I)

Issued registered bond preliminary rating: AAPlanned issuance amount: 600 billion yen
Planned issuance period: September 1, 2023 to August 31, 2025

Commercial papers
Issuance limit: 1,300 billion yen
Rating: a-1+

Euro MTN Program: AAIssuance limit: Equivalent of US$6 billion

Marunouchi OfficeLong-term issuer rating: A3

Moodyʼs
Treasury shares
2.1%

Stock Information (As of March 31, 2023)
Authorized shares

4,800,000,000

Total number ofissued shares

1,436,496,086

Number ofshareholders

Other
companies
38.8%

278,018

Major Shareholders

Financial
institutions
23.9%
Securities
companies
3.5%

Long-term issuer rating: A-

FTSE Russell
The Company has been selected as a constituent of the
FTSE4Good Index Series, FTSE Blossom Japan Index,
FTSE Blossom Japan Sector Relative Index, performanceindexes of Japanese companies that excel in addressing
ESG issues, developed by global index broker FTSE Russell.

Ownership(%)

Mitsubishi Corporation

264,044

18.38

S&P/JPX Carbon Efficient Index

Mitsubishi UFJ Financial Group, Inc.

208,345

14.50

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

112,341

7.82

Custody Bank of Japan, Ltd. (Trust account)

65,391

4.55

Hitachi, Ltd.

59,152

4.11

MUFG Bank, Ltd.

50,348

3.50

S&P Dow Jones Indices, LLC (S&P), a global index provider,and the Tokyo Stock Exchange, a member of the Japan
Exchange Group (JPX), have jointly developed an ESG index(stock price index), and the Companyʼs stock has been
included in this index since 2018, the year it was launched.

Mitsubishi UFJ Trust and Banking Corporation

28,431

1.97

Sompo Sustainability Index

Meiji Yasuda Life Insurance Company

27,990

1.94

JPMorgan Securities Japan Co., Ltd.

22,807

1.58

STATE STREET BANK WEST CLIENT-TREATY 505234(Standing proxy: Mizuho Bank, Ltd., Settlement & Clearing Services Division)

11,5430.80

The Company has been selected for the Sompo
Sustainability Index, a composite of about 300 companies
that are making remarkable efforts in ESG, established by
Sompo Asset Management.

(Note) Treasury shares (30,416,158 shares) are excluded when calculating ownership.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Short-term issuer rating: A-2

Selection as an index stock for SRI (Socially Responsible Investment)

Shares held(Thousand shares)

Name

89

S&P

Distribution of
Shareholders(Excluding 30,416,158 treasury shares)

Issuance limit: Equivalent of US$6 billion

Individuals/Others
13.7%

Foreign investors
18.0%

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Euro MTN Program: A3*The inclusion of Mitsubishi HC Capital Inc. in any index and the use of its logos, trademarks, service marks, or index names herein do not constitute a sponsorship,endorsement, or promotion of Mitsubishi HC Capital Inc. by each index company or any of its affiliates. The indexes are the exclusive property of each index
company. Each index company and its index names and logos are trademarks or service marks of its index company or its affiliates.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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