Net One Systems
Sustainability Data
Book 2022

Contents

G：Governance ...................................... 27

Editorial Policy .......................................... 2

Progress in Strengthening Corporate
Governance ......................................... 28

Message from the Chairperson of the
Sustainability Committee ........................ 3

Basic Approach and System on
Corporate Governance ...................... 30

Sustainability Management .................... 4
Net One Group’s Corporate
Philosophy System .............................. 4

Executives (as of June 22, 2022) ..... 32
Composition of Organizations andCommittees, Status of Meetings, andContent of Deliberations ................... 34

Sustainability Policy............................. 5
Sustainability Promotion System ...... 5
Materiarities of Net One Group .......... 6

Initiatives to Improve theEffectiveness of the Board of
Directors .............................................. 36

Stakeholder Engagement........................ 7
Stakeholders and Basic Approach .... 7

Executive Remuneration System .... 39

Initiatives and External Organizations
in Which We Participate ...................... 8

Policy and Processes to Elect /Dismiss Executive Directors ............ 41

E：Environment ........................................ 9

Succession Plan ................................. 42

Environment Management ................ 10

Risk Management............................... 43

Responding to Climate Change ....... 11Internal Control ................................... 45

Green Solutions (Refurbishment)
Deployment .......................................... 12

Compliance ......................................... 47

S：Social .................................................. 13

Fostering a Corporate Culture basedon Our Purpose .................................. 51

Personnel Management ..................... 14

Health Management ........................... 53

Education and Training System ....... 16

Information Security .......................... 54

Personnel System and Diversity...... 17

Protection of Personal Information 56

Human Rights ...................................... 19

Quality Management .......................... 57

Labor Relations ................................... 20

Responsibility to Shareholders ....... 58

Employee Engagement...................... 20

Data and Materials ............................. 62

Responsibility to Customers andCustomer Satisfaction ....................... 22External Evaluations.......................... 62
ESG Data .............................................. 63

Responsibility to our Partners andBuilding Co-creative Relationships 23
Community Contribution(Stakeholder Communication) ......... 24

1

Editorial Policy
Editorial Policy
This Sustainability Data Book 2022 (SDB 2022) serves as acomplement to the net one report 2022, and places anemphasis on reporting a wide range of non-financial
information centered on ESG, for a wide range ofstakeholders.
net one report 2022
https://www.netone.co.jp/english/investor-relations/ir-library/integrated/

Reporting Period
In principle, from April 1, 2021 to March 31, 2022. However, some initiatives before and after this period are also
included.
Reporting Scope
In principle, the Group (the Company and 11 subsidiaries). Where the Company is mentioned, this refers to Net
One Systems on a non-consolidated basis.
With regard to data, please refer to the scope of the aggregation of data and materials that specialize in numericalinformation.
Forward-looking Statements
This report contains forward-looking statements that involve inherent risks and uncertainties and therefore may
differ materially from actual results. Forward-looking statements are based on information currently available to
the Company and investors should not place undue reliance on them. The Company undertakes no obligation to
update or revise current forecasts in this report to reflect events, changes in the operating environment or other
unforeseen developments that may occur in the future.

Notes on Included Matters
The names of each company in the SDB 2022 are trademarks or registered trademarks of each company.
“Health Management®” is a registered trademark of the Nonprofit Organization Kenkokeiei.

Date of Issue(Previous) Not applicable, since this is the first issue(Current) September 30, 2022
(Next issue scheduled) End of September 2023

Contact Information
Net One Systems Co. Ltd.
https://www.netone.co.jp/contact/ (Japanese only)2

Message from the Chairperson of the Sustainability Committee

Collaborating between departments and accelerating
initiatives centered on materiality, with the aim ofachieving both contributions to a sustainable society
and sustainable growth

Senior Vice President
Chief Strategy Officer (CSO)
Chairperson of the Sustainability
Committee
Koji Tsuji(Recognition of sustainability challenges and trends)

Developing policies and systems for company-wide sustainability management

As social challenges affecting international society, such as climate change and human rights, have become
more diverse and complex, the delay in digitalization has become a challenge for Japan as a whole. We havereaffirmed the importance of networks in promoting the digitalization of society.
Based on this environmental awareness, the Company has formulated our Sustainability Policy. We haveexpressed our determination to achieving both contributions to a sustainable society and the sustainable growth of
the Company, by supporting our customers’ efforts toward digitalization centered on our networks, which have been
our strength since the time of our founding. Furthermore, we have established the Sustainability Committee under
the Management Committee, for the purpose of promoting sustainability management across the Company.
(Roles and aspirations as the chairperson)
Promoting initiatives to solve social challenges and grow the Company’s business as two wheels
I have two roles, as both the Chairperson of the Sustainability Committee and the CSO (Chief Strategy Officer),
who oversees business strategy. In sustainability management and the execution of business strategies, my role
is to coordinate the departments that are responsible for each business area and promote initiatives. In our current
Medium-Term Business Plan, which started in fiscal 2022, we have positioned solving social challenges and growthof the Company’s business as two wheels that will carry us forward. We have placed the core of our businessstrategy as contributing to solving social challenges. In addition, we have also extracted key challenges from a
medium- to long-term perspective, and identified them as materialities.
For example, in order for the Company to contribute to solving social challenges through its business, we must
create services that meet new needs, including green solutions that contribute to the decarbonization of ourcustomers. To realize this aim, it is important that we have professional personnel who will lead the next generation.
In addition to training personnel who are competitive, it is also essential for us to create an environment in which
each employee can demonstrate their full potential. We have identified thriving professional personnel as one ofour materialities, and set KPIs to monitor progress. Furthermore, we have organized our contributions to SDGs
that are linked to our materialities, and announced them as our SDGs Declaration.
Going forward, we will contribute to solving social challenges and achieve further business growth, by focusing
on initiatives that are centered on our materiality.

3

Sustainability Management
Net One Group’s Corporate Philosophy System
On April 1, 2022, the Net One Group formulated a new corporate philosophy system.
The new corporate philosophy system consists of the “Purpose,” which is the reason for the existence of theGroup, the specific “Mission,” which shows what we can contribute to society, the “Vision,” which is our specifictargets and path, the “Values” from which we should never stray, and the “WAY” which serves as the basics of how
we think and decide for each and every member of the Group.
Net One Group Corporate Philosophy System
PurposeUnleash the potential of people and networks, and create a prosperous future by carrying on / inheriting
tradition and making Innovation happen
MissionEach of us is a professional with outstanding expertise and high ethical standards, and contributes tosolving the problems of the society and our customers
Vision Act with pride as a leading network company
 Create added value unique to Net One and achieve sustained growth Continue to be an elite group of people who train their minds and skills through continuous selfimprovement

 Maintain an appropriate profit structure to fulfill our responsibilities to a wide range of stakeholders
ValuesPeople: I will proudly fulfill my duties honoring my loved ones
Governance: I will strive to take socially responsible behavior
Social: I will work with customers to create and promote values for society
Environment: I will work to create a better future for all
WAY (Code of Conduct)Moving forward to next net one

 Remember the failure of arrogance Be sincere Be thoughtful
 Healthy body, Healthy mind Work together to break new ground Find seeds of growth in both failure and success “TAKUMI” as a never ending story
 No WAKUWAKU No work
 Go beyond all expectations

4

Sustainability Policy
As a leading network company, we have grown by providing high value-added services that support thetransformation of our customers and society.
Our value is “to create a prosperous future through tradition and innovation by unlocking the potential of people
and networks,” and we believe that contributing to “customer success,” “employee happiness,” “building co-creation
relationships with partners,” “increasing shareholder value,” and “preserving the natural environment” through ourbusiness will enhance corporate value. We will hone our ICT expertise in critical assessment and knowledge bornof “superior network technology,” “multi-vendor support,” and “co-creation with customers” to provide services thatcreate both social and economic values, thereby contributing to a sustainable society and achieving sustainablegrowth for our company.

Sustainability Promotion System
Net One Group’s Sustainability Management
Net One Group’s sustainability management promotes our materialities, the current Medium-Term Business Plan,and our SDGs Declaration in an integrated manner, based on our corporate philosophy system.

Net One Group’s Sustainability Promotion System
In April 2022, the Group established the Sustainability Committee to deliberate and decide on important mattersrelated to sustainability, with the aim of promoting sustainability initiatives. The Sustainability Committee’s officer
in charge is the President who serves as CEO, and the Committee is chaired by the Vice President who serves as
CSO. It consists of managers and personnel who are in charge of the business divisions, corporate divisions, andsome subsidiaries.
In promoting sustainability, the Committee identifies our materialities and appoints organizations in charge. KPIs
are set for the identified materialities, and based on these KPIs, the Sustainability Committee monitors the activitiesof the organizations in charge and reports to the Management Committee. Through this system, we promote andmonitor our sustainability initiatives on a Group-wide basis.

5Materiarities of Net One GroupThe Net One Group announced its materialities in December 2021.
Based on our recognition of the current operating environment, the new philosophy system, and the policies of
the current Medium-Term Business Plan, we examine materialities with an emphasis on value for our company
and value for society. These materialities are approved by the Board of Directors. Going forward, the Sustainability
Committee, which was newly established in April 2022, will confirm their progress on a quarterly basis, while being
monitoring by the Board of Directors.
■ Materiality Identification Process■Four Materialities and KPIs
Materialities
Realization of a safe
and secure advanced
information society

KPIs
 Provide solutions and services by challenge
and domain
 Expand and promote the service businessWe will contribute to realizing a safe and secureadvanced information society through high-quality
services, with our strength in network technology as
our core.

 Revenue of social challenge-solving solutions*: 30.0
billion yen (fiscal 2024 target) Service ratio: 55% (fiscal 2024 target)*Three focus areas of the current Medium-TermBusiness Plan: “Digital government,” “Society 5.0,” and“Smart manufacturing.”

6Materialities
Thriving professional
personnel

KPIs
 Train IT personnel for the next generation
 Promotion of diversity and inclusion

In order to achieve sustainable growth, we will train
and secure diverse personnel, who are the source ofour competitiveness, and build a work environment
where each employee can play an active role.

 CISSP certification: 80 (fiscal 2030 target)
 Security specialists: 100 (fiscal 2030 target)
 Front divisions: up 50% compared to fiscal 2021
(fiscal 2030 target)
 Corporate divisions: up 150 persons (fiscal 2030
target) Business improvement proposals: 100 (cumulative
total from fiscal 2022 to 2030)
 Ratio of female managers: 15% (fiscal 2030 target) Ratio of female new graduate hires: 50% (fiscal 2030
target) Male employees taking paternity leave and special
leave for childbirth: 90% (fiscal 2030 target)

Contribution toa decarbonized society Reduce greenhouse gas emissions throughbusiness Reduce emissions in the business processesof our Company

We will address climate change by both reducing
greenhouse gas emissions through business, andreducing the environmental impact of our own
business processes.

 Expansion of green solutions
 Expansion of sales of low-power consumption
products and services

 Foster the corporate culture and enhanceinternal controls
 Realization of Health and Productivity
Management®

Maintaining and enhancing
a governance structure
for sustainable growth
In order to improve corporate value, we will
strengthen governance and work to reform ourcorporate culture, so as to build stronger relationshipsof trust with stakeholders.

 Conduct an annual employee awareness survey aspart of our efforts to foster the corporate culture Progress report on recurrence prevention measures
 Certification as an Outstanding Organization of
Health and Productivity Management (fiscal 2024
target)Materialities and SDGs Declaration
The Net One Group has established a total of 12 SDGs Declarations for our materialities in order to achieve bothcontributions to a sustainable society and the sustainable growth of the Company, through business and corporate
activities toward the achievement of the SDGs.
SDGs Declaration toward Materialities
https://www.netone.co.jp/sustainability/sdgs/#sdgs_h301 (Japanese only)

Stakeholder Engagement
Stakeholders and Basic Approach
Our Mission states that “each of us is a professional with outstanding expertise and high ethical standards, andcontributes to solving the problems of the society and our customers.” As key factors in fulfilling this mission, we
have defined our four Values as “People, Governance, Social, and Environment,” and are engaging in deeper
dialogue with our stakeholders as we work to resolve social challenges.

7

■ Examples of Dialogue with Stakeholders
Stakeholders
Customers

Employees

Partners

Key Initiatives
We are engaged in customer satisfaction surveys and dialogue with customers. In our
fiscal 2021 customer satisfaction survey, we changed the survey policy significantly
from the conventional “research on defects, issues, and points of dissatisfaction” to“clarifying the gap between the Company’s vision and customer expectations, as well
the factors behind it.” As a result, 78.2% of respondents were satisfied or somewhat
satisfied in terms of overall satisfaction.
We have set up training programs to support personal growth and development andensure equal opportunities for all employees. We are also working to provide safe andcomfortable working environments that take into account employees’ health. We arealso promoting the concept of RCT*. We conducted internal awareness surveys in fiscal
2021 as well, and the company satisfaction level was 3.69pt.
We have formulated the Partner CSR Guidelines to share our philosophy and policies
with our suppliers. In addition, we have received awards from various partnercompanies for our contributions to the acceleration of customers’ DX, such as “Japan
Partner of the Year” (from Cisco Systems).

Shareholders

We disclose information and actively engage in dialogue with market participants inaccordance with our disclosure policy. In fiscal 2021, the Company’s President andOutside Executive Directors held investor meetings 41 times and 3 times respectively,
while the Investor Relations Office held a total of 231 investor meetings.
Natural environment
We consider environmental issues, including climate change to be importantmanagement challenges, and has set “contribution to a decarbonized society” as oneof our materialities. We will work to both reduce greenhouse gas emissions through ourbusiness and reduce our environmental burden in our own business processes.
*RCT (Respect, Communication, Teamwork): A shared communication approach designed to create strong links
between management and employees, share our corporate philosophy, enhance workplace environments, andfoster our corporate culture

Initiatives and External Organizations in Which We Participate
Affiliated Initiatives and External Organizations
We participate in a wide range of related organizations in order to contribute to the development of networks andsecurity, innovation and industry, and the construction of a circular economy.

■ Examples of Participating and Affiliated Organizations
Net One Systems:
・Open Networking User Group (ONUG)
・P4 Users Japan・Japan Network Security Association (JNSA, a specified nonprofit organization)
・Open Government Consortium (OGC, general incorporated association), and others

Net One Next:
・Japan Partnership for Circular Economy (J4CE)

8

E：Environment
One of the Net One Group’s Values is “Environment: I will work to create a better future for all.” In order to passon a rich environment to the next generation as a global citizen, we will contribute to the creation of anenvironmentally friendly society through our daily work, such as by preventing global warming, pursuing energy
conservation, promoting paperless operations, and reducing waste and CO 2 emissions. We will also strive toprovide and disseminate environmental solutions by utilizing ICT, which is our core business.

Related Materialities• Contribution to a Decarbonized Society

TOPICS• Addressing Climate Change in line with TCFD Recommendations ▶▶▶P.11• Providing Green Solutions (Refurbishment)▶▶▶P.12

9

Environment Management
Basic Approach / Environmental Policy
Environmental Policy
Basic Principles
Through all of our business activities, we contribute to the realization of a society where sustainable growth ispossible, by using cutting-edge IT technology to help prevent global warming, and working on energy andresource conservation measures.
We also aim to be a company that is trusted not only by our customers but also by society, through the actionsof each and every employee, each of whom maintains a high level of environmental awareness.
Basic Policies
The Company will implement the following policies, in order to realize the principles described above:
1. Reducing CO2 emissions with green IT technology
We will contribute to the reduction of CO2 emissions throughout society, by increasing the operational
efficiency of our customers and reducing their environmental impact by proposing solutions using
cutting-edge IT technology.
2. Energy-saving and resource-saving activities
We will promote a reduction of the energy and paper resources used in our corporate activities.
3. Compliance with laws and regulations
We will comply with environmental laws, regulations, agreements, requests from customers (green
procurement), etc. that are related to our corporate activities.
4. Maintaining and improving the environmental management system
We will always remain aware of the environmental aspects of our corporate activities, and work tocontinuously improve our environmental management system through the PDCA cycle.
5. Conducting environmental training
In order to achieve our environmental policy, we will implement environmental training for all
employees working at the Company, improve their environmental awareness, and strive to develop
green human resources with high environmental awareness.
6. Disclosure of environmental information
We will strive to disseminate information on our environmental efforts to the public, including thisenvironmental policy, through our website and other means.

Sustainability | ESG Initiatives > Environment Management
https://www.netone.co.jp/sustainability/esg/environment/management/ (Japanese only)

10

Environment Management Promotion System
Promotion System
Led by our Environmental Management Supervisor, the Net One Group engages in activities to reduce ourenvironmental burden, such as responding to climate change. The Environmental Management Division Managerof each division, including those for group companies, and the Environmental Management Division In-charges
who serve as the driving force, play central roles in these activities. At least once each year, the Environmental
Management Supervisor receives and reviews reports on changes in external and internal challenges related tothe environment, nonconformities and corrective actions, monitoring and measurement results, etc.

Environmental Training and Enhancing Awareness
All Net One Group employees (excluding those of some subsidiaries) are provided with environmental training
through e-learning once each year. Furthermore, we provide “EMS* annual education” via e-learning forenvironmental management division managers and environmental management department in-charges once eachyear. The attendance rate for both of these educational courses is 100%.
* Environmental Management System

Responding to Climate Change
TOPICS
Addressing Climate Change in line with TCFD Recommendations
As Net One Group’s response to the risks and opportunities related to climate change, we are promoting
information disclosures regarding governance, strategy, risk management, and metrics and targets, in line withthe recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
In addition to responding to the risks that climate change may pose to our business activities, we are
discussing ways to acquire growth opportunities utilizing ICT, and will expand our disclosures going forward.
Our initiatives to address climate change in line with TCFD recommendations (June 22, 2022)
https://www.netone.co.jp/news/information/2579.html (Japanese only)11

Green Solutions (Refurbishment) Deployment
TOPICS
Providing Green Solutions (Refurbishment)
In order to support our customers’ transition from “owning” to “utilizing” ICT platforms, since 2017 we havebeen providing the “NetOne ‘all in’ Platform,” a subscription-type (paid-for-use) service that allows customers to
use the functions they need. In 2019, we established Net One Next Co., Ltd., which handles recycled ICT
platform products, with the aim of expanding the use of this service.
Part of the “NetOne ‘all in’ Platform” utilizes recycled products that are handled by Net One Next. In addition,
Net One Next provides maintenance services for hardware failure recovery of ICT equipment that are not limited
to the manufacturer support period, rental services for ICT assets, sales of refurbished products, and rental andsales of SFP transceivers, which are necessary parts for network connection.
Going forward, Net One Next will accelerate circular economy-type business and use resources whilecirculating them for as long as possible, in order to reduce the generation of waste, and will aim to realize both
environmental protection and profit creation.
The Group will provide new value and propose sustainable ecosystems through ICT utilization services, andwill support the construction of sustainable social infrastructure.
Net One Next Co., Ltd.
https://www.netone-next.co.jp/en/company/

12

S：Social
We have set our Mission as, “Each of us is a professional with outstanding expertise and high ethicalstandards, and contributes to solving the problems of the society and our customers.” To achieve this, it isessential that we train and secure diverse personnel who are the source of our competitiveness, and build a work
environment where each employee can play an active role with a sense of purpose. Even amidst drasticchanges, we will continue to provide high-quality services with our network technology as our core, andcontribute to realizing a safe and secure advanced information society by honing our ICT expertise in criticalassessment and knowledge born of “superior network technology,” “multi-vendor support” we have cultivatedthrough relationships with various business partners, and “co-creation with customers.”

Related Materialities• Thriving Professional Personnel
TOPICS• Establishing a Personnel Management Policy for Personnel System
Reform▶▶▶P.15• Launch of Support for National and Public Universities through the
Establishment of a Study Support System▶▶▶P.2513

Personnel Management
Basic Approach to Strengthening Human CapitalAs the evolution of technology is rapid in the ICT industry, responding to evolution itself is “value,” andrepresents the “source” of our competitiveness. The power of personnel is the key to maintaining ourcompetitiveness. There is a risk that our competitive advantage may become obsolete if it is reliant on a specifictechnology. Therefore, we believe that the point of human capital management is to train and produce excellent
personnel who can think and act on their own, so that they are able to create value from the essence andutilization of technology.
At the Group, we make reference cases from the practical experiences we have gained from successes andfailures we have made through our own operations, and use these reference cases in solutions for ourcustomers. As such, the knowledge and experience of our employees help to create added value. For thisreason, we believe it is critical to train personnel who can act autonomously and create solutions, and for eachand every employee to understand and adopt the Code of Conduct and compliance that form the foundation ofthese activities.
In addition, we are promoting diversity-and-inclusion initiatives with the aim of creating synergies andinnovation through the integration of diversity. We aim to create work environments where each employee canactively express their thoughts and work in good health, regardless of gender, age, nationality, disability, work
experience, sense of values, or any other differences. By doing so, we will draw forth the power of individuals,
foster an open corporate culture, and achieve sustainable growth by increasing productivity.
Prior to implementing its new personnel system, the Group has established a Personnel Management Policy(Reference: P.15 TOPICS “Establishing of a Personnel Management Policy for Personnel System Reform”).

Promotion System for Personnel-related Measures
To promote personnel training and empowerment of diverse personnel, we manage and operate various crosscompany organizations and systems under the strong commitment of the management team.

Commitment of the top management

Chief Human Resources Officer (CHRO)

Human Resources Department

Promotes personnel measures to execute growthstrategies and strengthen our business base, under thestrong commitment of the management team
Establishes human capital management and leads at theforefront of the management team, to increase the value of
the Group’s personnel
Implements overall personnel management to establish
and maintain a business base that supports the growth ofthe entire Group over the medium to long term

14Personnel strategy in the current Medium-Term Business Plan
We will create an environment in which personnel who have a desire to grow can take on challenges without
hesitation and demonstrate their abilities to the fullest.

TOPICS
Establishing a Personnel Management Policy for Personnel System Reform
The Group recognizes the necessity of reforming our personnel system, based on the past corporate culture
which led to the failure of arrogance and the results of our employee awareness surveys. Accordingly, theGroup is considering the introduction of a new personnel system, in order to realize personnel strategies suchas professional personnel training and providing an environment where our personnel can thrive. In fiscal
2022, with the aim of introducing the new personnel system in fiscal 2023, we have established the “Personnel
Management Policy” as our first step, which serves as the core concept of our system reform.

With our new personnel system, we aim to enable each staff member to have contact with customers at
every stage of the value chain, and to make proposals and provide value, irrespective of employee categories
such as “sales or technical” or “front-line or follow-up.” By introducing our new personnel system, we will
resolve challenges in our current system, reform our corporate culture, and realize our management
strategies.

15

Education and Training System
Basic Approach / Our Criteria for Personnel
At Net One Systems, we strive to cultivate personnel who can put customers’ ideas into practice, based on ourbelief that “there is an optimal solution for every customer.” We have a variety of training and education systems
in place to enhance our personnel training programs to support each employee in realizing his/her own growthautonomously.
Employees Net One Needs
1.

The ability to address customer needs using a wealth of expertise in cutting-edge technologies and thedesire to boldly take on groundbreaking new challenges

2.

The ability to lead innovation by leveraging communication skills and building collaborative relationships
with all project partners

3.

The ability to work independently towards goals in self-designed career path scenarios

Training Policy and Strategies
To promote personnel training and empowerment of diverse personnel, we manage and operate various crosscompany organizations and systems under the strong commitment of the management team.
Training Program and System■ Education System Chart of the Net One Group*Some subsidiaries have a different education system from the above.

16

DX Personnel Training
We provide education to many companies and organizations through our “Network Academy,” which provides
practical education programs that consolidate our diverse range of know-how, and have worked to produce ICT
personnel that support Japanese society. Furthermore, we have grown together with our customers, by considering
the experiences and knowledge we have gained through our own practice as common challenges for our customers,
and providing them as added value. We will develop DX personnel through the development of training methods
such as design thinking and data analytics in addition to conventional training, so that corporate personnel can
promote digitalization and realize DX that leads to the creation of profit models, in order to provide further value in
addition to conventional added value.

Leadership Development
In line with the establishment of the Nomination Advisory Committee, we will formulate a succession plan forsustainable growth and the medium- to long-term enhancement of our corporate value. We have establishedcriteria for selecting and promoting personnel who are suitable for realizing our business strategies, and we willtrain successors while shifting personnel in the candidate talent pool as needed, through “ability development andplacement” with education programs, challenging assignments, etc. In order to establish a leadership pipeline thatmatches this system, we will conduct leadership development aimed at training next-generation leaders from a
medium- to long-term perspective. Specifically, in addition to conventional level-based education, we will conduct“personality assessments” and “action learning-type training” (target: manager level, approximately 300 persons).

Personnel System and Diversity
Basic Approach
The Net One Group is promoting diversity and inclusion with the aim of creating synergies and innovation throughthe integration of diversity. We aim to create work environments where employees can work in good health,regardless of gender, age, nationality, disability, work experience, sense of values, or any other differences. By
doing so, we will draw forth the power of individuals and achieve increased productivity and continuous growth.

Evaluation / Compensation System
We have established a compensation system that corresponds to the scale of the role, and the scale of the job
responsibilities and achievements of each employee, regardless of their employment format.
We have also introduced a system for reviewing the compensation of contract employees according to their work
achievements, and hire them as full-time employees when their intentions align with the positions we offer.
In the evaluation system, individual goals are set in accordance with the strategies and goals of the organization,
based on the current Medium-Term Business Plan, as well as the expectations of each individual with regard totheir grade, occupation, or managerial position. We have introduced a system that measures the evaluation of theresults from various perspectives, which leads to the continuous growth of our employees. In addition, we haveintroduced incentives that lead to medium- to long-term motivation, such as an employee stock ownership plan anda defined contribution pension system, so that targets are not biased towards enhancing short-term performance.

Initiatives to Promote the Active Participation of Diverse Personnel
See [Principle 2-4. Ensuring Diversity, Including Active Participation of Women] in our Corporate Governance
Report.
Corporate Governance Report > Principle 2-4. Ensuring Diversity, Including Active Participation of Women
https://ssl4.eir-parts.net/doc/7518/ir_material15/129505/00.pdf#page=2 (Japanese only)

17

Employment of Persons with Disabilities
In order to draw forth the power of individuals and create work environments where our employees can work ingood health, we will continue initiatives to foster a corporate culture that emphasizes diversity, and actively hire
employees with consideration for their disabilities.

Main Measures to Support Work-life Balance
At Net One, we aim to grow together with our customers by first implementing work style innovations ourselves,
and then considering the experiences and knowledge we have gained as a common challenge for our customers,
and providing them as added value. This is what we call “netone on netone”.
With the shift to working styles centered on telework, we have introduced a personnel system that allows flexibility
in both working hours and work locations. We are working to create an environment in which employees canefficiently produce results, while maintaining a work-life balance amidst diversifying individual lifestyles, values,
and work views.

Examples of major systems
Telework system
Flex-time system
Work select system

Multi-job system
Work location change system

Work-life balance support

Overview
Workstyle is centered on telework, working from home or outside, in
principle
Enables employees to flexibly set their own working hours, based on thepremise of autonomous work planning.
① Area select: Improve work-life balance by limiting work locations② Time select: A system in which employees work less than the prescribedworking hours per month③ Job select: A system that restricts expected roles by changing the rating
to a lower grade or class, for reasons such as childcare or nursing care
A multi-job system that realizes diverse work styles in response to changes
in society, allowing employees and the Company to grow together
A workstyle in which an employee in a location that is distant from the baseof the assigned department, and commutes as needed to the nearest
business office, as a “home base”
Childcare leave of absence system, shorter working hours system while on
childcare / nursing care leaves of absence, child nursing care leave, stockleave (for child nursing care), special maternity leave, long-term nursing
care leave of absence system, nursing care leave, etc. Focusing on thechildcare leave of absence system, we have introduced a number offlexible system designs that exceed legal requirements.

Recruit Information | System / Environment > Welfare Program
https://www.netone.co.jp/recruit/environment/welfare/ (Japanese only)

External Evaluation
We have acquired the “Kurumin Mark” from MHLW (certified in 2013) for activities to promote work-lifebalance, and have also received the “Eruboshi certification (second stage)” for our activities to promote theempowerment of women.

18Human Rights
Basic Approach to Human Rights
Under the corporate philosophy system (Purpose, Mission, Vision, Values, and WAY), each and every memberof Net One Group will fulfill our responsibility to respect the human rights of all persons as professionals withoutstanding expertise and high ethical standards.
In addition to respecting basic human rights, our Code of Ethics stipulates that there shall be no discrimination
based on race, religion, skin color, gender, nationality, language, body, age, marital status, etc. The compliancemanual stipulates the following as standards that all employees should comply with, in common.
Standards of Conduct
Respect for others’ personality and individuality andappropriate communication

Respect for fundamental human rights

Our Promises
We respect others’ personalities and individuality,
and strive for appropriate communication. We willhone our expertise and creativity to maximize ourabilities and potential.
We respect basic human rights and do notdiscriminate against others.
We never tolerate harassment.

Compliance Manualhttps://www.netone.co.jp/sustainability/esg/governance/compliance/ (Japanese only)

Implementation of Training and Survey of Actual Conditions / Awareness
The Net One Group conducts compliance training on harassment every year. In addition, to confirm the status
of dissemination and thorough enforcement of compliance, we conduct surveys regarding actual conditions andawareness for all officers and employees during annual training. The results of these surveys are utilized incompliance education and policy formulation in order to make improvements.
In addition, we conduct an “internal awareness survey” and strive to understand the situation of harassment. In
fiscal 2021, we conducted a survey of 2,665 persons, and confirmed improvements in power harassment andsexual harassment for the second consecutive year. Going forward, we will continue to implement training on
harassment and human rights, and foster a corporate culture based on our Purpose, with the aim of making further
improvements.
[Survey results on harassment in the fiscal 2021 “Internal Awareness Survey”]
 Target: 2,665 persons (valid response rate: 94.7%)
 Power harassment: Improved by 0.1pt compared to the previous year Sexual harassment: Improved by 0.06pt from the previous year
We also require our business partners to consider human rights and comply with labor laws, in our Partner CSR
Guidelines.
[Partner CSR Guidelines] 3.4 Consideration for human rights and compliance with labor laws
・Respect the human rights of employees, and promote the creation of a healthy and safe working environment.
・Respect the dignity and diversity of humankind, and prohibit all forms of discrimination and unfair labor
practices (ensure compliance with legal working age limits, prohibit forced labor, etc.).
・Strictly implement safety and health measures, manage working hours, and comply with labor practices
such as not unfairly withholding or reducing wages.

Partner CSR Guidelines
https://www.netone.co.jp/sustainability/files/e05105156064dd325f50db7c171e800e_1.pdf(Japanese only)19

Establishment and Responses of Our Harassment Helpdesk
In fiscal 2020, the Net One Group reviewed the operation of its whistleblower system and separated the reporting
desks for misconduct and harassment, with the aim of fostering trust in the system. As a result, we have establisheda system that allows each responsible department to respond quickly and appropriately.
In addition, to ensure that employees can use the whistleblower system with peace of mind, our Whistleblowing
Regulations stipulate the confidentiality of all involved parties, including those who cooperate in investigations. The
regulations also prohibit searching for whistleblowers, as well as the possibility of being subject to disciplinary
action in the event of a violation of the aforementioned rules. These regulations are made known to all employees
via the internal portal site, in order to ensure the confidentiality of whistleblowers.
We confirm the facts of all consultations and take actions against the relevant parties, as necessary. We also
conduct follow-up and care for those who are affected, as well as dissemination through training, in order to prevent
any recurrence.

Labor Relations
Basic Approach
Although the Net One Group does not have a labor union, we place importance on building labor-management
relations and are promoting various initiatives.
■ Key Initiatives
Examples of initiatives
Conclusion of an Agreement
on Overtime Work
(Agreement 36)

Details
Based on Article 36 of the Labor Standards Act, we have concluded
agreements between employees and the Company, with the aim of arranging
working hours and ensuring that working hours are not disadvantageous toemployees.
Establishment of a Safety and Based on the Industrial Safety and Health Act, we have established a “Safety
Health Committeeand Health Committee” for the purpose of investigating and deliberating
important matters, such as basic measures to prevent dangers or healthproblems for employees.
Establishment of
The Net One Group has set up an “Employee Association” to solicit requests
an Employee Associationfrom employees and opinions from management.
Establishment ofWith the aim of maintaining a good relationship between the Company andthe Employee Council
employees, and to communicate with each other to enhance the working
environment and working conditions, we have established the “Employee
Association,” which consists of employees, and an “Employee Council,” which
is a council for discussions with management.
In addition, we are building systems to ensure that employee opinions reach and receive feedback frommanagement, such as through the installation of suggestion boxes.

Employee Engagement
Conducting Engagement Surveys
The Group conducts the following three types of engagement surveys, in order to understand the current stateof the workplace environment and organizational culture.
・Internal awareness survey (implemented until fiscal 2021)
・Organizational culture survey (implemented from fiscal 2021)
・Corporate culture monitoring survey (pulse survey) (implemented from fiscal 2021)

20

Internal Awareness Survey
Our aim is to collect opinions and proposals for future initiatives, as well as to clarify employees’ job satisfaction
and awareness of the workplace environment, and identify challenges related to work style measures based on
survey results.
■ Fiscal 2021: Internal Awareness Survey Overview
In fiscal 2021, the identification of challenges has progressed further, as the number of questions in the survey
was expanded from 75 in fiscal 2020 to 97, and the effective response rate was 94.7%, which is an improvementof 1.1pt over the previous survey.
Fiscal 2019
Fiscal 2020
Fiscal 2021
Number of persons
2,332
2,393
2,665
surveyed
Number of valid
2,163
2,241
2,524
responses
Percent of valid
92.8%
93.6%
94.7%
responses
・ Survey target: Net One Group* executives, employees, temporary employees, contract employees, andseconded employees*Net One Systems, Net One Partners, Net One Next, Net One Business Operations, eXtreak■ Fiscal 2021 Implementation Results and Year-to-year Comparison
In fiscal 2021, it was confirmed that “customer orientation,” “compliance,” and “overall feelings” have improved
over the past three years, by category. In terms of items, compliance, evaluation of superiors, understanding of the
management philosophy, and customer orientation were evaluated as strengths. On the other hand, room for
improvement remains in areas such as work load, work efficiency, information sharing, and willingness for reforms
in the workplace.

*Category averages were calculated by narrowing the scope to questions that can be compared for 3 years.

Relevant indicators: Company satisfaction level, up 0.05pt from the previous year
*Fiscal 2019: 3.45pt, Fiscal 2020: 3.64pt, Fiscal 2021: 3.69pt

Organizational Culture Survey and Corporate Culture Monitoring Survey
In fiscal 2021, the Group launched a new organizational culture survey as part of its activities to reform and cultivate
our organizational culture. Based on the results of this survey, we identify challenges related to organizational

21

culture and implement various measures for improvement. In addition, we also conduct a “corporate culture
monitoring survey” every other month, in order to observe the results of these measures from a fixed perspective.

Responsibility to Customers and Customer Satisfaction
Basic Approach
We aim to realize a sustainable society together with our customers and business partners, and our mission is
to build fair relationships with our partners while adhering to rules and social norms, and to provide customers with
optimized ICT utilization to contribute to customer success.

Promotion System
From fiscal 2022, we have established the Customer Satisfaction Enhancement Subcommittee, as anorganization that cooperates with the department in charge of the materiality, “realizing a safe and secure advanced
information society.” The Customer Satisfaction Enhancement Subcommittee plays the role of examining importantmatters related to enhancing the Net One Group’s customer satisfaction, reporting to the Sustainability Committee,
and promoting activities aimed at enhancing customer satisfaction.

Key Initiatives in Fiscal 2021
Based on the previous year’s customer satisfaction survey, we pursued and implemented more effective
activities in three phases: survey, policy formulation, and promotion support.
〇 Examples of Activities in Fiscal 2021
Survey: Customer Satisfaction Survey
In the fiscal 2021 customer satisfaction survey, we changed the survey policy significantly from theconventional “research on defects, challenges, and points of dissatisfaction,” with the aim of “clarifying the
gap between the Company’s vision and customer expectations, as well as the factors behind it.”
Measure Example 1: Holding “online sales skill building training”
While sales activities are shifting toward online-centered sales, based on the analysis results of the customer
satisfaction survey in fiscal 2021, we focused on the fact that customers have challenges such as “difficulties
unique to online sales,” “a decline in communication quality,” and “the significance of participation in web
conferences with a large number of participants.” Accordingly, we hold in-house online sales training for our
employees in order to acquire effective methods to lead online sales and skills to enhance communication.
Measure Example 2: Holding “interdepartmental collaboration workshops”
In order to enhance the quality and speed of our services, we hold workshops for the core employees of eachdepartment, to foster a culture of mutual understanding and mutual support between departments.
Measure Example 3: Utilization of digital marketing to strengthen customer contact points
As sales activities are shifting to online-centered sales and the reduced number of customer contact points
is becoming a challenge, we are strengthening our regular communication of information so that we can utilize
various methods of information distribution more effectively.
Customer satisfaction improvement activities in fiscal 2021
https://www.netone.co.jp/sustainability/esg/social/customer-survey/2021/ (Japanese only)

22

Initiative Policies after Fiscal 2022
In order to achieve the targets of our current Medium-Term Business Plan for revenue for social challengesolving solutions (2024 target: 30.0 billion yen) and improving the service ratio (2024 target: 55%), we will work to
implement customer satisfaction surveys that contribute to our business and service strategies, and to realize ahighly sustainable customer satisfaction management system. Specifically, we will consolidate information on theactivities of each division and identify challenges based on the results of the fiscal 2021 survey, and plan andimplement a customer satisfaction survey for fiscal 2022 based on the resulting data. In addition, we will consider
more effective systems for improving customer satisfaction, while determining the correlation of our survey datawith various surveys and measures, such as corporate culture monitoring surveys.

Responsibility to our Partners and Building Co-creative Relationships
Basic Approach
We aim to realize a sustainable society together with our business partners, build fair and long-term relationshipsof trust while adhering to rules and social norms, and strive for coexistence and co-prosperity as a company thatis trusted by society.
Sustainability | ESG Initiatives > Responsibility to our Partners
https://www.netone.co.jp/sustainability/esg/social/responsibility/ (Japanese only)

Key Initiatives in Fiscal 2021
In addition to conducting compliance questionnaire surveys for our partners, we hold safety and healthconventions and safety study sessions for major partners.
We have also received various awards from our partners.
■ Examples of Fiscal 2021 Awards from Our Partners
 Net One Systems
Company nameDell Technologies
Red Hat K.K.
Citrix Systems Japan K.K.
Veeam Software Japan K.K.
Cisco Systems

Cisco Systems
Cisco Systems

Cisco Systems
Cisco Systems

Cisco Systems

Cisco Systems

Award details
Awarded the “Excellence in Services Sales APJ Award” at theDell Technologies Partner of the Year Awards 2021
Awarded the “Innovation Partner of the Year” at the Red Hat
Japan Partner Awards 2021
Awarded the “2021 1st Half Best Partner Engineer” at the2021 1st Half Citrix Partner Awards
Awarded “The Best ProPartner AWARD” at VeeamON TOUR
Japan 2021
Awarded the “Enterprise Networking & Meraki Partner of theYear” at the Global Awards of the Cisco Partner Conference
Japan 2021
Awarded the “JAPAN Partner of the Year” at the APAC
Awards of the Cisco Partner Conference Japan 2021
Awarded the “Customer Experience Partner of the Year” at
the APAC Awards of the Cisco Partner Conference Japan
2021
Awarded the “Japan Partner of the Year” at the Japan Awardsof the Cisco Partner Conference Japan 2021
Awarded the “Customer Experience Partner of the Year” at
the Japan Awards of the Cisco Partner Conference Japan
2021
Awarded the “Enterprise Networking Partner of the Year” at
the Japan Awards of the Cisco Partner Conference Japan
2021
Awarded the “DevNet Partner of the Year” at the Japan
Awards of Cisco Partner Conference Japan 2021

23

Company name
Juniper Networks

Palo Alto Networks

Award details
Awarded the “Japan Mist Partner of the Year 2021”
Award for partners who have contributed the most to sales ofMist products, the company’s AI cloud-based Wi-Fi products
in Japan.
Awarded the “FY21 JAPAC CDSS Partner of the Year”
Award for partners who contributed the most to sales of thecompany’s cloud-provided security service (CDSS) in Japan

 Net One Partners
Company name
Cisco Systems
Cisco Systems

Award details
Awarded the Cisco Business Resilience Award
Awarded the “Audience Award” at the Japan DevNet
Innovation Challenge 2021

 Net One Asia
Company name
VMwareCitrixDell Technologies

Award details
Award: Digital Partner of the Year 2021 - Singapore.
Award: Citrix CSP Partner of the Year 2021 - Singapore
Award: Data Center Solutions, Server, Partner of the Year
FY 2021 - Singapore■ Acquisition examples of manufacturer certified partner programs in fiscal 2021
 Net One Systems
Company name
NVIDIA
Palo Alto Networks
GoogleCisco Systems

Award details
Promoted to “Elite,” the highest partner qualification in
Virtualization Competency
Acquired the “Prisma Cloud Specialization,” held by selectpartners with Prisma Cloud specialized skills
Acquired Sell partner certification in Google Cloud Partner
Advantage
Acquired “Cisco DevNet Specialization,” a qualification that
evaluates software development capabilities and businessprocesses for infrastructure automation, as the first company
in Japan to receive this qualification

 Net One Partners
Company name

Details
Acquired the “Customer Experience Specialization,” aCisco certification in the field of customer experience for the
first time as a distributor in the Asia-Pacific, Japan andGreater China (APJC) region*The listed company names are trademarks or registered trademarks of each company.
Cisco Systems

Community Contribution (Stakeholder Communication)
Basic Approach
As long as we live on the Earth, we must always contribute to society. There will be no future for us if we neglect
to take the currently required actions for society and the environment. We believe that it is an important
responsibility and an important role for humanity to approach the Earth and society head-on, and take action.

24Based on our Philosophy, the Net One Group will realize and achieve contributions to society and theenvironment, by promoting activities that leverage our strengths.

Promotion System
We are promoting initiatives based on the Sustainability Promotion System (P. 5), as we have set “train personnel
for the next generation” as a relevant theme for the materiality, “Thriving professional personnel.”
Key Initiatives in Fiscal 2021
We have been supporting the development of ICT personnel at multiple universities and colleges of technology.
In addition to holding information security classes, we conduct practical information security exercises using actual
network equipment, joint basic research, and program development. In fiscal 2021, we launched industry-academia
collaboration classes with Kyoto Women’s University, and strengthened the information security education programthat is being jointly developed by Kagawa University and Net One Systems from the perspective of DX.
Launch of the industry-academia collaboration classes with Kyoto Women’s University and Net One Systems/ Practical academic content on the theme of “Modern Society and ICT” (2021.4.5)
https://www.netone.co.jp/news/release/20210405_01.html (Japanese only)
Strengths of the information security education program that is being jointly developed by Kagawa University
and Net One Systems from the perspective of DX (2021.4.7)
https://www.netone.co.jp/news/release/20210407_01.html (Japanese only)

Initiative Policies after Fiscal 2022
Training personnel for the next generation is also a theme that is related to this materiality, and we plan topromote initiatives more strongly than ever. In April 2022, we launched a new industry-academia collaboration
class on the theme of “AI technology in modern society” with Kyoto Women’s University, with which we have been
conducting industry-academia collaboration classes with thus far. In addition, we have established a new study
support system for national and public universities that have a track record of industry-academia collaboration with
the Company.

TOPICS
Launch of Support for National and Public Universities
through the Establishment of a Study Support System
As part of our social contribution activities, Net One Systems has established a study support system fromfiscal 2022, and has launched support for national and public universities that have a track record of industryacademia collaboration with the Company.
This system supports university students with tuition fees until graduation, thereby raising awarenessregarding employment at companies, etc. In addition, it is also is aimed at contributing to the provision ofopportunities for active participation in society, in the future.
As the first school, in April 2022, a memorandum signing ceremony in relation to this system was held at
Hiroshima City University. At this University, graduate students who find it difficult to advance to higher education
due to the burden of tuition fees will receive two years’ worth of annual tuition fees, through a Net One Systems
Scholarship.
Going forward, we will continue to contribute to the stable production of ICT personnel over the medium tolong term through this system.
Net One Systems: Launch of support for national and public universities through the establishment of a study
support system (2022.4.27).
https://www.netone.co.jp/news/information/20220427_01-news.html (Japanese only)25

Launch of the industry-academia collaboration classes on the theme of “AI Technology in Modern Society”
with Kyoto Women’s University and Net One Systems (2022.4.5)
https://www.netone.co.jp/news/release/20220405_01.html (Japanese only)

See below for a wide range of other activities.
Sustainability | ESG Initiatives > Social Contribution Activities
https://www.netone.co.jp/sustainability/esg/social/social-contribution/ (Japanese only)26

G：Governance
The Company will achieve continuous growth based on our corporate philosophy. Aiming for an enhancementof our corporate value over the medium to long term, we are continuously working to enhance and strengthen
corporate governance for transparent, fair, prompt, and conclusive decision-making.

Related Materialities• Foster the Corporate Culture and Enhance Internal Controls• Realization of Health and Productivity Management®
TOPICS• Transition to a Company with an Audit & Supervisory Committee andIncreasing the Ratio of Outside Executive Directors to More than Half (Sixout of Nine Members Are Outside Executive Directors)▶▶▶P.29• Outside Executive Director Appointed as Chairperson of the Board of
Directors▶▶▶P.29• Revision of the Executive Remuneration System (Introduction of a
Restricted Stock Remuneration Plan, Adoption of Non-financial Target
Indicators, etc.)▶▶▶P.3927

Progress in Strengthening Corporate Governance- 2005

2006

Board of Directors / Audit &Supervisory Board One outside executive
director appointed (2004)

Committees
 Compliance Committee
established (2003)

 Term of office for executive
directors reduced from two
years to one2009 Group compliance manual
established (2003)
 Whistleblower system
introduced

 Risk Management Committee
established Investment & Financing
Committee established Advisory Committee
established Vision Inculcation Committee
established (-2015)

2007

Other

 Vision Book published2011

 Vice President system
introduced2012 Stock option compensation
system introduced
 Female outside executive
director appointed

2015

2016

 Compliance Committee andRisk Management Committee integrated as the
Risk & Compliance
Committee

 Assessment of effectivenessof Board of Directors started

2017

2020

2021

2022

 Corporate Governance
Guidelines published Transitioned to a company
with an Audit & Supervisorycommittee
 Six out of nine appointed
executive directors areoutside executive directors
 Outside executive director
appointed as Chairperson of
the Board of Directors

 Risk & Compliance
Committee divided into Risk
Management Committee andCompliance Committee
 Vision Inculcation Committee
reestablished Vision Inculcation Committee
renamed to Corporate
Culture Reform Committee
 Internal Control
Enhancement Council
established Reorganized the Internal
Control Enhancement
Council and the Corporate
Culture Reform Committee
into the Governance andCorporate Culture Advisory
Committee
 Separated the Advisory
Committee into theNomination Advisory
Committee and theRemuneration Advisory
Committee

28

 Audit & Supervisory Board
member contact point added
to compliance reporting andadvice line
 Sales Supervisory Officeestablished Vision Book revised Compliance Officeestablished Business Control Division
and Business Planning Officeestablished Revised the executive
remuneration system,
including the introduction of a
restricted stock remuneration
plan, etc.
 The Corporate Data andAnalytic Office establishedTOPICS
Transition to a Company with an Audit & Supervisory Committee
and Increasing the Ratio of Outside Executive Directors to More than Half
(Six out of Nine Members Are Outside Executive Directors)
In 2019 and 2020, several cases of fraudulent acts committed by former employees of the Company werediscovered, and an external investigative committee analyzed the causes of these fraudulent incidents, andprovided advice on measures to prevent recurrence.
Since that time, we have formulated specific measures to prevent recurrence, and have engaged in Groupwide efforts to strengthen internal control, and fundamentally reform our corporate governance and corporate
culture. In order to sustainably develop these initiatives and achieve our current Medium-Term Business Plan,
we determined that it is necessary to increase the independence and objectivity of the Board of Directors andfurther strengthen the supervision of business execution, and to establish a business execution system that is
capable of responding quickly and flexibly to rapid changes in the operating environment of our Group.
Accordingly, following approval at the 35th Annual Shareholders Meeting held on June 22, 2022, we transitioned
from a company with an audit and supervisory board to a company with an Audit & Supervisory Committee.
After the transition, the Board of Directors comprises six outside executive directors out of a total of nine
executive directors.

TOPICS
Outside Executive Director Appointed as
Chairperson of the Board of Directors
On June 22, 2022, Independent Outside Executive Director Maya Ito was
appointed Chairperson of the Board of Directors. A message from the
Chairperson of the Board of Directors is available in the net one report 2022.
net one report 2022
P.43 Message from the Chairperson of the Board of Directors
https://www.netone.co.jp/english/investor-relations/ir-library/integrated/
Chairperson of the Board of Directors/
Independent Outside Executive Director
Maya Ito29

Basic Approach and System on Corporate Governance
Basic Approach
The Company will achieve continuous growth based on its corporate philosophy. Aiming for an enhancement ofour corporate value over the medium to long term, we are working continuously to improve and strengthen
corporate governance to ensure transparent, fair, prompt, and decisive decision-making.
The basic approach to corporate governance is stipulated in Article 1 of the “Corporate Governance Guidelines.”
Sustainability | ESG Initiatives > Corporate Governancehttps://www.netone.co.jp/sustainability/esg/governance/corporate/ (Japanese only)

In addition, we transitioned to a company with an Audit & Supervisory Committee following approval at the 35th
Annual Shareholders Meeting held on June 22, 2022, with the aim of further strengthening the supervision ofbusiness execution, and establishing a business execution system that is capable of responding quickly and flexibly
to rapid changes in the operating environment.
Corporate Governance Structure

The Board of Directors
As a general rule, the Board of Directors meets regularly once a month. In addition to matters stipulated in laws
and regulations and our Articles of Incorporation, the Board makes decisions regarding management strategy,
management policies, Medium-Term Business Plans, and other important matters related to management andbusiness execution. In addition, it also oversees overall management through reports on the execution of duties by
the executive directors. Since June 2022, it has been chaired by an outside executive director.
Audit & Supervisory Committee
As a general rule, the Committee meets regularly once a month to audit the execution of duties by the executive
directors, elect / dismiss the accounting auditor, and exercise authority related to audit compensation. It is chairedby an outside executive director who is a full-time Audit & Supervisory Committee member.
Nomination Advisory Committee
As a voluntary advisory body to the Board of Directors, the Committee deliberates and reports on matters suchas the nomination of executive directors and vice presidents, in order strengthen our corporate governance byenhancing the transparency and fairness of the election, dismissal, and succession plans of executive directors
and vice presidents. The Committee is chaired by an outside executive director.
Remuneration Advisory Committee
As a voluntary advisory body to the Board of Directors, the Committee deliberates and reports on matters suchas the remuneration of executive directors and vice presidents, in order to strengthen our corporate governanceby enhancing the transparency and fairness of the remuneration of executive directors and vice presidents. The
Committee is chaired by an outside executive director.

30

Governance and Corporate Culture Advisory Committee
The Committee was established as a voluntary advisory body to the Board of Directors, and examines andreports on matters related to the evaluation and progress monitoring of action plans for strengthening governance,
corporate culture reforms, continuous implementation of measures to prevent recurrence, and strengthening ofinternal control systems, and also engages in continuous management involvement in monitoring and further
improvement. The Committee is chaired by the President & CEO.
Management Committee
The Committee was established under the President & CEO, in order to establish a system for speedy andefficient business execution, while ensuring the transparency and fairness of management by focusing on business
management and supervisory functions, with regard to the functions of the Board of Directors. The Committee has
been delegated with decision-making authority for matters that do not require resolution by the Board of Directors
according to internal regulations, and it promptly and appropriately and promptly deliberates and decides on basic
or important matters for corporate management. The Committee is chaired by the President & CEO.

Investment & Financing Committee
The Committee deliberates and decides on matters related to the management of the Company’s investments
and loans. The Committee is chaired by a vice president who also serves as the CFO.

Risk Management Committee
The Committee deliberates and decides on important matters concerning the evaluation and control of risk
management activities, in order to continuously enhance the corporate value of the Group. It is chaired by a vicepresident who also serves as the CRO.

Compliance Committee
The Committee is responsible for evaluation and control of compliance activities, and it deliberates and decides
on important matters related to the compliance activities of the Group, in order to promote the strengthening ofcompliance within the Group. It is chaired by a vice president who also serves as the CCO.

Sustainability Committee
The Committee deliberates and decides on important matters related to sustainability, in order to promotesustainability initiatives by the Group. It is chaired by a vice president who also serves as the CSO.

31

Executives (as of June 22, 2022)
Executive Directors
Position

Name

President & CEO

Takafumi Takeshita

Executive Vice President & Chief
Operating Officer (COO)
President & CEO, Net One
Partners Co., Ltd.

Takuya Tanaka

Executive Vice President & Chief
Human Resources Officer (CHRO)

Mitsuru Kiuchi

Outside Executive Director

Maya Ito

Outside Executive Director

Hideki Suda

Outside Executive Director

Masayoshi Wada

Divisions and Committees
in charge
General management
Divisions in charge
Risk Management Department
Compliance Office
Government Affairs Promotion
OfficeBusiness Control Division
Business Development Division
Customer Service Division
Committees in charge
Chairperson of Governance andCorporate Culture Advisory
Committee
Member of the Nomination
Advisory Committee
Chairperson of the Management
Committee
Divisions in charge
East Japan Business Unit 1
East Japan Business Unit 2
East Japan Business Unit 3
Central Japan Business Unit
West Japan Business Unit
Sales Engineering Unit
Division in charge ofCorporate Planning DivisionCorporate Management &Administration Division
Member of the Remuneration
Advisory Committee
Chairperson of the Board of
Directors
Member of the Nomination
Advisory Committee
Member of the Remuneration
Advisory Committee
Chairperson of the Nomination
Advisory Committee
Chairperson of the Remuneration
Advisory Committee
Chairperson of the Audit &Supervisory Committee

Outside Executive Director (FullKazuhiro Noguchi
time Audit & Supervisory
Committee Member)
Outside Executive Director (Audit
Sachiko Iizuka& Supervisory Committee
Member)Outside Executive Director(Audit & Hideki Kusaka
Supervisory Committee Member)* All outside executive directors have been filed with the Tokyo Stock Exchange as independent executive
directors.

32

Skill Matrix of Executive Directors
Based on our management strategy, business content, business scale, and external environment, we havedefined the skills required of the executive directors to be “corporate management / management strategy,”“technology,” “personnel / corporate culture and organizational reform,” “finance / accounting,” “governance / law /risk management,” and “sustainability.” The members of the Board of Directors, as a whole are to possess all ofthese skills, in principle.

Name

Takafumi
Takeshita
TakuyaTanakaMitsuru
KiuchiMaya
Ito
Hideki
Suda
Masayoshi
Wada
Kazuhiro
Noguchi
Sachiko
IizukaHideki
KusakaCorporate
management
Management
strategy

Technology

Human
resources
Corporate
culture andorganizational
reform

〇

〇

〇

〇

〇

〇

Finance
Accounting

〇

〇

〇
〇

〇

〇

〇

〇
〇
〇

〇
〇

Sustainability

〇

〇

〇

GovernanceLaw
Riskmanagement

〇

〇
〇

〇

Status of Vice Presidents (Excluding Those Who Concurrently Serve as Executive Directors)
Position
Senior Vice President & Chief Technical Officer(CTO)
Senior Vice President & Chief Strategy Officer(CSO)
Executive Director, Net One Partners Co., Ltd.
Senior Vice President & Chief Risk Officer (CRO)
Chief Compliance Officer (CCO)
President & CEO, Net One Business Operations
G.K.
Executive Director, Net One Partners Co., Ltd.
Executive Director, Net One Next Co., Ltd.
Vice President & Chief Financial Officer (CFO)
General Manager, Corporate Planning Division
Executive Director, Net One Partners Co., Ltd.
Vice President & Chief Information Officer (CIO)
General Manager, Corporate Management &Administration Division
Vice President
General Manager, Business Control Division
Vice President
General Manager, East Japan Business Unit 1
Vice President
General Manager, East Japan Business Unit 2
Executive Director, Net One Partners Co., Ltd.
Vice President

Name

Committees chaired

Fumihiko Shinoura
Koji Tsuji

Chairperson of the
Sustainability Committee

Masayuki Kitajima

Chairperson of the Risk
Management Committee
Chairperson of theCompliance Committee

Kazuaki Ishibashi

Chairperson of the Investment& Financing Committee

Tomohiro Iwamoto
Katsuya Hayashi
Junji Ueno
Akiko Kanai
Yoshimitsu Narita
33

Position
General Manager, East Japan Business Unit 3
Vice President
General Manager, Central Japan Business Unit
Vice President
General Manager, West Japan Business Unit
Vice President
General Manager, Sales Engineering Unit

Name

Committees chaired

Yoichi Matsumoto
Daisuke Hatakeyama
Kenta Minagawa

Composition of Organizations and Committees,
Status of Meetings, and Content of Deliberations
Board of Directors
Composition (as of June 22, 2022)
Position
Outside Executive Director
President & CEO

Name
Maya Ito
Takafumi Takeshita

Roles, composition(〇)
Chairperson〇

Executive Director

Takuya Tanaka〇

Executive Director

Mitsuru Kiuchi〇

Outside Executive Director

Hideki Suda〇

Outside Executive Director

Masayoshi Wada〇

Kazuhiro Noguchi〇

Sachiko Iizuka〇

Shigeki Kusaka〇

Outside Executive Director(Full-time Audit & Supervisory
Committee Member)
Outside Executive Director(Audit & Supervisory
Committee Member)
Outside Executive Director(Audit & Supervisory
Committee Member)

Meeting Status (Fiscal 2021)
PeriodAttendance rate
Resolutions
Reports
April, 2021
100%
7
3
May
100%
11
3
June
100%
17
5
July
100%
3
9
August100%
57September100%
915
October100%
68November100%
13
13
December100%
69January, 2022100%
5
6February
100%
7
12
March
100%
19
8
(Total)100%
108
98* In addition to the above meetings of the Board of Directors, there were ten written resolutions that are deemed
to have been made by the Board of Directors based on the provisions of the Companies Act and the Articles ofIncorporation of the Company.

34

Audit & Supervisory Committee
Composition (as of June 22, 2022)
Position
Outside Executive Director(Full-time Audit & Supervisory
Committee Member)
Outside Executive Director(Audit & Supervisory
Committee Member)
Outside Executive Director(Audit & Supervisory
Committee Member)

Name

Roles, composition(〇)Kazuhiro Noguchi

Chairperson

Sachiko Iizuka〇

Shigeki Kusaka〇

Position
Outside Executive Director
Outside Executive Director

Name
Ryugo Hayano
Shigeki Kusaka

Roles, composition(〇)
Chairperson〇

Outside Executive Director

Maya Ito〇

Kazuhiro Noguchi〇

Keiichi Horii〇

Hideki Suda〇

Sachiko Iizuka〇

Takafumi Takeshita〇

Advisory Committee (Fiscal 2021)
Composition

Full-time Outside Audit &Supervisory Board Member
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
Outside Audit & Supervisory
Board Member
President & CEO

Meeting Status
PeriodFiscal 2021,
first half
Second half

Number ofmeetings held

Attendance rate

5

100%

4

100%

35

Major deliberations
・Examination of the skill matrix
・Analysis of the current state of the executive
remuneration system
・Examination of the skill matrix
・Examination and deliberation of the new
executive remuneration system
・Deliberation on executive director candidates

Initiatives to Improve the Effectiveness of the Board of Directors
Evaluation of the Effectiveness of the Board of Directors
Effectiveness Evaluation Method
In 2016, the Company began evaluating the effectiveness of the Board of Directors. In fiscal 2021, we
significantly expanded the items contained in the questionnaire, and adopted an anonymous response method,which ensures confidentiality by having executive directors respond to external organizations. Based on theaggregated results of the responses, the Board of Directors analyzes and evaluates the effectiveness of the Boardof Directors, and considers and implements future responses.
■ Contents of the Effectiveness Evaluation Questionnaire (Major Items)
Fiscal 2020 (Six items)

Fiscal 2021 (12 items)(1) Composition of the Board of Directors(2) Operation of the Board of Directors(3) Contents of the proceedings of theBoard of Directors(4) Systems supporting the Board of

Directors(5) Relationships with stakeholders(6) Summary(1) Composition of the Board of Directors(2) Operation of the Board of Directors(3) Deliberation by the Board of Directors(4) Monitoring function of the Board of Directors(5) Performance of inside executive directors(6) Supervisory functions of outside executive directors(7) Support systems for executive directors and Audit &Supervisory Board members(8) Dialogue with shareholders (investors)(9) Personal efforts(10)
Operation of the Committee(11)
Summary(12)
Outside Executive Liaison Meetings

Fiscal 2021
Effectiveness Evaluation Process
Conducted a questionnaire
consisting of 52 items, for executive
directors and Audit & Supervisory
Board members▼
Received reports from externalorganizations
Analysis / Evaluation▼
Reported survey results to theBoard of Directors
Reported to the Board of Directors
on matters requiring improvement,
etc.

36

Effectiveness Evaluation and Response (Last 3 Years)
Evaluation in Fiscal 2019
With regard to challenges related to theabovementioned (3) Contents of the proceedings ofthe Board of Directors, and (4) Systems supporting theBoard of Directors that were identified in past surveys,
we confirmed from the results of the questionnaire thateach of the implemented measures was bearing fruit.
Specifically, in fiscal 2019, the Advisory Committee
held discussions on executive tenure andremuneration, and conducted executive training
mainly for inside executive directors and future
executive candidates.
Nevertheless, in a survey conducted in 2020
targeting the Board of Directors of fiscal 2019, thenecessity of a further strengthening of the supervisory
function was pointed out, in response to the discoveryof transactions that did not actually deliver goods.

Responses based on the Evaluation
Regular reports were made to the Board of Directors
regarding the progress of measures to prevent
recurrence formulated in response to the discovery of
fraudulent transactions. In addition, the Board of
Directors has supervised initiatives to strengtheninternal control, with reports made to the Board of
Directors on risk and compliance activities byexecutive directors.
In addition, through deliberations by the Advisory
Committee, we have begun formulating specificprograms, such as successor development plans forrepresentative executive directors and training for the
next generation of senior management.

▼
Evaluation in Fiscal 2020
We have determined that the effectiveness of theBoard of Directors has largely been ensured.
However, partly due to the impact of a series offraudulent transactions by former employees of theCompany, the roles and responsibilities of insideexecutive directors and a strengthening of internal
controls were pointed out as challenges that we should
address, in order to improve the effectiveness of theBoard of Directors. We also recognized that it isnecessary to continue to improve the quality andquantity of reference materials, provide referencematerials early or provide explanations in advance,enhance executive training, and ensure thetransparency of the Advisory Committee, in order toenhance the discussions at the Board of Directors.

Responses based on the Evaluation
In response to the discovery of a series of fraudulent
transactions, we conducted training by external
experts, in order to reaffirm the importance ofunderstanding internal controls and the state of ourcorporate governance.
We have also worked to improve the operation of theBoard of Directors, such as by restructuring the Boardof Directors Secretariat to include members frommultiple departments, in order to strengthen its
functions.

▼
Evaluation in Fiscal 2021
In the previous effectiveness evaluation, partly due
to the impact of a series of fraudulent transactions byformer employees of the Company, we clarified thechallenges related to roles and responsibilities of
inside executive directors, as well as those related tostrengthening internal controls. Challenges such as
improving the quality and quantity of referencematerials and the early provision of materials toenhance discussions were also shared. In response tothese, we provided training on the roles andresponsibilities of inside executive directors, promoted
the strengthening of the overall internal control systemof the Company through the newly established Internal
Control Enhancement Council as an advisory body to
the Board of Directors, and proceeded with advance
reviews of reference materials and initiatives toprovide reference materials early, by strengthening thestructure of the Board of Directors Secretariat. As aresult, we considered that our efforts to have been
fruitful.
On the other hand, we also recognized the need toenhance various discussions based on management
strategies, review the agenda items of the Board of
Directors, and secure time for the discussion ofimportant agenda items through planned agenda
submissions.

Responses based on the Evaluation
For the purpose of deepening the discussions at theBoard of Directors, we have decided to regularly reportto the Board of Directors on the status of activities atimportant internal meetings and the operational statusof the Board of Directors.
In addition to the matters to be resolved and mattersto be reported, as stipulated in the rules of the Boardof Directors, we have also established “deliberation
matters” in order to encourage an exchange of
opinions as well as discussions on important themes
such as management strategies, and decided to holdregular discussions at the Board of Directors meetings.

37

Various Measures to Revitalize the Board of Directors
In order to ensure appropriate decision-making and management supervision by the Board of Directors, we
provide outside executive directors with appropriate information in a timely manner and provide opportunities forexchanging opinions where they are able to collect a wide range of information.
Examples of measuresprovided and implemented
in fiscal 2021
Holding Outside Executive Liaison
Meetings

Implementation timing
and frequency
Held once a month

Ensuring opportunities to attend
important internal meetings such as
those of the Management Committee

When meetings are held,such as Management
Committee meetings(roughly twice a month)

Providing explanations in advance andthe early provision of referencematerials

Implemented in a timely
manner, as necessary

38

Content
We hold outside executive liaison
meetings comprising only outside
executives, in order to secure
opportunities for cooperation andinformation exchange among outside
officers. If necessary, these meetings
are also utilized as opportunities foroutside executives to gain a deeper
understanding of the Company’sbusiness, etc., with the attendance of
relevant internal personnel to report onindividual themes.
We ensure opportunities for outside
executives to attend important internal
meetings (Management Committee,
Compliance Committee, etc.) as
observers in addition to the Board of
Directors, and strive to provide
appropriate information.
We have established a system thatallows outside officers to be given
explanations in advance regarding
agenda items and reference materials,
prior to meetings of the Board of
Directors.
We also strive to provide referencematerials for the Board of Directors
meetings as early as possible tosecure time for consideration inadvance.

Executive Remuneration System
Basic Approach
The basic policy of the Company’s executive remuneration system is as follows:（１） The executive remuneration system shall contribute to the realization of the Company’s long-term vision,
Medium-term Business Plan, and corporate culture reform in order to achieve continuous growth andenhance corporate value.
（２） The executive remuneration system shall promote the sharing of interests with shareholders and alsoenhance the management awareness from the perspectives of shareholders.
（３） The executive remuneration system shall be a highly objective and transparent remuneration system thatis accountable to shareholders and other stakeholders.
Policy for determining executive remuneration
https://ssl4.eir-parts.net/doc/7518/ir_material29/157287/00.pdf (Japanese only)

TOPICS
Revision of the Executive Remuneration System(Introduction of a Restricted Stock Remuneration Plan,
Adoption of Non-financial Target Indicators, etc.)
Following approval at the 35th Annual Shareholders Meeting held on June 22, 2022, we revised our executive
remuneration system. The purpose of this revision is to further share value between the Company’s
management team and shareholders by further motivating executive directors and vice presidents to enhance
our corporate value over the medium to long term, and through an increase in the proportion of stock-based
remuneration. To this end, we will make efforts towards the steady achievement of the performance targets set
forth in the current Medium-Term Business Plan which started in fiscal 2022 and non-financial targets to solidify
the Company’s social significance, and to ensure the thorough implementation of measures to prevent a
recurrence of fraudulent transactions discovered in the past fiscal year, and the dissemination of corporate
culture reforms. For details, please see “Revision of the Remuneration System for Fiscal 2022” below.

Revision of the Remuneration System for Fiscal 2022
Following approval at the 35th Annual Shareholders Meeting held on June 22, 2022, we revised our executive
remuneration system. Remuneration, etc. for officers of the Company consists of (1) a fixed amount of basic
remuneration, (2) a bonus linked to annual company-wide performance as a short-term incentive, and (3) stockbased remuneration in the form of restricted stock as a medium- to long- term incentive. Among these, (1) basic
remuneration is for all executive directors, including outside executive directors, and vice presidents, while (2)bonuses and (3) stock-based remuneration are for executive directors other than outside executive directors(excluding executive directors who are Audit & Supervisory Committee members) and vice presidents.
■ Comparison between the Conventional System and the New System (Using the President & CEO as an
Example)Conventional:
Title
Representative
Director

Basic remuneration

Bonuses

Stock compensationtype stock option

62.69% - 63.58%

26.39% - 27.36%

9.93% - 10.26%(Note) The percentages shown in the table above are guidelines for the case where the degree of achievement related toperformance-based remuneration is 100%.

New system:
Title

Basic remuneration

BonusesPresident & CEO

Approx. 44%

Approx. 22%

39

Restricted StockRemuneration
Approx. 33%

Aim of the Revision
The purpose of this revision is to further share value between the Company’s management team and shareholders,
by further motivating the executive directors and vice presidents to enhance our corporate value over the medium
to long term, and through an increase in the proportion of stock-based remuneration. To this end, we will makeefforts toward the steady achievement of performance targets set forth in the current Medium-Term Business Plan
which started in fiscal 2022 and non-financial targets to solidify the Company’s social significance, and to ensure
the thorough implementation of measures to prevent recurrence of fraudulent transactions discovered in the pastfiscal year, and the dissemination of corporate culture reforms.

Points of Revision（１） Introduction of Restricted Stock and Expansion of the Proportion of Stock-based Compensationin the Remuneration Composition
Conventionally, we had introduced a stock compensation-type stock options plan. The new restricted stock
remuneration plan was introduced with the aim of providing incentives to the Company’s executive directors(excluding executive directors who are Audit & Supervisory Committee members and outside executive directors)
and vice presidents (hereinafter, collectively referred to as “eligible executives”) to continuously improve thecorporate value of the Company, while further promoting the sharing of value between eligible executives andshareholders.
（２） Adoption of Non-financial Target Indicators in Bonuses
In the revision, company-wide performance indicators and individual performance indicators are weighted 70%
and 30%, respectively.
As company-wide performance indicators, the Company adopts the “service ratio,” “consolidated revenue,” and“consolidated operating income,” which are also important indicators in the current Medium-Term Business Plan.
Of these, the Company places the highest priority on the “service ratio” in order to further promote the Group’s
current transition from a business model centered on the sale of goods to one that provides comprehensive ICTrelated services, with service ratio, consolidated revenue, and consolidated operating income weighted 50%, 10%,and 10%, respectively.
As individual performance indicators, taking into consideration the lessons from the past misconducts, theCompany adopts “corporate culture reform,” “materiality KPIs,” and “other individual goals” as non-financial
indicators, which are indispensable for further enhancement of corporate value, with each weighted 10%, 15%,
and 5%, respectively.
Based on the degree of target achievement regarding these indicators and other factors, the amount of thebonuses will fluctuate between 0% and 200% of the standard amount to be paid.

（３） Introduction of the Malus / Clawback System
As part of efforts to establish a high-level corporate governance system, the Company has introduced thefollowing system (malus / clawback system) for bonuses and stock-based remuneration.
1)

A system to force the return of bonuses paid in the event of a material revision of financial results or serious
misconduct.

2)

A system under the restricted stock remuneration plan whereby, if, after the expiration of the restrictedtransfer period, an eligible executive officer is found to have committed an act in violation of laws andregulations during the restricted transfer period, the Company may demand the eligible executive officer toreturn all or part of the allotted shares held by him or her, or to pay an amount equivalent to the market
value of the shares in lieu of the said shares.

40

3)

A system under the restricted stock remuneration plan whereby, if an eligible executive officer is found tohave committed an act in violation of laws and regulations during the restricted transfer period, the Company
may acquire all or part of the allotted shares held by the eligible executive officer without consideration.

See the Annual Securities Report for details of the remuneration system and the results for fiscal year 2021.
Annual Securities Report for the Fiscal Year Ended March 31, 2022 > Executive remuneration etc.
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100ODD8/00.pdf#page=56 (Japanese only)

Policy and Processes to Elect / Dismiss Executive Directors
Election of Executive Director Candidates
The election of executive director candidates and vice presidents is decided by resolution of the Board of
Directors, after deliberation by the Nomination Advisory Committee.
Selection Criteria for Executive Director Candidates (excluding Outside Executive Director Candidates)
and Vice Presidents
1.

Individuals who have a practical perspective based on extensive business experience2.

Individuals who are highly knowledgeable in social affairs, economic trends, industry trends, etc.

3.

Individuals who have a company-wide, objective and professional perspective, with the optimization of
the overall Company in mind

4.

Individuals who have the ability to build relationships of trust and teamwork as a person, and have theability to take action and lead others

5.

Individuals who have a high standard of ethics, compliance awareness, accounting literacy, and canthink fairly and impartially6.

Individuals who are able to form opinions from the standpoint of fairness and universality and act basedon their own convictions

7.

Individuals who have the ability to communicate and build relationships of trust with other executive
directors and employees

8.

Individuals who are sound in physical and mental healthSelection Criteria for Outside Executive Director Candidates
1.

Individuals who possess extensive experience in fields such as corporate management, legal
compliance, and financial accounting, with an objective and professional perspective based on a highlevel of insight into social affairs and economic trends

2.

Individuals who satisfy the “Independence Standards” to ensure consistency with the original purposeof selection of outside executive directors

Independence Criteria
https://ssl4.eir-parts.net/doc/7518/ir_material17/129483/00.pdf (Japanese only)

Dismissal
In the event that an executive director (including the Representative Director) or vice president lacks thequalifications, the Nomination Advisory Committee will discuss the candidate for dismissal, and a decision will bemade by resolution of the Board of Directors.

41

Succession Plan
Basic Approach
The Company shall strive to nurture successors, by providing the necessary training, including external training,
to future senior management candidates as appropriate, and by having them gain experience in various internal
committees and as executive directors of subsidiaries, and by securing opportunities to attend important meetings
such as those of the Management Committee. The Board of Directors appropriately supervises the implementation
status of the succession plan by receiving reports on the deliberations of the Advisory Committee.
Initiatives to Enhance Succession Plans
In June 2022, in line with the transition to a company with an Audit & Supervisory Committee, the Advisory
Committee, which had formerly been established as a voluntary advisory body to the Board of Directors, had its
functions separated, and was reorganized as the “Nomination Advisory Committee” and the “Remuneration
Advisory Committee.”Roles of the Nomination Advisory Committee
Matters related to policies and standards for the nomination of executive directors and vice presidentsMatters related to the election and dismissal of executive directors and vice presidentsMatters related to the selection and dismissal of representative directors, executive directors with titles, andvice presidents with titles



Matters related to succession plans for executive directors and vice presidentsMatters related to the composition of the Board of Directors and the skill matrix



Other important matters related to the above, regarding which the Board of Directors seeks advice

In fiscal 2022, which is the first year of the Nomination Advisory Committee, we aim to build a stable businessbase by introducing a succession plan that includes the top management and completing a succession chart, withthe aim of achieving sustainable growth and enhancing our corporate value over the medium to long term. First ofall, we plan to consider initiatives centered on defining the type of personnel required for management, formulatingeach position profile, and creating a talent pool selection, assessment, and development plan for candidate
personnel.

42

Risk Management
Basic Approach
The Company defines risks as events that have a negative impact on the Company (including events that may
have a negative impact). We analyze and evaluate various risks surrounding the Group, and carry out risk
management activities to minimize losses for the Group by formulating, implementing, and promoting plans to deal
with each risk.
The Group’s basic policy regarding risk management activities is as follows:
１. We will develop a risk management system, with full recognition of the possibility of a significant impact onmanagement if a risk materializes.
２. Based on consistency with the Medium-Term Business Plan (management strategy and business strategy),
we determine the management resources that are to be invested in safety measures, according to thecharacteristics of the risk.
３. We conduct periodic reviews of risk management status and strive to improve the management system. Basedon the results of our reviews, we revise the basic policy of risk management on a company-wide basis, andestablish a continuous and sustainable management system.
４. With consideration for the emergence of new threats and cases of damage to other companies, we establish
an appropriate risk management process, properly allocate management resources according to managementtargets, and decide on concrete and highly feasible response policies.
５. To ensure that the interests of shareholders are not damaged, we continuously manage internal controls thatare compatible with the environment surrounding the Group.

Promotion System and Initiatives
See our Annual Securities Report for details regarding the Group’s risk management system, risk classification
and assessment, risk assessment, overview and assessment of major risks, and the status of countermeasures.
Annual Securities Report for the Fiscal Year Ended March 31, 2022 > Business and Other Risks
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100ODD8/00.pdf#page=14 (Japanese only)

See below for other initiatives to date to strengthen our risk management system.
Corporate Information | Progress of Recurrence Prevention Measures of Inappropriate Conduct, etc. > 2.
Strengthening risk management system
https://www.netone.co.jp/company/responsibility/prevention/details-2/ (Japanese only)

Key Initiatives in Fiscal 2021
In fiscal 2021, we continued to identify and assess risks, and implemented thorough recurrence prevention
measures and responded to the most important risks by specifying and implementing countermeasures. At thesame time, we strengthened our comprehensive risk management by building a system in which subcommittees
identify various risks and report to the CRO / Risk Management Committee.
Initiatives
Risk identification / assessment

Details
In fiscal 2021, we identified a total of 115 risks for the entire company,
consisting of the most important risks (25), major risks (30), and generalrisks (60).

Materialization / implementationof countermeasures

We scrutinize the countermeasures considered by the department incharge from the perspective of the accuracy and validity of the cause
analysis confirm their sufficiency, and implement monitoring.

43

Initiatives
Establishment / implementationof monitoring system(including building an information
aggregation system)

Initiatives
relatedmanagement

to

risk

Details
・Holding meetings of the Risk Management Committee
The Representative Director and CRO is in charge of the Committee, while
the Vice President and General Manager of the Corporate Planning &Strategy Division serves as its chairperson. Executive directors, theGeneral Manager of the Risk Management Office, and General Manager ofthe Legal Office are appointed as Committee members, and the Committee
held a total of 11 meetings. Outside executive directors, full-time outside
Audit & Supervisory Board members, the General Manager of the Internal
Audit Office, and advisers all participate as observers.
The Risk Management Committee conducts an annual review of risks, andpromotes the strengthening of our risk management activities by identifying
and assessing risks that are important to Group management, identifying
and assessing specific responses, implementing countermeasures, andconducting monitoring. In December 2020, we concluded an advisory
agreement with an external expert, in order to incorporate the perspectiveof an external expert to strengthen our risk management systems. Following
the agreement, we maintained our system for receiving appropriate advice
and support from external experts.

Initiative Policies after Fiscal 2022In order to promote risk management activities while responding promptly and flexibly to rapid changes in theoperating environment surrounding the Group, we will change the Risk Management Committee into anadvisory body to the Management Committee, which is the final decision-making body for business execution.



We will assign a departmental CRO to each department with the aim of creating a system in which eachdepartment autonomously promotes risk management activities.



We will prioritize the promotion of various measures related to individual risks (partner management / BCP).



We will continuously promote other risk management activities.

44

Internal Control
Basic Approach and System
We have established a basic policy regarding our internal control system, in order to develop and operate thesystem, which should serve as the foundation of our corporate operations, and to strive for its continuous
improvement. In terms of structure, in contrast with the three-lines model that is common for organizational risk
management and control activities (First line: sales divisions / business divisions, Second line: back-office divisions,Third line: internal audit division), we have also established our own 1.5 line in order to independently monitor theFirst line. As such, our system is characterized by our efforts to establish highly effective business rules together
with discipline.
■ Overview of Internal Controls

With regard to internal audits, we have established an Internal Audit Office (18 members, as of the end of June2022) as an organization that reports directly to the Audit & Supervisory Committee. The Internal Audit Office
investigates whether the Company’s business activities are conducted properly and efficiently, in accordance withbusiness plans, management policies, and internal regulations, and are not in conflict with laws and social ethics,
etc. In addition to pointing out the necessary items for improvement, it follows up on their improvement status.
The Internal Audit Office, Audit & Supervisory Committee Members, and the Accounting Auditor hold meetings
on a regular basis or as necessary, to report on audit plans, audit implementation status, etc., and work tostrengthen mutual cooperation.
See our Annual Securities Report for details on the basic approach regarding the internal control system and its
development status.
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2022
Basic Policy and Status of Internal Control System
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100ODD8/00.pdf#page=43 (Japanese only)

45

Key Initiatives in Fiscal 2021
〇 Review of the Organizational Structure regarding the 3 Lines
The Internal Control Enhancement Council (currently the Governance and Corporate Culture Advisory
Committee), which is headed by the President & CEO and includes external experts, promoted continuous,company-wide recurrence prevention measures. We established the 1.5 line (Business Control Division) with theaim of checking and supporting the First line from a position that is closer to actual operations. In addition, we also
strengthened the structure and functions of the Third line (Internal Audit Office).
〇 Development and Recruitment of Personnel to Strengthen Internal Control
In the Company, certified internal auditors have long been eligible for the system for supporting the acquisitionof qualifications, and in May 2021, we added certified fraud examiner to the qualifications that are eligible forsupport. We also determine and disseminate the operation policy and content of the qualification acquisition
support, in order to promote the acquisition of qualifications. We are also strengthening the recruitment of qualified
personnel and mid-career hires with extensive knowledge of internal audits. As of August 2022, among the 18
members of the Internal Audit Office, there are two certified internal auditors, two certified fraud examiners, one
financial internal auditor, and one internal auditor (note that some hold multiple qualifications).
See the information below for an overview of the operational status of our internal control system for fiscal 2021.

Net One Systems Attachment to the Notice of the 35th Annual Shareholders Meeting【Overview of Internal Control System Operation】
https://ssl4.eir-parts.net/doc/7518/ir_material22/185231/00.pdf#page=78

See the information below for our initiatives to date to strengthen the internal control of the Group.
Corporate Information | Progress of Recurrence Prevention Measures of Inappropriate Conduct, etc.
4. Fundamental Review of the Audit System
https://www.netone.co.jp/company/responsibility/prevention/details-4/ (Japanese only)

Initiative Policies after Fiscal 2022
〇 Enabling the Early Understanding of Situations through Visualization and Strengthening of the System
for the Prompt and Steady Execution of Operations
From the perspective of expediting business execution, we will review the roles in the organization, in order toconsolidate the sales activity support operations and the management promotion function of sales operation
processing in the First line.
We will establish a Business Promotion Department (Office) in each business unit in the First line, and promotevisualization of the business status. We will also establish a new Business Promotion Department in the BusinessControl Division for the 1.5 line, and the Business Planning Office within the Business Control Division will be
responsible for business quality assurance, sales supervision, and technology supervision functions. In this manner,
we will expand the business control function of the entire Business Control Division, and realize management andensure the completeness of contract execution details with customers. By reviewing the roles of the First line andthe 1.5 line in an integrated manner, we will enhance the productivity of an effective check-and-balance function,and the business execution of the Company, as a whole. As a result, we will track the expectations of, and signs
from our customers and the market at an early stage, and realize smooth sales activities.
〇 Reinforcement of the Check-and-balance Function by Changing the Assignment of Executives
In addition to equal partnerships between departments, we will appoint vice presidents with titles to be in chargeof each line, with the aim of forming equal partnerships between the lines. We have also reviewed the lines thatare supervised by executive directors, and have decided to appoint different executive directors in charge of the
1.5 line and the Second line.
46

Compliance
Basic Approach
The Net One Group aims to achieve an equal balance between stronger governance, further leaps forward, andsustainable growth. Compliance is not only a “defensive” measure to prevent fraud and failures of arrogance, but
is also an essential element in terms of serving as an “offense,” in order to realize the enhancement of our corporate
value and allow us to continue to be the brand of choice for many customers. In other words, we believe that ourtrue basic stance regarding compliance is to take the expectations and trust of the many stakeholders who support
the Net One Group seriously, and respond to them in a sincere manner.
In order to ensure that compliance takes root as a corporate culture, it is essential that each and every employee,
including executives, maintains a high sense of ownership and acts through steady initiatives. We will always
examine ourselves, and strive to conduct sincere and trustworthy corporate activities and actions on a daily basis,
thereby building a strong compliance system and culture throughout the Group, based on the pride and awarenessof being a member of the Net One Group.

Compliance Manualhttps://www.netone.co.jp/english/files/CSR2.pdf

Fair Relationships with Customers and Business Partners
As our responsibility to our customers, it is our policy to always think from the customers’ point of view, toaccurately grasp their needs, and to strive to provide products and services that truly meet their needs.
In addition, as a responsibility to our partner companies, we stipulate that we maintain and continue fair business
relationships, by adhering to a fair attitude and expecting the same attitude from our partners.
To this end, we have set the following standards in our compliance manual.
Standards of Conduct
Customer needs are first
Fair and transparent business relationships withcustomers
Developing business in accordance with laws andethicsHandling customers’ complaints promptly andappropriately and preventing troubles beforehandManaging customers’ confidential information andpersonal information strictly

Fair and transparent business relationships withpartners

Selecting and managing partners adequately

Maintaining and controlling product quality
through cooperation

Our Promises
We grasp the true needs of individual customers.
We provide excellent products and services.
We endeavor to provide precise information and respectcustomers’ own decisions.
We execute written contracts with customers.
We do not engage in illegal or unfair sales activities whichharm customers’ interests.
We ensure that we acquire the necessary permits,
licenses, qualifications, and requirements.
We act faithfully, promptly, and properly.
We improve our products and services throughcomplaints.
We always endeavor to improve our skills and prevent theoccurrence of complaints.
We strictly manage customers’ confidential informationand personal information.
We do not obtain confidential information or personal
information without authorization, or leak suchinformation.
We maintain sound and normal partnerships.
We have no vested interests, and do not accept
entertainment or gifts that exceed socially accepted
norms.
We build appropriate relationships with partners.
We manage and instruct subcontractors and endeavor tomaintain quality of their business.
We thoroughly control the quality of delivered products
and services.

47

Standards of Conduct

Our Promises
We do not make complaints, nor demand returns or
exchanges for unjust reasons.

Promotion System
We have developed and operated a compliance system by establishing the Compliance Committee, appointing
division compliance managers, and establishing departments in charge. The Compliance Committee deliberates
and decides on important policies and matters related to compliance.

Whistleblower System
The Compliance Control Department accepts reports and consultation requests from employees and partnercompany employees, and based on the results of investigations conducted by the Compliance Control Department,
the Compliance Committee determines the facts regarding compliance violation events. Furthermore, the Rewards
and Disciplinary Committee deliberates on the necessity of disciplinary action for incidents that are considered to
be grounds for such action under the Employment Regulations.
We have established four whistleblowing and consultation desks. For example, if the Risk Management
Department or Compliance Office accepts a report regarding a serious incident, it is promptly reported to the CRO,
CCO, and the President prior to the investigation. The Risk Management Department or Compliance Officeconducts an investigation, and through the processes and decisions of the Risk Management Committee,
Compliance Committee, Rewards and Disciplinary Committee, etc., feedback is provided to the whistleblower or
consulter, and measures to prevent recurrence are formulated.

Internal

Contact point
Fraud Risk
whistleblowing andconsultation desk

Responsibilities
 Accounting Fraud Fraud related tobusiness transactions
 Others (matters otherthan those that are theresponsibility of thecompliancewhistleblowing andconsultation desk) Harassment (power
harassment, sexual
harassment, etc.)
 Work environment, etc.
Injustice by executives
and generalmatters related to risk
and compliance
General matters related
to risk and compliance

Compliancewhistleblowing andconsultation desk

External

Full-time Audit & Supervisory
Committee Member
whistleblowing andconsultation desk
Law offices
whistleblowing and48

Reception
Risk Management
Department

Compliance Office

Full-time Audit &Supervisory Committee
MemberLaw offices

Contact point
consultation desk

Responsibilities

Reception

In addition, we stipulate confidentiality obligations and the prohibition of disadvantageous treatment, anddisseminate them thoroughly. Based on the relevant laws and regulations and the internal regulations of eachcompany, we will strictly protect the confidentiality of those who have reported or consulted with the whistleblowing
and consultation desks inside and outside of the Group, and the confidentiality of the contents of such reports andconsultations. We also promise that the whistleblower or consulter will not be disadvantaged as a result ofwhistleblowing or consulting. Any individual who retaliates against a whistleblower or consulter will be severely
punished, based on the Employment Regulations and other internal regulations.
Key Initiatives in Fiscal 2021
We are continuously strengthening our initiatives to disseminate compliance through the following examples.
〇 Implementation of Compliance Education and Improvement of Communication
In each division that executes business, we hold an “opinion exchange meeting” to discuss the complianceactivity plan of the division, as well as a “case study meeting” to discuss past cases. Afterwards, based on theopinions provided by each department at these “opinion exchange meetings” and “case study meetings,” we hold“internal Group opinion exchange meetings,” the members of which are selected from the executives in charge ofeach division, general managers, deputy general managers, employees of headquarters, representative directorsof group companies, executives, and employees. Through this series of initiatives, we facilitate the understandingof management regarding the opinions of each department, the sharing of compliance awareness throughout theCompany, and a strengthening of communication.
In addition, the Compliance Office takes charge of conducting annual e-learning-style compliance education andcompliance questionnaires for all employees, in order to inculcate and confirm compliance awareness.
〇 Inculcation Activities for the Middle Management Layer
The Compliance Office serves as the secretariat, and conducts group training once every 6 months for the middle
management layer, in order to spread awareness of the role of middle management (its hub function), which is toaccurately understand and share messages from executive management so that they take root in the field, as wellas to integrate the voices of the field and convey them to management. In addition, regarding the role of this middle
management layer, each target person is asked to set a personal goal, and the role that they have actually fulfilled
is evaluated at the end of the term.
〇 Operation of a Suggestion Box
Since August 2021, under the supervision of the Compliance office, we have set up a suggestion box as a system
for gathering employee feedback, in order to solicit candid opinions and evaluations from employees. In fiscal 2021,
we received 389 suggestions. After examining the contents of the comments and evaluations, we post specificimprovement measures and their response status on our internal portal site, and update them as needed.
〇 Use of Compliance Self-check Sheets in Personnel Evaluation Interviews
During the personnel evaluation interviews held twice a year, we utilize the compliance self-check sheet provided
by the Compliance Office for the purpose of self-inspection, and through dialogue between superiors andsubordinates, we confirm the degree of inculcation of compliance awareness among employees.
〇 Learning from Cases of Failure
We are undertaking initiatives to disseminate and mutually share (timely) examples of daily failures and problems
among all First line employees. This includes study groups and comprehension tests (every quarter) for all
employees in the First line to ensure an understanding of the Company’s business rules, led by education staff
who are selected from the first line. We also hold workshops (every quarter) for First line employees in order to49

share examples of failures in proposal activities for customers and system introduction and installation work, anduse tools such as a post-type internal portal site for sharing cases of failure.
Supply Chain Risk Assessment
We conduct compliance surveys for our partners. Although it is possible to respond to the questionnaireanonymously, if there are matters for consultation in answers that are provided with names, we conduct interviews
with the responding companies based on the content of the consultations listed in the responses, and work to
resolve the issue.
Initiative Policies after Fiscal 2022
From fiscal 2022, each division will have a new division CCO (Chief Compliance Officer). The division CCO is
responsible for reviewing and implementing the investigation policy, verifying countermeasures, and monitoring thereports and cases of consultation from each department, for those cases that do not fall under the Whistleblower
Protection Act, and which can be resolved quickly and efficiently by utilizing the work environment information of
the concerned division for investigation. Through these initiatives, we aim to build a system that realizes
autonomous compliance activities, including whistle-blowing investigations in each division and advanced
prevention of recurrence.

50

Fostering a Corporate Culture based on Our Purpose
Basic Approach
The Net One Group has formulated a new corporate philosophy system (Purpose, Mission, Vision, Values, andWAY) in order to promote measures to prevent recurrence as planned, and steadily build a foundation forestablishing a corporate culture that will prevent fraudulent acts from recurring. For the Group to make a further
leap forward, it is essential that all members of the management team and employees engage in initiatives together
to disseminate the new corporate philosophy system. We will improve our corporate value by putting into practicea series of strategic stories that are derived from our “Purpose.” Furthermore, we will enhance its effectiveness byclearly defining the WAY (Code of Conduct), which serves as the basis for how we think and decide for eachmember of the Group, who serve as the main drivers in the implementation of the series of strategic stories from
“Purpose” to “Values.”
Corporate information | Corporate philosophy > Philosophy system
https://www.netone.co.jp/company/philosophy/(Japanese only)

Promotion System
In order to prevent a recurrence of the failure of arrogance, we have positioned corporate culture reforms as a
key measure. To this end, we have established the Governance and Corporate Culture Advisory Committee as anadvisory committee to the Board of Directors. In order to further promote corporate culture reforms, and theimplementation and inculcation of recurrence prevention measures, we are promoting initiatives to strengthen
governance, make corporate culture reforms, continuously implement recurrence prevention measures, andstrengthen our internal control systems.

Key Initiatives in Fiscal 2021
〇 Implementation of Recurrence Prevention Measures
We have sincerely accepted the survey results and recommendations that were given in the “External
Investigation Committee Report - From the Perspective of Governance and Corporate Culture -,” and we believe it
is important to ensure that our internal controls function effectively by implementing the “measures to prevent
recurrence” dated May 13, 2021, and for the entire Company to work together to reform our fundamental corporate
governance and culture.
Corporate information | Progress of recurrence prevention measures of inappropriate conduct, etc.
https://www.netone.co.jp/company/responsibility/ (Japanese only)51

〇 Toward the Fostering of a Corporate Culture Based on Our Purpose
Implementing the Organizational Culture Survey and Corporate Culture Monitoring Survey
In fiscal 2021, the Group launched a new organizational culture survey as part of its activities toward the reformand cultivation of our organizational culture. Based on the results of this survey, we identify challenges related toorganizational culture and implement various measures for improvement. In addition, we also conduct “corporate
culture monitoring surveys,” in order to observe the results of these measures from a fixed perspective.
<Overview of the Corporate Culture Monitoring Survey >Start time: Every other month from February 2022
Target employees: Employees of Net One Systems and major subsidiaries on secondment*Excludes full-time employees of Group companies, employees on leave of absence, and advisers
Question themes: (1) Measuring changes in our organizational culture, (2) Measuring changes in organizational
issues, (3) Listening to employees’ opinions, (4) Raising employee awarenessOperation of a Suggestion Box
The Compliance Office has taken charge of setting up a suggestion box with external (third-party) lawyers as
points of contact, in order to solicit candid opinions and evaluations from employees regarding the implementationof recurrence prevention measures. The suggestion box takes the form of employees posting opinions using a
posting form on our internal portal site.

Measures to Inculcate the Corporate Philosophy
Publishing of the Vision Book, and Setup of a Special Internal Site on an Electronic Bulletin Board
After formulating our new code of conduct, we published an electronic version of the Vision Book, which reflects
the code of conduct, and posted it on our internal electronic bulletin board. In January 2022, after reviewing themanagement vision and code of conduct, we revised the electronic version of the Vision Book and posted it on theinternal electronic bulletin board.
Implementation of Vision Week and the Vision Awards
Vision Week was held from January 31, 2022 to February 4, 2022, under the theme of “Considering the future of
Net One,” in order to promote resonance with and inculcation of the Group’s new corporate philosophy system.

Initiative Policies after Fiscal 2022
We have recruited new members for our philosophy inculcation project, and launched corporate philosophicalinculcation activities under the new system in fiscal 2022. We plan and execute events, tools, etc. for inculcationfrom the perspective of the WAY, in an effort to inculcate our corporate philosophy. In addition, we will work on
measures to improve the inculcation of the philosophy utilizing the 1-on-1 training implemented in fiscal 2021, andpromote the inculcation of the corporate philosophy system together with the measures planned by the membersof the philosophy inculcation project. Through these measures, we aim to enable all of our employees to embody
the philosophy in their daily actions.

52

Health Management
Basic Approach
The Net One Group has established a health declaration as follows, with the aim of providing an environment
where employees can continue to work in good physical and mental health in order to achieve sustainable growth,and to strategically practice employee health management from a management perspective.

Net One Group Health Declaration
The Net One Group aims to achieve its Purpose to “Unleash the potential of people and networks, and create aprosperous future by carrying on / inheriting tradition and making innovation happen.” To this end, we declare that
we will support our employees and their families, who are our irreplaceable assets, to ensure that they achieve
work-life balance and self-fulfillment, both professionally and privately by working autonomously to maintain andimprove their health.
Promotion System
The Net One Group has established a health management promotion system based on the Health Declaration
under the President & CEO, who serves as the Health Management Officer. Health management measures arepromoted by the Human Resources Department. In order to properly operate health management and promotehealth, professional staff such as industrial physicians, public health nurses, nurses, clinical psychologists, andcareer counselors work together with related parties to develop various measures such as health promotion,
literacy improvement, a variety of consultations, and mental health support. Under this promotion system, we areworking to continuously improve health management through the PDCA cycle.

Initiatives for Health Management〇 Understanding Employee Health Issues and Considering Necessary Measures
We will implement the following initiatives in the first year of health management.


Dissemination of health management policies, etc. inside and outside of the Company



Maintenance of the health promotion system and infrastructure

Thorough management of appropriate working hours



Improvement of work styles based on work-life balance indicators

Ensuring thorough health checkups and recommending re-examinations

Measures against second-hand smoke and initiatives to reduce the smoking rate

Utilizing stress checks and recommending retests

53

〇 Practicing Health Management: Sophistication of Labor Management
The Group is working to make our labor management more sophisticated, in response to the fact that each ofour departments tend to be overloaded against the backdrop of the increasing demand for ICT in recent years, andthe fact that work styles are changing further due to the progress of remote work.
In terms of ICT systems, in 2020, we took the change in work styles centered on telework as an opportunity tointroduce a web clocking system that enables the collection of timely and simple attendance records on the internal
portal site. Currently, in addition to these attendance records, using the VDI *1 PC connection management system,
we are strengthening our monitoring of working conditions, and are working to understand the actual working
conditions according to differences in departments and operations.
We are also focusing on teaching and inculcating knowledge regarding labor management. Completion of labor
management training with a perfect score is required for managers with titles, and labor management topics arealso covered in compliance case study sessions for all employees.
Through these initiatives, we aim to protect the health of our employees, as well as to refine FTE *2 by grasping
the actual situation, which will lead to the sophistication of personnel allocation and project management. In addition,
we aim to accumulate and provide the knowledge gained from these systems and initiatives, so that it can be usefulfor our customers as netone on netone.
1. VDI (Virtual Desktop Infrastructure): A system for consolidating, managing, and using the processes performed
on a PC. It strengthens ICT controls by increasing manageability. Although the desktop screen can be viewed andoperated like a PC via a network, it can also be used as a countermeasure against information leakage, since data
does not remain on the device.
2. FTE (Full-Time Equivalent): The amount of work per full-time employee. In project management, this is used
when examining the number of personnel engaged in a project.

Information Security
Basic Approach
Since the time of its founding, the Net One Group has acted as a pioneer of new products and technologies in
the network field, and by providing these to our customers, we have contributed to the advancement of information
technology in all of its aspects, including industrial economics and academic culture. For the Group, the appropriate
handling of information and the implementation of safety management measures are important social
responsibilities, and are some of our most important management challenges.
The importance of security will continue to grow in modern society. Accordingly, the Group is working tostrengthen security by formulating policies in terms of its own risk management and service menu. In addition, weare also enhancing our service menu by making references to our initiatives to strengthen security.
Basic Policy on Information Security
In order to protect the information assets owned by the Group, we are working on various measures such ascompliance with regulations, appropriate management, and employee education and training, in accordance withour basic policy on information security. In addition, we have acquired the ISMS certification for the entire Company,
as a third-party evaluation of our measures.
Sustainability | ESG Initiatives > Information Security
https://www.netone.co.jp/sustainability/esg/governance/security/ (Japanese only)54

Promotion System
We believe that it is our social responsibility to ensure the Company’s cybersecurity against cyber-attacks, whichhave become more sophisticated in recent years. At Net One, we have established a CSIRT (Computer Security
Incident Response Team) system across a wide range of internal departments, in order to respond quickly tocybersecurity incidents in our network systems and to make prompt decisions, in addition to a personal information
protection system.

Strengthening of Information Security System
Relevant indicators (Fiscal 2021)
 Number of significant incidents that require an announcement to the public related to information
security: zero
 E-learning employee participation rate related to information security: 100%
 Comprehension test related to information security: completed with full marks for all employees* Scope of e-learning participation rate and comprehension test: Net One Systems, Net One Partners, Net
One Next, Net One Business Operations. Employees, temporary employees, contract employees are in thescope.

55

Providing Security Services
Amid advances in ICT technology, security threats and risks are becoming more sophisticated, making existing
approaches and measures increasingly obsolete. Net One Systems provides a range of security services that
ensure the reliable and secure operation of public ICT platforms.
We also provide research and training for customers and run courses at universities and colleges of technology
to cultivate security professionals who understand and can utilize the latest security technologies.
Optimal security services and solutions that support a variety of ICT environments are introduced below.
Services | Technology > Security
https://www.netone.co.jp/service/technology/security/ (Japanese only)

Other case studies include a wide range of introductions including work style innovation, cloud, and security,etc.
Knowledge Center > Case Studies
https://www.netone.co.jp/knowledgecenter/?category=%E5%B0%8E%E5%85%A5%E4%BA%8B%E4%BE%8B (Japanese only)

Protection of Personal Information
Basic Approach
For the ICT market, our business ranges from the installation of network systems using cutting-edge technologies
and products, to the provision of high added value services. We recognize the importance of personal information,and believe that the proper handling and management of personal information is our important social responsibility.
In order to properly fulfill this responsibility and continue to be a company that is trusted by our customers, inaccordance with the following basic policy, we will continue to implement various company-wide measures andstrive to protect personal information.
Group companies also formulate their own policies based on the same concept.
Policies on Personal Information Protection
https://www.netone.co.jp/english/privacy-policy/

Promotion System
We have established a PMS (Personal information protection Management System) which is integrated with our
ISMS system (Reference: P. 55 Information Security > Promotion System), and have acquired the Privacy Mark.
The main contents of the safety management measures taken by the Company are as follows:(Formulation of Policies on Personal Information Protection)
 In order to ensure the proper handling of personal information, we have formulated our “Policies on
Personal Information Protection” and the “Handling of Personal Information” with respect to “compliancewith relevant laws and regulations, guidelines, etc.,” as well as a “point of contact for inquiries andcomplaints.”(Development of rules related to the handling of personal information)
 For each stage in the handling of personal information, including acquisition, use, storage, provision,deletion, disposal, etc., we have formulated rules for handling methods, as well as responsible persons,
persons in charge, and their duties.
(Organizational security management measures) In addition to appointing an administrative manager for the handling of personal information, we haveclarified the employees who handle personal information as well as the scope of the personal information
56

handled by them, and have developed a system for reporting and contacting the administrative manager
in the event that the actual occurrence or a sign of a violation of the Act on the Protection of Personal
Information or internal regulations is identified.
 With regard to the handling of personal information, we regularly conduct self-inspections and audits byother departments or external parties.
(Personnel security management measures) We provide regular education to our employees regarding points to note about the handling of personal
information.
 Matters concerning the confidentiality of personal information are explained in the Employment
Regulations.
(Physical security management measures) In areas where personal information is handled, we manage the entry of employees and take measures
to prevent unauthorized persons from viewing personal information.
 In addition to taking measures to prevent the theft or loss of equipment, electronic media, and documentsthat handle personal information, we take measures to prevent personal information from being easily
identified, such as setting passwords and access restrictions, when transporting the relevant equipment
or electronic media, including during transfers within the office.
(Technical security management measures) Access control is implemented in order to limit the scope of the person in charge, as well as the personal
information database handled.
 We have introduced a system to protect the information system that handles personal information fromunauthorized external access or unauthorized software.

Key Initiatives in Fiscal 2021
In fiscal 2021, we formulated our Policies on Personal Information Protection in accordance with the April 2022
revision of the Act on the Protection of Personal Information, and conducted annual training for all employees
through e-learning. In addition, the number of cases of guidance and recommendations from the Personal
Information Protection Committee is zero.

Quality Management
Basic Approach
For the Group, it is essential to perform the correct operations using the correct procedures, and to ensureservice quality that is in line with promises to our customers. In securing and enhancing the quality of our operations,
we conduct project screening based on the PMS (Process Management System) guidelines, which standardize
the project response process related to project acquisition, profit improvement, risk management, quality control,
and related business control for systems and services provided to customers.
Promotion System
The PMS guidelines, which are a series of project handling processes, consist of two phases: the sales process
before receiving an order and the delivery process after receiving an order. As a general rule in screening, thedetails of the project are reviewed by the concerned parties, with the aim of building a consensus on each risk.
Based on these reviews, in our sales process, the general manager of the sales division decides whether toimplement the project, while in the delivery process, the general manager of the engineering division decides
whether to consider and implement risk countermeasures. In screening, our projects are verified from four
perspectives: technology, project management, business, and compliance. In addition, the Business Control
Division monitors the operational status of the screening and tracks the implementation status of the indicateditems, thereby building a system that fulfills quality assurance.

57

In addition to PMS, which is our unique system for business process management, we have acquired additional
certifications for our management systems. This includes “ISO9001” in the inspection and verification work ofcomputer network equipment at our “Quality Control Center,” which centrally manages the quality, distribution, andinventory of sales products and maintenance parts. Furthermore, Our Expert Operation Center (XOC), which
supports the high availability of our customers’ ICT platforms, has acquired the “COPC® CX standard CSP version
Release 6.1,” a standard that evaluates the quality of contact center operations according to international standards.

Key Initiatives up to Fiscal 2021
In 2016, we began screening based on the PMS guidelines in order to standardize our project response process,and in 2018, we strengthened risk management in the financial and delivery processes, and streamlined operations.
In 2021, we strengthened risk management from a compliance perspective, and established rules to improve theaccuracy of budget planning.

Initiative Policies after Fiscal 2022
From May 2022, we newly established detailed regulations for the PMS in order to clarify the implementation
policy and each role, and revised the PMS guidelines to optimize company-wide operations and establish a quality
culture. We have also introduced an approval support system that visualizes project screening. In addition to
expanding the scope of screening to include all projects and establishing criteria to enable a flexible risk-based
operation system, by introducing an operational application that promotes both process reform and digitization, we
will continue to improve the workflow according to the operations. In addition, we aim to accumulate and provide
the knowledge gained from these systems and initiatives, so that it can be useful for our customers as netone on
netone.

Responsibility to Shareholders
Basic Approach
The Company gives due consideration to ensuring substantial equality among the Company’s shareholders inaccordance with the content and number of shares they hold, and takes appropriate measures to ensure that therights of all shareholders are substantially secured. At the same time, we promote constructive dialogue withshareholders, in order to encourage continued growth and medium to long-term enhancement of our corporate
value.
Sustainability | ESG Initiatives > Corporate Governancehttps://www.netone.co.jp/sustainability/esg/governance/corporate/ (Japanese only)

To this end, we have set the following standards in our compliance manual.
Standards of Conduct
Proper accounting processing

Our Promises
We will conduct proper and prompt accounting
processing pursuant with various laws and accounting
standards.
We will conduct management that places importanceon our shareholders.
We will disclose accurate and fair information in atimely and proper manner.
We will actively conduct IR activities.

Disclosure of management information in a timely
and proper mannerCompliance Manualhttps://www.netone.co.jp/sustainability/esg/governance/compliance/#compliancemanual (Japanese only)58

Promotion System
The Company places importance on constructive dialogue with shareholders, in order to encourage continued
growth and a medium to long-term enhancement of corporate value.
We have established a disclosure policy and actively disclose information that is deemed to be useful in helping
shareholders gain a deeper understanding of our Company, in addition to legally mandated disclosures.
Disclosure Policy
https://www.netone.co.jp/english/investor-relations/management-policy/disclosure-policy/■ System Chart for Timely Disclosures

In addition, we promote dialogue between the senior management, including the President & CEO, the CFO,
and executive directors (including independent outside executive directors), according to the purpose of the
dialogue. The IR division is in charge of dialogue with shareholders, and these matters are supervised by the
executive in charge of the division. Divisions such as IR, corporate planning, finance and accounting, legal affairs,
and compliance support dialogue with shareholders through organic collaboration, such as by mutually sharing
information.

59

■ IR-related Activities
Activities
Holding regular briefings forindividual investors

Holding regular briefings foranalysts and institutional
investors

Holding regular briefings foroverseas investors

Posting of IR materials on our
websiteEstablishment of a department(person in charge) for IR
OthersOverview
We have generally held a business briefing session after the Annual
Shareholders Meeting. However, the briefing session after the 35th Annual
Shareholders Meeting was cancelled from the perspective of preventing the
spread of COVID-19.
We hold financial results briefings for analysts and institutional investors on
the quarterly results announcement day. Full-year financial results and 2ndquarter financial results will primarily be explained by the representative
director, while 1st and 3rd quarter financial results will primarily be explainedby the vice presidents.
The representative director visits institutional investors three times a year
(once each in New York, London, Hong Kong, etc.) and holds individual
meetings. In 2022, we will continue to hold dialogue with investors in therelevant regions through web conferences and telephone conferences, inorder to prevent the spread of COVID-19.
We post our IR materials on our website, at the page shown below.
https://www.netone.co.jp/english/investor-relations/With regard to IR materials, we post financial results information (financial
results, financial results briefing materials), timely disclosure materials otherthan financial results information, Annual Securities Reports, Quarterly
Reports (both reports are disclosed in Japanese only), notices ofshareholders meetings, and other materials announced externally.
We have an IR in-charge in the Investors Relations Office of the Corporate
Planning Division.
We hold business strategy briefings for analysts and institutional investors
to help them understand our business strategy.
Individual meetings are held between independent outside executive
directors and shareholders (institutional investors) in order to facilitate theoutside executive directors’ understanding of the intentions of shareholders
and strengthen supervision.

Ensuring Shareholder Rights and Equality, and Shareholders Meetings
We make early delivery of the notices of shareholders meetings, schedule shareholders meetings to avoid peakdays, accept questions asked in advance, adopt electronic voting methods, participate in electronic voting platforms,
and publish the notices of shareholders meetings in English.
In addition to live streaming of the Annual Shareholders Meeting, we conduct a web questionnaire for ourshareholders in conjunction with electronic voting (exercise of voting rights via the Internet) at the Annual
Shareholders Meeting, and publish the results on our website.
Shareholders Meetings
https://www.netone.co.jp/ir/stock/meeting/ (Japanese only)
Report on the Results of the Shareholder Survey
https://ssl4.eir-parts.net/doc/7518/ir_material19/187806/00.pdf (Japanese only)

Key Initiatives in Fiscal 2021
〇 IR Activities
Financial results briefings (for analysts and institutional investors): Held 4 times
Other briefings: Held 1 time. *Briefings on share buybacks
Meetings with investors: Held 275 times-

President: Held 41 times

60-

Independent outside executive directors: Held 3 times-

IR Division: Held 231 times

In addition, as a first-time initiative in fiscal 2021, we held business strategy briefings for analysts and institutional
investors, as well as interviews between independent outside executive directors and shareholders (institutional
investors).
Awards and Evaluations related to IR in Fiscal 2021
Overview
Selected for the first time as a Highly Improved
Integrated Report selected by GPIF’s domestic
equity management institutions
Selected as the “AAA Website” for substantial
content in the Overall Ranking of the Ranking Surveyof All Japanese Listed Companies’ Website for fiscal
2021
Selected for the “‘Most Liked!’ IR Award” at the 2021
IR Award

Related News Release URL (Japanese only)
https://ssl4.eirparts.net/doc/7518/announcement/76169/00.pdf
https://ssl4.eirparts.net/doc/7518/announcement/74813/00.pdf

https://ssl4.eirparts.net/doc/7518/announcement/73903/00.pdf

Initiative Policies after Fiscal 2022
We will implement the following initiatives, in order to proactively provide information other than disclosure basedon laws and regulations, and to actively engage in constructive dialogue with shareholders.


Implementation of business strategy briefings (IR Day)

Holding small meetings with independent outside executive directors



Creation of opportunities for active dialogue between executives and shareholders

Strengthening ESG information disclosure through integrated reports, our sustainability website, etc.

61

Data and Materials
External Evaluations
State of Adoption in ESG Indices
We have been evaluated and adopted by the following ESG indices (as of August 2022).
JPX-Nikkei Index 400
An index comprising “companies with highinvestment appeal for investors” that meet a varietyof requirements in global investment standards, suchas efficient use of capital and an investor-oriented
management perspective.
FTSE Blossom Japan Sector Relative Index
An index that reflects the performance of Japanesecompanies that are relatively outstanding in
responding to ESG in each sector, and that promotes
the transition to a low-carbon economy.

MSCI Japan ESG Select Leaders Index
An index composed by selecting companies withexcellent ESG evaluations, with a target of 50%
market capitalization by industry classification.
MSCI Japan Empowering Women Index (WIN)An index composed of companies with outstanding
gender diversity in their industry classification

As a result of a third-party investigation, FTSE Russell (registered trademark of FTSE International Limited andFrank Russell Company) certifies that Net One Systems Co., Ltd. has met the requirements for inclusion in the
FTSE Blossom Japan Sector Relative Index, and has become a constituent of the index. The FTSE Blossom Japan
Sector Relative Index is widely used in the creation and evaluation of sustainable investment funds and otherfinancial instruments.
The inclusion of Net One Systems in MSCI indices, and the use of MSCI logos, trademarks, service marks, or
index names herein, does not imply sponsorship, endorsement, or promotion of Net One Systems by MSCI or anyof its affiliates. The MSCI indices are the exclusive property of MSCI. MSCI and the MSCI index names and logos
are trademarks or service marks of MSCI or its affiliates.

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Acquisition of Certifications for Management Systems
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ISO/IEC27001: Information security management system certification standard
ISO/IEC27017: Security management system for cloud services
ISO14001: Environmental management system certification standard
ISO9001: Quality management system (inspection and verification of computer network equipment at our
Quality Control Center)
Privacy mark: Personal information protection management system
COPC® CX Standard CSP Version Release 6.1: Response speed and quality in ICT platform
maintenance and operation services

ESG Data
See the appendix sheet dedicated to numerical information.

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