Sustainability of the SoftBank Group

Environment

SocietyGovernanceFeature1

ESG Initiatives as a Strategic Investment Holding Company
As a strategic inve stment holding company engaged in global investment activities, we are working to integrate ESG factors into our investment
process in order to enhance the sustainability of our investment activities. In this report, we invited Akitsugu Era, Managing Director and Head ofInvestm ent Stewardship at BlackRock Japan Co., Ltd., one of our shareholders and the world’s largest asset manager, and discuss the requests
and expectations he has for us as a shareholder, and how we should approach ESG as an investment company.

Behind the Fink Letter

Akitsugu Era

Yotaro Agari

Reiko Oda

Managing Director,
Head of Investment StewardshipBlackRock Japan Co., Ltd.

Global Head of Investor Relations
SoftBank Group Corp.

Head of Sustainability Promotion Group,
General Administration Department
SoftBank Group Corp.

Sustainability Report 2021

Agari: The Fink Letter, in which your CEO Larry Fink sends a
message to the CEOs of the companies you invest
in, attracts global attention every year. As aninvestee of your company, we also read the letter
each year, and it seems that in recent years, he has
mentioned ESG in the letter more frequently. Could
you tell us what’s behind this?
Era:
We have been sending the Fink Letter since 2012.
While the key topics of the letter vary depending on
the socioeconomic situation at the time, the coremessage remains consistent that “we are committed
to supporting long-term corporate value creation.”
When we first started sending out the Fink Letter,
we were concerned, especially in the U.S., thatcompanies were focusing too much on the shortterm outcome and that is hindering the long-termvalue creation of companies. Rather than engaging
in excessive share buybacks and distribution ofprofits through dividends, companies should bemaking investments for the growth opportunities
and their employees, from a long-term perspective.
Investors should also navigate and support thecompanies from a long-term perspective. These are9Sustainability of the SoftBank GroupFeature1Long-term value creation of theSoftBank Group

Oda:

Society

Governance

ESG Initiatives as a Strategic Investment Holding Company

thoughts in the background regarding what led toprepare the annual Fink Letter.
Since the message emphasizes topics related tolong-term view, there have naturally been morereferences to ESG in recent years. We focus on roleof the board of directors in articulating long-term
strategy, how they are emphasizing the importanceof purpose, how they are adapting its business toprepare for the impacts of climate change risks andopportunities, the energy transition and thechanges in society. The reason behind an issuance ofthe Fink Letter is to express our thoughts on what
we believe is important, and what might representrisks and opportunities in long-term value creation.
It is also to understand the plans and thoughts fromthe companies’ leaders.

Era:Environment

In terms of long-term value creation, more than 10years have passed since the announcement of theSoftBank Group’s “Next 30-Year Vision”*1 in 2010.
What do you think has been the major progress orchanges?
In the “Next 30-Year Vision,” we reaffirmed ourcorporate philosophy of “Information Revolution— Happiness for everyone.” In addition, we haveannounced to become a company that will grow forthe next 300 years as a corporate group needed mostby people around the world, by forming partnerships
with the most outstanding companies at the time in

the information industry, without focusing on
particular technologies or business models.
This was a way of articulating our attitude
towards sustainability, as it conveyed theimportance of thinking about social trends on a 100year basis, rather than on a 10- or 20-year basis,and of always keeping abreast of changes in theworld and continuing to be the most indispensable
company in each situation. In this respect, the visionitself is a long-term one, and remains unchanged in
more than 10 years.
At the time of the announcement, we had astronger focus on telecommunications, and I think
there was a sense that we would continue to makea difference in society through a focus on the IT andtelecommunications industry. However, as we
explained at this year’s General Meeting of
Shareholders under the key phrase “a capitalprovider driving the Information Revolution,” weare now shifting in the direction of becoming agood advocate of superior technologies andbusiness models in the information industry andrealizing our vision as an investment company.
Agari: Our CEO Son sometimes looks back and says,“Things are happening more or less as I expected,
but at a faster pace,” and I also feel that he isbecoming increasingly confident about our vision.
10 years ago, I think we were a hybrid
telecommunications company investing in theinternet domain. Today, the telecommunications
business is part of our portfolio, and the company isincreasingly becoming an investment company. We
are investing in areas that will accelerate innovation
to enrich people’s lives based on AI, such as
healthcare, fintech, and robotics. We are now

realizing what we set out to achieve in our “Next30-Year Vision,” and I believe we are developing ourbusiness in line with this vision.

Integrating ESG into theinvestment business in theSoftBank GroupEra:

In May 2021, there was an announcement that theSoftBank Group would integrate environmental andsocial factors into the investment process. What is
the reason behind this decision?
Agari: In the past few years, we have been receiving moreand more questions in our dialogues with investors
about how we integrate ESG into our investment
process as an investment company. Actually, we
have invested in many companies that make positivechanges in terms of the environment and society. To
take advantage of these traditional strengths of our*1 See our corporate website for further details of “Next 30-Year Vision.”

Sustainability Report 2021

10Sustainability of the SoftBank GroupFeature
1Era:

Oda:

Environment

Society

Governance

ESG Initiatives as a Strategic Investment Holding Companycompany, we decided that we should adopt a moreorganized approach. Our investment may have been
seen as something carried out based on our instincts
and intuition, but through our discussions with ourmanagement team, we decided it is important toestablish a clear system for evaluating the risks andopportunities associated with environmental andsocial factors in the investment process, and explain
it to our stakeholders.
So, the step was mainly to increase transparency of
the investment process, rather than drasticallyshifting to a new investment approach. What are
the key points in evolving this process further?
Currently, we are analyzing what are the key risksand opportunities among the environmental andsocial factors in each investment area. However,creating a massive playbook won’t help you in thereal world, and we do not want to create
complicated processes that prevent speedy decisionmaking, which is one of our strengths. Our goal is tocreate a simple, yet powerful tool that will help toidentify the risks and opportunities associated withthe environmental and social factors in the businessmodels of potential investments and clarify theissues that we should support after the investment.
There are various approaches and methods ofintegrating ESG into the investment process. We
need to find our best practices through trial anderror.
Agari: Although risks are common to a certain extent,
opportunities vary depending on the businessmodel, so we need to take a close look at themarket needs.
Era:
It has never been more important to achieve theright balance between economic returns and socialreturns, both at a high standard. This is easier said
than done, and as the world becomes morecomplex, it is becoming increasingly challenging. Acompany who does a good job in managing thisbalance will be successful and will be evaluatedhighly, companies who fail to achieve this balance
will be evaluated poorly. We understand that this isa very high expectation, and this is why we would
like to be a partner in this value creation process.

What BlackRock looks for in
engagement
Agari: As an investor, what are some of the things you
focus on when engaging with your portfolio
companies?
Era:
Our engagement focuses on topics that areimportant in pursuing long-term sustainable valuecreation. This would include, for example, corporate
philosophy, vision, and awareness of sustainability.
And how these elements are deeply embedded

Sustainability Report 2021

throughout the company, including themanagement team and all employees.
For example, sometimes even for a company
whose public disclosure seems comprehensive,
when we ask questions about the details of theirefforts in sustainability, the only person who cananswer those questions is the direct person incharge. On the other hand, there are also cases
where the top management is very conscious andpassionate about explaining the company’s
approach to long-term value creation including
sustainability efforts, even though the public
disclosure appears to be limited. This is why weplace an importance on qualitative information
obtained through engagement, which sometimes
cannot be fully understood if you only look at
ESG ratings and public documents. We also sharethese insights achieved from our engagement
internally with our portfolio managers.
Another point to emphasize is that we believe
the materiality of ESG and factors varydepending on the business model, region, and11Sustainability of the SoftBank GroupFeature1Oda:

Era:

Society

Governance

ESG Initiatives as a Strategic Investment Holding Companysociety. Therefore it is important to pay attention
to how the world is evolving in order tounderstand the background, respective situationand context, which is not an easy task.
I can relate to what Mr. Era said about focusing on
qualitative aspects. We are currently working tointegrate what we have done qualitatively in theinvestment process into a structure and framework.
However, we also understand that sometimes
intuition is correct, and that there are situations thatare difficult to measure with a uniform standard.
How we strike a balance between these two will
be important for us going forward.

Expectations for the SoftBank
Group from BlackRock as ashareholder
Oda:

Environment

Lastly, as our shareholder, do you have any requests
or expectations for us?
From an investor’s point of view, I think a continuous
effort to enhance transparency on how the SoftBank
Group is achieving the right balance between
offense and defense is extremely important. In otherwords, how the company is balancing riskmanagement, while making sure it is not missingout on new business opportunities.
Strengthening the form of corporate governanceis very important to investors. However, I believe it iseven more important to make sure that a company
has established a management system that is
focused on long-term value creation, andsimultaneously has an effective governance system
in place to support that value creation. I think it
would be a good idea for the SoftBank Group toSustainability Report 2021

clearly articulate the most important matters to yourcompany, the philosophy and values, and what doyou see as the right balance between management
and governance, without taking a one size fits allapproach. To do so, it might be helpful to explain
how your company’s DNA and corporate culture
drives such value creation.
Agari: It is true that Son’s ideas, energy, and leadership arepart of our strength, and also our corporate culture
is not to avoid risks and minimize failures, but rather
to embrace some risks and failures, and take onchallenges in a way that does not strictly adhere toconventional wisdom. On the other hand, ourcompany has strong defensive aspects to ourapproach, and our culture is strongly based on theidea that what’s wrong is wrong, and to correct
failures immediately once found. In addition, active
discussions are held at each Board of Directors
meeting, and we receive frank opinions from
External Board Directors from their respective expert
perspectives. In the future, we may need to makesure to include these aspects in our communication
when we talk about the state of our governance.
Oda: We understand that it is important to build a system,take essential actions, and disclose information witha focus on our strengths and importance of thecompany. We would take into account theseperspectives as an investor and engage in essential
communication with our portfolio companies.
Thank you very much for your valuable comments.

Akitsugu Era
Managing Director,
Head of Investment StewardshipBlackRock Japan Co., Ltd.
As Head of Investment Stewardship in the Investment Division,
Mr. Era is responsible for the exercise of voting rights forJapanese companies addressing corporate governance issues,and established policies and guidelines for the exercise ofvoting rights. He joined BlackRock Japan in 2011. Prior tojoining BlackRock, he worked as a corporate governancemanager and fundamental equity analyst at Nikko AssetManagement from 2006. In addition, he served as thepresident of an Internet-related company he founded for sevenyears from 1999. He has also participated in a number ofexternal working groups related to corporate governance,
including those of the Japan Business Federation (Keidanren)and the Ministry of Economy, Trade and Industry. Furthermore,
he has contributed to the Ito Review of “Competitiveness andIncentives for Sustainable Growth – Building Favorable
Relationships between Companies and Investors –,” led by theMinistry of Economy, Trade and Industry.

See the official website for the company’s details of “BlackRock Japan Co., Ltd.” (available only in Japanese).

12Disclaimers
This report provides relevant information about the Group and does not constitute or form any solicitation of investment, including any
offer to buy or subscribe for any securities in any jurisdiction.
This report contains forward-looking statements, beliefs or opinions regarding the Group, such as statements about the Group’s futurebusiness and future position, including estimates, forecasts, targets and plans for the Group. None of the Group nor its management gives
any assurance that the estimates expressed in these forward-looking statements will turn out to be correct, and actual results orperformance could materially differ from expectations.

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