9. Sustainability Management

ITFOR’s approach to sustainability

Basic Sustainability Policy
We aim to build a sustainable future by fostering
innovation that supports every aspect of local communities and individuals’ life stages while delivering
meaningful experiences.
ITFOR’s services find application within local communities and across various life stages, including
birth, enrollment in school, education, graduation,
employment, marriage, childbirth, and retirement.
We promote a sustainable future by continuously
providing excellent value to society through ourservices and business activities. In doing so, we
aim to bring joy and inspiration to people while
contributing to the health of the global environment,
economic systems, and local communities.
● We will support people in all stages of their lives
and always conduct our business activities based on
the power of empathy, contributing to the creation of asociety filled with inspiration and happiness.
● We will strive to address societal challenges throughengagement with communities and contribute toregional revitalization.
● We will contribute to the development of sustainable cities by building social infrastructure through thepromotion of digital transformation (DX).
● We will practice management with maximum consideration given to the environment. Through our systems
and services, we will contribute to resolving various
environmental issues faced by our customers, including
climate change.
● We will provide an equal, fair, and diverse environment
where individuals can leverage their unique qualities
and feel fulfilled.
● We will establish a robust governance structure thatenables us to respond swiftly and flexibly to significant
changes in society and to evolving needs. Through thisstructure, we will practice management that contributes
to all our stakeholders.

Promotion System
At ITFOR, we have established a Sustainability
Committee to drive sustainability initiatives. The
committee is chaired by the president and representative director, with three directors serving as
vice-chairpersons. For addressing key issues, wehave established three promotion committees:
the Regional Revitalization Promotion Committee,
the Human Resources Promotion Committee, andthe Environmental Promotion Committee. Eachcommittee is headed by one of the three directors.
This allows us to respond quickly to important challenges at ITFOR and to expand and enhance oursustainability efforts.
As part of ITFOR’s governance-driven operations,
the Sustainability Committee reports its activities to

40

【E】

the Board of Directors every six months. Directives
from the Board of Directors are communicated toour group companies through the Sustainability
Committee and the ITFOR Group Management
Committee. This latter committee consists of top
executives from each division and group company,
ensuring a seamless implementation system.
The members of the Sustainability Committee
include employees from various ranks across ourbusiness divisions. Furthermore, female representation of approximately 30% demonstrates ourcommitment to gender diversity.

Reduceenvironmental
burden【S】
Contribute tosociety throughregional revitalization【S】
Improve productivity
and enhance added
value through thepromotion of DX

Reducing our environmental impact is a challenge that we share in common withmanagements at other companies. We are implementing measures to reduce our impact,
particularly measures critical to mitigating climate change. We are also looking from a
BCP perspective into solutions for environmental-related and other issues affecting ourbusiness continuity.

We have a robust regional business base and recognize and seek to contribute to the crucial roleof regional economic revitalization in societal development. We are doing so through business
innovation that yields optimal solutions for addressing regional disparities, fostering local
employment, and more.

Society’s rapid digital transition is another essential challenge that we are tackling. We use
evolving IT to digitize and thereby boost the productivity of businesses and other entities. We
strive for enriched social environments by making possible meaningful individual experiencesthat result in a sense of fulfillment. Our objective is societies where people can live well andfind purpose.

Board of Directors【S】

Sustainability Committee
Committee chairperson:president andrepresentative director

Regional
Revitalization
Committee

Head OfficeVice chairs:
director of technology
development
head office director
managing director

Human
Resources
Committee

Technology
Development
Headquarters

Management
Division

Environment
Committee

Deepen humancapital【G】
Strengthen
managementfoundation

We believe that each individual employee is an asset, to our company and to society. So we
provide a healthy and safe workplace where human rights for diverse values and backgrounds
and more are respected and where employees can maximize their capabilities and serve as
valuable resources. We promote employee education to enhance knowledge and skills that
support our corporate activities and that build individuals secure in who they are and who thus
are able to be contributing members of society.

Sound corporate governance is essential management policy to benefit the interests of all
stakeholders. We are strengthening our management foundation by enhancing such of ourcorporate governance structures as compliance management and risk management. We arealso reinforcing our internal infrastructure, chiefly by boosting the security measures so
indispensable for good corporate governance.

Group companies

Materiality

Stakeholder Engagement

ITFOR’s raison d’être is to contribute to the development of a sustainable future by delivering unexcelled and positive experiences to individuals andbusinesses through regional revitalization. Based on
this purpose, we have formulated our Sustainability
Basic Policy and identified five areas of materiality(key issues) in sustainability from environmental(E), social (S), and governance (G) perspectives.

ITFOR prioritizes stakeholder engagement topromote a sustainable future. We incorporate stakeholder feedback in our corporate activities throughtransparent information disclosure to build trustand drive mutual development.

ITFOR’s sustainability initiatives involve businessactivities in response to these material issues andstrive to achieve the United Nations Sustainable
Development Goals (SDGs) adopted in 2015 with a2030 deadline.
【E】Reduce
environmental burden【G】Strengthen
management foundation【S】Deepen human capital【S】Contribute to society
through regional revitalization

Regional communities(Individuals)

For details of stakeholder engagement

Initiatives Assessed Based on ESG Scores
ESG initiatives are objectively scored by various
evaluation organizations, each with a distinct perspective. The Nikkei ESG Management Forum established by Nikkei Inc., is Japan’s lead ESG assessor.
The forum provides comprehensive support for
entities’ ESG activities through three approaches:
information dissemination, information gathering,and research and analysis.
ITFOR is a general member of the Nikkei ESG
Management Forum, and as such reviews andadvances its corporate ESG initiatives based on
the ESG scores the initiatives have received. We
also support the improvement of our customers’
ESG scores with suggestions and assistance andthrough our products and services.

Students

Customers

Suppliers
and affiliatedcompanies

Employees
and theirfamilies

Shareholders
and investors【S】Improve productivity and enhance
added value through the promotion of DX

41

9. Sustainability Management

ESG initiatives

Reduced environmental impact

Basic to its third medium-term management plan is
ITFOR’s dedication to advancing ESG. This entails
pursuing our ESG initiatives and assisting ourcustomers with theirs. To that end, we reopened ourrenovated 12th-floor office space in December 2022
to offer internal and external stakeholders a place
to examine our sustainability initiatives. We plan aswell to open this space to local elementary schools
and other such groups for educational and work
experience purposes.

Basic Approach
The world faces significant risks from increased
environmental burden caused by climate change,
including rising air and ocean temperatures, raging
forest fires, heavy rainfall, flash floods, and additional severe natural disasters.

Innovation

Communication

Imagination

Innovation ＝ Communication ＋ Imagination

1. Environmentally friendly office [E]

4. Comfortable work environment [S]Our office boasts vinyl chloride flooring materials
and carpet tiles crafted from environmentally friendly
substances. We also recycle materials, such as waste
clothing, for green objects and use furniture linoleum
for box tables and meeting tables.
We have utilized 2,623 kilograms of recycled materials,
a reduction in greenhouse gas emissions of 1,877
kilograms and roughly the amount of CO2 213 40-yearold cedar trees would absorb in one year.

We feature a flexible work environment where
employees can work freely anywhere through ourintroduction of a hot desk system and movable desks
in open spaces. Team members can thus unleash theirpotential wherever and whenever in the office.

2. Paperless environment [E]We have achieved paperless operations by not installing photocopiers and printers in our office. This has
eliminated our need of trash cans and moved us toward
our objective of zero waste generation.

3. Conference rooms named for SDG colors [E][S] [G]
Our office has nine conference rooms, each namedfor a theme color associated with the SDGs. We havecarefully selected and arranged these theme colors toalign with our initiatives.

5. Communication that sparks creativity [S]We promote interaction among our employees byoffering free drinks in our office café and by providing
courtesy alcoholic beverages during happy hours
several times a month. We cover the cost with thesavings that we achieve through our paperless initiatives.

6. Battery station installations [S] [G]We have installed battery stations to provide just theright amount of power when needed. They are designed
for internal use and for use by the local community
during disasters or other emergency situations in linewith our focus on contributing to the regions where
we do business.

The ITFOR Group strives to reduce its environmental
impact and to assist its customers’ initiatives in thisregard through its products and services. Internally,
our efforts to combat global warming include thestrengthening of our greenhouse gas emissions
regulations in line with international frameworks.
We also consider disaster preparedness essential
amid heightened environmental risks and, as such,
have put in place business continuity planning(BCP) measures.
Our Environmental Promotion Committee is conducting an analysis of climate change risks andopportunities. Its scenario analysis of our transition
risks, which encompass policy and regulatory risks,market risks, and acute physical risks, forecasts
no significant impact on our operations to the year
2050. The reference for this forecast is that our
scope 1 and 2 emissions for fiscal 2021 were 454
t-CO2. We seek to identify our emissions so that
we can set reduction targets for fiscal 2024 andbeyond.

Key Initiatives
1. In-House Efforts● Low Environmental Impact Workspace
Our expansion of ourTokyo headquarters workspace wastrue to our commitment to ESG initiatives. We refrained
from installing photocopiers, printers, and shredders
to achieve paperless operations and minimize waste,eliminating the need even for trash cans. We have also
incorporated various environmentally friendly products
in our workspace (see page 42).

2. Our Customers’ Initiatives● Verification Experiment for Electronic Issuance ofUniversity Completion Certificates Using Blockchain
Technology
Open-space workplaces feature a hot desk system with movable desks

Environmentally friendly offices

Since May 2022, ITFOR has been conducting joint
verification experiments with the Kyushu Instituteof Technology and Chaintope Inc. into the electronic
issuance of university course completion certificatesusing blockchain technology. Enabling students toobtain their certificates without their need of visiting
the registrar’s office will reduce car travel and CO2
emissions.

financial institutions and other entities with cashless
payment platforms.
● Reduced Environmental Impact through Cloud
Service
Our next-generation cloud service, IPaC (ITFOR
Package Cloud), is a robust system of minimal environmental impact based on Amazon Web Services(AWS). Its leading-edge energy efficiency and use ofrenewable energy reduce its power consumption andCO2 emissions beyond anything previous and take us
toward a carbon-neutral society.

3. External Initiatives● Participation in Japan Climate Initiative
The Japan Climate Initiative was established in July
2018. Its participant companies, governments, NGOs,
and others pledge to solve global challenges and to
decarbonize society. They constitute a network thatstrengthens communication and the exchange of strategies and solutions regarding climate change. ITFOR
has participated in the initiative since November 2021
and uses the information it obtains to benefit various climate-related activities domestically and internationally.
Japan Climate Initiative● Response to the CDP
The CDP (formerly the Carbon Disclosure Project) is anongovernmental organization managed by a UK-based
charity. It operates a global information disclosuresystem for investors, businesses, countries, regions,and cities to manage their environmental impacts.
ITFOR began responding to the CDP’s annual questionnaire in 2022 to disclose information on its activities
related to climate change.
CDP Japan● Sponsorship of Tour de Kyushu 2023
We were a Silver Partner sponsor of the Tour de Kyushu
2023 bicycle race held from October 6 to 9, 2023. This
event transcends cycling in its promotion of sustainability in Kyushu. In its emphases on regional development
and recovery, environmental conservation, health, andadvanced technology, the event aligns with various
SDGs. It focuses on eco-friendly race operations, carbon
neutrality, and respecting the natural environment—all
goals and visions that ITFOR embraces.
Tour de Kyushu 2023

● Cashless Payments Lessen Environmental Burden
Cashless transactions reduce CO2 emissions associated with the issuance, transport, and management ofcash. ITFOR promotes cashless transactions in supportof regional economic revitalization by providing local
Battery stations

42

Meeting rooms with SDG
color names

Office café encourages employee interaction

43

9. Sustainability Management

Societal contributions through regional revitalization

Digital transformation for productivity and added value

Basic Approach

Basic Approach

Japan’s population, including its working-age demographic, is in decline because of the country’s low birthrate and aging society. This is a significant issue, as
it strains the nation’s social security capabilities andjeopardizes its international competitiveness.
Of particular concern is the stagnant population
growth in the nation’s rural regions, where populations
are rapidly aging and there is a net outflow of younger
residents to urban centers. The concentration ofpeople in major cities may enhance economic efficiency, but it poses the risk of mass casualties from thekind of natural disasters to which Japan is prone.
ITFOR believes that balance between Japan’s ruraland urban areas will strengthen the nation and bringpeace of mind to its members of society. The company
is addressing urban-rural disparities through open
innovation and by promoting regional economic revitalization in rural areas that yields employment andincome-generating opportunities.

Key Initiatives
1. Regional Revitalization through Open Innovation
We support corporate business transformation and, inturn, regional revitalization, by offering packages that
integrate our and other companies’ technologies tolocal customers.
● Solutions for Financial Institutions
We leverage expertise garnered through our workwith regional financial institutions, an ITFOR strength,
to provide our other financial institution customers
with increasingly advanced solutions to their needs.
These include personal loan operation support system“SCOPE” and the web-based loan application system“WELCOME.” By offering such solutions, we are helping
to revitalize regional finance.
● System for Retailers
RITS is a core operating system designed for and that
ITFOR provides to the retail industry. It caters to a wide
range of retail formats, including department stores,
hardware stores, specialty shops, general merchandise
stores, supermarkets, and drugstores. RITS features
every function vital to a retail operation: product management, sales management, customer management,
and credit. As such, it improves operational efficiency
and increases sales.
● Support for Public Education
Boards of education in Japan benefit from ITFORdeveloped CARS School Affairs Support Series. This
educational solution boosts efficiency by streamlining
and enhancing tasks typical of educational settings. It
frees teachers to focus on education. Comprehensive
in scope, it provides standardized support for schoolaffairs, ensuring equitable education for all children,
regardless of their location or school.

44

2. Cashless Transactions Revitalize Regional
Economies
ITFOR furnishes its cashless payment platform
iRITSpay, to regional financial institutions and otherentities. Further details of our regional promotionof cashless transactions appear in “Dialog with a
Customer” on page 16.
● Business Process Outsourcing Boosts Regional
Employment
ITFOR offers business process outsourcing (BPO)
services to local governments. Governments that
outsource to us the collection of tax and National
Health Insurance payments and other tasks liberate
their employees to focus on core responsibilities. This
improves services for local residents. Our BPO also
opens local employment opportunities, as we hire
and train local people to undertake these tasks to thehighest standards. In regions grappling with economic
stagnation, our recruitment of locals stimulates local
economies.
● Cybersecurity for Local Companies
ITFOR collaborates with local systems engineering
companies to meet the cybersecurity needs of local
businesses. The cybersecurity service “Ransom
Guard,” protects small and medium-sized enterprises(SMEs) from ransomware threats. It helps even SMEs
that lack specialized expertise elevate their cybersecurity. In fiscal 2022, the Tokyo metropolitan government entrusted ITFOR to enhance the cybersecurityof SMEs in its jurisdiction. We are doing so throughthe AI-based EDR service “CyCraft AIR” (see page 45
for details).

External Initiatives
1. Public-Private Partnership for Regional
Revitalization and SDG Implementation
The Japanese government Cabinet Office has established a public-private partnership to promote theimplementation of the SDGs and the revitalization ofregional economies. ITFOR joined the partnership earlyin calendar 2023 and is working toward its objectives
alongside regional financial institutions and governments and public enterprises and universities.
Public-private partnership for regional revitalizationand SDG implementation

2. Regional Revitalization Campaign to Promote
Remote WorkWe are aligned with the objectives of a Japan government Cabinet Office and Cabinet Secretariat campaign
to promote remote work as a means of driving regional
revitalization. Early in 2023, we issued an action declaration regarding this campaign.
Campaign to promote remote work for regional
revitalization

Much of what ITFOR does to advance DX is foundedin Japanese government policies.
Japan’s government formulated its Basic Policy
for Reforms for the Realization of a Digital Society
in 2020 and in so doing announced its vision fora futuristic digital society. This was followed up
in 2021 with the passage of the Basic Act on theFormation of a Digital Society and the adoption bycabinet of the Priority Policy Program for Realizing a
Digital Society. What is clear in each issuance fromthe Japanese government is the imperative role oflocal governments in helping to realize the vision fora digital society in Japan.
Ministry of Internal Affairs and Communications
ITFOR leverages emerging technologies and works
with businesses and other organizations to support
their DX initiatives and enhance their productivity. We
strive to establish workplace environments whereindividuals find fulfillment in their work and can workwith a sense of purpose. To do so sees us blend ourtechnologies with those from other companies tobuild and provide the digital infrastructure necessary
for the DX of businesses, other organizations, andsociety overall.

DX and “Decent Work”“Decent work” is a term introduced by Juan Somavia,
who became the director-general of the International
Labour Organization (ILO) in 1999. It refers to theidea of ensuring work that is meaningful, motivating,and dignified. ITFOR values decent work and is capitalizing on digital technology to transform society
and its myriad entities to enrich the lives of workers
and people in general. We are determined to ensurethat workers find job satisfaction in meaningful,motivating, dignified employment.

Trustworthy ITFOR technology, therefore, will figure
prominently in raising the quality of services provided
by local governments.
2. End-of-Life Service Verification Project
ITFOR’s Digital Safe end-of-life service employs
blockchain technology. Kumamoto Prefecture haschosen Digital Safe for its DX verification projectof advanced Web3 technologies, scheduled to run
from July 2023 to March 2024 of our 2023 fiscal year.
The prefecture is thus pioneering IT for end-of-life
services in its bid to improve its public service. ITFORis pleased to be a part of this project and to support
Kumamoto Prefecture’s DX initiatives.
Demonstration Project for DX Utilizing Blockchain Technology

Building Societal Awareness and Knowledge

Digital safe

Blockchain

End-of-lifenotebook

Local government

Local citizens
Interactive exchange

3. Artificial Intelligence Cybersecurity

Key Initiatives

To combat cyberattacks, ITFOR offers CyCraft AIR.
Artificial intelligence (AI) underpins CyCraft AIR andsignificantly reduces the time and cost involved ininvestigating and analyzing vast terminal logs. It
also expedites recovery, delivering analyses reports
within three hours along with actionable response
strategies in report form. CyCraft AIR enables organizations to undertake cybersecurity internally. The
primary users of this ITFOR product are regional
financial institutions, governments, and e-commercesite operators.

1. Electronic Issuance of Certificates

4. Automated Call Center Systems

ITFOR collaborated with the Kyushu Institute ofTechnology and Chaintope Inc. in a verification
experiment for the electronic issuance of university
course completion certificates using blockchain
technology. Having verified the technology, we plan
now to establish partnerships with other private
corporations to offer it to universities across thecountry and to upgrade it to issue certificates ofdiverse kinds.

Financial institutions benefit from two further ITFOR
systems, each of which encourages customers tosettle outstanding payments. The automatic call
reception system “Robotic Call” that uses interactive voice response (IVR) technology, and the credit
promise reception system “NYUS.” Because thesesystems automate traditional call center tasks, they
obviate the need for personnel to handle calls andenhance efficiency. Staff can focus on interfacingwith customers for more complex tasks, thereby
improving service quality.

Japanese Trade Union Confederation

We will also develop additional digital platforms thatinspire DX throughout the country. These platforms
will facilitate the electronic issuance of certified
copies of resident registers and other documents.

45

9. Sustainability Management

Human capital valued

long term. We hope to expand our proportion of female
employee role models to, in turn, raise our number offemale managerial candidates.

Basic philosophy
Our basic philosophy is to elicit joy through the power of
empathy. To realize it, we cultivate a work environment
where employees can engage diligently and enthusiastically and be empowered to unlock their potential. Each
employee is integral to our mission of staying closely
connected with our customers to learn how best we canmeet customer needs. Only a happy, fulfilled employee isable to do so.
We believe that every initiative related to securing andnurturing human resources contributes to improving
our ROIC. This reflects our approach to human capitalmanagement. We engage in initiatives where everyone
involved is aware of the objective to maximize the effectiveness of each initiative. And for every initiative, weestablish and monitor key performance indicators (KPIs)
that we observe at fixed points throughout an initiative.

Key Initiatives● Conducting in-house education and training
In line with ITFOR’s belief that the growth of each employee
contributes to the growth of the company, ITFOR’s management is committed to employee education and development. We also encourage a culture of self-learning in the
belief that this contributes to elevating job performancecapabilities.
KPIs
PMP certification holders: FY 2022: 17.3% (FY 2023 target: 20%)

1. Respecting Human Rights
We consider it our corporate responsibility to respect
the right of all individuals to freedom and happiness.
This initiative applies as much outside as inside thecompany. In the conduct of our business and in our
conduct as members of society in general, we respect
the human rights of our customers and of every individual in society.
2. Promoting and Nurturing the Participation ofDiverse Human Resources
We inaugurated a project team to drastically revise
our personnel system in September 2021. That teamengages in ongoing discussions regarding personnel
system challenges and the direction of our humanresource (HR) initiatives. This has resulted in the implementation of various reforms, such as a qualificationand grading system and a performance evaluation
system.

Components
of indicator

We also conduct surveys to discern employee expectations and satisfaction levels through scoredassessments. The surveys enhance employee engagement, and we utilize the insights gleaned fromthem to optimize our work environment and refine our
HR systems. We regularly measure the effectivenessof our engagement with employees by employing aplan-do-check-act (PDCA) cycle to ensure continuous
improvement in that regard.

Improvement drivers

National exam pass rate for IT engineers: FY 2022: 75.3%(FY 2023 target: 80%)

● Pursuing aggressive hiring of experienced personnel
We emphasize the recruitment and development of recent
graduates but also hire experienced professionals toensure the swiftest response to changes in the businessenvironment. This promotes diversity within our organization. In April 2023, in fact, we introduced a Comeback
Alumni Program that seeks to reemploy former employees
who left ITFOR mid-career for such reasons as childbirth,caregiving, spousal relocation, or career advancement
elsewhere. It is part of our efforts to secure talented
individuals and raise the mix of our employee ranks andplaces no limitations on the duration either of employment
or nonemployment at ITFOR.
● Promoting female empowerment
ITFOR promotes the recruitment of women and aworkplace that accommodates their life stages, including
marriage and childbirth, to ensure that they thrive in careers

Improvement measures

Human resources strategyaligned with measures
Strengthen internal talenteducation and development

Grossprofit margin

Enhance marketing,expand new businesses
and products, andsustain and improve
the recurring business

SG&A expenses
to sales ratio

Capitalturnover ratio

Enhance employees’
value and creativity,
and reduce costs

Current asset
turnover ratio

Strengthen
diversity and inclusion
Improve
employee retention rate
Enhance working conditions
Improve employees’ mental
and physical well-being

Fixed asset
turnover ratio
Every employee actively
participates, keeping in mind the
direction of each initiative witha focus on improving ROIC

46

Promotewomen’s participation

Secure and nurture
new talent, andenhance the work
environment

Engage senior professionals

Operatingprofit margin

ROIC

Recruitexperienced professionals

Ensure a workplace
where employees
can maximize
their potential

KPIs
Percentage of female employees: FY 2022: 18.0%(FY 2025 target: 25%)
Percentage of female managers: FY 2022: 4.3%
(FY 2025 target: 9%)● Fostering the participation of senior talent
We plan to implement a retirement age extension in April
2024. This is a strategic measure to exploit the skills andexperience of our senior talent.
● Strengthening diversity and inclusion
To foster IT-related innovation, we offer a work environment that embraces diverse talents and work styles. Thisencourages mutual inspiration among employees andpermits employees to work in the way that they are most
comfortable and productive. It also sees us participate intalent exchanges with client and other companies throughlong-term secondments and placements and the like. In
some cases, we develop IT talent on behalf of and for the
express purpose of placement with our customers.
● Lowering employee turnover
Mobility within the IT industry is rising. So we are improving
our employee retention rate by emphasizing the value ofeach initiative outlined in this section.

3. Providing a Fulfilling Workplace
A large part of what we offer in the way of a fulfilling
workplace is our flexible accommodation of individual
work styles. This heightens employee engagement,
empowers personal growth, and bolsters creativity andproductivity.
● Prioritizing ease of work through a redesigned officespace
We believe that a comfortable workplace contributes toenthusiastic and innovative work. The redesign of our
12th-floor headquarters’ office space, completed in fiscal
2022, provides a relaxing environment and encourages
employee interaction (see page 42).
● Improving our work environment and conditions ofwork
Our efforts at employee motivation and engagement
involve improvements to ensure a fulfilling and rewarding
workplace. We also advocate for work-life balance, especially through the taking of paid vacations. In fiscal 2022,
we saw our paid vacation utilization exceed 80%.
Success in this respect came in part because of incentives.
They include anniversary leave, where employees who takepaid leave during the month of their birthday or some othercommemorative day are eligible for a bonus. They also
include +1 (plus one) leave, where employees are encouraged to take an extra holiday before or after a three-day
weekend or in the gap between public holidays. Throughthese and possible further incentives, we hope to maintainour paid vacation utilization rate at a high level.

leave and in providing for individual work styles to support
men and women in balancing work and life.
KPIs
Percentage of employees taking paid leave: FY 2022: 83.0%(FY 2023 target: 85%)
Percentage of male employees taking childcare leave: FY 2022:
44.4% (FY 2023 target: 50%)

4. Promoting Occupational Health and Safety
In an evolving work environment with diverse employment arrangements, we prioritize occupational safety
and health. Our commitment is to ensure a work environment where everyone can work with confidence andpeace of mind.
● Conducting regular employee health checkups
We proactively monitor the physical and mental well-beingof our employees. As such, we arrange for regular healthcheckups and track participation therein. We strongly
encourage any nonparticipating employees to avail themselves of these health checkups.
KPI
Percentage of employees taking health checkups: FY 2022:
89.0% (FY 2023 target: 100%)● Protecting employee mental health
We strive to protect the mental health of our employees.
This includes annually checking employees for stressto raise their awareness of their stress levels. Stressed
employees are taught coping mechanisms while we
address any workplace issues causing their stress. We
also offer one-on-one sessions with occupational physicians. In addition, we have established the ITFOR Hotline,
an internal and external consultation service throughwhich employees can anonymously seek advice if they
feel uneasy about openly discussing power harassment,
sexual harassment, compliance malfeasance, and the like.
KPI
Percentage of employees taking stress tests: FY 2022: 84.0%(FY 2023 target: 100%)● Participating in the Health & Productivity
Management Alliance
The Health & Productivity Management Alliance is, asof June 30, 2023, a collection of 148 companies and organizations that share a vision of invigorating Japanesecompanies by promoting employee health and sustainable
health insurance.* ITFOR participates in this alliance tocollaborate on health-related initiatives, including healthinsurance, with other companies and on recognizing healthand productivity management.
*Health & Productivity Management is a registeredtrademark of nonprofit organization Kenkokeiei.
Health & Productivity Management Alliance website

We also hope to achieve the government target of a 50%
uptake in paternity leave by 2025. We launched a support
program for that purpose in October 2022 that provides fullsalary for up to two weeks from the start of paternity leave.
Our promotion, meanwhile, of the diverse work styles of
our working parents has seen us implement a number ofmeasures. Among them are the options of telework andshortened working hours. We desire our efforts in paternity47

9. Sustainability Initiatives

Management foundations strengthened through corporate governance

Basic Philosophy
ITFOR draws on its corporate philosophy of eliciting
joy through the power of empathy in expressing its
philosophy of corporate governance. It recognizes
that the basis of corporate governance is transparent and fair management systems and efficientbusiness execution underpinned by prompt andresolute decision-making and timely and appropriate information disclosure. The aim of effective,
constantly improved corporate governance is theenhancement of ITFOR’s corporate value.
Corporate Governance Structure
ITFOR has adopted a corporate governancestructure consisting of an Audit and Supervisory
Board to reinforce the supervisory function of theBoard of Directors and to ensure the robustnessof the company’s corporate governance (seeschematic of corporate governance structure on thefollowing page).
1. Board of Directors
The Board of Directors consists of eight members:
two representative directors, three non-audit
directors, and three directors who also serve as
members of the Audit and Supervisory Board. To
strengthen the supervisory function of the Boardof Directors, ITFOR has established a policy toappoint independent outside experts to one-third ofits Board of Directors’ directorships. Of the Board’s
eight directors, three are outside directors.
The Board of Directors holds regular meetings oncea month and extraordinary meetings as necessary.
Directors knowledgeable in the company’s business
operations and independent outside directorsof diverse expertise engage during meetings indynamic discussions leading to swift and flexible
decision-making and the strengthening of theBoard’s supervisory function.
Comprehensive information sharing among
directors, including outside directors, is ensured
by having directors attend Business Executive
Committee meetings (see 4). And the Board’s effectiveness is regularly evaluated through surveys
of its directors.
Number of meetings in fiscal year 2022: 25
2. Audit and Supervisory Board
The Audit and Supervisory Board oversees theinternal controls, the legality, and the appropriateness and efficiency of ITFOR’s business operations.
It consists of three ITFOR directors: one ITFOR
director who is a full-time Audit and Supervisory
Board member and two outside directors.
The Audit and Supervisory Board meets at least
once a month in principle to audit the execution

48of the duties by the company’s directors, to audit
the company’s financial documents and othermaterials, to produce audit reports, and to handle
other matters. It conducts its audits in coordination
with ITFOR’s external auditor, ITFOR’s internal audit
division, and other parties in accordance with its
audit policies and plans.
Number of meetings in fiscal year 2022: 19
3. Nomination and Compensation Committee
ITFOR has established its Nomination andCompensation Committee as a voluntary advisory
body to its Board of Directors. The committee istasked with enhancing and ensuring the transparency and objectivity of procedures regarding thenomination and compensation of directors and withbolstering corporate governance,
The Nomination and Compensation Committee iscomposed of three or more members appointed
through a Board of Directors’ resolution. It adheres
to a policy that the majority of its members are to
be independent outside members, one of whom
will serve as the committee’s chair. The committee
conducts deliberations and provides recommendations to the Board of Directors in response toinquiries therefrom.

The Sustainability Committee meets monthly,reports on its progress to the Board of Directors
semiannually, and receives directives as needed toensure its continuous, effective, and smooth functioning. Its three subcommittees convene monthly
to bimonthly.
6. Compliance and Risk Management Committee

Japan’s Corporate Governance Code
ITFOR implements each principle of Japan’s
Corporate Governance Code. Details regarding
disclosure in this regard are documented in thecompany’s Corporate Governance Report (revisedon June 27, 2023).

ITFOR’s Compliance and Risk Management
Committee reports directly to the Board of Directors
and oversees the overall compliance and risk
management of the ITFOR Group. The committee
is chaired by ITFOR’s president and representative director and includes in addition three ITFOR
directors. It convenes quarterly in principle and may
hold additional meetings as needed, especially inthe event of significant compliance-related incidents(see page 50).
Basic Policy on Corporate Governance (revised onJune 28, 2022)
Basic Policy on the Establishment of an Internal
Control System (revised on June 19, 2015)

Corporate Governance StructureManagement oversightGeneral Meeting of Shareholders

Number of meetings in fiscal year 2022: 2
4. Business Executive Officer Committee
ITFOR has adopted the executive officer system toswiftly respond to changes in the business environment by separating management’s decision-making and supervisory functions from the businessexecution function. Executive officers convene thecommittee twice a month in principle to deliberateon execution policies and to ensure agile business
operations.

❸Nomination
and Compensation
Committee

Inquiry
Report❶Board of Directors

Determination of management
polices and strategies, andsupervision of business execution

Audit/
Report❷Supervision

ITFOR established its Sustainability Committee
to achieve a basic objective of its third mediumterm management plan: to advance ESG. The
Sustainability Committee is chaired by ITFOR’s
president and representative director and includes
three directors as vice-chairpersons. Collectively,
they drive ESG by addressing its material issues.
Three subcommittees operate under the guidanceof the Sustainability Committee: the Regional
Revitalization Promotion Committee, the Human
Resources Promotion Committee, and theEnvironmental Promotion Committee, each led by
an ITFOR director and each focused on a specificarea. This structure enables agile responses tocritical challenges.

ReportAccounting Auditor

Cooperation❺

Sustainability
Committee

President andrepresentative director

ReportInternal Audit Office

Accounting
audit

Cooperation

Internal
control audit

Internal
auditing

Number of meetings in fiscal year 2022: 22
5. Sustainability Committee

Cooperation

Audit andSupervisory Board

Internal control❻ Compliance andRisk Management
Committee❹

Business execution/internal control

Business Executive
Committee

Security
Committee

Business execution

Executive officers
Office Efficiency
and Environmental
Enhancement
Committee

Quality and
Safety Committee

Divisions/offices

Group companies

49

9. Sustainability Initiatives

Management foundations strengthened
through compliance and risk management
Basic Approach

Key Initiatives

ITFOR strives to be a company trusted by society byadhering to laws and regulations, including internal
regulations. We make every effort to act withintegrity and good judgment.

1. Promoting Compliance and Embedding Risk
Management

Promotion System
Our Compliance and Risk Management Committee
oversees our overall compliance and risk management. It investigates the causes of complianceviolations and other business risks and considers
and implements measures after reviewing laws andregulations to prevent or mitigate recurrence.
In the event of emergencies, such as natural
disasters, the president and representative director
heads up the company’s Emergency Response
Headquarters to promptly and appropriately manage
the crisis. ITFOR has established three subcommittees—the Security Committee, the Office Efficiency
and Environmental Enhancement Committee, andthe Quality and Safety Committee—to analyze fromtheir specialized perspectives operational risks
arising from emergencies. Those subcommittees
report their findings to the Compliance and Risk
Management Committee.

ITFOR has internal regulations governing compliance and risk management. In accordance
therewith, the directors, executive officers, andemployees of ITFOR and its subsidiaries are guided
by the three just-mentioned subcommittees inongoing training and awareness-building activities.
This ensures that everyone views compliance as apersonal responsibility and conducts business witha focus on risk management. Our Corporate Codeof Conduct, moreover, is a universal standard thateveryone at ITFOR must abide by in doing business.
2. Ensuring Compliance
We have established three internal mechanisms toensure compliance: the Compliance Consultation
and Reporting Liaison Office, the Harassment
Consultation Hotline, and the Mental Health
Consultation Hotline. We have in addition set up an
external liaison office to accommodate employees
who prefer not to report internally.
We prioritize user privacy. Nobody who reports
transgressions in compliance will face adverse
treatment for seeking our consultation or cooperating in fact-finding. As required, and only with thereporting individual’s consent, a report may be madeto the company in an effort to resolve the issue.

Anticipated key risks and their mitigation
Type of risk

50

Outline of risk

Key measures

Naturaldisasters, etc.

Business disruption from power
outages and telecommunications failures caused byearthquakes and other disasters

We have data centers in Tokyo and Osaka and have established a business continuity
plan (BCP) that takes into account large-scale earthquakes. We implement safetymeasures such as the introduction of a safety confirmation system, seismic resistancemeasures, and disaster prevention training.

System (product)development andquality management

Costs and damages due toquality-related issues

We have obtained ISO 9001 certification (2015 edition), produced a quality manual, andset quality objectives to ensure thorough quality management. ISO 27001 certification(2013 edition), meanwhile, facilitates our ability to conduct quality assurance, to improve
services, and to enhance customer satisfaction.

Information security

Loss of critical information

Division managers serve as information security officers and oversee security within
their divisions. We have obtained privacy mark certification and have bolstered our
information management with CAT Supporter, a system that monitors access control
and PC operation logs.

Competition

Price declines amid intensecompetition

Our business strategy sees us leverage our extensive business experience tospecialize in systems for regional financial institutions and for distribution and retailindustries. By concentrating on these areas, we accumulate system expertisesuperior to our competitors’. We differentiate ourselves by offering comprehensive
services encompassing tangible and intangible elements and our unique solutions
and network infrastructure.

Exchange rate
fluctuations

Increased costs due toexchange rate fluctuations

We engage in forward exchange reserve transactions within the scope of foreign
currency accounts payable and order amounts. We select the counterparties for forward
exchange reserve transactions from among highly reputable domestic banks to mitigate
our credit risks.

COVID-19

Constraints on order activities,
delays in software development,
and delays in delivery caused bydisruptions in the supply chain
because of the renewed spreador prolonged impact of infections

We promote work-style reforms that include telecommuting and more. As part of ourintegrated supply chain management, we also exercise procurement based on customer
demands to minimize transportation, inventory, and waste generation, thereby limiting
the impact on performance.