Shizuoka Financial Group
Initiatives to Realize Sustainability Management

December 2023
Clearing the way
to a new era

Contents

1.

Sustainability Management Targeted by theFirst Medium-term Business Plan

p. 3－

2.

Environmental Initiatives

p. 7－

3.

Initiatives to Maximize Human Capital

p. 18－

4.

Reference Materials

p. 32－

Realizing Sustainability Management (1)Under our Corporate Philosophy —Expand dreams and affluence with our community—we will seek to achievesustainable growth for both the region and the Group by striving to balance both social value creation and increased
corporate value.
Vision for FY2030: Sustainable well-being for all stakeholders
Balancing sustained improvements in stakeholder well-being while strengthening Shizuoka Financial Group’s corporate value by providing
solutions to the issues and needs of our community and customers
Futuregenerations

Community

Customers• Future human resources in
the community• The future of the community
itself

Newly added to the launch of theFirst Medium-term Business Plan

Shizuoka Financial Group
Executives andemployees

Creating social value

社会価値の創造×

Strengthening
corporate
企業価値の向上value

Shareholders
Corporate Philosophy(Purpose-driven mission)
Expand dreams and affluencewith our community

First Medium-term
Business Plan
(FY2023-2027)

Now

Ten-year Vision(2030)

Back casting

Sustainability KPIs

Future3

Realizing Sustainability Management (2)Identifying seven material topics (key issues) for both Shizuoka Prefecture and the Financial Group, with an emphasison coexistence with the community
Impacting society through solutions to community challenges
Identifying key
issuesMaterial topics

Vision for FY2030

Sustainable well-being
for all stakeholders

Issues for the Shizuoka
Financial Group

Creating industrial development
and financial innovation
Building a digitalsocietySocial enhancement balancing
environmental and economic
interests

Responding to depopulation and
aging
Creating industrial development
and financial innovation
Sound growth of the local
community
Permeation of DE&I

Social impact
KPIs

Expand dreams andaffluence with ourcommunity

Sound growth of the local
community

Strengthening corporate value

Practicing human capitalmanagement

Financial
targets(Purpose-driven mission)

Responding to depopulation
and aging

Social rate of growth of Shizuoka
Prefecture’s population
Shizuoka Prefecture’s real GDP
Rate of reduction in Shizuoka
Prefecture’s GHG emissions

Consolidated ordinary profit

Consolidated
ROE

Consolidated
OHR

Consolidated CET1 ratio
Engagement
indicators

Corporate Philosophy

Building a society that balances
environmental and economic
interests
Realizing a society in which all can
thriveBuilding a digital society
Industrial development to generate
wealthetc.

Social value
creationIssues in Shizuoka Prefecture

Sustainability KPIs

Increase corporate value[The Shizuoka Financial
Group’s reason for being]

Identification of
topics for study

Establishing KPIs

Customer satisfaction withGroup transactions
Carbon neutrality (Scopes 1, 2)Group employee engagement

etc.

4

Realizing Sustainability Management (3): Impact roadmap
Preparing an impact roadmap to encourage executives and employees to act with an awareness of impacts on society, the economy, and the environment

Inputs/activities
Management resources, corporate activities

Outputs

Outcomes

Impacts

Direct results

Indirect results

Impacts on society

Supporting healthcare and long-termcare businesses
Promoting employment for people withdisabilities, holding hands-on training
programs, etc.
Attraction from overseas and thegreater Tokyo area
Community development businesses
Promoting a cashless society
Permeation of digital transactions

Number of business launches supported

Financial and economic education

Number of cases of involvement incommunity educational activities

Long-term asset-building proposals
Total asset management

Support for overseas advancement andsales channel expansion

Percentage of employees withdisabilities in the Shizuoka Financial
Group
Tourism promotion, creation of tourist
destinations
Number of contracts received inbusinesses targeting local governments
Number of uses of cashless services
Number of uses of contactless services

Stock revenue asset balance
Revenues from wealth, inheritance, and otherbusiness

Startup businesses

Number of cases of support for overseas
sales channel development (customer
referrals)

Inheritance/business succession

Number of venture debt transactions, numberof investments to venture capital funds

Enhancement of equity functions

Revenues from various consulting
businesses

Responding to demand for filling
employment vacancies/providing places
to work

Monetary amount of buyout funds establishedSupporting an industrial revolution
Promoting digital transformation (DX)Supporting investment in powergenerating and cogeneration equipment
Supporting initiatives toward theSustainable Development Goals (SDGs)

HR referrals to businesses in the prefecture
Number of cases of industrial revolution
support, number of uses of funds
Number of cases of support for customer DX

Number of ESG leases handled
Environmental finance executed

Easement of healthcare and long-termcareIncreased employment opportunities forpeople with disabilities
Increase in inbound tourism and users offacilities in the prefecture
Enhancement of public services
Promotion of use of cashless services in
Shizuoka Prefecture
More convenient transactions

Improved financial literacy in the region
Increase balances of household
financial assets
Increased incomes and assets
Increased international transactions bybusinesses in the region
Growth of startups
Controlling decreases in/increasing
numbers of businesses
Succession of essential businesses,
technologies, etc.
Securing and enhancing members ofmanagement and workforce
Transition to an industrial structure
suited to a decarbonized society
Securing productivity increases andprofitability

Adoption of renewable energy andincreasing numbers of energy
conservation equipment, plants, offices,
residences, etc.

Extended healthy lifespans
Improved employment-creation
environment in Shizuoka
Prefecture
Related population growth

Rate of growth of
ShizuokaPrefecture’s
population(sustained growth)Higher quality of life

From savings to investment

Securing sustainability of local
businesses(improved performance,increased corporate tax
payments)

Development and growth of
products and services with zero
GHG emissions

ShizuokaPrefecture’s realGDP(sustained
development)

Rate of reduction in
Shizuoka Prefecture’s
GHG emissions(FY2030: down 46% vs. FY2013)

5

Strengthening corporate value by finding solutions to community challenges
Sustained community growth, the foundations of economic activity (solutions to community challenges), is essential to the sustained
growth of a regional financial institution.
Following the basic strategies of the First Medium-term Business Plan, we will grow earnings opportunities while actively tacklingsolutions to community challenges.

Strengthening
corporate
value

Sustained
earnings growth• Sustained community growth(solutions to community
challenges)

Community

Medium/• Expanding revenue opportunities long term

Reducing equity
capital costs• Enhanced disclosure• Proactive dialogue withshareholders and investors

Shareholders

Futuregenerations

Enhancing disclosure anddialogue through IR activities

Strengthening corporate value

Executives andemployees

Customers

Achievement of sustainability
KPIs

Shareholders• Controlling capital adequacy
levelsGroup governancestrategies• Improving profitability

Transformation strategies

Further raising
ROE

Promotion through the basic strategies of
the First Medium-term Business Plan

Community creation
strategies

Stakeholders

Group business strategies(Time axis)
Short
term

6

Environmental Initiatives

The Shizuoka Financial Group’s Environmental Initiatives: Background of initiatives
Realizing the sustained growth of both the community and Group through appropriate support for community topics such as
decarbonization and industrial structural reforms and maintenance and enhancement of regional competitive strengths

Material topic

Building a society that strikes an idealbalance between environmental andeconomic interests

One of the leading manufacturing prefectures in Japan: shipments ofmanufactured goods, etc. JPY17,290.5 bn (fourth highest in Japan)
Manufacturing as a share of total output: about double the national average

ShizuokaPrefecture

Rate of reduction in Shizuoka Prefecture’s GHG
emissions
Making the Shizuoka Financial Group carbon neutral

Issues faced by regional firms (ex.)

Regional industrial structure38%

Sustainability
KPIs

21%

Issue
Risks
unaddressedJapan

Demands for
decarbonization from the
supply chain

Transitioning industrial structure(e.g., EV shift in the auto industry)・・・

Cancellation oftransactions
Business contraction

Technological obsolescence
Business contraction

・・・

Contraction of the Shizuoka Prefecture’s customer base (foundation for
future revenues)

Supporting decarbonization and industrial structuraltransformation in the region and among customers

Shizuoka Financial
Group’s transactions
with manufacturers

Listed companies
headquartered in
Shizuoka Prefecture

Borrowers●Shibaura
Machine●Star Micronics●Hamamatsu Photonics●Yamaha●Suzuki ●Yamaha Motor

5,000
Loan balance

1.6 tnJPY

Deposit balance

600 bnJPY

Realizing the sustained growth ofboth the community and Group
TOPICS

Japan’s carbon neutrality strategy

Economic impact• Green growth strategy (October 2020)
Economic impact of capital investment, etc., in 2050:
JPY290 tn
Employment impact: 18 million people• Green transformation (GX) promotion
strategy (July 2023)
GX investment of more than JPY150 tn over the coming
decadeEmployment impact

290(JPY tn, 10,000 people)

140

1,800

870
By FY2030

By FY2050
8

Roadmap to achieving carbon neutrality throughout the region as a whole
In addition to achieving carbon neutrality within the Group and supporting decarbonization by customers, broadening the basis of support to cover theentire region through cooperation with local governments
Aiming to reduce Shizuoka Prefecture’s GHG emissions (a sustainability KPI) by 46% vs. FY2013

Roadmap to achievement of sustainability KPIs
2023
２

2030

2040

2050

１

Supporting customer
decarbonization(1)

Learning

Shizuoka Prefecture target(sustainability KPI)

GHG emissions
in Shizuoka Prefecture-46%

Interviews
Analysis

Customer GHG
emissionsSustainable finance３

Shizuoka Financial
Group’s GHG emissions

Promoting efforts toward net zero GHG emissions
in the Shizuoka Financial Group (Scopes 1, 2)
Scope1
Scope2

p. 16

Switching to renewable energy

Operation of Shizugin Solar Park
Energy conservation efforts

FY2013

FY2023

Shizuoka GX
SupportJ-Credits

Carbon offset auto leases

Achieving carbon neutrality
within the Group(Scopes 1, 2)

３(2) Measuring

Reducing(3)

１

pp. 10-11

Considering not just SFG customers but the region as awhole regarding the scope of support
Growing business opportunities while protecting theregional economy

２

Cooperation with local governments(regional ecosystem)

pp. 12-14• Building platforms with local governments, support agencies in
the region, etc.
• Deploying effective support across a broad area by expanding
local initiatives

9

Initiatives to support customer decarbonization (1): Research, analysis
Interviewing customers on the state of their decarbonization efforts to provide support that addresses their issues (conducted annually since FY2021)
Based on the results of interviews, enhancing support options in accordance with customer issues and deploying active support

Customer interviews on decarbonization (approx. 1,700 customers)

Scope 3 (Category 15 [Investments])

Percentage of customers implementing or planning to implement efforts has
increased to approx. 60%.

• We joined the PCAF in November 2022. We calculated GHG emissions ofcorporate borrowers based on PCAF standards.

[State of decarbonization efforts ]• In the future, we will improve precision through calculation on a measured value
basis using emissions calculation tools, to provide more effective support byidentifying priority sectors through analysis of the results of measurement

First interviews (FY2021)

None
49%

Most recent interviews (FY2023)

Underway31%

Planned
20%

None
39%

Carbon intensity: t-CO2e/JPY mn; emissions: t-CO2e

Underway47%

Planned14%[Issues in decarbonization efforts]
The issues facing customers are shifting toward practical implementation issues.
Issue

Unsure where to begin

FY202134%

FY2023

26%

Change-8pt

Unsure how to calculate CO2 emissions

9%

16%

＋7pt

Lack the human resources to implement measures

12%

30%

＋18pt

Do not understand subsidies and other support measures.

14%

21%

＋7pt

Would like to formulate business simulation of capital investment.

7%

12%

Carbonintensity

Emissions

Carbonintensity

Emissions

Beverages

0.33

2,919

Oil, gas

9.80

2,737,911

Agriculture

6.73

47,461Coal

3.32

12,659Packaged foods,
meat

0.82

219,806

Power companies

11.99

246,061

Paper, forest
products

2.28

594,780

Metals, mining

12.24

4,550,676

Air transport(cargo)－0

Chemicals

3.32

269,714

Air transport(passenger)

Building materials

0.11

1,017

4.75

15,0800.34

71,341Sea

9.81

170,359

Capital goods(buildings, etc.)

Rail transport

1.12

28,271

Real estate
management anddevelopment

0.02

199,539

Trucking services

2.73

416,065

Others0.67

2,216,874

Automobiles,
auto parts

0.20

121,704

Total

Industry＋5pt

Of the firms interviewed, 348 plan to make capital investments.

We will provide appropriate support for customer
decarbonization efforts while enhancing support optionsin accordance with customer issues(Scope1, 2)

Industry(Scope1, 2)

11,922,235

10

Initiatives to support customer decarbonization (2): Support options
Using the functions of the Shizuoka Financial Group to expand earning opportunities through support initiatives suited to the phases ofcustomer efforts and to their needs

Customer decarbonization support options
Initiative
phase

Details of support

Solutions

Step 1
Making GHG emissions visible

Step 2
Establishing policies andtargets

Step 3
Reducing GHG emissions

Step 4
Offsetting

Step 5Disclosure

Supplying visualization tools

Providing information, identifying
issuesAdoption of energy conservation
and renewable energy equipment

Creating and purchasing J-Credits

Earning external accreditation,
improving calculation levels

GHG emissions calculation
service
Shizuoka GX Support

Referring support recipients• Energy conservation diagnostics• Roadmap formulation
SBT accreditation support(Shizuoka Bank)

Referring energy conservation
and renewable energy vendors• Solar power/storage cell adoption• Adoption of energy conservationequipment

Support for creating J-Credits(Shizugin Management Consulting)Support for purchasing J-Credits(Shizuoka Bank)

Support for earning environmental ISO
and Eco Action 21 accreditation(Shizugin Management Consulting)Third-party verification of GHG
emissionsSustainablefinance(Shizuoka Bank) Positive-impact finance, sustainability-linked loans, GX support loans, SDG support guarantees, etc.
(Shizugin Lease) ESG leases, carbon offset leases

NEW
Shizuoka GX Support[Customers ](launched October 2023) • Ascertaining emissions trends• GHG emissions calculation
service intended to support
decarbonization management• Conforms to GHG Protocol(international standard on
emissions calculation andreporting)• More than 300 customers
began use in first month after
service launch (provided toregional firms free of charge)(Responses to be considered based on identification of future trends)• Managing reduction plans• Ascertaining state ofachievement• Reporting to OEM clients, etc.

Sustainable financeSupport for generating J-Credits

Carbon offset auto leases

FY2030 target: JPY2 tn (including JPY1 tn environmental finance)
Progress rate of 30.7% (including 28.9% on environmental finance)• Supporting customers in Shizuoka
Prefecture in applying for recognition of
J-Credits on forests they own• Shizugin Lease purchases J-Credits to offset
CO2 emissions of leased vehicles＋1,533
Environmental financeincluded in total(JPY 100 mn)

Leased vehicle

6,149
Generators/suppliersof J-Credits

4,616[Shizuoka FG ]• Side-by-side solutions
Improved Scope 3 data
quality score• Cooperation with local
governments and energy
firms

1,133
547
FY2021

2,297
FY2022＋594

2,891
FY2023 2Q

J-Credit
generators

J-Credit

J-Creditbuyers• First project planned for recognition
during FY2023

Carbon-credits
markets or J-Credit
providers

Purchaseof ___ t inemissionscredits___ t in CO2 emissions

Lease
agreement

Use of offset leased
vehicleShizugin Lease
J-Credit accountCustomer

Credit offsetting
J-Credit offsetting
account11

Decarbonization support initiatives in cooperation with local governments (1): Basic concept
Building platforms including support agencies and other partners to achieve solutions reflecting the properties of each community, in cooperation
with local governments
Accelerating realization of a decarbonized society and increasing community sustainability by demonstrating synergies
among individual strengths
Regional

Shizuoka Financial Group自治体

financial
institutions

Local
governments

Realizing decarbonization throughout the region as a whole

Local firm
(Customer)

Regional
financial
institutions

Specialists

Regional
associations

Local firm

Individual efforts,
limited scope(Customer)• Although we cooperate with individual agencies todeploy varied support options, cooperation witheach agency is insufficient

Individual
cooperation• Steady expansion of support options for individual
customers• Efforts are centered on customer (local) solutions
and are lacking in support reflecting the distinctive
features of the region (area)⇒ Limited effects
Local firm
[Support options]• Shizuoka GX Support• Sustainable finance• J-Credit generation
supportetc.

Demonstrating synergies Specialists
among individual strengths
by building platforms

Current status

Local
government

Current status

Chambers ofcommerce
and industry,etc.

Subjects
ofsupportVisionVision• Deploying comprehensive support for not justcustomer (local) solutions but also reflecting thedistinctive features of the region (area)• Deploying decarbonization initiatives integrated
with the community, in cooperation with eachagency• Achieving sustainability KPIs
• Growing customer infrastructure and new business
opportunities• Achievement of Shizuoka Prefecture’s GHG
reduction targets• Realizing a sustainable community

ShizuokaFG

Local
governments

Conclusion of cooperative agreements
Concluding cooperative agreements with four cities in theregion, to achieve carbon neutrality and sustainable
development in the region

City of Hamamatsu

City of Kosai

Reducing GHG emissions

Cooperation with multiple
financial institutions

City of Gotemba

City of Iwata

Building a virtuous cycle ofcommunity decarbonizationand economic growth

Reducing GHG
emissions12Decarbonization support initiatives in cooperation with local governments (2): Regional ecosystem (Hamamatsu)
The city of Hamamatsu is one of Japan’s leading industrial clusters, centered on vehicles. It faces the pressing need for a smooth transition to a decarbonized society.
We will deploy varied support options for community firms in cooperation with each agency, based on calculation and sharing of GHG emissions data across theregion.

Shizuoka
GX Support

Shizuoka
FG

City ofHamamatsu

Chambers ofcommerce andindustry

Other
banks

Deployment at regional firms through various organizations,
not restricted to Shizuoka FG customers alone

Sharing calculated GHG
emissions data
Community properties: Hamamatsu
Shipments of manufactured
JPY2 tn
goods, etc.
Approx. 10% of Shizuoka Prefecture’s shipments(which are ranked fourth nationwide)
Business sites

Status of customers (corporate, individual)

630,000

Loan balance

800 bnJPY

C

City ofHamamatsu

Specialists

Sustainablefinance

490,000 ha

Ranked first among municipalities nationwide

Customers

Other financial
institutions

Enhancementof support
systems

40,000 sites

Approx. 20% of Shizuoka Prefecture’s sites(which are ranked 10th nationwide)
FSC certified forests

Decarbonization
consulting

Financialsupport basedon emissions
data

Deposit balance

1.9 tnJPY

Hamamatsu’svisionBusiness
opportunities
for theShizuoka FG• Calculating GHG emissions for 200 firms during FY2023• Reducing GHG emissions by 52% by FY2030*

Variousseminars
Consulting
business
Community
associations such aschambers ofcommerce andindustry* Reflects planned increase from existing reductions target of 30%

Projected execution ofenvironmental lending*(Cumulative through FY2030)

Approx. JPY150.0 bn

Deployment of decarbonizationrelated services➢ Business matching (energy conservation diagnostics, energy
conservation/renewable energy businesses)➢ Consulting to support receipt of various subsidies andaccreditation, etc.

* GX support loans, positive-impact finance, sustainability-linked loans, green loans, etc.

13Decarbonization support initiatives in cooperation with local governments (3): Regional ecosystem (Gotemba)
The city of Gotemba was an early adopter of decarbonization initiatives, promoting efforts to build a virtuous-cycle model by using its wealth of forest resources as
offsets for firms in the city to contribute to the local economy. We will aim both to accelerate community efforts and to grow business opportunities by using Groupfunctions to provide support.
Efforts to promote cyclical co-creation eco-garden city at the easternbase of Mt. Fuji (city of Gotemba, city of Susono, town of Oyama)

Oyama

Local firms

City hall• Generation of J-Credits• Advancement of forest
management• Giving back to the local
economyReturning price ofsale of J-Credits tothe community as
local currency• Calculation of GHG
emissions Investment indecarbonization• Offsets

Sale andpurchase of
J-CreditsCommunity• Purchase of local currency• Purchase and consumption
in the community

Community properties: Gotemba

SusonoHorizontal deploymentof expertise

Purchase andprovision of
products andservices of local
firms

Local firms
GotembaAbundant forest resources
About 60% of the city’s land area isGenerating
J-Credits

covered by forests

Support for
generating
J-Credits

Shizuoka
Promoting
GX Support decarbonization

Third highest number of tourists andvisitors in the prefecture

Industry centered on
manufacturing

Community*
vitalization

Manufacturing accounts for the largest
population by industry

An early adopter ofdecarbonization efforts
First in the prefecture to makeZero-Carbon City Declaration in 2020

Shizuoka Bank’s
shares*

Loans

59.7%

Deposits 43.4%* Based on totals of bank and credit union branches in the city of Gotemba

Status of customers (corporate, individual)
Customers

60,000Loan balance

100 bnJPY

Deposit balance

100 bnJPY

Community,
futuregenerations

SustainablefinanceC
Community
branding

Deploying support by putting the Shizuoka
FG’s group functions to maximum use

Variousseminars
Consulting
business
Community associations
such as chambers ofcommerce and industry

Gotemba’s
vision• Promoting a virtuous-cycle modelBusiness
opportunities
for theShizuoka FG

Deployment of decarbonization-related services using Group functions• Reducing GHG emissions by 46% by FY2030➢ Support for J-Credit generation(Shizugin Management Consulting)➢ Community branding (SFG marketing)➢ Shizuoka GX Support, sustainable finance➢ Business matching (energy conservation diagnostics,
energy conservation / renewable energy businesses)➢ Consulting to support receipt of various subsidies andaccreditation, etc.
14

Climate change risks: Impact on credit costs
There is a risk that credit costs may rise up to roughly JPY33.6 bn by 2050 if the transition and physical risks identified in the analyses should actually emerge.
We will strive to reduce risks through proper management of risks associated with climate change and realizing a smooth migration to a decarbonized society inthe region.

Trend in credit costs

Climate change risks

Total credit costs through FY2050 anticipated based on results of scenario analysis are roughly
equivalent to those during the 2008 financial crisis. We will strive to reduce them gradually bysupporting customer decarbonization.

• We reviewed risks due to climate change based on TCFD recommendations.
• We anticipated cases of transition and physical risks for each risk category.
• We will carry out appropriate management with consideration for the impacts of climatechange in accordance with the properties of each risk type.

343

336
117

FY2008FY2020Global financial crisis

55

48

FY2021

FY2022

Scenario analysis (details of FY2022 measures)

Scenario analysis
results
Total through FY2050 due
to manifestation of risks• For credit risks, scenario analysis was conducted to make value at risk visible.
• For transition risks, analysis was enhanced through more thoroughly reviewing the auto industry
and the addition of the electric power industry.
• For physical risks, SMEs and small businesses and home mortgage debtors in Kanagawa
Prefecture and Tokyo were added to the subjects of analysis.
■Physical risks■Transition risks
Subject
sectors

Scenarios
usedAnalyticalmethodAnalyticalresults

Paper and
pulp

Manufacture of
motor vehicles,
parts, andaccessories

Calculation of credit costs
related to building
damage and businesscontinuity risks to SMEs
and small businesses in
Shizuoka and Kanagawa
Prefectures and in Tokyo

Calculation of building
damage and credit costs
to home loan debtors in
Shizuoka and Kanagawa
Prefectures and in Tokyo

Balance ofloans
subject toanalysis

JPY2,525.0 bn

JPY2,502.5 bn

ScenariousedHigh-emission scenario (RCP8.5) from IPCC
Sixth Assessment Report (4°C Scenario)

Analyticalresults

Increase of up to approx. JPY14.8

Electric
energy• IEA Net Zero Emissions by 2050 Scenario(NZE2050)• IEA/ETP 2017 Beyond 2°C Scenario• NGFS Net Zero 2050
Analysis of credit costs by forecasting changes
in profit, loss, and financial standing through2050 using data from forecasts of carbon taxesetc. based on scenarios.
Increase of up to approx. JPY18.8 bn
in credit costs in total by 2050

Scope

bn in credit costs in total by 2050

Transition risks

Physical risks

Risks associated with a changing businessenvironment, such as changes in policies,
regulations, and technological development,
and risks of delays in decarbonization

Risks of damage from natural disasters
caused by climate change, such as wind andfloodsIncrease in credit costs
associated with worsening
customer businessperformance

Credit risk

Increase in credit costs
associated with worsening
customer business performanceand damage to security assets

Decrease in value of securities andother assets heldMarket risk

Decrease in value of securities andother assets held

Worsening of Group’s credit rating
and associated restrictions onmeans of raising funds from themarkets

Liquidityrisk

Difficulty in raising funds from themarkets due to outflow of deposits as
cash is needed to respond to damage
and to financial market turmoil

Operationalrisk

Damage to assets held andassociated business interruptions

Reputation damage

15

Promoting efforts toward net zero GHG emissions in the Shizuoka Financial Group (Scopes 1, 2)
We have set the target of achieving net zero GHG emissions (Scopes 1, 2) within the Group by FY2030. We have been a pioneer in adoption of energy conservation and renewable energy in theregion.
We have attained reductions of approx. 70% by FY2023 and aim to achieve net zero through GHG emissions reductions other than from direct energy use in the future.

GHG emission (Scopes 1, 2) results and projections
Scope1

Scope2２ FY2023 efforts

１

18,514
1,377

Switching to use of renewable energy (starting June 2023)
12,714
1,177

２ Down approx.

11,5384,924

70% vs.
FY2013

17,137FY2013• In addition to use of Shizuoka Green Power and operation of
Shizugin Solar Park, switching steadily to renewables in direct
power use by the Shizuoka FG as a whole, through means
including issue of non-fossil-fuel certificates

FY2022

３

FY2023 (projected)

Carbon neutrality
achieved
FY2030 (planned)* Scope of calculation expanded in FY2023 to include scope of calculation under TCFD guidance inaddition to that required by the Act on Rationalizing Energy Use

１ Efforts through FY2022[Efforts at Shizuoka Bank’s
headquarters tower]• LED lighting (adjusted
automatically)• Powered vents[Adoption of energy
conservation equipment ]• LED lighting• High-efficiency airconditioning• Adoption of motion
sensors etc.

[Adoption of renewable energy]• Beginning to purchase renewableenergy produced in Shizuoka
Prefecture (Shizuoka GreenPower) in September 2021
Shizuoka Green Power[Energy conservation efforts ]• Reducing hours of lighting andair-conditioning use in ways
linked to workstyle reforms

Operation of Shizugin Solar Park (starting October 2023)• Established based on an offsite
corporate PPA* agreement
concluded with the Chubu ElectricPower Group

Shizugin Solar Park

* Purchase of power from powergeneration equipment installed in aremote location

３ Efforts to achieve carbon neutrality• Advancing study of offsets and other efforts to reduce GHG
emissions related to energy other than direct power use

16Natural capital management initiatives
In addition to making this region, which is endowed with the blessings of nature, more sustainable through efforts to conserve and restore the natural capitalon which regional industry is based, leveraging such efforts to generate business opportunities to achieve the Shizuoka FG’s materiality goal of social
enhancement balancing environmental and economic interests

Relationship between natural capital and local industry

Shizuoka FG’s initiatives• Shizuoka Prefecture is blessed with a wealth of natural capital, on which its diverse
industries are based.
• Conservation and recovery of this underlying natural capital will lead to the region’ssustained growth.

Understanding of the issues

IssuesWater pollution(Illustration of relationship) Promoting future initiatives
ClimatechangeAir

Decrease in biodiversity
・・・
Deforestation

Lower numbers of
tourists Business
contraction

Flooding and landslides
Impediments to business
continuity

Biodiversity

Water

Soil

Flora andfauna

Agriculture,
forestry,
fisheries

Various industries depend
on natural capital
Secondary industries also arehighly dependent on andaffected by water resources.

Manufacturing

Food

Tourism

Paper

Impact
Low

・・・
High

Plant closure

Impacts on
Decreased fisheriescommunity
resources

Recent initiatives• Beginning efforts toward conservation and recovery of the natural capital on which
industry is based• Targeting disclosure in FY2024 based on TNFD recommendations

Mt. FujiSouthern
Japan Alps

Structurebuilding

UNESCO Park
certification
Port of Tagonoura

Port of Yaizu
Port of Omaezaki

SurugaBay✓

Beginning analysis of relationships (dependence/impacts) between
customers and natural capital✓✓

Joining the Fujinokuni Biodiversity Strategy Promotion Partnership
Efforts toward swift agreement to TNFD recommendations(Deliberations in the Environmental Committee, collecting informationfrom TNFD members)

Future policies

Port of Shimizu
Lake
Hamana・・・

Contraction of Shizuoka FG’s customer base (basis of future earnings)

Research,
analysis
Wealth ofnaturalresources

Degradation ofnatural scenery

Izu Peninsula

GlobalGeopark• Disclosure of measures in accordance with the four items recommended by the
TNFD (FY2024)
Governance

Strategy

Risk and impact
management

KPIs andtargets

17

Initiatives to Maximize Human CapitalOverview of human capital management in the Shizuoka Financial GroupThe Shizuoka Financial Group will strive to maximize its human capital by enhancing investment in human capital through efforts to find solutions to bridge
the gaps between current and future states based on the three pillars.
We will realize a balance between creating social value and increase corporate value by enhancing growth potential over the medium to long term throughputting human capital management into practice.

Overview of human capital management

Three pillars ofhuman capital management

Material
topicsPromotion structure
Human Capital Management
Committee

1. Consistency between
management strategies and
HR strategies

HR Development
Working Group
DE&I Working Group

2. Efforts to increase HR value(HR portfolio optimization)

Well-being Working
Group

Enhancinginvestment
in humancapitalPracticing
human capitalmanagement

Sustainability
KPI
3. Building a corporate culture andatmosphere to acceleratechangeHR system reforms

Appropriate reflection
in strategy

Status of promotion

Enhancement of humancapital disclosure

Dialogue

Employeeengagementof 4.0 or
higherMedium-/long-term
visionCreatingsocial value

×Strengthening
corporate
value(FY2027 target)

Stakeholders (Investments,
executives and employees,
communities)
19

Human capital management action plans
Aiming to maximize HR value and make the Shizuoka Financial Group more sustainable by putting into place four
action plans to realize human capital management
Four action plans

Issues identified

Closing the gap between our purpose andemployee actions

Building an HR portfolio to makestrategy more feasible

Investment
in humancapitalFostering a corporate culture toaccelerate change
Evolving to be an organizationthat inspires affection andpride among its members

KPI
Employee engagementof 4.0 or higher

1

Updating the HR evaluation system
to link it directly to changes in
employee behavior

2

HR portfolio enhancement
through development anddiversification of hiring channels

3

Encouraging autonomous
growth and career building

4

Implementing a PDCA cycle
using engagement surveys

20

Updating the HR evaluation system to link it directly to changes in employee behavior
Eliminating gaps between our Purpose and employee behavior by adopting OKR and Value systems intended toreform how we look at results and behavior evaluation standards

Key actions

Changing how we look at results and behavior
evaluation standards

Currently

FutureGaps between our Purpose andemployee behavior

Purpose and employee behavior in agreement

PurposeFor the community(Medium-/long-term perspective)
Bases of employee
behavior

To achieve performancetargets

Previous evaluation system
Evaluation based on degree ofachievement of quantitative
targets

OKR

Degree ofachievement of
numerical targets

Value

Objective
Identifying dreams and vision
to realize for stakeholders

Go Wild!
A state of repeatedly taking on challenges and learningfrom failure, moving ambitiously toward reform

Be Innovative!

Do Collaboration!
A state of continually generating added value throughcooperation, freely exchanging opinions throughrelationships based on a flat organization model

Process evaluation(75% quantitative evaluation)

New behavioral value
standards

A state of continual self-reform aiming fordestructive innovation through repeatedly pursuingknowledge

Key Results
Quantifiable targets at a“moon shot” level(Short-term perspective)

Need to integrate objectives

Current evaluation system
Qualitative evaluation based on
how much challenges was it*

How we look at results

Behavior evaluation standards* Numerical targets are subject to quantitative evaluation (5-8%)21

Behavioral changes through updating the HR evaluation system
Increasing behavior linked to medium- to long-term profit, by establishing a unique OKR system based on the dreams and visions of individualorganizations (departments and branches) and personnel
Communicating information on value-based behavior through internal social media, to foster a culture of mutual recognition and increased psychologicalstability in the organization

Examples of changes from adoption of the OKR system
Case of Branch A
O

Making the ___ region Japan’s mostfinancially literate region
Holding study meetings for customer

KR firms and administrators at least ___times a year and making survey average
results at least ___ points
Holding NISA seminars for employees of customer firms
Helps not just to increase financial literacy but also to secure
NISA accounts at the branch

Case of Branch B
O

KR

Becoming a collection of professionals where all employees findfinance interesting and are glad to be working in a bankTargeting annual skills challenge points of ___ points through all
employees taking on self-improvement challenges
Holding an in-house contest in which employees compete for highest
interest rate on virtual 1 million yen in investment trusts handled by
the bank
Improved ability to propose investment instruments by fostering
customer’s point of view, chiefly among new employees

Growing these activities through communication from the field concerning
strategy-linked behavior that leads to medium- to long-term profits

Examples of changes from adoption of the value system
Communicating information on value-based behavior through internal social
media (Unipos), to build an environment of mutual recognition among employees
From a branch manager to head office staff
Thank you for cooperating in #GoWild! efforts for our large-scale project.
This is a project that could not have been achieved without the help of ____ and ____ over about twomonths leading up to the loan execution.
The experience of working together with these two people on this project, which above all has greatly
satisfied our customer, is something I will never forget.
Let’s take on new challenges together again in the future.

A message of gratitude from a branch manager to head
office employees who worked on a successful large-scale
project (syndicated loan)#Ikukyu Branch General
Manager

From a sales office employee to an employee of Shizugin Management
Consulting
Thank you for consistently providing understandable customer support!
I am grateful for the way we were able to carry out interviews smoothly thanks to your thoroughpreparations through advance meetings and other means.
Thanks to your attentive follow-up over an extended period, were have been finally able to complete a
proposal to the heirs.
We also have finally been able to bring the estate settlement process
to the final stages.
We would appreciate your continued support through completion.

A message of gratitude from a sales office employee to an
employee of Shizugin Management Consulting who worked
on a successful inheritance project#Shizuoka FG
collaboration

Sharing successful value-based case studies to foster a culture of mutual
recognition and increased psychological stability in the organization
22

HR portfolio enhancement (1): Overview
Aiming to enhance the HR portfolio through individual HR development and hiring, redefining human resources as the leaders in First
Medium-term Business Plan strategies

Key actions

Redefining human resources as strategic leaders

Currently

FutureHR patterns have not advanced fromprevious operation categories and are
not consistent with all strategies

Enhancement of HR portfolio linked directly to realizing strategies
Community
cocreation strategies

Corporate
Middle/backofficeIndividual
Head officestaffGroup company
staff
Need to change to HR patterns
related to strategy instead ofoperation categories

Value-creating
human resourcesGroup businessstrategies

Problem-solving
human resources

人財ポートフォリオの状況と調達方針
Status of
HR portfolio and procurement policies

Transformation
strategies

Digital humanresources* Circle sizes indicate numbers ofhuman resources.
※円の大きさは人財量を表す

価値創造人財Value-creating
HR
戦
略
へ
の
関
連
度

低
Low

Problem-solving
Digital/IT
Middle/back office

4,004

Human
resources now lacking
不足している人財High高Relation to strategy

Previous HR patterns

HR portfolio

Main leaders in strategy

Expected to decrease
業務のデジタルシフトに
withreassignment
伴う再配置によりaccompanying
digital
縮小見込み
shiftof operations

Middle/backミドル・バック
office984

Value-creating
New business

Reassignment
accompanying
digital shift ofoperations

287
solving HR

810

100
350
450

155

Problem課題解決人財

4,150

Digital HR
デジタル人財Securing HR able to
育成プログラムの実践とcontribute right away through採用チャネルの多様化による
implementing
training
戦力人財の確保
Increasing solutions programs and diversifying
課題解決力を高め、
abilities and growing hiring channels
1人あたり収益を向上
revenues per employeeHigh高Difficultyof reskilling
リスキリングの難易度

2,578

FY2022(Actual)Proposing newvalue creation in
addition toexisting
businesses

2,440

FY2027(Planned)23

HR portfolio enhancement (2): Development policies
Adding the definition of value-creation human resources to existing problem-solving human resources, broadening training domains and areas to match strategies and material
topicsDeveloping the three types of HR who will be responsible for the strategy by assessing their skills from various perspectives through a certification system tailored to their fieldsof activity to be helpful in resolving materiality issues(Strategy)

Domains of value-creating HR and problemsolving HR

FY2027 KPI: 450 persons
HR capable of creating new value not present intraditional core businesses

Broadening training domains and areas to match
strategies and material topics
Problemsolving HR(Examples of activity themes)
Decarboni
zationIndustrial
reformsupportCommunity
digitalization

Healthandmedicine

Problem-solving HR FY2027 KPI: 800 persons
HR capable of solving challenges centered on
traditional core businesses(Examples of activity themes)
Finance

Asset
Businessmanagement succession

M&A

Inheritance HR dispatch

Diamond

Solutions capabilities

Startups

Businesses
for wealthy
customers

PlatinumGold

SilverValue-creating HR(Businesses for
wealthy customers)
WealthDigital consultants Accelerators(DX support)(New-business
Wellnessdevelopment support)(Health and medicine
business)
Sustainable(Decarbonization,industrial reform)(No accreditation)

Digital coordinators(Coordinating digital topics)

FY2027 KPI: 100 persons

HR capable of using technology to transform businessmodels and deliver new customer value(Examples of activity themes)
App
Cost cutting
development

MarketingDatautilization

Knowledge
sharing

Determining
the ideal
number of
branches

Multifaceted appraisal of actual abilities
by including business skills and practicein accreditation requirements
Problemsolving

Value-creating

Duties, fields

Corporate consulting
Individual consulting

New domains andareas

Accreditation
requirements

Official qualifications
Official qualifications
Training completed
Business skills
Practical experience
Business results
in related sections

Accreditation
ranks

Four ranks－

Expansion

Accreditation of problem-solving andvalue-creating HR

Domains and areas

Digital HR

Accreditation schemes

Community innovation(State-of-the-art technologies)

Illustration of accreditation
scheme and activities
Accreditation requirements
Mastering basic skills

Completion of training byoutside instructors
Earning official qualifications
Practical project participation
etc.

Developing two types of humanresources based on area of activities
Digital HR
accreditation

Transformation

Group businesses

Community
cocreation

Value-creating HR

Digital specialists

Data specialists

Business model
designDesign

Proposing data
strategies
Designing businesses
using data and AI

HR portfolio enhancement (3): Diversification of hiring channels
Maintaining and diversifying the HR portfolio over the medium to long term through not just enhancing mid-career hiring of strategic
professionals but also promoting diversity in hiring

Hiring strategies to secure specialized human resources

Hiring strategies to secure competitive strengths over the medium to long term

There is an increasing trend in mid-career hires thanks to increasing HR staff andadoption of new hiring methods.

Making the HR portfolio more diverse through means such as increasing thepercentage of new graduates hired from outside the prefecture and expanding
diversity initiatives in hiring
Enhancing the lineup of diversity
Change in percentage of new graduates
hired from outside the prefecture
initiatives in hiring

Trends in forms of hiring
New mid-career hiring methods

New graduates
Midcareer
Global
21

3
23

248

261

8
32 *1

3
57

8

Direct recruiting by
individual head officesections

*2

＋α

249

332

Use of alumni communities
FY2020

FY2021

FY2022

FY202337.6%

Sports/Arts hiring

Referral hiring ofspecialized HR

*2

256

17.3%

FY2024*1 Through end * Based on
tentative hiringof Sept.
decisionsGlobal hiring
Side jobs/second
businesses

2023
hires

2018
hires

High-school and tradeschool graduate hiring• Encouraging high-school
graduates hired to attend
Shizuoka University (evening
program)• Shizuoka Bank covers testing
costs, enrollment fees, and four
years’ tuition

Now under trial operation

Leveraging mid-career hires

TOPICS

Hiring strategies based on labor demand-supply simulation

The first mid-career hire named president of a Shizuoka FG Group company

Understanding of issues• A labor shortage is intensifying
nationwide due to depopulation

President Takahiro Watanabe,
SFG Real Estate Investment Advisors
I joined the company as a mid-career hire in 2007, to put my knowledge andexperience in the real estate business from my previous positions (with a trust bankand other organizations) to use in contributing to the progress of my hometown of
Shizuoka. After that, I worked mostly in growing the real-estate finance business.
When I proposed entering the business of real estate asset management so that
the Shizuoka FG could contribute to community solutions in areas such as regional
vitalization, not just was my proposal accepted—I was named president of the new
business.
I feel that the move to a holding-company structure has further expanded our
corporate culture in which the diverse individuality of each and every employee has
contributed to your competitive strengths.

• Securing new personnel isessential to sustained corporate
growthShort supply(right axis)

Labor demand(left axis)

Labor supply(left axis)

Hiring of diverse human resources(enhancement of hiring capabilities) withan eye on changing population trends isconnected directly to medium- to longterm competitive strength

Source: Future Forecasts 2040: A Society of Restricted Labor Supply, March 2023, RECRUIT Works Institute25

Fostering a corporate culture to accelerate change
Aiming to be an enterprise that generates innovation by establishing new systems to support autonomous employees growth andcareer-building

Key actions

Establishing systems to encourage the pursuit of challenges
and autonomous career-building

Currently

FutureA conservative corporate culture
intolerant of failure is unable togenerate employees who take on new
challenges

Becoming an organization that generates innovation
by backing employees as they take on challenges

Understanding of issues in thecorporate culture
Overcoming the top-down system

In-house startup
program

Seeking ideas from all employees on internalinnovation and external startups, to encouragethem to take on challenges and link them to action

Getting rid of sectionalism
Fostering a corporate culture ofmutual recognition

My Career Design program
Establishing a new voluntary program that enables
diverse career choices such as secondment outside
the organization and challenging posts in othersections, in order to support employees inautonomous career-building and realizing their
dreamsMy dreams

Eradicating multi-level decisionmaking

There is a need for continuous
efforts to lead to reforms to thecorporate culture

Posts, duties
Desired branches
or departments,
etc.

Toward an enterprise that generates change
by encouraging people to take on challenges

My challenges

Me now

Gap analysis

Skills and abilities fordesired branch or
department and duties,
qualifications, etc.

Skillsimprovement

Bank internal qualifications
systemMy Career Design program
Skills challenge plan, etc.

Maximizing HR value by encouraging expansionof capabilities
26

Changes resulting from the establishment of the new in-house startup and My Career Design programs
Growing the Shizuoka Financial Group’s business portfolio and boosting profitability by changing the corporate culture to stimulate
individual initiative
In-house startup program
My Career Design program
With entrants in their 20s and 30s accounting for a growing proportion of our workforce, a
corporate culture characterized by the spirit of seeking out challenges is spreading,chiefly among younger employees.
Those in their 20s and 30s account for about
60% of entrants.

2%

12%

25%
35%
26%

First program
entrants(Total entrants: 59)

20s
30s
40s
50s
60s

23%

29%

31%

Second program
entrants(Total entrants: 60)

1% 4%

Digital securitization of whiskey
casks using digital tokens

Providing whistleblowing
programs for outside firms
under contract

A winner takes on the challenge ofstarting up a new company

8%
20s
30s
40s
50s 37%39%
56%

FY2019 applicants

9%46%

FY2022 applicants(Total applicants: 72)

External
In-house trainee
dispatch
Tackling the challenge of a posting
to a requested section
Transfer between Group
companies

Dispatch to a local firm
Working concurrently
in another section

Cumulative
total users:

269* From FY2019 to theend of Sept. 2023

(Total applicants: 158) 10% of all employees have used
the program.

Activities for a program
participant

Kosuke Wada, Business Strategy/ALM Group, Corporate Planning Dept.

Hideaki Takato, Venture Business Support Department, Tokyo Sales Division

Theme: Providing whistleblowing programs for outside firms under contract

I have long been interested in the venture-capital business, and given theopportunity I decided to apply for dispatch to an external VC firm through thisprogram.
At the company where I was dispatched, I was able to gain the expertise needed toinvest in startups and build a new network in the business.
I plan to use this experience in promoting the venture business after returning to
the Group, to contribute to growing Group profits while giving back what I havelearned to the organization.

Since joining the Bank, I’ve worked exclusively in corporate sales. I entered thein-house startup program because I wanted to be involved directly in solutions tosocial challenges through entrepreneurship.
I want to embody the Shizuoka Financial Group’s corporate culture of
intuitiveness while leveraging my experience of management thinking in tacklingnew challenges on the frontlines of sales.

Expected
medium-/longterm results

Diverse career choices

Stimulating initiative among those in their 40s
and 50s as well

Winning themes in thefirst program

Financial services for foreign
workers

17%

As the age range of applicants grows, people across a wide range of generations areactively choosing their own career paths.

Individual initiative contributing to the growth of the
Shizuoka Financial Group’s business portfolio

Expected
medium-/longterm results

Autonomous career choices impacting growth in the
Shizuoka Financial Group’s profits

27

Implementing a PDCA cycle using engagement surveys
Increasing understanding of HR strategies and employee engagement through a plan-do-check-act (PDCA) cycle using engagement
survey results

Key actions

Implementing measures based on engagement
survey results
FutureCurrently
Need to verify thesuitability/efficacy of HR
strategies
Issues in the deploymentof HR strategies

Strengthening employee engagement
FY2023 engagement indicators (preliminary
figures) are up in both the Shizuoka
Financial Group and Shizuoka Bank.

Diversifying job awareness
Adapting to changes

3.83

Shizuoka Bank
Shizuoka Financial
Group
3.78

3.80

3.76

3.81
3.77

3.76

3.70

Increasing understanding andputting the results to use

-0.02
+0.04
+0.04

“I feel an attachment to the Shizuoka Financial Group.”“The Shizuoka Financial Group’s culture and atmospheresuit me.”

Implementing culture and innovation
measures in FY2023,
with a focus on internal branding andcultural and atmospheric reforms

Awareness and atmosphere reforms moving from a top-down approach toward one of co-creation → Holding town
hall meetings
Increasing strategic understanding → Distributing video messages concerning strategy from top management
Connecting strategy to employee aspirations → Adopting My Sustainability Books

3.62

FY2008(1) Satisfaction(2) Attractiveness toemployees(3) Initiative(4) Diversity

vs. FY2021-0.07

Questions highly correlated with KPIs
(1) and (2)Implementing culture and innovation
measures

3.67

3.64

Need to incorporate engagement
survey results into the PDCA cycle

The KPIs of satisfaction and attractivenessto employees fell from last year

FY2022 KPIs

3.79

Collecting and reflecting
honest opinions

Analysis of FY2022 results and implementing measures in FY2023

FY2009FY2010FY2016FY2020

FY2021

FY2022

FY2023Making a positive impact on engagement survey results

28

Implementing culture and innovation measures
Implementing measures intended to reform our culture and atmosphere and to connect employee aspirations to management strategy,
based on engagement survey results

Holding town hall meetings

Awareness and atmosphere reforms moving from a
top-down approach toward one of co-creation

Aiming to raise awareness of co-creation andencourage reforms to the internal atmosphere bydeepening understanding of the corporate philosophy
and management strategy through opportunities for
direct dialogue between management and employees

Communicating messages from management

We are communicating messages from management to all employees on the themes ofhuman capital management and the Medium-term Business Plan, to increase understandingof strategy.

Theme (1) Why is human capital management necessary?

I was able to reaffirm my status as amember of the Shizuoka Financial Groupby listening directly to management’s views(Shizugin TM Securities employee)
Discussion of how the growth of local firms leads
directly to Company profits gave me a chance toreconsider my own views.
(Shizuoka Bank employee)

Adopting My Sustainability Books

Connecting management strategy toemployee aspirations

President Yagi spoke with Kunio Ito, a leader inhuman capital management, and Piotr Feliks
Grzywacz, who provided support for adopting oneon-one meetings and OKR, on the theme of humancapital management.
Pronoia GroupCEO

Piotr Feliks
Grzywacz

Shizuoka Financial Group
Director
Chair of Human CapitalManagement Committee
Shizuoka Bank President

Director of Hitotsubashi
CFO Education andResearch Center

Kunio Ito

Minoru Yagi

These books, which are about 250 pages long, will
be completed over the five years of the Mediumterm Business Plan in communication with superiors,
using them as tools for one-on-one meetings inparticular.

They explained purpose-driven management andSX management based on the thinking of theMedium-term Business Plan.

Theme (2) Why do we need to achieve the goals of the First Medium-term
Business Plan?
Basing our actions on our purpose, instead ofnumbers

We adopted My Sustainability Books and distributed
to employeesto connect management strategy to theaspirations of individual employees.

Increasing understandingof strategy

Purpose-driven
corporate vision

Expand dreams and affluence withour community

BeforeUnder the new Medium-term Business Plan

Actions based on numericalfigures

Actions based on our purpose

Do they enliven our region
and customers?

Do they enliven ourselves?

Enlivening our region andcustomers
We see the meaning of ourwork through contributing to society
This contributes to rewarding work andachieving numerical targets

This message explained the background of
formulating the First Medium-term Business Plan,
which differs greatly from the previous Medium-term
Business Plan due to consideration of subjects suchas purpose-driven management and balancing
corporate and social value.
Management communicated its views on how totransform our behavior from that based on
numerical figures to that based on our purpose andhow to balance short-term and long-term profits.

29

Courses of action in human-capital management
The management of human capital is a significant aspect of overall management strategy. Our goal is to boost investments to maximize our human capital,
including investment in employee benefits and training and education.
We will take measures to improve compensation, including base pay, which affects our hiring capabilities, while also acting to reflect the changing social
environment.

Trends in human capital investments

Courses of action in human capital management(JPY 100 mn)

Investment in benefits

425

435

2

3

5

6

6

7

7

8

412

415

466

444

420

423

9

2

430

• Hiring an additional 290 mid-career hires and others able to contribute
immediately through proactive employment activities• Enhancing Group earning capabilities through reskilling and other efforts byincreasing investment in training and education per employee
Gross operating profit per employee: up JPY8,601 thousand(Increase over five years of the Medium-term Business Plan)

450
3
Base payincrease

Labor costs

FY2020

FY2021

FY2022

2

FY2023(planned)

FY2027(projected)[Gross operating profit and investment in training and education
per employee (Shizuoka Bank)](JPY thousand)

Gross operating
profitInvestment in
training andeducation

FY2023
FY2027(planned) (planned)

Investment in benefits (e.g., sanitary management,
employee stock ownership plan costs)• Maximizing organization and HR outputs by providing benefits intended tomake work more rewarding for Group executives and employees, realizing
flexible work styles, and promoting DE&I, among other goals
Implementing measures related to theemployee stock ownership plan

FY2020

FY2021

FY2022

51,775

50,111

54,12656,34362,727

79

89

165

168

203

• Maximizing human capital through means such as improving compensationand hiring new strategic personnelー• While reflecting the changing social environment, increasing base pay, which
affects hiring capabilities, appropriately using funding made available throughmeans such as revision of the valuation of fixed assets(Reference) Training costs per employee
Training andeducation costs

Investment in education etc. (training and hiringcosts etc.)• Developing human resources to implement the basic strategies of theMedium-term Business Plan
(1) 450 value-creating human(2) 800 problem-solving
resources
human resources(3) 100 digital humanresources

7

1

1

25

30

32

ー

* “Fact-finding Survey on Training and Education Costs,” SANRO Research Institute, Inc.

3

Labor costs (salaries, bonuses)

Maximizing human capital to support
sustained growth

Investment in training and education

30

Status of human capital disclosure: External evaluation
The nature and completeness of the disclosures in our Integrated Report ranked first among regional banks in training for HR officers
organized by the Regional Banks Association of Japan (subjects: 99 first- and second-tier regional banks).

Disclosure content compared to other banks

Source: RAF Laboratory Co., Ltd. survey results

Total disclosure points compared to other banks

15 disclosure items(: Items assessed not disclosed by us)
Staff composition by type
Training time, costs, etc.
(current, target)
Number of staff holding
Mid-career hires
qualifications
Percentage of womenMale-female wage differential
managers
Percentage of paid leave Percentage taking childcare
received
leave
Health indicators
Engagement indicator

Staff composition by age

On-the-job injuries

Incentives (excluding average bonuses)

Separation rate

• On average, 4.7 of the total of 15 items weredisclosed.
• We and three other banks ranked in the leading
position by disclosing 12 items.

Evaluation items
Information on HR strategies, etc.
Linkage to management
Portfolio optimization
strategies
Advancement, reskilling
HiringDiversity, workplace
Engagement
environment
Incentives (e.g., HR systems, remuneration, salaries)
Indicators
Responding to stakeholder expectations
Investors
Authorities, society
Employees

Source: RAF Laboratory Co., Ltd. survey results• Average score of top banks: 2.46 points• We held the highest score.

31Reference Materials
Extracted from the Shizuoka Financial Group
Integrated Report 2023

Formulating plans for transitioning to carbon neutrality
The Shizuoka Financial Group has formulated a transition plan for achieving carbon neutrality. As we work toachieve carbon neutrality, we will also seek to help achieve decarbonization within the community (social
value creation) by supporting customers through Groupwide efforts and joint efforts with local governments.

Promoting net zero GHG emissions in thecompany (Scopes 1, 2)

Support for TCFD recommendations

Achieving carbon neutrality (sustainability KPI)

Implemented throughFY2022-31.3% (vs. FY2013)• Switching all contracted
electricity to renewables• Target: -73% (vs.
FY2013)

Promoting efforts to transition to a decarbonized society: Promoting net zero
Scope 3 emissions
Settingtargets Promoting sustainable finance

FY2030
Achieving carbon
neutrality (Scopes 1, 2)
Rate of reductions in
GHG emissions in
Shizuoka Prefecture:-46% (vs. FY2013)

Implementing JPY2 tn
by FY2030(Including JPY1 tn inenvironmental finance)

Zero by
FY2040

Zero balance of investment in coal-fired power generation
Achieving Scope
3 carbon neutrality

Support involving calculating and reducing GHG emissions

Estimating and disclosing Scope 3 (Category 15) emissions

33

Specific initiatives (1): Governance structure
Building a Group governance structure to advance sustainability management; establishing the Shizuoka Financial
Group Environmental Policy to help realize sustainable society on a Groupwide basis
Enhancing the governance structure• Establishing the Environmental Committee and the subsidiary
Environmental Working Group to realize Group sustainability
management• Alongside cross-functional discussions of policies andmeasures related to environmental management, including
responding to climate change, and securing governance torealize a decarbonized society by reviewing these policies andmeasures in the Board of Directors meetings after discussion in
the Sustainability Committee (Executive Committee), with thegoal of promoting measures to dynamically improve efficacy

Board of Directors
Submittal, reporting

Policy, oversight

Sustainability Committee (Executive Committee)
Submittal, reporting

Policy, oversightEnvironmental Committee

Environmental Working Group
Shizuoka Bank’s headquarters
related sections

Group companies

Establishing the Shizuoka Financial Group Environmental Policy• Establishing the Shizuoka Financial Group Environmental Policy to recognize the management risks posed by climate change and toclearly delineate policies for helping to build a sustainable society through our major businesses• Clearly identifying and reducing GHG emissions at Group companies while striving to build a sustainable society through service
provision by each company

34

Specific initiatives (2): Strategy (promoting sustainable finance)
Establishing a sustainable finance target (JPY2 tn by FY2030) and promoting decarbonization within the community
by providing funding support for customer ESG initiatives
History of sustainable finance promotion measures
Sustainablefinance

Jan.

Sept.

Oct.

April

ESG FinanceAwards Japan

Ministry of theEnvironment ESG
regional financepromotion project

Executed
Japan’s first PIF
for SME.
Executed firstsustainability-linked
loan in Shizuoka
Prefecture.

Positive impact finance (PIF)

Sustainability-linked loans

Green loans

Social loans

TOPICs: SDG-support guarantees⚫ Co-developed by Shizuoka Bank and Shizuoka Credit
Guarantee Association⚫ Encouraging SDG/ESG management initiatives andimplementing partnership support through simplified
valuations based on dialogue with customers

Set sustainablefinance targets.

Began handling
SDG-support
guarantees.

Main sustainable finance efforts

FY2021: Silver Prize

Results, evaluation
Adopted in
FY2022

FY2022: Gold Prize

Publishing
Impact Report

Adopted in
FY2023Adopted in two
consecutive years

Won for two
consecutive years

Ministry of theEnvironment ESG regional
finance promotion project

ESG Finance Awards Japan
Indirect Financing Category
FY2021: Silver Prize
FY2022: Gold Prize
35

Specific initiatives (3): Indicators and targets (our GHG emissions)
Establishing solar power facilities and promoting a switch in contracted power to renewable energy to achieve carbon
neutrality (Scopes 1, 2) by FY2030; calculating emissions in each Scope 3 category
Achieving carbon neutrality (Scopes 1, 2) by FY2030
The Shizuoka Financial Group has established the target of achieving carbon
neutrality (Scopes 1, 2) by FY2030.
We estimated a GHG emissions reduction of 73% in FY2023 compared to FY2013
by switching our contracted power to renewable energy, in addition to therenewable energy obtained from Shizugin Solar Park, which began operating in
October.

-31.3%

Unit: t-CO2e

Scope 3 (Categories 1-14)
Unit: t-CO2e

Measurement

FY2022 emissions

Category 1

Purchased goods and services

30,426

Category 2

Capital goods

23,022Category 3

Fuel- and energy-related activities

2,031

Category 4

Upstream transportation anddistribution

Category 5

Waste generated in operations

99

Category 6

Business travel

560

Category 7

Employee commuting

Category 8

Upstream leased assets

Category 9

Downstream transportation anddistribution

Category 10 Processing of sold products
Category 11

Included in Category 1

1,469

Excluded *1

Use of sold products

Category 12 End-of-life treatment of sold products
Category 13 Downstream leased assets

Category 14 Franchises
FY2013

FY2019FY2020

FY2021

FY2022* Scope of calculations expanded in FY2023 to include aspects specified in the TCFD guidancein addition to those required by the Act on Rationalizing Energy Use

0 *2

Excluded *1

Scope of calculation: Shizuoka Financial Group as a whole (excluding resident offices andsubsidiaries overseas)*1 Categories 8-12 and 14 not applicable for business reasons*2 Shizugin Lease not subject to calculations on Category 13

36

Specific initiatives (4): Indicators and targets (e.g., sustainable finance promotions)
We have set targets for sustainable finance and the balance of investments and financing for coal-fired power generation, and are also
promoting efforts to transition to a decarbonized society.
Further, we have ascertained lending balances to carbon-related industries as part of efforts to quantify climate change risks.

Sustainable finance

Balance of investments and financing for coal-fired power generation

Target: JPY2 tn by FY2030 (including JPY1 tn in environmental
finance)Zero investments and financing by FY2040[Trends in total sustainable finance executed](JPY100 mn)

4,616
3,610
2,765

Balance of investments and financing for coal-fired
power generation at the end of March 2023
JPY15.9 bn(0.12% of loan balance)

Progress rate 23.0%(including 22.9% inenvironmental finance)

2,158

1,133
547
FY2021

1,137

1,384

1,624

FY2022 1Q

FY2022 2Q

FY2022 3Q

2,297

FY2022

Carbon-related industries
Shown below are Shizuoka Bank’s balance of loans to carbon-related industries and their share of total lending at the end of March 2023.
Subject sector

EnergyTransport

Materials, structures

Agriculture, foods, forestry

Total

Share

2.33%

8.05%

14.09%

4.30%

28.77%

Loan balance (JPY100 mn)

2,342

8,100

14,1784,330

28,950Note:Energy: oil and gas, coal, electricity; Transport: air cargo, air passenger, sea transport, rail transport, trucking services, autos and parts
Materials, structures: metals and mining, chemicals, building materials, capital goods (e.g., buildings), real estate management and development
Agriculture, foods, forestry: beverages, agriculture, packaged foods and meat, paper and forest products

TOPICs: Carbon Disclosure Project climate change survey assessment
The Carbon Disclosure Project, an international NGO that evaluates and accredits corporate environmental strategies and initiatives, has given us a grade of B- in its climate change survey.

37

Our vision for human capital management (1): Linking management strategies to HR strategies
Linking management strategies to HR strategies
Our management strategies seek to develop a future-oriented vision of the Group’s purpose; in our human capital strategies, we seek to maximize
the human capital needed to realize this vision.
By linking these two strategies, we seek to increase the feasibility of management strategies and enhance the quality of our human resources.
HR strategies
Autonomous humanresources capable ofaccepting diverse
opinions and continuing
to seek out new
challenges

HR strategies makemanagement
strategies morefeasible.

Corporatephilosophy

Initiatives to achieve our vision
1. HR systems to establish firmly autonomy, initiative,and diversity

2. Optimal HR assignment and development

Purpose-driven mission

Expand dreams andaffluence with ourcommunity.
Management
strategies
A problem-solving corporategroup that creates newvalues for the futureManagement
strategies help
enhance the qualityof human resources.

3. DE&I*1 enhancement to maximize HR value

4. Culture and Well-being Innovation*2*1 Diversity, equity, and inclusion*2 Initiatives to foster an internal corporate culture to realize the vision
aimed of the First Medium-term Business Plan
38

System revisions to firmly establish autonomy, initiative, and diversity (1)Adopting, firmly establishing, and operating a new evaluation system
We’re adopting various new systems in stages to achieve thoroughgoing reforms of the HR evaluation system into one
consisting of OKR and Values. We hold continuous annual evaluation training sessions to deepen understanding among
executives and employees of the new HR system and to ensure it takes firm root.
2019: one-on-one meetings
introduced

Evaluation training launched

FY2021: OKR, Value,
Cheer*Chat introduced

Beginning April 2023:
My Sustainability Books, sustainability
training, town hall meetings

April-June 2022:
HR evaluation conducted (implementing negotiation,
calibration, and multifaceted evaluation)

Objective
Key Results

Key Results

Individual

We introduced OKR to align the goals of the organizationand individuals through opportunities to exchange
viewpoints in departments and branches based on a flatorganization model.
We reflect multifaceted opinions in the HR evaluation
process. Details are comprehensively shared to encouragechanges in behavior among individual executives andemployees.

Organization(department,
branch)OKR

OK results×
Initiative

Negotiation
Calibration

Reflecting comments from
customers and otherexecutives and employees(Cheer*Chat) in evaluation

39

System revisions to firmly establish autonomy, initiative, and diversity (2)Three Values
To realize our corporate philosophy and group vision, we have established three Value keywords as value standards to be embodiedin our daily actions, and we communicate these among executives and employees to ensure that our actions agree with these values.

Go Wild!

Be Innovative!

Do Collaboration!

A mindset that seeks to tackle challenges
repeatedly and to learn from failure whilemoving ambitiously toward reform

A culture characterized by constant selfreform to achieve creative destruction andthrough the relentless pursuit of knowledge

An outlook that continually seeks to generate
added value through joint efforts and the open
exchange of perspectives through relationships
based on a flat organization model

One-on-one meetings

Using the Cheer*Chat internal social media platform

We’re deploying one-on-one meetings to foster a culturethat promotes human capital development by stimulating
communication within the workplace and between
superiors and subordinates. We’re seeking to deepen
trust between supervisors and subordinates and to create
an organization of autonomous thought and action byencouraging subordinates to lead one-on-one meetings.
In FY2022, we introduced the Naname and Yoko-Shita
one-on-one meetings to create opportunities for dialogues
that transcend affiliations and positions.

To foster a culture of mutual
recognition, we have introduced
Cheer*Chat, an internal social media
platform for executives and employees
to exchange words of appreciation andpraise on a daily basis.
Users can use hashtags to spreadawareness of the Value action
standards and to manage
subordinates.
40

Optimal human resource assignment and development (1)Developing visionary leaders (establishing a succession planning structure)
We are developing human resources for the future through a structure that combines leader training programs such as training programs, on-the-job
training (OJT), work experience, and outside opportunities.
Level

Training programs

OJT

Outside opportunities

Work experience
Multifaceted career development across the GroupLine head

Executive
academyManagement
academyDeveloping leaders to guide Grouptransformation

Leader academy

Developing leaders who can inspire
team members

Manager

Young employees
striving to reachleadership positions

Organizational management
workshops

Developing vision as organization
leaders

Next-generation leader
workshops

Basic training on leadership andmanagement

Active assignment to outside opportunities (opportunities for external exchange)

Block manager Division chief

Section head/manager
mentorship program

Officer

Forming the basis of leadership andfostering a deeper understanding ofmanagement

Line head

Section chief Section chief
Crew
Bank branch

Crew

President

BusinessschoolGeneral manager

Section chief

Crew

Interindustry
exchange

Head office Group company

Training program participantsThrough means such as business school and inter-industry exchange, we
provide opportunities for exchange with human resources from outside theGroup to encourage autonomy and initiative, help employees broaden their
networks, and improve employee knowledge and perspectives.

[Main curriculum]○ Nikkei Executive Governance Program○ Waseda University Top Management Training, Senior Management
Lectures○ Nomura Management School (Management Strategy Course for
Women Leaders, Digital Strategy Courses for Managers), andnumerous others

FY2020

FY2021

FY202241

Optimal human resource assignment and development (2)Developing value-creating personnel, further improving solutions capabilities, and expanding the scope of learning
By working to increase the value of each and every employee and to optimize the assignment of our human resources, we seek torealize the First Medium-Term Business Plan’s vision: Become a problem-solving corporate group that creates new values for the future.
Human resource portfolio vision
Problem-solving

Value-creating

Digital/ITNew
businesses

Value-creating human resources
Middle/back office

Human resources capable of creating community value drawing
on their expertise and personal networks

Reassignment in linewith digital shift ofoperations

Training fields
IT/DX
support

Proposing value
creation in new
businesses in addition
to existing ones
FY2022(Actual)FY2023(Planned)

Health and Decarbo
Wealth businessmedicine nization

Startups

Mastering professional skills

Mastering practical skills(Attending external training programs,
graduate university, etc.)(Dispatch to external firms,
concurrent duties, etc.)

Establishment of a new certification system

FY2027(Projected)

Problem-solving human resources

Digital human resources
Human resources capable of using state-of-the-art technologies inoperational enhancements and business development
Mastering professional skills

Mastering practical skills

Trainees in external training
programs
46 persons in FY2022

Side jobs in related head officesections
10 persons in FY2022

Improving IT literacy Groupwide

Human Resources who deliver solutions through deeper
awareness of customer issues
Mastering professional skills
Enhancing fields of in-house training
Business
Corporate
succession
rehabilitation
M&A

Staffing, etc.

Establishment of a newcertification system
Certification requirements
Holding official qualifications
Business skills checks

IT Passport holders as of the end of March 2023: 1,207 persons
42

Optimal human resource assignment and development (3)Internal qualifications programThis program clarifies the qualifications and skills required of consultants who deliver solutions to customer challenges, thereby supporting the career development
goals of each individual.
The number of certified personnel under this program continues to grow from year to year. In FY2022, two employees earned the highest-level Diamond certification.

Certification rank

SilverGold

PlatinumDiamond

Official qualifications,etc.

Second grade of FP,
Legal Affairs Level 3
Qualification
Examination,
IT Passport,
Financial Services
Certification Level 3

In addition to those at
left:
First grade of FP and
Financial Services
Certification Level 2

In addition to those atleft:
Senior M&A Expert,
Senior Private Banker,
orFundamental
Information Technology
Engineer

In addition to those at left,
one or more of the following:
Small and Medium EnterpriseManagement Consultant,Labor and Social Security
Attorney,
Certified Tax Accountant/Lawyer,
Certified Public Accountant,
Real Estate Appraiser,
Administrative Scrivener,
Judicial Scrivener

Business skills checks

Ｃ

Ｂ

Ａ

Ｓ

Number of certified personnel (Silver and above)(People)FY2020

FY2021

FY2022

FY2027

Trends in numbers of holders of major qualifications
Qualification

FY2020

FY2021

FY2022

MBA

13

13

13

Small and Medium EnterpriseManagement Consultant

68

70

72

First grade of FP/CFP

313

351

358

IT Passport

396

748

1,207

Fundamental Information
Technology Engineer

135

180

199

43

Optimal human resource assignment and development (4)Development and environment to enable autonomous career building
We’re developing an environment to enable autonomous career building by each executive and employee. To provide recurrent education andreskilling opportunities, we’re boosting training expenses per staff member. (In FY2021, alongside revisions to the HR system, training hours
increased sharply to promote awareness and use of the system among personnel.)
Trends in training costs per staff
Trends in training hours
Trends in Open College participants
member(Hours)Other thansystem revision

FY2020

System revision(included in total)

FY2021

FY2022(JPY1000)(Persons)

FY2020

FY2021

FY2022

FY2020

FY2021

FY2022

Shizuoka Financial Group Open College (Liberal Arts)
We provide executives and employees with opportunities to learn
about new topics through means such as seminars on liberal arts,
IT/DX, the environment, and DE&I in courses offered on weekends
and weeknights.

Open College participants(persons)

FY2020

FY2021

FY2022

3,843

4,498

5,696
44

Optimal human resource assignment and development (5)Developing systems to support autonomous career development
We are enhancing systems to support autonomous career design by each executive and employee to realize his or her dreams with the
Shizuoka Financial Group.

Visualization

Career Training
Career CounselingTraining and career counseling byprofessional career counselors to
support diverse career development

My Career Design Sheets
These describe employee dreams andvisions with the Shizuoka Financial
Group and their desired positions toachieve them (to visualize the skills andexperience required to achieve them).

Use of these systems
My Career Design program

Value Up program
Meet Up program

Bringing
dreams to life

Motivation

Supporting career autonomy for younger workers
We have introduced a mentorship program and an anchor program to enhance follow-up and career development support for younger employee
job retention.
Mentorship

AnchorSubject employees

Employees in their first or second years

Employees in their third or fourth year

Roles

Employees with less professional experience can consult
with familiar senior colleagues on topics such as
mastering their jobs and social life to foster a professional
mindset and help them settle into their jobs.

Senior colleagues serve as career development rolemodels for younger employees with limited experience,
providing practical guidance and career development
counseling to help foster a growth mindset.

Career counseling by the Human Resources Counseling OfficeOnce a year, HR consultants qualified as career consultants visit all divisions and branches to address the challenges facing each organizationand the career development issues encountered by executives and employees. They help resolve such issues by providing information onvarious training programs and systems to maintain staff motivation and encourage proactive career development.

45

Optimal human resource assignment and development (6)My Career Design program
Systems to support the autonomous career design and diverse career development of each and every employee and executive are expanding
each year.
System■Trends in number of applicants

Details

By providing precise solutions to the management issues facing regional
companies and in other ways, employees themselves grow by contributing to thegrowth and development of businesses within the community.
Employees are dispatched to outside companies or provided traineeships inExternal Dispatch/Internal
specialized sections to acquire specialized expertise in business succession,
Traineesfinancial markets, digital technologies, and other fields.
The Post Challenge system allows employees to work in the sections of their
Post Challenge/Intra-company choice. The intra-company side job system allows them to work one day a week
in sections of their choice while maintaining current affiliations in their present
side jobs
sections.
This specialized program combines the intra-company side job system with
IT/DX Programs
interval training by external consultants to develop digital human resources.

Dispatch to Regional
Companies

System for Transfer between
Group Companies
Side jobs/Second businesses

Under this program, employees can choose to transfer between Group
companies in accordance with their own career visions, regardless of form of
employment.
These systems proactively support secondary posts and voluntary dispatch toother companies for concurrent posts, so that executives and employees canrealize self-fulfillment, acquire broad expertise, and grow their interpersonal
networks.

Value Up programThis program provides financial support for skills development initiatives plannedby the individual employees themselves.
[Examples of past support]
Business schools (e.g., Globis, Waseda University), programming schools,
qualification schools (e.g., for tax accountants and real-estate appraisers),
language schools, etc.

FY2020

FY2021

FY2022Meet Up programThis program provides support for part of the cost of participating in various events,
including community events, study meetings, and inter-industry exchange meetingsorganized by government or local firms.
[Main examples of past support]
Participation in inter-industry exchange meetings, seminars on recent wine
trends, events for learning about local history, fishing classes (community
vitalization), etc.

46

DE&I enhancements to maximize human resource value (1)Initiatives to empower women
We seek to achieve a ratio of at least 22% of leadership positions (at the section manager level and above) being women by the end of March 2024 andat least 40% by the end of March 2031, as we actively assign and appoint women to these positions while supporting women’s career development anddevelopment women managers.

General employer action plan initiatives

Supporting women’s careers

Five Group companies—Shizuoka Bank, Shizugin TM Securities, Shizugin
IT Solution, Shizugin Mortgage Service, and Shizugin Business Create—
have formulated general employer action plans, as we strive to advance theroles of women Groupwide with the aim of strengthening our DE&I initiatives.

○ Holding training for women executives and employees
to make work more rewarding and to help them tackle
the challenges of career development○ Raising awareness of women’s health issues○ Holding seminars to promote better understanding
among colleagues
TOPICs: Support for the “Challenge to 30% by 2030” program

Ratio of leadership positions filled by women (Shizuoka Bank)
22% or more by the end of March 2024 and 40% or more by theend of March 2031

We support the program promoted by the Japan Business Federation. As
of April 2023, ten female executives, including the president of a Group
company, play active management roles within the Group.

Number of women in leadership
positions in the Group
Ratio of leadership positions
filled by women (%)(Five companies with generalemployer action plans)
Ratio of leadership positions
filled by women (%) (Shizuoka
Bank only)
FY2019FY2020

FY2021

FY202247

DE&I enhancements to maximize human resource value (2)Maintaining a percentage of 100% of eligible male employees
taking childcare leave*
In line with amendment of the Child Care and Family Care Leave Act in April andOctober 2022, in April of that year we expanded our “Ikusapo” childcare support
program. Alongside establishing a system to promote gender-neutral
participation in childcare, we seek to overcome resistance to men taking
childcare leave and rectify unconscious biases concerning balancing family andwork.

Average days of leave taken *Percentage of leave taken ** At five companies with general employer action plans
Percentage of 100% of eligible male employees taking childcare leave (%) = number of male
employees who took (began) childcare leave in the fiscal year/number of male employees whose
spouses gave birth in the fiscal year * 100

Rectifying male-female wage differentials

FY2019FY2020

FY2021

FY2022The wage differential between males and females in permanent, full-time employment is due mainly to the lower percentage of management
positions filled by women. We will strive to minimize this differential by empowering women through career development, training, and active
assignment and promotion.
Total

Job classification(Shizuoka Bank, as of end of FY2022)

Posts subject to transfer involving
relocation (included at left)(WomenWage differential
percentage)

Posts not subject to transfer involving
relocation (included at left)(WomenWage differential
percentage)

Wage differential(Womenpercentage)

Managerial (permanent, full time)

81.7（18.1）

89.4

（4.8）

96.1

（43.6）

Non-managerial (permanent, full time)

89.1（47.3）

87.4（33.0）

90.5（80.1）

Other

77.7

（71.7）

―

―

―

―

Total

65.7

（33.8）

59.9（19.7）

76.4（62.4）

48

DE&I enhancements to maximize human resource value (3)Diversity
In addition to longstanding efforts to promote women’s empowerment, expand employment of people with disabilities, mid-career hiring, andhiring global human resources (non-Japanese nationals and international students), we also proactively accept human capital with diverse
knowledge and experience through means including permitting second jobs and athletic hiring.
New
graduates

Mid-career hires

TOPICs: Ensuring diversity in areas such as core human resources

Global hires

We have set targets for women, non-Japanese nationals, and mid-careerhires as percentages of those in managerial positions and are striving todevelop human resources and create an environment to ensure diversity.
Category (Shizuoka Bank)FY2020

FY2021

FY2022Global hiring

Sports/arts hiring

Mid-career hiring

FY20237 new graduates
1 mid-career

10 current
employees

FY202257 hires

FY2022

KPI

Global hires inmanagerial positions

0%

10%(through end of March2024)

Annual global hires

3(8 hired in FY2023)

A few

Mid-career hires inmanagerial positions

67.2%

70%
(through end of March2024)

Annual mid-career hires

33

15

Acceptance of sidejobs

High-school andtechnical college
graduates

Para-athlete hire

Cumulative total of 7

19 hires through2023

Wheelchair rugby
player Hidefumi
Wakayama hired49

DE&I enhancements to maximize human resource value (4)Establishment of the Human Rights Policy
We have established the Shizuoka Financial Group Human Rights Policy in accordance with the Universal Declaration of Human Rights, theUN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, and otherinternational standards. We will contribute to realizing a society that respects the human rights of all.

[Major initiatives]○ Establishment of Human Rights Policy○ Enhancement of education on human rights awareness(expansion of tiered training)○ Holding seminars on human rights awareness in the Open College○ Establishment of human rights hotlines at Group companies○ Identification of themes related to human rights in harassment
workshops

LGBTQ initiatives
Alongside efforts to prevent harassment due to discrimination and other violations of the human rights of sexual minorities, we implement
LGBTQ-related measures to foster a corporate culture that respects diversity.

[Major initiatives]○ Introduction of same-sex partnership program, LGBTQ awarenesstraining for all officers and employees○ Express warnings to prevent SOGI harassment (added to harassment
guidelines)○ Distribution of LGBTQ ally badges (upon request)○ Creating handbooks (containing information on matters such as customer
service)○ Establishment of internal and external hotlines○ Efforts at branches and other facilities (e.g., modifying multipurpose
restrooms to all-gender restrooms, pamphlet distribution)

LGBTQ Ally Badge

Handbook50

DE&I enhancements to maximize human resource value (5)Empowering people with disabilities

New initiative

We established Shizugin Heartful in October 2019 as a company to create awork environment where people with disabilities can work with peace of mind
while feeling rewarded and fulfilled, and actively support their participation insociety.
(As of April 2023, 2.35% of employees were people with disabilities, exceeding
the legally mandated rate of 2.3%.)

In May 2023, we accepted massage trainees from a
special-needs school at the Shizugin Headquarters Tower
in a trial effort to provide health keeper services.

Joining the Valuable 500
We support the goals of the Valuable 500, an international initiative to empower people withdisabilities. We were the first Japanese regional bank to join the Valuable 500 (March 2021).

51

Culture and Well-being Innovation (1)Promoting autonomous, flexible work styles
To promote flexible work styles for all executives and employees, since July 2019 we have promoted work-style innovation and introduced andexpanded various related systems. Since April 2023, we have expanded this initiative into the Culture and Well-being Innovation program, consisting of
measures to improve the engagement and well-being of every employee.
13th Mid-Term Business Plan
Work Style Innovations (WSI) (July 2019-)
Shifting viewpoints from Company rules tocustomers and the community, establishingautonomous work styles• Adopted flexible dress codes• Expanded flextime and remote work to all staff• Adopted side jobs/side businesses in stages

14th Mid-Term Business Plan

Shizuoka FG First Medium-Term Business Plan

WSI 3.0 (October 2022-)• Pursuit of the well-being of executives, employees,
and their families• Respect for and maximizing diversity• Enhanced leave and work programs forchildcare support• Further expansion of diversity-related leave
and work programs

WSI 2.0 (April 2021-)

WSI 3.1 (March 2023-)

Creating innovative ideas and new experiences by promoting diversity,
recognizing individual values, and mutually leveraging individuality• Introducing same-sex partnershipsystem• Introducing a full flextime system• Expanding work programs related to diversity (relearning, life events, etc.)• Extending the age limit in employment of veteran human resources

Culture and Well-being Innovation 1.0(April 2023-)• Maintaining the corporate culture and traditionof being close to the community and customers
while reforming the Group’s internal culture• Improving health and well-being (strengthening
health management, mutual growth of individuals
and the organization through acceptance ofdiversity)• Holding townhall meetings between management andemployees• Eliminating use of titles among executives andemployees• Trial launch of the health keeper program (in-housephysical therapy by visually impaired therapist)• Expanding eligibility for the off-the-job injury/illness
leave program, etc.

[Main initiatives]○ Adapting to the amended Child Care and Family Care Leave Act○ New funding to support men who take long-term leave, women returning to work early (additional funding to support households where the father takeschildcare leave), and other measures○ Extension of the periods of childcare leave, shortened working hours, and other childcare programs under special circumstances, and establishment of
new leave programs
52

Culture and Well-being Innovation (2)Support for balancing work and personal life
To enable each and every executive and employee to maximize performance in his or her own environment, we are developing and expanding
systems to promote a work-life balance. These measures promote autonomous work styles that match the working and personal lives of executives
and employees facing constraints on their working hours, thereby contributing to their skills development and making their work more rewarding.
Infertility
treatment

Pregnancy

Maternity leave

Spousal special
maternity leave(10 business
days)
System of work measures for
infertility treatment(shortened working hours, noovertime, limits on overtime)

Preschool

First through third
grades of elementary
schoolFourth throughsixth grades of
elementary schoolChildcare leave
Postpartum(until child reaches two years of age;maternity
three years of age if child is on aleave
waiting list for daycare center)(eight weeks)

Prepartummaternity
leave(six weeks)

Infertility treatment
leave (365 days)

Childcare leave

Long-term careLong-term care leave(365 days)

Leave program for caring for childrenof relatives and others
Restricted working Permission to extend
restricted working
hours for childcare(shortened working hours for childcare forhours, no overtime,children in special
limits on overtime)
cases

System of work measuresduring pregnancy(shortened working hours, noovertime, limits on overtime)

System of work measures forlong-term care(shortened working hours, noovertime, limits on overtime)

Support programs for returning to work
Childcare support Childcare support
interviews
interviews(before returning(during leave)
to work)

Childcare support interviews(during pregnancy and before leave)

Childcare support
interviews(after returning towork)Children’s nursing time off(five days for one child, 10 days for two
or more)Monetary payments
on childbirthFunding to support households
where the father takes childcare
leave, additional funding to support
households where the father takeschildcare leave

Time off for long-term care
(five days for one care recipient,
10 days for two or more)

On-site childcare
facilities(Mori-no-hoikuen)

Diversity leave program in special family circumstances, etc.

53

Culture and Well-being Innovation (3)Promoting health management
Having established the Health and Productivity Management Declaration as a basic policy, we strive to create comfortable work ing environments and to support thehealth of our executives and employees. In addition, we have formulated a strategic map based on the Guidelines for Administr ative Accounting of Investment in
Health and Productivity Management established by the Ministry of Economy, Trade and Industry (METI) and invest in health in various ways as solutions tomanagement issues.

Certificated Health and Productivity
Management Organization 2023

Strategic map

Mental health

PhysicalhealthSocial and overall
healthHealthinvestment

Health investment effects
Health initiative
indicators

Indicators of changes in
employee awarenessand behavior

Development and provision ofservices related to healthmanagement

Number of services, etc.

Increasing health-related
approaches

Obtaining health knowledge

Number of persons passing
health master testing

Increasing highly healthliterate employees

Using health apps

Number of health app users

Raising awareness ofeveryday health management

Health checkups

Percentages undergoingcheckups and follow-up exams

Early detection of illness

Motor-function checks

Decrease in on-the-job injuries

Rising awareness of motor
functions
Increasing capability to employ
cautionStress checks

Percentage undergoing stresschecksDevelopment of self-care
Increased in counselingopportunities

Flexible work styles(#summercampaign,#wintercampaign)

Shortening working hours

Realizing diverse work styles

Final target healthindicators

Increasing health literacy
within the community

Reducing absenteeism(time off due to physical ormental issues)

Increasing presenteeism(lower productivity due tophysical or mental issues)

Management issues
to be solved throughhealth management

We were named a Certified Health andProductivity Management Organization
2023 in recognition of our healthmanagement efforts.

Health andWell-being

Increased
engagement

Employees and theCompany growing
as partners

54

Culture and Well-being Innovation (4)Cafeteria plan linked to health promotion
We encourage independent and sustained health improvement efforts among our
executives and employees by awarding points that can be used for the cafeteriaplan, which offers a wide range of benefit options, to those who sign up on thehealth management app and take action in various aspects, including healthmanagement and exercise, smoking cessation, and gaining health-related
qualifications. These points can be used to purchase customer products, lodging,and other benefits.

Cafeteria point illustration(3) Use points for customer
products, accommodations,
etc.

(1) Register healthy behavior, etc.
on the app(2) Get awarded and use
cafeteria points

Various benefit programs
We offer the following benefit programs as part of our efforts to maintain and promote the health of all executives, employees, and their families.

Vaccinations

Various leave
programs• COVID-19 vaccination at
six locations in andoutside of Shizuoka
Prefecture• Influenza vaccination
subsidies

A full range of leave
programs including:• Leave for comprehensive
physical examinations• Volunteer leave to supportsocial and community
contribution activities
among executives andemployees

Various welfare
facilities

Length-of-service
awards ceremony

Eco-Bicycle Support
Program• We have concluded
contracts with various
athletic facilities, artmuseums, resorts, andother facilities.

• Special service leave for
employees with 25 yearsof continuous service• Length-of-service awards
ceremony held in person
in FY2022 for first time inthree years

Offering subsidies forcosts of purchasing
bicycles for commuting• Encouraging employees
to switch from commuting
by car or bus to bicycling
to and from work
55

Culture and Well-being Innovation (5)Financial wellness initiatives
The Shizuoka Financial Group offers a wealth of asset-building, illness/injury benefits, and other programs to help executives
and employees, who are responsible for creating value within the Group, realize their own financial wellness.**A sense of security regarding one’s financial future and ability to make choices to enjoy life

Employee Stock Ownership
Plan (ESOP)

Subsidy increased from 80 to 100 yen per contribution of 1,000 yen for ESOP unit
With the transition to a holding company structure, we have increased this subsidy to promote assetbuilding by Group executives and employees and to strengthen awareness, through equity sharing,of our roles as individuals in contributing to the community and to the Group’s corporate value.

Student-loan Repayment
Support Program

We established the Student-loan Repayment Support Program in April 2020
This program aims for a solution to social issues related to the burden of repayment of student loans
and make employee work more rewarding, by helping younger employees repay their loans based on
their years of employment.

Other specific measures• Providing 30,000 yen per month for five years after marriage for those who live in rented homes• Providing investment training in tiered training sessions• Special salary and additional benefits provided by the health insurance society to cover 80% ofbase salary for a certain period after the expiration of injury/illness allowance (under healthinsurance) for a leave of absence due to a non-occupational injury or illness, etc.
56

This document contains forward-looking statements.
Such statements include risks and uncertainty and provide no guarantees
regarding future performance.
Note that future performance may differ from targets due to changing economic
conditions and other factors.
* In principle, monetary amounts and other figures in this document are rounded to the nearest unit. Year-on-year changes
indicated in graphs are calculated from the figures shown in the corresponding tables.

Contact
Yukimasa Okumoto, Corporate Planning Office, Corporate Planning Department,
Shizuoka Financial Group, Inc.
Tel.: 054-261-3111 (main switchboard)

054-345-9161 (direct)

FAX: 054-344-0131
E-mail: ir@jp.shizugin.com URL: https://www.shizuoka-fg.co.jp/
Shizuoka Financial Groupwebsite (IR News)