Net One Systems
Sustainability Data Book
2023

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

G: Governance....................................................... 18

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

Progress in Strengthening Corporate Governance............................................................................ 18

Sustainability Management ....................................... 4

Corporate Governance: Basic Approach and
System ................................................................ 19

Sustainability Policy .............................................. 4

Organizations and Committees: Status andContent of Meetings ............................................ 20

Materialities of the Net One Group ....................... 4
Stakeholder Engagement .......................................... 7
Stakeholders and Basic Approach ....................... 7

Initiatives Aimed at Improving the Effectiveness of
Our Board of Directors ........................................ 22

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

Succession Plan ................................................. 24

Responding to Climate Change ............................ 9

Executive Remuneration System ........................ 25

Expansion of Green Solutions ............................ 10Internal Control ................................................... 25

S: Social ................................................................. 12

Fostering a Corporate Culture Based on Our
Purpose............................................................... 27

Personnel Management ...................................... 12

Health Management ............................................ 29

Promotion of Diversity and Inclusion ................... 15

Data and Materials .................................................. 31

Human Rights ..................................................... 16

1

Editorial Policy
This Sustainability Data Book 2023 (“SDB 2023”) serves as acomplement to our net one report 2023 integrated report.
Accordingly, we ensure that it reports a wide range of nonfinancial information while also prioritizing information
concerning materiality-related initiatives.

net one report 2023
https://www.netone.co.jp/english/investor-relations/ir-library/integrated/
Reporting Period
In principle, from April 1, 2022 to March 31, 2023; however, some initiatives adopted or executed before or after
this period are also included.
Reporting Scope
In principle, the Net One Group (the Company and three subsidiaries). Abbreviations indicating specific Group
companies have been provided below.
NOS: Net One Systems Co., Ltd.
NOP: Net One Partners Co., Ltd.
NOX: Net One Next Co., Ltd.
NOB: Net One Business Operations G.K.
For information regarding the scopes of data used to calculate the non-financial figures presented within this data
book, please refer to the specific scopes of aggregation provided for each of these non-financial data.
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 2023 are trademarks or registered trademarks of each company.
“Health and Productivity Management®” is a registered trademark of the Non-profit Organization Kenkokeiei.
Date of Issue(Previous) September 30, 2022
(Current) November 9, 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

We will establish a value creation cycle that is
unique to our Group and focuses on generating
both economic and social value.

Koji Tsuji
Senior Vice President
Chief Strategy & Digital Officer (CSDO)
Chairperson of the Sustainability Committee(Activities of the Sustainability Committee)
A year during which the Group’s sustainability efforts generated increasingly widespread impact
The Net One Group revealed its Sustainability Policy in fiscal 2021 and later identified materiality-related issues
to be targeted with various initiatives in fiscal 2022. We are confident that our additional establishment of original
KPIs that complement existing management targets has made our approach toward increasing corporate value
through both economic and social value easier to convey. In addition, we firmly believe that information
distributed through our companywide Sustainability Day event has successfully enhanced employee
understanding while heightening their enthusiasm for participating in managerial affairs. As chairperson of ourSustainability Committee, I would like to encourage employees to view sustainability initiatives as their own
personal responsibilities and conduct themselves accordingly.
(Materiality-Related Progress)
Aiming to improve overall corporate value while maintaining an awareness regarding theinterconnectedness of materiality-related issues
During fiscal 2022, we confirmed that our business strategy is on track toward solving social challenges. With
regard to “expansion of green solutions,” a KPI associated with the materiality-related issue of “contribution to a
decarbonized society,” we successfully developed services designed to solve social challenges and help
decarbonize our society. These services have great potential, but we remain aware that contribution through ourbusiness operations will only be possible once we demonstrate the benefits these services provide when utilized.
As our next step, we will expand our approach to include customers from different sectors and facilitate thecreation of opportunities for new projects.
In terms of diversity, we have established goals for our female manager and newly hired female graduate
ratios. By ensuring diversity, we will be able to carry out discussions and reviews from various perspectives,
thereby strengthening our governance. Moving forward, we will continue to create an organizational culture
characterized by respect for a diverse range of values.
We recognize that we now exist in an era during which everything is connected through networks; accordingly,
we will continue to ensure that we focus on establishing connectivity as a means of contributing to the solving ofsocial challenges. As a leading network company, we must fulfill our responsibilities by leveraging our expertiseto rapidly develop and provide valuable services to society. We are confident that conducting business activities
predicated upon the noble cause of solving social challenges will enhance both our economic growth and thevalue our existence represents to society at large. Furthermore, we plan to utilize the general value and profit wegenerate through both economic and social initiatives as resources for further value creation. We remain
convinced that establishing such a value creation cycle will engender support from our stakeholders.

3Sustainability Management
Sustainability Policy
As a leading network company, the Net One Group has grown by providing high value-added services that
support the transformation of its customers and society.
Our Purpose is to “unleash the potential of people and networks, and create a prosperous future by carrying
on / inheriting tradition and making innovation happen,” 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 our business will enhance corporate value. We will hone our ICT
expertise in critical assessment and knowledge born of “superior network technology,” “multi-vendor support,”and “co-creation with customers” to provide services that create both social and economic values, thereby
contributing to a sustainable society and achieving sustainable growth for our Company.
Materialities of the Net One Group
Based on our perception of our current operating environment, our philosophy system, and the policies of ourcurrent Medium-Term Business Plan, we examine materiality-related issues while emphasizing the generation ofvalue for both Net One Systems and society. These materiality-related issues have been approved by our Boardof Directors. At present, our Sustainability Committee reviews the progress of associated initiatives on a quarterly
basis while our Board of Directors provides additional support through regular monitoring.
■Materiality Identification Process■Four Materialities and Their KPIs
Materialities

KPIs

Realization of a safe and secureadvanced information society◼ Provide solutions andservices by challenge anddomainWe will contribute to realizing a safe
and secure advanced informationsociety through high-quality
services, with our strength in
network technology as our core.

• Revenue from social challengesolving solutions*: ¥30.0 billion(fiscal 2024 target)

4

Fiscal 2022 results and major
developments and initiatives◼ Provide solutions andservices by challenge anddomain• Revenue from social challengesolving solutions: ¥7.2 billion➢ Progress associated with thefocus areas of our MediumTerm Business Plan
➢ Demand remains strong
throughout the market

Materialities

KPIs◼ Expand and promote theservice business• Service ratio: 55% (fiscal 2024
target)* Three focus areas of our current
Medium-Term Business Plan:“digital government,” “social
infrastructure to realize Society
5.0,” and “smart manufacturing”

Fiscal 2022 results and major
developments and initiatives◼ Expand and promote theservice business• Service ratio: 45.2%➢ Although revenue increased
13.0% YoY thanks to our
expansion and promotion ofservice-oriented businesses,
we recognize that further
growth in revenue generated
through services is necessary
to achieve our target for fiscal
2024.
➢ We will focus on
strengthening our service
proposal system andexpanding our service
portfolio.
◼ Train IT personnel for the
next generation

Thriving professional personnel◼ Train IT personnel for the
next generation

In order to achieve sustainablegrowth, we will train and secure
diverse personnel, who are thesource of our competitiveness, andbuild a work environment where
each employee can play an activerole.

• Security personnel
CISSP holders: 80 (fiscal 2030
target)Registered information security
specialists: 100 (fiscal 2030
target)• Security personnel
CISSP holders: 23
Registered information security
specialists: 51➢ Steady progress achieved
thanks to expanded support
for maintenance ofqualifications• Cloud personnel
Front divisions: 50% increase
compared to 2021 (fiscal 2030
target)• Cloud personnel
Front divisions: 448 individuals➢ Conducted regularqualification training• DX personnel (data analysis
qualification holders)
Corporate divisions: increase of
150 individuals (fiscal 2030
target)• DX personnel (data analysis
qualification holders)
Corporate divisions: 23
individuals

Business improvement
proposals: 100 proposals(cumulative target for 2022–
2030)

Business improvement
proposals: seven proposals➢ Planned training programs
and launched related
activities◼ Promotion of diversity andinclusion◼ Promotion of diversity andinclusion• Ratio of female managers: 15%(fiscal 2030 target)

5• Ratio of female managers: 7.8%
(as of April 1, 2023)➢ Fostered awareness of thechallenges associated withmanagerial positions throughtrial implementation of acareer development
mentoring system androundtable discussions
involving female managers

Materialities

KPIs• Ratio of newly hired female
graduates: 50% (fiscal 2030
target)• Rate of male employees taking
paternity leave and special leave
for childbirth: 90% (fiscal 2030
target)Contribution to a decarbonizedsociety◼ Reduce greenhouse gas
emissions through businessWe will address climate change byboth reducing greenhouse gas
emissions through business, andreducing the environmental impactof our own business processes.

• Expansion of green solutions◼ Reduce emissions in thebusiness processes of ourCompany• Reduce ratio of greenhouse gas
emissions to revenue by
expanding sales of low-power
consumption products andservices➢ Ratio of total Scope 2 andScope 3 greenhouse gas
emissions to revenue: 9.8%
decrease compared to fiscal
2021 (fiscal 2024 target)

Fiscal 2022 results and major
developments and initiatives• Ratio of newly hired female
graduates: 28.6%➢ Launched a medium- to longterm paid internship systemand established a female
team of recruiters on a trial
basis• Rate of male employees taking
paternity leave and special
leave for childbirth: 68.0%➢ Increased the rate of male
employees taking special
leave for childbirth primarily
through efforts aimed at
fostering a better
understanding of our work–
life balance support systemand seminars held with theaim of encouraging
employees to take paternity
leave◼ Reduce greenhouse gas
emissions through business• Developed green solutions:
three solutions➢ Developed and began making
proposals related to threesolutions: data erasurecertification services,visualization of data centerelectricity usage, and remotesupport◼ Reduce emissions in thebusiness processes of ourCompany• Ratio of total Scope 2 andScope 3 greenhouse gas
emissions to revenue: reduced
27.5% compared to fiscal 2021
➢ Declined by a significant
27.5% margin YoY primarily
because product purchaseamount (used as a basis forcalculating Scope 3 Category
1 emissions [purchased
goods and services]) was
lower than projected◼ Foster the corporate culture
and enhance internal
controls

Maintaining and enhancing agovernance structure forsustainable growth◼ Foster the corporate culture
and enhance internal controls

In order to improve corporate value,
we will strengthen governance andwork to reform our corporate culture,so as to build stronger relationshipsof trust with stakeholders.

• Conduct an annual employee
awareness survey as part of ourefforts to foster the corporate
culture (survey results to bedisclosed at a future date)• Conducted an employee
awareness survey for all
personnel at end-September
2022• Progress report on measures toprevent recurrence of fraudulent
acts• Released operational status ofrecurrence prevention
measures for 2H FY22 on our
website6Materialities

KPIs◼ Realization of Health andProductivity Management®
• Certification as an Outstanding
Organization of Health andProductivity Management (fiscal
2024 target)

Fiscal 2022 results and major
developments and initiatives◼ Realization of Health andProductivity Management®
• Performance wascommensurate with projections➢ Regarding fiscal 2022 as thefirst year of our Health andProductivity Management
efforts, we launched basic
initiatives targeting
certification as an
Outstanding Organization of
Health and Productivity
Management (healthmanagement policy
clarification, development of a
Health and Productivity
Management promotion
system, etc.)➢ Developed specific KPIs andundertook concrete actions
related to health investment
policy-related initiatives■Materialities and SDGs Declaration
The Net One Group has established a total of 12 SDGs declarations for our materiality-related issues in order toachieve both contributions to a sustainable society and the sustainable growth of the Company, through businessand corporate activities toward the achievement of the SDGs.
SDGs Declaration on 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 society and our customers.” As key factors in fulfilling this Mission, we havedefined 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.
■Examples of Dialogue with Stakeholders
Stakeholders
Customers

Key initiatives• Customer satisfaction surveys• Dialogue with customers

Employees• Providing employees with fair
opportunities• Developing training programs thatfacilitate personal growth• Providing safe, comfortable, andhealth-conscious work
environments• Promoting the concept of RCT*• Creating partner CSR guidelines
to ensure proper sharing of theGroup’s philosophy and policies

Partners

Fiscal 2022 results
Results of our customer satisfaction survey indicatedan overall satisfaction rate (share of “satisfied” and“somewhat satisfied” responses) of 78.3% (versus
78.2% in fiscal 2021)
Results of our organizational culture survey indicated
a companywide satisfaction rating of 3.46 points(versus 3.69 points in fiscal 2021)

Each quarter, we hold “case study meetings,” training
sessions that offer all employees opportunities toexchange opinions and ideas. To ensure legal
compliance and proper business dealings with ourpartners, we conducted training concerning Japan’s
Act on Prohibition of Private Monopolization and
Maintenance of Fair Trade in Q2 FY22 and Japan’s
Act against Delay in Payment of Subcontract
Proceeds, etc. to Subcontractors in Q4 FY22. Alleligible employees completed this training.

7• Disclosing information and actively * Please refer to the TOPICS section below forengaging in dialogue with market
details.
participants in accordance with ourdisclosure policy
Natural• Reducing greenhouse gas
In September 2022, we joined the Green × Digital
environment
emissions through business
Consortium, which aims to facilitate carbon neutrality• Reducing the environmental
among Japanese companies.
impact of our business processes* Respect, Communication, and Teamwork (RCT): A shared communication approach designed to create strong
links between management and employees, share our corporate philosophy, enhance workplaceenvironments, and foster our corporate culture
Shareholders

Joined the Green × Digital Consortium, which aims to facilitate the carbon neutrality among Japanesecompanies (September 5, 2022)
https://www.netone.co.jp/news/information/20220905_01-news.html (Japanese only)

TOPICS
Generating Greater Opportunity for Dialogue with Shareholders andInvestors
Net One Systems proactively discloses information deemed useful for facilitating a deeper understanding of its
corporate group among shareholders and investors. Meanwhile, we strive to promote greater insight into ourbusiness activities and growth strategies through both direct and indirect communication.
Fiscal 2022 Results
Shareholders Shareholder survey: recorded responses from 1,313 shareholders (out of 2,197 eligible
shareholders*)* Shareholders who exercised their voting rights via electronic voting during our Annual
Shareholders Meeting
Institutional• Personal meetings held with analysts and institutional investors: 282 (including 15
investors andmeetings involving members of senior management, three meetings involving
analysts
independent outside executive directors, and 264 meetings involving our IR division)• Briefings and other events: six (four financial results briefings, one business strategy
briefing, and one briefing regarding other matters)• Small meetings with analysts and institutional investors: five
• Personal meetings with representatives responsible for exercising the voting rights ofinstitutional investors: 16
Primary• Efforts aimed at improving the effectiveness of our Board of Directors and strengthening
agendagovernance• Status of initiatives targeting the achievement of Medium-Term Business Plan objectives• Our capital allocation policy, shareholder return, and other elements of our financial
strategy• Measures designed to improve employee conditions, an overview of our new personnel
system, and personnel training
Please follow the link below for details regarding the status of our dialogues with shareholders and investors.
Investor Relations | Management Policy > Corporate Governancehttps://www.netone.co.jp/english/investor-relations/management-policy/corporate-governance/

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 Materiality• Contribution to a Decarbonized Society
Responding to Climate Change
TOPICS
Addressing Climate Change in Line with TCFD Recommendations
As the 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.
Sustainability | ESG Initiatives > Environment > Addressing Climate Change
https://www.netone.co.jp/sustainability/esg/environment/tcfd/ (Japanese only)
Items
Governance

Strategy

Riskmanagement

Metrics andtargets

Response status• We have set “contribution to a decarbonized society” as one of our materiality-related
issues and corresponding progress is monitored by the Sustainability Committee, whichis overseen by the President & CEO and chaired by a senior vice president.
• The Sustainability Committee meets once per month and regularly reports on its activities
to the Management Committee.
• The Management Committee deliberates and decides on fundamental or importantmatters related to company management in a proper and prompt manner, while theBoard of Directors focuses on overall management and supervisory functions.
• We consider a wide range of potential impacts of climate change over the medium to longterm and identify particularly important risks and opportunities.
• The Net One Group discloses its judgments regarding potential business environments
under different climate change scenarios (e.g., the below 2°C scenario, which would
primarily produce transition risks, and the 4°C scenario, which would mainly generate
more serious physical risks) and overviews of the potential business impacts the
scenarios would have.
• We have established the Risk Management Committee as an advisory body to theManagement Committee and appointed a chief risk management officer (CRO). We
identify and respond to risks, evaluate the effectiveness of risk management activities,
make continuous improvements, and promote and supervise other risk management
processes across the organization. In addition, we identify, evaluate, and monitor
important management risks on an annual basis.
• The Net One Group prepares a business continuity plan (BCP) in preparation for system
blackouts and business shutdowns due to disasters. In the event of a disaster, we haveestablished a system that ensures the safety of all Group officers and employees andenables us to continue providing services to our customers.
• We have expanded the scope of greenhouse gas emissions and implemented
management up to Scope 3, based on the recognition that it is important to engage inenergy conservation efforts not only at the Company, but also throughout the entire
supply chain in order to reduce climate change risks.
(Fiscal 2022 results)
Scope 1: N/A / Scope 2: 5,303 t-CO2 / Scope 3: 458,356 t-CO2 (calculated for categories
1–7, 9, 11, and 12)• Going forward, based on the results of greenhouse gas emissions calculations, we will
work actively to reduce greenhouse gas emissions through the use of renewable energy,
in collaboration with our customers and business partners.

9

Expansion of Green Solutions
TOPICS
Development of an ICT Circular Economy
The Net One Group has been offering the NetOne “all in” Platform since 2017 as a service that allows
customers to utilize functions they deem necessary on a subscription basis (pay-per-use) to help customers
shift from ownership to use of ICT platforms. In 2019, we established Net One Next Co., Ltd. to handle
refurbished ICT platform products in an aim to expand 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 and sales of SFP transceivers, which are necessary parts for network connection. Additionally, we
have joined the Japan Partnership for Circular Economy (J4CE), a public–private initiative, and are working tobuild a larger database of ICT application examples to facilitate the realization of a recycling-oriented society.
Going forward, Net One Next will accelerate circular economy-type business while circulating resources foras long as possible in order to reduce the generation of waste. At the same time, will aim to realize both
environmental protection and profit creation.

10

TOPICS
Storage Disk Data Erasure Certification Service
Physical destruction of hard disks does not entirely eliminate the risk of remaining data. To ensure that harddisks can be reused safely and securely, Net One Systems has developed a service through which itcompletely erases data and obtains certification confirming total erasure from third-party organizations. During
December 2021, we conducted Japan’s first demonstrative stored software data erasure test in Shiojiri,
Nagano. This test was performed in compliance with security policies established by Japan’s Ministry ofInternal Affairs and Communications and provided technological proof that data recovery was practically
impossible following the erasure methods we applied.
Through services that apply and utilize ICT, the Net One Group will provide new value and recommend
maintainable ecosystems as it supports the construction of sustainable social infrastructure.

11

S: Social
We have set our Mission as, “Each of us is a professional with outstanding expertise and high ethical standards,
and contributes to solving the problems of the society and our customers.” To achieve this, it is essential that wetrain 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 drastic changes, we willcontinue to provide high-quality services with our network technology as our core, and contribute to realizing asafe and secure advanced information society by honing our ICT expertise in critical assessment and knowledge
born of “superior network technology,” “multi-vendor support” we have cultivated through relationships withvarious business partners, and “co-creation with customers.”

Related Materiality• Thriving Professional Personnel
Personnel Management
Basic Approach to Strengthening Human CapitalAs the evolution of technology is rapid in the ICT industry, responding to evolution itself is “value,” and represents
the “source” of our competitiveness. The power of personnel is the key to maintaining our competitiveness. Thereis a risk that our competitive advantage may become obsolete if it is reliant on a specific technology. 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 and utilization of technology.
At the Net One Group, we make reference cases from the practical experiences we have gained fromsuccesses and failures we have made through our own operations, and use these reference cases in solutions
for our customers. 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 perform with fulfillment and enthusiasm, regardless of gender, age,nationality, physical ability, 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.
Personnel Strategy Overview

12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.
We promote personnel measures to execute growthCommitment of top management
strategies and strengthen our business base, under thestrong commitment of our management team.
Our CHRO establishes human capital management andChief Human Resources Officer (CHRO)
leads at the forefront of the management team to increase
the value of the Group’s personnel.
Our Human Resources Department implements overall
personnel management to establish and maintain a
Human Resources Department
business base that supports the growth of the entire Groupover the medium to long term.
Personnel Strategy in Our 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.

〇 Companywide Personnel Development Policy
The Net One Group maintains a training policy of “supporting the independent growth of each and every
employee as they apply their skills as professional personnel.” Accordingly, our companywide personnel
development rests on three pillars: “baseline education,” which requires employees to acquire the skills
necessary for their respective positions or grades; “skill development education,” through which employees can
independently choose what they want to learn; and “selective education,” which is attended by designatedemployees.
Of particular note is our skill development education program. Under this program, volunteer employees
serve as instructors and share their knowledge with other employees through in-house training sessions, and we
also offer correspondence courses on more than 50 topics, and e-learning courses on more than 700 topics, peryear. Through this program, we provide an environment that enhances the skills and expertise associated with allorganizations, positions, and individuals within the Net One Group.
Additionally, all departments appoint an HR representative who serves as a liaison between his or her
department and our personnel divisions. This arrangement strengthens coordination between departments andour personnel divisions; enables two-way sharing of information and knowledge between those involved incompanywide training provided through our personnel divisions and those providing or receiving department-leveltraining; and facilitates management of training conditions throughout the Company (e.g., securing budgets andconducting training).
〇 Development of Professional Specialists• Development of DX Professionals within Our Corporate Divisions
Our corporate divisions have launched initiatives aimed at both equipping employees with the specialized skills
they need and developing digital transformation (DX) personnel. By improving DX literacy among personnel inour corporate divisions, we aim to enhance operational efficiency and utilize the knowledge thereby attained tofacilitate the creation of profit models. We are currently categorizing and defining DX personnel skills by level andplan to provide our staff with the experience and training they need to eventually become DX experts.

13• Development of Consulting Personnel within Our Business Divisions (ICT Business Positions)Through our business divisions, we are expanding our team of personnel who demonstrate the critical insight toidentify customer issues and are capable of adopting consulting-based approaches that deliver high quality andvalue (consulting personnel).
Since fiscal 2022, we have been providing consulting personnel development programs consisting of bothtraining and e-learning facilitated by internal and external instructors. These programs are aimed at improving “IT
human skills,” which are a fusion of the creative, executive, practical, and communicative capabilities that
represent the foundational competencies required of consulting personnel. Moving forward, we will focus on
creating new business opportunities that allow these well-trained personnel to work with, and provide support to,clients as they aim to address managerial challenges.

TOPICS
Personnel System Reform
Having identified areas in need of improvement, including a corporate culture impacted by past misconduct
and revelatory employee awareness survey results, our Group recognizes the need for personnel system
reform. Accordingly, we have been introducing a new personnel system designed to facilitate theimplementation of our personnel strategy, which includes developing professional personnel and establishingenvironments under which they can thrive. In 2022, we established a Personnel Management Policy that
constitutes the core idea behind our personnel system reforms. Later, in April 2023, we revised our evaluation
system before launching a new grading and compensation system in July of the same year.
Under our new personnel system, we aim to increase the value we provide to customers while encouraging
all employees to contribute to the enhancement of Net One Systems’ competitiveness by eliminating jobclassifications, such as “sales or engineer” or “frontline or follow-up,” and simplifying them into two categories:
ICT business positions and corporate positions. Additionally, by defining both managerial and specialized
positions necessary for organization within the Net One Group, we aim to accomplish our management
strategy through the incentivization of strong expertise that enhances the value we provide to our customers
and through compensation and benefits commensurate with the scales and roles of their corresponding
positions. Furthermore, as we establish competitive compensation levels based on market benchmarks, weare aiming through our Human Resource Development Council, which fulfills a critical role with regard toevaluations, to focus more intently on personnel development by devoting sufficient time to both discussions
concerning evaluations and compensation decisions and conversations related to the development of
individual employees.
〇 Providing Learning through Industry–Academia Collaboration• Industry–Academia Collaboration Programs Carried Out through Universities
The Net One Group supports the development of ICT personnel at multiple universities and colleges oftechnology. In fiscal 2022, we began conducting industry–academia collaboration classes focused on “AItechnology in modern society” through Kyoto Women’s University; industry–academia collaboration courses
targeting “security personnel development” with the assistance of the Osaka Institute of Technology; and special
lectures designed to provide university education-related societal contributions with the aid of Hosei University.
〇 Contribution to the Development of Next-Generation ICT Personnel• Support for National and Public Universities through Our Study Support System
As part of our social contribution activities, the Net One Group established a study support system in fiscal 2022
and has since been providing support for national and public universities with track records of carrying out
industry–academia collaboration with the Group. This system supports university students with tuition fees until
graduation, thereby raising awareness regarding employment at companies, etc. In addition, this system also
aims to help generate more opportunities for active participation in society moving forward.
• ICT Support for Educational Environments and Development of Vocational Learning Opportunities forPrimary, Middle, and High School Students
While providing operation services consistent with the GIGA school concept through our business activities, we
also advance our overall social contribution efforts by visiting schools and conducting online career education
programs. At the same time, we provide opportunities for children to develop their future career perspectives andcultivate their dreams and aspirations for the future by introducing our business activities and offering them
opportunities to interact with our employees. Through these activities, we supply children with hands-on ICT
experiences through which they can deepen their understanding of the network technologies that will help leadsociety toward a prosperous future.

14

Promotion of Diversity and Inclusion
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 perform with fulfillment
and enthusiasm, regardless of gender, age, nationality, physical ability, work experience, sense of values, or any
other differences. By doing so, we will draw forth the power of individuals and achieve sustainable growth while
increasing productivity.
Initiatives Aimed at Promoting Active Participation from Diverse Personnel
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 (Japanese only)
Employment of People with Disabilities
In order to draw forth the power of individuals and create work environments where our employees can performwith fulfillment and enthusiasm, we will continue initiatives to foster a corporate culture that emphasizes diversity
while actively hiring employees with consideration for their disabilities.
Main Measures Implemented in Support of Work–Life Balance
The Net One Group aims to grow together with its customers by first implementing work style innovation and thenconsidering how the experiences and knowledge thereby gained can be applied to challenges facing both theGroup and its customers and converted into added value for the latter.
We are striving to create environments under which employees can efficiently produce results while
maintaining proper work–life balance that is centrally driven by remote working amidst a trend toward increasingly
diverse individual lifestyles, values, and work views.
Examples of major systems
Overview
Telework system
Workstyle is centered on telework, working from home or outside, in
principle
Flex-time system
Enables employees to flexibly set their own working hours, based on thepremise of autonomous work planningWork select system(1) Area select: Improve work–life balance by limiting work locations(2) Time select: A system under which employees work less than theprescribed working hours per month(3) Job select: A system that limits expected roles in response to individual
requests concerning work–life balance related to childcare, nursing
care, etc.
Multi-job system
A multi-job system that enables diverse work styles in response to changes
in society, allowing employees and the Company to grow together
Work location change system
A workstyle according to which an employee residing in a location that is
distant from the base of his or her assigned department commutes asneeded to the nearest business office (his or her “home base”)
Work–life balance support
Childcare leave of absence system, shorter working hours system while on
childcare or nursing care, child nursing care leave, stock leave (for childnursing care), special maternity leave, long-term nursing care leave ofabsence system, nursing care leave, etc. Focusing on the childcare leaveof absence system, we have introduced a number of flexible systemdesigns that exceed legal requirements.
Recruit Information | Systems and Environment > Welfare Program
https://www.netone.co.jp/recruit/environment/welfare/ (Japanese only)15External Evaluation
We have acquired the Kurumin mark from the Ministry of Health, Labour and Welfare (certified in 2013) for
activities to promote work–life balance, and have also received the Eruboshi certification (second stage) for ouractivities to promote the empowerment of women.

Human Rights
Basic Approach to Human Rights
Under the Group’s corporate philosophy system (Purpose, Mission, Vision, Values, and WAY), each and every
member of the Net One Group will fulfill his or her responsibility toward respecting the human rights of all people
as a professional with outstanding expertise and high ethical standards.
In addition to requiring respect for basic human rights, our Code of Ethics, which sets forth ethical standards
for both officers and employees, stipulates that there shall be no discrimination based on race, religion, skincolor, gender, nationality, language, physical ability, age, marital status, or any other personal characteristics.
Furthermore, we have established our compliance manual as a concrete and practical guide to compliance.
This manual establishes five basic principles and 20 standards of conduct as minimum criteria necessary forensuring fair and impartial corporate activities and respect for human rights. By requiring semi-annual complianceself-checks, we communicate and disseminate the manual’s five basic principles and 20 standards of conduct on
an ongoing basis.
The Net One Group is planning to augment and modify its human rights policy in accordance with current
global perspectives and consensus observed in recent years and aims to make this policy publicly available infiscal 2024.
Compliance Manual
Basic principle No. 1: Demonstrating responsibility to all employees while behaving ethically andvirtuouslyStandard of conduct No. 3: Respect for basic human rights■We respect basic human rights and do not discriminate against others
Personnel employed by the Net One Group respect each other’s fundamental human rights and do notdiscriminate against others based on employment status, race, religion, skin color, gender, nationality,
language, physical ability, age, marital status, sexual orientation, or any other irrational reason not relevant to
the performance of professional responsibilities. The Net One Group employees will not slander, defame, orharass any employee or third party, inside or outside the Group.
■We never tolerate harassment
Harassment seriously disrupts both the overall atmosphere and order of the entire workplace and generates
serious consequences, including declines in the morale of both victims of harassment and other employees. In
accordance with regulations concerning harassment prevention, we will endeavor to thwart both harassment
and bullying while fostering positive human relations and establishing pleasant work environments.
Compliance Manualhttps://www.netone.co.jp/sustainability/esg/governance/compliance/#compliancemanual (Japanese only)
Initiatives Targeting Respect for Human Rights〇 Implementation of Training and Survey of Actual Conditions and Awareness
The Net One Group conducts compliance training on harassment every year. In addition, to confirm the status ofdissemination 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.
Furthermore, we conduct compliance surveys to ascertain conditions related to harassment and other issues.
Our fiscal 2022 compliance survey polled 4,691 individuals including both employees of the Net One Group andpersonnel employed by partner companies. Moving forward, we will target further improvement by continuing toprovide training related to harassment and human rights while fostering a corporate culture consistent with our
Purpose.
(Top two fiscal 2022 compliance survey responses that reported compliance issues) Sample: 4,691 individuals consisting of the Net One Group personnel and employees of partner companies;
3,200 respondents (valid response rate of 68.2%)
 Harassment: indicated by 2.5% of respondents
 Labor-related compliance issues: indicated by 0.7% of respondents
We also require our business partners to consider human rights and comply with labor laws through our Partner
CSR Guidelines.

16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 healthy and safe working environments
 Respect the dignity and diversity of humankind and prohibit all forms of discrimination and unfair labor
practices (ensure compliance with legal working age limits and prohibit forced labor) Strictly implement safety and health measures, manage working hours, and comply with labor practices(abstain from unfairly withholding or reducing wages)
Partner CSR Guidelines
https://www.netone.co.jp/sustainability/files/5f1e671effac28a00c03e3143a5c48f3_1.pdf (Japanese only)〇 Establishment of, and Responses Received through, Our Harassment Helpdesk
To foster trust in its whistleblower system and protect whistleblowers, the Net One Group modified this system infiscal 2022, allowing anonymous whistleblowers to communicate directly with designated points of contact.
Through this change, we have established a system that further enhances the credibility and protection ofwhistleblowers while also speeding up investigations conducted in response to incident reports.
Additionally, we hold quarterly internal study sessions (case study meetings) attended by all employees.
During these study sessions, we cover topics including misconduct, fraud, and harassment while raisingawareness of our whistleblower contact desk and striving to instill awareness among our employees to ensure
they can effectively utilize our whistleblower system. Through these and other efforts, we aim to prevent serious
issues from an early stage by activating self-purification mechanisms.
Furthermore, the Net One Group confirms the facts surrounding all reports made through its whistleblower
system and, if necessary, takes disciplinary action against the parties involved while following up with, andproperly tending to, those affected. Moreover, to prevent recurrence of reported incidents, the Group conducts
training to inform its staff regarding relevant policies and procedures.
Please follow the link below for information regarding our whistleblower system.
Sustainability Data Book 2022 ˃ Compliance ˃ Whistleblower System
https://www.netone.co.jp/english/files/E_sustainability-data-book_2022.pdf#page=49

17

G: Governance
The Net One Group will achieve continuous growth in accordance with its corporate philosophy. Aiming for anenhancement of our corporate value over the medium to long term, we are continuously working to enhance andstrengthen corporate governance for transparent, fair, prompt, and conclusive decision-making.

Related Materiality• Maintaining and Enhancing a Governance Structure for Sustainable
GrowthProgress in Strengthening Corporate GovernanceThrough2005
2006

Board of Directors andAudit & Supervisory
Committee (Board)• Appointed one outside
executive director (2004)

Committees

Other• Established the Compliance
Committee (2003)• Established the Group
compliance manual (2003)• Reduced the term of officefor executive directors fromtwo years to one

2007• Introduced the whistleblower
system• Established the Risk
Management Committee• Established the Investment &Financing Committee• Established the Advisory
Committee• Established the Vision
Inculcation Committee(through 2015)2009• Published the Vision Book

2011

• Introduced the Vice
President system

2012• Introduced the stock optioncompensation system

2015• Appointed a female outside
executive director

2016• Began evaluating theeffectiveness of the Boardof Directors• Integrated the Compliance
Committee and the Risk
Management Committee as
the Risk & Compliance
Committee

2017

2020

2021

• Separated the Risk &Compliance Committee into
the Risk Management
Committee and theCompliance Committee• Reestablished the Vision
Inculcation Committee• Renamed the Vision
Inculcation Committee to the
Corporate Culture Reform
Committee

18• Published the Corporate
Governance Guidelines• Added an Audit &Supervisory Board member
contact point to thecompliance reporting andadvice line
• Established the Sales
Supervisory Office• Revised the Vision Book

• Established the Compliance
Office• Established the BusinessControl Division and theBusiness Planning OfficeBoard of Directors andAudit & Supervisory
Committee (Board)2022• Transitioned to a company
with an audit andsupervisory committee• Six out of nine appointed
executive directors areoutside executive directors• Outside executive director
appointed as Chairpersonof the Board of Directors

2023• Developed andstrengthened chief
executive system to clearly
define the separation ofsupervisory and executive
responsibilities

Committees• Established the Internal
Control Enhancement
Council• 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

Other• Revised the executive
remuneration system,
including the introduction of a
restricted stock remunerationplan• Established the Corporate
Data and Analytic Office• Established a common
whistleblower contact desk
for all Group companies

TOPICS
Development and Enhancement of Our Chief Executive System
Net One Systems has been appointing personnel to chief executive positions as it aims to strengthen its
governance. In fiscal 2022, we clearly defined the roles of our chief executives and are striving to support
these personnel as they carry out their respective functions.
By developing and strengthening our chief executive system, we aim to clarify both supervisory andexecutive responsibilities; create synergy among business divisions by facilitating lateral cooperation between
them; optimize resource allocation; and facilitate the execution of policies and measures. Additionally, by
establishing direct lines of communication between chief executives and our CEO, we will further improve ourCEO’s ability to gather information. Furthermore, through proper delegation of authority, we will ensure that the
CEO can focus on activities reserved for senior management.
To establish a succession plan that will allow our chief executive system to function continuously, we arealso creating profiles for a total of 19 positions ranging from vice president to CEO.
net one report 2023 > Reinforcement of executive functions: Development and enhancement of our chief
executive system
https://www.netone.co.jp//english/files/Netone_2023EN_a3.pdf#page=24

Corporate Governance: Basic Approach and System
Basic Approach
The Net One Group will achieve continuous growth based on its corporate philosophy. Aiming for anenhancement of our corporate value over the medium to long term, we are working continuously to improve andstrengthen 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.
Investor Relations | Management Policy > Corporate Governancehttps://www.netone.co.jp/english/investor-relations/management-policy/corporate-governance/

19

Corporate Governance Structure

Organizations and Committees: Status and Content of Meetings
Please see below for information regarding the compositions and meeting attendance rates associated with our
Board of Directors, Audit and Supervisory Committee, Nomination Advisory Committee, and Remuneration
Advisory Committee. All these committees reported attendance rates of 100%.
net one report 2023 > Executives
https://www.netone.co.jp/english/files/Netone_2023EN_a3.pdf#page=26
Board of Directors
Meeting Status (Fiscal 2022)
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2023
(1) Executive Directors and Board of Directors
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100R3JF/00.pdf#page=57 (Japanese only)
Major Details of Discussions Held during Meetings of the Board of Directors• Our Medium-Term Business Plan and annual budget• Financial strategy• Restructuring of Group companies• Evaluation of the effectiveness of our Board of Directors• Succession plans for executive director and vice president positions• Our executive remuneration system• Sustainability• Visualization• Progress of measures targeting recurrence prevention and enhancement of internal controls
Quantitative Data Associated with Activities of the Board of Directors (Period Covered: July 2022–March
2023)
Our Board of Directors transferred approximately 70% of its previous decision-making authority to ourManagement Committee and other bodies. As a result, total items resolved or reported decreased in comparison
to the previous period of measurement. Meanwhile, due to the introduction of new items for deliberation, total
items discussed and time spent on discussion have increased.
Previous period
Items
Item details
Current period(for reference)
Agenda items
Resolutions
34
78
Reports
61
87
Deliberations
7
—
Total
102
165
Average time required
Resolutions
14.9 minutes—
per agenda item
Reports
14.6 minutes—
Deliberations
35.2 minutes—
Average21.6 minutes
13.4 minutes
Average number ofResolutions
2.0—
questions
Reports
1.7—
Deliberations
5.3—
Average
3.0—

20Agenda items amended
or resubmitted in
response to points raised
Record concerning
preliminary confirmationof provided materials

Number
Percentage of total agenda items

4
3.9%

—

Percentage of participants withpreliminary access

47.2%

—

Sustainability | ESG Initiatives > Governance > Corporate Governance > Assessment of Effectiveness ofBoard of Directors
Summary of Results of Evaluations of the Effectiveness of the Company’s Board of Directors (April 28, 2023)
Appendix
https://ssl4.eir-parts.net/doc/7518/ir_material18/129484/00.pdf#page=3 (Japanese only)
net one report 2023 > Message from the Chairperson of the Board of Directors
https://www.netone.co.jp/english/files/Netone_2023EN_a3.pdf#page=6
Status of Audit and Supervisory Committee Audits (Fiscal 2022)
Please see below for information regarding the activities of our Audit and Supervisory Committee.
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2023
(3) Status of Audits
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100R3JF/00.pdf#page=71 (Japanese only)
Major Details of Discussions Held during Meetings of the Audit and Supervisory Committee• Status of the development and operation of internal control systems (risk management system, governancesystem, internal controls applied to the entire Group, including operations overseas, etc.)• Critical audit items, etc.
• Development of audit environments• The appropriateness of audits performed by the accounting auditor• Transactions performed by executive directors that may compete with the Company’s interests ortransactions involving conflicts of interest• Misconduct, etc.
net one report 2023 > Message from the Chairperson of the Audit and Supervisory Committee
https://www.netone.co.jp/english/files/Netone_2023EN_a3.pdf#page=25
Nomination Advisory Committee / Remuneration Advisory Committee
Meeting Status (Fiscal 2022)
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2023
(3) General Committees• Nomination Advisory Committee• Remuneration Advisory Committee
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100R3JF/00.pdf#page=57 (Japanese only)
Main Topics Considered by Our Two General Committees
Nomination Advisory Committee
Remuneration Advisory Committee• Succession plans for executive directors and vice
• Executive director and vice president remunerationpresidents (formulation of a CEO qualifications
for the current fiscal year
profile, creation of position profiles, selection of• Executive remuneration system for the fiscal year
candidate personnel, performance of assessments,
ending March 31, 2024 (setting remuneration levels
etc.)
based on expectations for specific positions rather• Skill matrix
than rank, reassessing the overall constitution of our• Candidates for executive director positions (notremuneration structure, establishing financial andincluding executive director positions held
non-financial indicators for short-term incentive
concurrently with Audit and Supervisory Committee
remuneration, considering evaluative weightings formember positions) to be nominated during the 36th
each indicator, etc.)
Annual Shareholders Meeting• Changes that could potentially be made tocompensation and benefits for vice presidents in
response to our full transition toward a delegatedvice president structure

21

Initiatives Aimed at Improving the Effectiveness of Our Board of Directors
Evaluation of the Effectiveness of the Board of Directors
Effectiveness Evaluation Method
In 2016, the Company began evaluating the effectiveness of its Board of Directors. During fiscal 2022, we
expanded the content of evaluative questionnaires primarily in response to the establishment of our Nomination
Advisory Committee and our Remuneration Advisory Committee.
■Contents of the Effectiveness Evaluation Questionnaire (Major Items)
Fiscal 2021 (12 items)
Composition of the Board of Directors
Operation of the Board of Directors
Deliberation by the Board of Directors
Monitoring function of the Board of Directors
Performance of inside executive directors
Supervisory functions of outside executive
directors(7) Support systems for executive directors andAudit & Supervisory Board members(8) Dialogue with shareholders (investors)(9) Personal efforts(10) Operation of committees(11) Summary(12) Outside executive liaison meetings

Fiscal 2022 (16 items)
Composition of the Board of Directors
Operation of the Board of Directors
Deliberation by the Board of Directors
Monitoring function of the Board of Directors
Performance of inside executive directors
Performance of independent outside executive
directors(7) Support systems for executive directors(8) Training(9) Dialogue with shareholders (investors)(10) Personal efforts(11) Operation of the Nomination Advisory
Committee and Remuneration Advisory
Committee(12) Details deliberated by the Remuneration
Advisory Committee(13) Details deliberated by the Nomination Advisory
Committee(14) Outside executive liaison meetings(15) Personal evaluations(16) Summary

(1)
(2)
(3)
(4)
(5)
(6)

(1)
(2)
(3)
(4)
(5)
(6)

Fiscal 2022 effectiveness evaluation process
Conducted a questionnaire consisting of 60 items for executive directors▼
Performed analysis and evaluation based on reports received from externalorganizations▼
Reported survey results to the Board of Directors
Reported to the Board of Directors on matters requiring improvement, etc.
Effectiveness Evaluation and Response (Last Three Years)
Evaluation in fiscal 2020
Response to evaluation(Insights and issues realized through points raised)• To reaffirm the importance of understanding internal• The need to strengthen both internal controls andcontrols and ideal corporate governance, we
the roles and responsibilities of inside executive
provided training conducted by outside experts indirectors following several cases of fraudulent acts
response to the discovery of several cases ofcommitted by former employees of the Company
fraudulent acts committed by former employees of• The urgency of continuously improving the quality
the Company.
and quantity of, and quickly providing, materials to• Membership of the Board of Directors Secretariat
enhance discussions at meetings of the Board of
was reorganized to strengthen its functional
Directors and the importance of conducting
capabilities (reconstituted to include members frompreliminary briefings, enhancing executive training,
multiple divisions, etc.).
and ensuring the transparency of advisorycommittee meetings.
▼
Evaluation in fiscal 2021
Response to evaluation(Insights and issues realized through points raised)• We ensured regular reporting to the Board of• Generation of tangible results through response to
Directors regarding the actions of critical internal
the previous year’s issues
decision-making bodies and the operation of the• The necessity of enhancing all manner ofBoard of Directors in an effort to enhance
discussions regarding management strategies anddiscussions held during meetings of the Board ofreviewing agenda items for meetings of the Board of
Directors.
Directors and the obligation to secure time for the• Visualization was identified as a priority theme fordeliberation, and corresponding discussions based

22

discussion of important agenda items throughsystematic and planned submission

on objective data were held once every threemonths.
• The Board of Directors delegated approximately
70% of its previous decision-making authority to theManagement Committee and other bodies.
• We ensured well-planned and methodical
operations through the formulation of annual
agendas.
• Apart from matters to be resolved and/or reported
as stipulated by the rules of the Board of Directors,
we established “matters for deliberation” to stimulate
opinion exchange and discussion regarding
important topics such as management strategies.
▼

Evaluation in fiscal 2022
(Insights and issues realized through points raised)• Measures targeting a highly effective Board of
Directors (addressing issues identified through ourfiscal 2021 evaluation, actions taken in connection
with structural changes made to decision-making
bodies and the reorganization of our Nomination
and Remuneration Advisory Committees, etc.) are
effectively generating impact.
• We recognized the need to enhance discussions
regarding progress toward targets in our MediumTerm Business Plan and circumstances surrounding
risk management for all Group companies.

Response to evaluation• We improved and fleshed out discussions
concerning our risk management system, potential
risks associated with all Group companies, andother related issues.
• Net One Systems has been continuously following
up on progress related to its Medium-TermBusiness Plan.
• The Company has improved and enhanced
materials provided for meetings of its Board of
Directors (clarifying issues and refining preliminary
discussions).

Various Measures Established to Revitalize Our 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 measures established
Implementation timing
Content
and implemented in fiscal 2022
and frequency
Holding outside executive liaison
Held once per month
We hold outside executive liaison
meetings
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.
Ensuring opportunities to attend
When meetings are held, We ensure opportunities for outside
important internal meetings such as
such as Management
executives to attend important internal
those of the Management Committee
Committee meetings
meetings (Management Committee,(roughly twice per month) Compliance Committee, etc.) as
observers in addition to the Board of
Directors, and strive to provide
appropriate information.
Providing explanations in advance
Implemented in a timely
We have established a system thatand ensuring early provision ofmanner, as necessary
allows outside officers to be givenreference materials
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 to secure
time for consideration in advance.

23

Succession Plan
As an advisory body to the Board of Directors, we have established a Nomination Advisory Committee that
deliberates and reports on various matters (the nomination of executive directors and vice presidents, etc.) inorder to strengthen our corporate governance by enhancing the transparency and fairness of the selection,
dismissal, and succession plans associated with executive director and vice president positions.
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 executive directors, executive directors withtitles, and vice 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

TOPICS
Formulation and Implementation of Succession Plans
In fiscal 2022, which is the first year of the Nomination Advisory Committee, we strove to achieve sustainablegrowth and enhance our corporate value over the medium to long term, developing and introducing a new
succession plan under our current management structure. Under this plan, we first conduct interviews with thecurrent president regarding the attributes of an ideal CEO moving forward before formulating our CEO profileand selecting, assessing, and planning for the development of candidate personnel. To ensure well-plannedand continuous succession, we also create profiles for each chief executive and vice president position while
preparing succession charts that illustrate the completeness of our succession pipeline.
During fiscal 2023, we plan to implement our successor development plan while also aiming to expand ourtalent pool through a repeated succession candidate screening process that encompasses a variety of steps
ranging from selection to assessment. In anticipation of these efforts, we are currently developing definitions
for the roles of each chief executive position while also formulating a more detailed skills matrix.
net one report 2023 > Nomination Advisory Committee: Formulation and administration of succession plans
https://www.netone.co.jp/english/files/Netone_2023EN_a3.pdf#page=25

24

Executive Remuneration System
As an advisory body to the Board of Directors, we have established a Remuneration Advisory Committee that
deliberates and reports on matters such as the remuneration of executive directors and vice presidents in orderto strengthen our corporate governance by enhancing the transparency and fairness of the remuneration of
executive directors and vice presidents.
Roles of the Remuneration Advisory Committee Matters related to policies and systems for the remuneration for executive directors and vice presidents
 Matters related to individual remuneration for executive directors (excluding executive directors who
concurrently serve as Audit and Supervisory Committee members) and vice presidents
 Other important matters related to the above, regarding which the Board of Directors seeks advice

TOPICS
Refining Our Remuneration System (Adjusting Compensation Breakdown,etc.) as We Strengthen Our Chief Executive System
During fiscal 2022, we made major revisions to our remuneration system, introducing a restricted stockcompensation plan and adopting non-financial targets and indicators for bonuses. In fiscal 2023, we havereferred to our current executive remuneration system as we prepare for fiscal 2024, adjusting remunerationlevels based on the expectations and roles, rather than the ranks, associated with different positions andreassessing compensation breakdowns. Furthermore, we have reexamined compensation and benefits forvice presidents in the aftermath of our transition toward a delegated vice president structure. Results of these
efforts have been reported to the Board of Directors.
When reexamining our compensation breakdowns, we expand the compensation share consisting of
incentives, adopt ROE as an indicator, and increase the weight of corporate culture reform indicators(categorized as non-financial target indicators).
net one report 2023 > Remuneration Advisory Committee: Fine-tuning our remuneration system whilestrengthening our chief executive system
https://www.netone.co.jp/english/files/Netone_2023EN_a3.pdf#page=25
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2023 > Executive
Remuneration, etc.
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100R3JF/00.pdf#page=74 (Japanese only)Internal Control
Risk Management and Internal Control
The Risk Management Committee and other divisions responsible for risk management spearhead the Net One
Group’s efforts aimed at formulating policies and plans for comprehensive risk management activities while
conducting risk analysis and assessment and providing instructions regarding risk response.
With regard to operational risk, we have established internal controls in accordance with our three lines ofdefense model (a model for organizational risk management and control activities) to facilitate corporate risk
management, goal attainment, and value creation.
Overview of Internal Controls
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 typical three lines of defense models (first line of defense:
sales divisions and business divisions, second line of defense: back-office divisions, third line of defense: internal
audit division), we have also established our own 1.5th line of defense in order to independently monitor the firstline of defense controls. As such, our system is characterized by our efforts to establish highly effective businessrules together with discipline.

25With regard to internal audits, we have established an Internal Audit Office (16 members, as of March 31, 2023)
as an organization that reports directly to the Audit and 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.
In addition to pointing out the necessary items for improvement, it follows up on their improvement status.
The Internal Audit Office, Audit and Supervisory Committee members, and the accounting auditor holdmeetings on a regular basis or as necessary, to report on audit plans and audit implementation status, and work
to strengthen mutual cooperation.
For more information concerning the basic policies surrounding our internal control system, please follow thelink below.
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2023
(Basic Internal Control System Policies)
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100R3JF/00.pdf#page=59 (Japanese only)
Key Initiatives in Fiscal 2022
〇 Ongoing Review of Organizational Structures Related to Our Three Lines of Defense Model
From the perspective of expediting business execution, we conducted an integrated review of the roles of the firstand 1.5th lines of defense associated with our three lines of defense model in an effort to streamline andcondense first-line sales activity support operations and management promotion functions related to sales
operations. Additionally, to facilitate more substantive internal audits (categorized as a third-line activity), ourInternal Audit Office does not limit its observations to verification of rule compliance; it also evaluates theadequacy and effectiveness of our internal control system.
〇 Reinforcement of Our Check-and-Balance Function Achieved through Adjusted Executive
Assignments
To establish equal partnerships between divisions and across all three lines of defense, we have appointed vicepresidents with titles to be in charge of each line of defense rather than assigning vice presidents to individual
divisions. We have also reviewed the lines of defense that are supervised by executive directors, and havedecided to appoint different executive directors in charge of the 1.5th line and the second line of defense.
〇 Clarifying the Operational Details and Check-and-Balance Functions Associated with Both Sales andEngineering Divisions
We have identified in detail the operations and checks and balances all divisions must perform both before andafter booking orders in association with business transactions. Additionally, we have created operationalguidelines and checklists to provide further support. Furthermore, to further improve effectiveness while ensuringthat checks and balances continue to function as intended, we have implemented constructive upgrades,

26

transitioning from a system of uniform checks for all projects to a system under which checks are performed
using risk-based criteria determined according to project characteristics and associated monetary values.
For an overview concerning the implementation of our internal control system during fiscal 2022, please follow
the link below.
Net One Systems Annual Securities Report for the Fiscal Year Ended March 31, 2023
(Overview of Internal Control System Implementation)
https://ssl4.eir-parts.net/doc/7518/yuho_pdf/S100R3JF/00.pdf#page=62 (Japanese only)

Fostering a Corporate Culture Based on Our Purpose
Basic Approach
In 2022, the Net One Group formulated a new corporate philosophy system (Purpose, Mission, Vision, Values,and WAY) to steadily build a foundation for a corporate culture that will prevent fraudulent acts from recurring.
Although already a peerless and unrivaled force in the industry, the Net One Group is committed to cementing its
status as an organization capable of resolving social and client challenges. To ensure further progress for our
corporate group, we must ensure that our corporate philosophy system is understood and accepted by both ourmanagerial staff and all other employees. Moving forward, we will improve our corporate value by putting into
practice a series of strategic stories that are derived from our Purpose. Furthermore, we will enhance
effectiveness by effecting more widespread recognition and awareness of our WAY (Code of Conduct), which
serves as the basis for how we think and decide for each member of the Group.
Company | Message > Philosophy
https://www.netone.co.jp/english/company/message/philosophy/
Promotion System
In order to prevent recurrences of past misconduct, 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. 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 2022
〇 Implementation of Recurrence Prevention Measures
The Net One Group has sincerely accepted the survey results and recommendations that were given in the“External Investigation Committee Report - From the Perspective of Governance and Corporate Culture -,” andcontinues to ensure that its internal controls function effectively by implementing “measures to prevent
recurrence” (dated May 13, 2021). Meanwhile, the entire Company remains undivided in its efforts targeting
fundamental corporate governance and culture reforms.
Company > Progress of Recurrence Prevention Measures of Inappropriate Conduct
https://www.netone.co.jp/company/responsibility/ (Japanese only)27

〇 Initiatives Undertaken to Propagate Our Philosophy Primarily through Event Activities
By holding events that allow for various forms of participation, we are broadening our dialogue-based approach tospreading our philosophy.
Event overviews
Results
Vision Week
Total number ofFrom February 13 through 17, 2022, we held our Vision Week event. Thisparticipants: 2,225
event serves to deepen awareness and understanding regarding our new
corporate philosophy while promoting corresponding mindfulness and action.
Vision Week includes programs through which we introduce the initiatives ofindividual divisions, deliver lectures through third-party individuals, andannounce awards received.
Vision Award
Total number ofWith the aim of ensuring that employees of the Net One Group will be able tosubmissions: nine
explain the new corporate philosophy to their colleagues, we asked
Number of votes: 645
employees to submit presentation materials designed to introduce our new
corporate philosophy system to fellow staff. Submissions were subsequently
reviewed and selected for awards through a voting process.
Respect, Communication, and Teamwork (RCT)
Number of participants:
To generate an increase in Group members who agree with and embrace our297
new corporate philosophy, we have established a forum through which
management and employees can hold relevant discussions.
Workshop
Number of participants: 21
After discussing the relevance between our corporate philosophy system andinternal issues identified through our organizational culture survey, membersof our philosophy inculcation project consider measures targeting systemic
improvements.
〇 Efforts Aimed at Promoting Our Philosophy through the Use of Tools
We produce pictograms that represent our WAY and can be utilized for a variety of
purposes. These pictograms deepen understanding regarding the details of ourcorporate philosophy and WAY as comic-style drawings, animations, and icons.
We have introduced a One WAY per Day system through which employees
recording their attendance electronically can view daily awareness-raising informationthat illustrates how different elements of our WAY relate to their everyday operations.
Additionally, we have included details regarding our corporate philosophy and WAY on
posters, PowerPoint templates, and background screens used for our web conferencing
systems, thereby ensuring their daily visibility.

Example Pictogram

Moving forward to
next netone〇 Conducting Our Organizational Culture Survey and Corporate Culture Monitoring Survey
Each year, the Net One Group conducts an organizational culture survey as part of its activities targeting thereform and cultivation of its organizational culture. Based on the results of this survey, we identify challenges
related to organizational 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; one per quarter from fiscal 2023
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 the awareness and acceptance of our organizational culture, (2) Measuringchanges in organizational issues, (3) Listening to employees’ opinions, (4) Raising employee awarenessFiscal 2022 results associated with theme one (1) above:
Awareness: 93% / understanding: 89% / acceptance: 80% / implementation: 82% / dissemination: 52%
Based on indicators demonstrating awareness and understanding, we can conclude that we have successfully
reached our “appreciation” phase, in which employees appreciate our philosophy and put it into practice using
their own unique approaches. Moving forward, we will adopt measures aimed at transitioning into the“harmonization” and “resonance” phases.

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Inculcation of Our Corporate Philosophy

Health Management
Basic Approach
The Net One Group has established the following health declaration 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 createa prosperous 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 thatthey achieve work–life balance and self-fulfillment, both professionally and privately by working autonomously
to maintain and improve 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, and career counselors work
together with related parties to develop various measures such as health promotion, literacy improvement, avariety of consultations, and mental health support. Under this promotion system, we are working to continuously
improve health management through the PDCA cycle.

Health Management Initiatives
Fiscal 2022 Initiatives
We implemented the following initiatives during our first year of health management.
 Disseminated health management policies inside and outside of the Company
 Maintained the health promotion system and infrastructure Conducted thorough management of appropriate working hours
 Improved work styles based on work–life balance indicators
 Ensured thorough health checkups and recommended re-examinations29

 Took measures against second-hand smoke and implemented initiatives to reduce the smoking rate among our
employees
 Utilized stress checks and recommended retests
Priority Measures for Fiscal 2023
While continuing to adopt initiatives we implemented in fiscal 2022, we will particularly prioritize the following
initiatives with the aim of achieving certification as an Outstanding Organization of Health and Productivity
Management (a target for 2024 and a materiality-related KPI).
〇 Educating and Informing Managers and Employees
As the basis for all our health-related initiatives, we are focusing on educating, and spreading awareness among,both managers and employees as we aim to increase health consciousness and foster a more health-orientedorganizational culture. Specifically, we will coordinate with the HR representatives of each of our divisions as we
aim to promote and disseminate health-related concepts within these divisions. At the same time, we will
establish a website summarizing our health management initiatives while developing other health-related training
systems to ensure that health-oriented information is routinely accessible. Furthermore, along with othervisualization efforts, we will focus on measuring the effectiveness of this health-oriented information.
〇 Ensuring Thorough Compliance with Health Checkup Requirements and Application of Checkup
Results
We aim to achieve a health examination rate of 100% by urging employees to receive early medical examinations
before the end of December. Additionally, we will strengthen follow-up procedures that encourage individuals
diagnosed with areas in need of attention to retest and facilitate improvement in our health examination rate.
〇 Anti-smoking Measures
The smoking rate among the Net One Group employees during fiscal 2022 was relatively high at 27%.
Accordingly, the Group has been introducing measures, including financial assistance, to reduce this smoking
rate.
We began partially implementing financial assistance for employees seeking outpatient smoking cessation
services in 1H FY23. Effective from 2H FY23, we plan to add a question confirming the presence or absence ofsmoking cessation intent among employees to our health awareness survey. Additionally, we have decided toestablish mechanisms through which employees who indicated an intent to quit smoking within one month canutilize health insurance to receive financial assistance for outpatient smoking cessation services.
In addition, on the 22nd of each month (Smoking Cessation Day) and International No Smoking Day (May31), we raise smoking cessation awareness by holding seminars and providing pertinent information.
Furthermore, our president communicates the importance of smoking cessation by personally issuing a message
regarding this challenge.

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Data and Materials
External Evaluations
Inclusion in ESG Indices
We have been evaluated by, and included in, the following ESG indices (as of August 2023).
JPX-Nikkei Index 400
An index comprising “companies with high investment appeal for investors” that meet a variety of requirements
in global investment standards, such as efficient use of capital and an investor-oriented management
perspective.
JPX Prime 150 Index
This index comprises Japanese companies that are listed on the TSE Prime Market and estimated to create
value based on assessments of their return on capital and market valuation.
FTSE Blossom Japan Sector Relative Index*
An index that reflects the performance of Japanese companies that are relatively outstanding in responding to
ESG in each sector, and that promotes the transition to a low-carbon economy.
MSCI Japan Empowering Women Index (WIN)*An index composed of companies with outstanding gender diversity in their industry classification
Morningstar Japan ex-REIT Gender Diversity Tilt Index (GenDi J)*
This index comprises companies that have strong gender diversity policies embedded in their corporate
culture and facilitates investment primarily targeting companies that ensure equal opportunities for employees,
irrespective of their genders.
iSTOXX MUTB Japan Platinum Career 150 Index
This index consists of companies that are proactive toward employee career development in accordance withthree perspectives: long-term view, active learning, and social contribution.
* Denotes major ESG investment indices recognized by Japan’s Government Pension Investment Fund (GPIF)
ESG Evaluations
MSCI ESG Rating: AA
This evaluative index is constructed based on MSCI’s research and analyses concerning environment, social,and governance-related initiatives and information disclosure conducted by companies throughout the world.
Net One Systems’ rating was upgraded from BBB to A in December 2022, and in August 2023, it was raised
from A to AA, the second-highest rating behind AAA.
Acquisition of Certifications for Management Systems• ISO/IEC 27001: Information security management system certification standard• ISO/IEC 27017: Security management system for cloud services• ISO 14001: Environmental management system certification standard• ISO 9001: 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 maintenanceand operation services
Examples of Partner Awards (Fiscal 2022)• Net One Systems
CompanyAward details
Juniper Networks• Japan Mist Partner of the Year 2021
US-based Juniper Networks recognized Net One Systems for achieving thehighest sales of its AI-driven Enterprise solutions powered by Mist, an AI
product from Juniper Networks, during January through December 2021.
NetApp• Partner SE Award 2022
NetApp recognized the daily activities of Net One Systems’ engineers for theoutstanding impact they generated in terms of proposing and providing
innovative solutions and excellent customer support.
Cisco Systems• APJC Partner of the Year (Global)• Service Provider Partner of the Year (APJC)• Software Partner of the Year (APJC)• Technology Excellence: Security Partner of the Year (APJC)
Cisco Systems granted Net One Systems an award in each of four categories:
Global, Asia Pacific, Japan, and China (APJC). Cisco Systems determinedthat Net One Systems generated the greatest contribution to its businessamong its partners in the APJC region by selling its products and developing
solutions.

31Company
Cisco Systems

Palo Alto Networks

Palo Alto Networks• Net One Partners
Company
Cisco Systems

OPSWAT

Award details• Lifecycle Selling Partner of the Year
• Innovation Partner of the Year Power Hybrid Work• DevNet Partner of the Year
Cisco Systems recognized Net One Systems as a leader in the Japanesemarket for its prompt launch of a service platform optimized for customer
lifecycles and commended it for contributing to the creation of secure hybrid
work environments for customers through its development of the Cisco Webex
recording management service and the success it has generated throughefforts targeting expanded sales of Cisco SASE.
• JAPAC NextWave Partner of the Year 2022
This award is presented to the partner recognized as having made thegreatest contribution to Palo Alto Networks’ business within markets in the
Asia Pacific region, including Japan (JAPAC markets). In granting this award,
Palo Alto Systems certified that Net One Systems achieved record sales infiscal 2022 while generating strong growth in the public sector.
• 2022 Japan Partner of the Year Award JAPAN NextWave Partner of theYear
This award is presented to the partner recognized as having made the mostsignificant contribution to Palo Alto Networks’ business within the Japanesemarket; during fiscal 2022, Net One Systems achieved record sales andgenerated robust growth in the public sector.

Award details• Japan Distributor of the Year
This award commends Net One Partners for its focus on the development oforiginal services, such as CX and DevNet.
• 2022 Public Sector Development Award
This award commends Net One Partners for the contributions it made as asales agent for OPSWAT in terms of expanding the recognition and use of
OPSWAT’s products within Japan’s municipal market.

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