The Kumagai Gumi Group
Corporate Report

Insight, Onsite, FarsightCONTENTS
As a leader in the construction services that society requires,the Kumagai Gumi Group is committed to contributing to the creationof an ideal community in which people would want tolive by solving social issues to the best of our ability at all times.

Our Value Creation Story
Our Value Creation Story

4 Interview with the President
8 Value Creation History
10 The Kumagai Gumi Group’s Business
12	Roundtable Discussion with Kumagai Gumi
Group Company Presidents

Management Planning Process
Based on the Group Vision

Insight, Onsite, Farsight
When we build a structure, we are building a community together with the people who will use that space.

Process

Editorial Policy
This Corporate Report is issued with the goal of communicating
the Kumagai Gumi Group’s management policies, businessstrategies, and value creation initiatives to all of our stakeholders.
It showcases the involvement of our ESG-based businessactivities with the SDGs, and communicates our contribution to
the formation of a sustainable society.
The report meets the expectations of stakeholders for information
disclosure, and makes reference to various guidelines in order toensure objectivity and transparency.
Information disclosure scheme

The Kumagai Gumi Group Corporate Report

Long
-term
visio
n
Med
Mana ium-term
geme
nt Planai
Kumag ’s
up
ro
G
i
Gum
age
im
te
corporant
geme
Mana 2030
forpolicy ond
ey
and b

es,
rategitS,
se
Polici oals for
and G Y2023
1-F
FY202

TRUST: To develop clients’ trust and earn their confidence.
CONSISTENCY: To be consistently professional and responsible.
CO-OPERATION: To promote cooperation and mutual prosperity.

Management Philosophy● ENVIRONMENT: We aim to use our breadth of expertise to design and construct projects which areenvironmentally friendly and which will improve quality of life and satisfy the needs of society.

● CLIENTS: We aim to be an innovative and dynamic company, one that can provide our clients withcomprehensive service of consistently high standards, tailored to satisfy clients’ individual requirements.

● STAFF: We strive to be a progressive and nurturing company, offering each individual the opportunity for
personal growth, pride, and satisfaction in his or her work.

● REPUTATION: We strive to be a responsible corporate citizen, recognized for our business integrity andSimpleNon-financial information● Company Information● KUMAGAI UPDATE● Kumagai News

Detailed● Governance Report

22 Management Strategy
24 Financial Analysis
26 Sustainability Initiatives
28 ESG/SDGs Matrix
30	Opinion-Exchange Meetings with
34
36
38
40

Knowledgeable Exparts
Domestic Civil Engineering
Domestic Building Construction
Overseas Projects
Construction-related Peripheral Businesses

Management Foundation

42 Diverse Human Resources
46	Development of Technologies
That Resolve Social Issues

50 Promotion of DX

Kumagai Gumi website

Period of Reporting
FY2022 (April 1, 2022 to March 31, 2023)
The information in this report also incorporates examples of activities
and other information from April 2023 or later, as required.
Scope of Reporting
The scope of this report covers Kumagai Gumi Co., Ltd. and its
seven group companies, six of which are in Japan and one of whichis in Taiwan. References in this report to “Kumagai Gumi” or “ourcompany” are used in reporting on Kumagai Gumi Co., Ltd. only.
Reports on Group companies mention the specific companies. In
reporting on domestic-based environmental activities, numerical
data for Kumagai Gumi covers construction projects undertaken
by Kumagai Gumi alone, as well as for joint venture projects with
Kumagai Gumi as the lead company.
Issue Date
September 2023 (Previous edition: September 2022; Next edition:
Scheduled for September 2024)
Referenced Guidelines● GRI Sustainability Reporting Standards● Environmental Reporting Guidelines from the Ministry of theEnvironment● International Integrated Reporting Framework from the IFRS
● Value Co-Creation Guidance from the Ministry of Economy, Tradeand Industry

ESG Activities

52 Environment
58 Occupational Health and Safety
59 Quality Control
60 Human Rights
62 Stakeholder Engagement
66 List of the Board of Directors
68 Corporate Governance
72 Compliance
74 Risk Management76	Roundtable Discussion with Outside Directors

ESG Activities

Our Company’s Code of Conduct (Mission Statement)

Financial Information● Shareholder Correspondence● Financial Statement Explanation
Material● Financial Result● Securities Report

Strategies for Sustainable GrowthManagement Foundation

Grou
p
Visio
n

18 FY2022 Highlights
		 Financial and Non-financial Information
		 Completed Projects

Strategies for Sustainable Growth

Kumagai Gumi Group Vision Statement

16	The Kumagai Gumi Group’s Value Creation

80 Key Financial Data over a 10 Year Period
82 Corporate Information and Stock Information
83 Organizational Chart

Notes on the Outlook for the Future
Opinions and other forward-looking statements in this report are
based on data currently available to us and certain assumptions
that we believe are reasonable. Actual results may, therefore, differ
materially from these statements for various reasons.

social awareness.

Information on the website

https://www.kumagaigumi.co.jp/en/index.html

2

The Kumagai Gumi Group Corporate Report 2023

3

Our Value Creation Story

Interview with the President
Our Value Creation Story

Awareness of social issues, and the society we seek

The society we seek
A sustainable society

In order to deliver unique value
to society and to move forward
together with it, we will work tocreate a corporate culture in which
employees can actively participate.

Greenhouse gas
emission reduction,
recovery, storage,
and utilization

Livelihoods with peaceof mind and feelingsof satisfaction
A society without
regional disparities
and disadvantages due
to infrastructure

Worsening financial situation ofnational and local governments
and aging infrastructure

Experimental cities andpilot towns that attract
people from all over
the world

Effective utilizationof resources,
self-sufficiency

A mechanisms for
swift recovery andrestoration fromnatural disasters

Small living spaces due touneven population distribution
and/or community collapse

Kumagai Gumi Co., Ltd.
President
Yasunori Sakurano

A society where the economy continues to growA society where people can live comfortably

Efficient urban
infrastructures using
digital technology

Global warming andacceleration ofclimate change

Frequent and intensifying
natural disasters

Economy and/or
industries uniqueto each region

Declining
competitivenessof cities

Imbalance in the supply
and demand of resources

Inefficient urban
infrastructure

Decreasing economic
power due topopulation decline

Social issues for the year 2030 and beyond

Q. Please tell us about the developments laid out in the Medium-term Management Plan for FY2023.
Our company will continue to develop its business based on the three basic strategies.
We will work to improve profitability and, above all, to ensure safety and enforce compliance.

Q. What are your thoughts looking back on FY2022?
Company performance during FY2022 makes me feel that we need to develop our ability to be chosen
by customers and our earning power.
On the other hand, the company also achieved results that will lead to the next stage of our growth.
In 2021, the Kumagai Gumi Group formulated its longterm vision that looks ahead to 2030 and beyond, andlaunched a new three-year Medium-term Management
Plan aiming to achieve that vision. FY2022 served as thesecond year of the Medium-term Management Plan, andour employees worked together as one to achieve ourtargets for the period. However, both sales and profits fell
short of the plan’s targets, which is a disappointing result.

This again makes me fully realize that we are lacking in
the ability to be chosen by customers and earning power,
things that I have been emphasizing for some time.
However, results are starting to show in the constructionrelated peripheral businesses field, which includes therenewable energy and real estate development, and I feelthat initiatives for the next stage of our growth are steadily
expanding.

Q. How do you see the business environment changing in the future?
Although the construction market is expected to remain strong in both the private and public sectors,
I feel that the impact of unexpected changes in the external environment will be significant.
In the domestic construction market, private sectorbusiness is expected to recover due to improvements
in corporate earnings while public sector business is
expected to remain strong. However, environmental
changes that were not anticipated when the plan wasformulated, such as the impact of the COVID-19 pandemic
and soaring material prices, have had a significant impact

4

on business. As a result, business performance in FY2023,
the final year of the Medium-term Management Plan, is
unfortunately expected to fall below plan targets. From
FY2024 onward, as we expect changes in the external
environment to slow down to some extent, we will further
strengthen the basic strategies that we are currently
working on, aiming to realize our long-term vision.

Currently, the three pillars of our strategy under the
Medium-term Management Plan that we are following
are: 1. Bolster our overall construction business; 2.
Evolve our construction-related peripheral businesses;and 3. Develop new business domains. The company will
also continue to develop its business in FY2023 based on
the three basic strategies.
Regarding the first strategy, which is to bolster our
overall construction business, I believe that while wemust indeed strengthen our core construction businessand increase profitability, our top priorities must be toensure safety and enforce compliance. Kumagai Gumi
has been implementing various measures with the goal
to be “No.1 in Safety.” However, in FY2022, this goal
could not be reached due to a serious accident. In orderto ensure thorough safety management, it is essential not
only to enhance measures but also to create a culture inwhich employees at work sites consider safety as the top
priority at all times. I will continue to engage in dialogue
with employees to ensure thorough safety awareness bygiving them new ideas.
In addition, it was discovered in April 2023 that a false
report had been made regarding concrete testing during
a construction project performed through a specificconstruction work joint venture led by us.

While we have been continuously striving to ensurecompliance, we will work to prevent this type of issue fromrecurring by reaffirming our commitment to the obvious,
which is to protect the details of contracts, and byreaffirming that a solid level of quality is the core of trust.
In FY2022, the gross profit margin on completed work
is a grim figure. The sections of the company that handle
design and estimates will again return to the basics tothoroughly enhance profitability when orders are received.
Looking at our priority areas, in Civil Engineeringbusiness, we will continue to focus on “expressway
renewal work,” for which we expect an increase in orders
thanks to our proprietary “Cotter Floor slab method forbridges,” and in Construction, we will continue to focus
on “medium- to large-scale wooden construction” throughour alliance with Sumitomo Forestry Co., Ltd.
In Overseas Projects, business is rapidly expanding.
For example, Taiwan Kumagai Co., Ltd., our Group
company in Taiwan, has received an order for super highrise twin towers, which will become landmarks, to be built
in front of Taipei Main Station. In addition to Taiwan andIndonesia, we will steadily expand our business in other
Asian countries in line with the entrance of Japanesecompanies into those countries.

The Kumagai Gumi Group Corporate Report 2023

5

Value Creation Story: Interview with the President

Q. Please tell us about your approach to human resources and about work style reform.

We are achieving results due to taking on challenges in renewable energy,
real estate development, and other sectors.

We launched Work Style Reform Action Plan 2023 with the aim of creating an environment where all
employees can work actively.

The second of the three strategies is to “Accelerate
construction-related peripheral businesses,” which thecompany is continuing to focus on. One of our priority
areas is the renewable energy sector. We are participating
in a solar power generation project in Vietnam while also
examining offshore wind power generation.
In Japan, the “black bark pellet business” is finallygetting into full swing. The initiative uses domestic woodtree bark, which has previously been handled as waste,
as a biomass fuel. We plan to start sales of black barkpellets in FY2024.

For a company, its most important asset is its employees.
Kumagai Gumi has made continuous efforts to create anenvironment in which employees can work with ambitionand pride, including formulating the Work Style Reform
Action Plan in 2018. As part of these efforts, we havecontinued to raise wage levels in FY2023 as in theprevious fiscal year. We also launched Work Style Reform
Action Plan 2023 in April 2023.
The plan is for responding one year in advance to theAnother one of our priority areas is real estatedevelopment. Overseas, in addition to participating in
an ESG-conscious US real estate development private
placement fund investment, in collaboration with Sumitomo
Forestry Co., Ltd., we are also working on a large-scale
wooden office construction project in the United States incollaboration with Sumitomo Forestry Co., Ltd.
Our third strategy is to develop new business domains.
In line with this strategy, we have launched two projects
in which bamboo and algae are being utilized. These
projects are now entering the commercialization phase.

Q. Please tell us about your sustainability management policies.
In order to promote ESG and SDGs initiatives in a sustainable manner,
it is essential to create a corporate culture that employees are always aware of in their daily work.
In addition to our three business strategies, the Mediumterm Management Plan calls for strengthening ourmanagement foundation as a basic policy. Part of thiseffort is the promotion of sustainability management,
which is particularly important in order to sustainably
increase corporate value.
Kumagai Gumi has created an ESG/SDGs Matrix
to clarify the relationship between efforts taken in ourbusiness activities and the 169 targets of the SDGs. In
FY2023, we added an item named “My SDGs” to the
Employee Evaluation Sheet as a way for each employee
to describe their specific actions aimed at helping achieve
the SDGs.
The results of the SDGs Awareness Survey conducted
for employees in FY2022 show that awareness of theSDGs is gradually changing among employees. In
the FY2021 questionnaire, Goal 3: “Good Health andWell-Being” is the issue that resonated with employees

6the most. However, Goal 11: “Sustainable Cities andCommunities” resonated with them the most in the
FY2022 survey, so I think they are now able to relate their
mission with the SDGs.
In regard to carbon neutrality, we are working to
reduce CO2 emissions, develop our renewable energy
businesses, and making other efforts, which are steadily
producing results. In January 2023, we announced our
support for the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations.
Enhancing corporate governance is also essential to
implementing sustainability management. The Kumagai
Gumi Group formulated its Human Rights Policy in FY2022.
Having signed the United Nations Global Compact, we willconduct our business activities while keeping human rights
in mind. In addition, we are strengthening our systems
related to sustainability, including the establishment of the
Sustainability Promotion Department in April 2023.

Our Value Creation Story

Q. What results has the company achieved in developing new business?

maximum overtime work limit regulations with penalties
under the Labour Standards Law that will be applied to theconstruction industry and other industries in April 2024. We
will continue to expand ongoing activities such as overtime
status visualization and the use of ICT tools to streamline
and equalize operations. This new action plan will not only
reduce overtime work, but will also make further progressin reforming work styles by realizing diverse work styles
and improving workplace environments.

Q. What is your message to stakeholders?
Based on the Kumagai Gumi Group’s Vision Statement “Insight, Onsite, Farsight,”
we will continue to deliver unique value to society and move forward together with it.
It goes without saying that dialogue with stakeholders isimportant for communicating the initiatives of the Kumagai
Gumi Group throughout society and to promptly reflect theviews of society in our management. The company willcontinue to actively hold institutional investor meetings
in Japan as well as overseas. We also hope to increase
opportunities for dialogue with our varied shareholders toprovide accountability as management in earnest.
In addition, as in the year before, we invited knowledgeable
experts in April 2023 to participate in an opinion exchange
meeting that we held to incorporate the opinions ofstakeholders into management. (➡ P30-33)
The mission of the Kumagai Gumi Group is to enhance
our own Worksite Excellence and Human Resources,deliver our unique value “Quality That Inspires Happiness”
to our customers and society, and continue to support
them throughout every era. Our mission, which we must
fulfill, will never change regardless of the era. In orderto fulfill this mission, we will tackle difficult projects indifficult places and continue to work together with our
stakeholders, aiming to be a company where everyone
can work actively.

Regarding the false report made during the construction of the Arishima portion of the
Hokkaido Shinkansen Yotei tunnel, etc.
In April 2023, it was discovered that a false report had
been made regarding testing frequency during concrete
quality control testing for the construction of the Arishima
portion of the Hokkaido Shinkansen Yotei tunnel, etc.
performed through a specific construction work joint
venture led by the Company. I sincerely apologize for any
inconvenience this may have caused for client and allother concerned parties.
After the incident was discovered, a special task force
committee was established to investigate the cause, takemeasures to prevent recurrence, and check/examine thesoundness of the concrete concerned and whether similar
improprieties occurred during other construction works.

WEB Notice Regarding Results of Inspection into False Reporting of Unit Water
Content and Slump Tests of Concrete, Measures for the Prevention of
Recurrence and Reduction of Officers’ Compensation

https://www.kumagaigumi.co.jp/en/news/item/ir_en_E-youtei20230629.pdf

When these checks and examinations are conducted,
the Legal Compliance Audit Committee, which is
independent from management, provides monitoring,guidance, and recommendations.
Our company will return to the “starting point of
manufacturing” to reaffirm that a solid level of quality is
the core of trust and will work to prevent recurrence withan undaunted determination to regain trust.

The Kumagai Gumi Group Corporate Report 2023

7

Our Value Creation Story

WEB ➡ History

https://www.kumagaigumi.co.jp/en/company/history/index.html

Value Creation History

Our Value Creation Story

The Kumagai Gumi Group will continue to work to contribute to the developmentof society through Worksite Excellence, the powerful synergy of the superb
technology and abundant human resources we have built up for over our
history spanning more than a century.

1898 Our founding and initial growth
period Work on difficult
projects in difficult places

1946 Postwar reconstruction period
Birth of Kumagai Gumi as tunnel
experts

1961 Second growth period
Rapid progress and challenges

1981 Third growth period
Active business expansion

1991 From crisis to reorganization

2015 New founding period
Aiming for a sustainable
company

Kumagai Gumi started its operation in
January 1898 when Kumagai Gumi
founder Santaro Kumagai, who had
worked as a stone mason in Fukui,
undertook aqueduct construction at
the Shikununo Power Station,
Kumagai Gumi has carried forward his
words of “If there is any challenging
construction work, let me do it” to takeon challenging construction projects.

After the war, Kumagai Gumi established
its Building Construction Division andcontributed to the reconstruction of Japan.
The Civil Engineering Division was involvedin many tunnel construction projects. It wasquick to adopt mechanized construction,and dramatically improved productivity. The
division took charge of the hard constructionof the Omachi Tunnel at the Kurobe River No.
4 Power Plant and solidified the reputation of
Kumagai Gumi as tunnel construction experts.

As the Japanese economy grew rapidly,
Kumagai Gumi's Building Construction
Division made remarkable advances,including the receipt of consecutive BCS
Prizes and the construction of skyscrapers.
The Civil Engineering Division, too, recorded
numerous achievements that include thefirst use in Japan of NATM, which became
a standard tunnel construction method. We
went on to conduct business development
on a global stage, particularly in Hong Kong,
Taiwan, and Southeast Asia.

Starting from Hong Kong, our overseas
projects expanded not only in Asia, butalso to the US, UK, Australia andelsewhere throughout the world. In
Japan, we have participated in numerous
large-scale projects. In 1985, Kumagai
Gumi recorded over one trillion yen inorders along with the industry's highest
ordinary profit of 32.6 billion yen.

Kumagai Gumi was hit by the burstingof the economic bubble. Facing afinancial crisis triggered by massive
real estate investments, the company
requested financial aid two times. It
promoted thorough business revolution,
tackled new fields of construction
such as mobile communication basestations, and undertook the developmentof technologies such as unmanned
construction. In 2014, Kumagai Gumi
completed the cancellation of preferredstocks and achieved its reconstruction.

In 2016, Kumagai Gumi made a newstart with the formulation of the Kumagai
Gumi Group Vision Statement. In 2017,
the company entered into a businessand capital alliance with Sumitomo
Forestry Co., Ltd. with the aim of building
a unique new position extending beyond
its existing business domains. As aleader in the construction services thatsociety requires, the Kumagai Gumi
Group is committed to contributing to therealization of a sustainable society bysolving social issues
to the best of its ability
at all times.

Web “Kurobe no Taiyo”
Kurobe River No. 4 Hydro Power Plant
Omachi Tunnel Project (in Japanese only)

https://www.kumagaigumi.co.jp/kurobe/index.html

1977

Opening of the Joetsu Shinkansen
Nakayama Tunnel

1937 Whole line opening of

Shinjuku Nomura Building
project completed

1958 Opening of the Omachi Tunnel at the

Sanshin Railway Line1978

Kurobe River No. 4 Power Plant

History of the group and performance

1990

The Bank of China
Hong Kong Branch Building

Start of service of Sydney Harbour
Tunnel2017
2004 TAIPEI 101 completed

Aso Ohashi Bridge Area slope disasterprevention construction

1993 Establishment of Kumagai Techno-Space Co., Ltd.

Sales

Ordinary income* Financial results through fiscal 1988 are for the fiscal year ended September 31;
financial results from fiscal 1989 are for the fiscal year ended March 31* Figures through fiscal 1981 are for Kumagai Gumi only

1,000

1945
Establishment of
Building Construction
Division

750

500Founder・Santaro Kumagai

250

1898
Founding ofKumagai Gumi

1938
Establishmentof Kumagai
Gumi Co., Ltd.

Tao Zhu Yin Yuan (Taiwan)
high-rise designer's condominium
completed

Ordinary income (dotted line)

2000 Change of company name to Techno-Space Creates Co., Ltd.

1,500
billion yen

2018

1989 Establishment of FATEC Co., Ltd.

Sales (bar)

1,250

1992

1963
Establishment ofKumagai Road Co., Ltd.

1958
Opening of the
Toyokawa Factory

1994Change of company nameto Gaeart Kumagai Co., Ltd.

1958
Opening of theOmachi Tunnel
at the Kurobe
River No. 4
Power Plant

60

1995 Establishment of Technical Support Co., Ltd.

1985
Recorded over one
trillion yen in orders,along with the highest
ordinary income inthe constructionindustry

1996 Spin-off of the Toyokawa Factory as Kumagai Technos Co., Ltd.
2002 Change of company name to Technos Co., Ltd.

2000

Financialassistance1974
Establishment of
Taiwan Kumagai Co., Ltd.

2003

2014

Financial assistanceIssuance ofpreferred stock andcompany split

Cancellation ofpreferred stocks
completed2001 Establishment of K&E Co., Ltd.

2016
Formulation of the Kumagai
Gumi Group Visionbillion yen
50

2017
Business and capital alliancewith Sumitomo Forestry Co., Ltd.
2018
120th anniversary offounding

30

2004
Merger of Gaeart Kumagai Co., Ltd. andTobishima Road Co., Ltd. Launch of
GAEART T. K. Co., Ltd.

20

2016 Change of company name to GAEART Co., Ltd.
10

0

0

1900

8

40

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020

(FY)

The Kumagai Gumi Group Corporate Report 2023

9

Our Value Creation Story

The Kumagai Gumi
Group’s Business

The construction value chain and our main fields of business
Our Value Creation Story

Kumagai Gumi Co., Ltd.
GAEART Co., Ltd.

In every phase of the construction
Area of focus
value chain, the Kumagai Gumi Groupdemonstrates the comprehensive
capabilities of its eight groupcompanies.
We are working to diversify our earnings
by strengthening our construction
business, which is the core of ourbusiness management, and adding
construction-related peripheralbusinesses as further growth areas.

Taiwan Kumagai Co., Ltd.
K&E Co., Ltd.
Techno-Space Creates Co., Ltd.
Technos Co., Ltd.
FATEC Co., Ltd.
Technical Support Co., Ltd.

Work outsourcing and insurance agency

DesignEngineering

Planning
Development

Research and marketing
Product planning● Business planning● Urban development●●

Survey / Design● Technology development/
application● Patent-related measures●

Procurement
Construction

Construction planning● Construction management● Safety and health management

Area of focus

Major infrastructure renewal● Renewable energy● Disaster prevention and mitigation,and national land strengthening● Unrecyclable waste disposal facilities●

Domestic Building
Business
Area of focus➡P34-35➡P36-37

Production, commerce, and logistics
Medical and welfare services● Medium- and large-scale wooden
construction● Urban redevelopment● Environmentally-friendly renewal field●●

Overseas Construction
Business
Area of focus

10➡P38-39

Urban infrastructure development in
Asia● Support for Japanese companies
entering the Asian market● Expand the Group's market share in
Taiwan●In the area of major infrastructure renewal, demand is expected to increase for bridge
deck slab replacement construction along aging expressways. We are focusing on the
promotion of construction methods including the Cotter Floor Slab Method for Bridges,
which uses joint members to join precast slabs, and the “Kirikata Jozu” method, which
separates the slab from the main girder while the road remains in service.
In the field of disaster prevention and mitigation, and national land strengthening, weare conducting research and development to improve unmanned construction
technologies.

In the area of medium- and large-scale wooden construction, we are promoting
initiatives through “with TREE,” a medium- and large-scale wooden construction brandlaunched with Sumitomo Forestry Co., Ltd. in March 2021. In addition, we are also
focusing on the development of technologies that meet customer needs, and arestrengthening our efforts in environmentally friendly construction by acquiring
fire-resistance certification for all major structural components (columns, beams, floors,
and walls) with our original Insulated Fire-Resistant λ-WOOD®.

Quality control● After-sales service system● Periodic inspection●

Construction contracting business
Domestic Civil
Engineering Business

Maintenanceand Repair●

Building management
Quality and environmental management● Inspections● System audit●●

Construction-related Peripheral Businesses

Renewable Energy Business
Area of focus

Woody biomass power generation
business, including a business alliancewith Sumitomo Forestry Co., Ltd.
● Wind and solar power generation
business (including overseas projects)●

Real Estate Development
Area of focus

Urban renewal/urban development
projects● Real estate development projects,
including business alliance with
Sumitomo Forestry Co., Ltd.
as well as overseas projects●

Infrastructure operation business
The Kumagai Gumi Group is expanding sales and marketing networks at our overseas
offices, and is striving to expand our business to secure stable sources of revenue.
To expand the Group's market share in Taiwan, Taiwan Kumagai Co., Ltd., our local
subsidiary in Taiwan, has received numerous large-scale orders due to its increased
brand power based on having constructed large landmark buildings in Taiwan, including
Taipei 101 and Tao Zhu Yin Yuan, dramatically increasing our business performance.

Operational
Management

Area of focus●●

Toll road operations
PPP (public-private partnerships)
and concessions including overseas
projects

Technology product sales business
Area of focus➡P40-41

In the woody biomass power generation business, including a business alliance with Sumitomo
Forestry Co., Ltd., we are planning a woody biomass power generation project in the village of
Iidate in Fukushima Prefecture, and are preparing to start power generation operations there in2024.
In the wind and solar power generation business, our first solar power generation project inHamamatsu City, Shizuoka Prefecture, and the Cat Hiep mega solar project in Vietnam areoperating smoothly, contributing to earnings.
In the urban renewal/urban development projects field, we are actively participating as a landowner in the redevelopment project under way in the area surrounding the Iidabashi Station
East Exit in accordance with the urban planning and development policies established by the
Tokyo Metropolitan Government and Shinjuku City.
In real estate development projects, including a business alliance with Sumitomo Forestry Co.,
Ltd., we are aiming to increase medium- to long-term profits through that business alliance.
Furthermore, we are also involved in activities including purchasing prime income-producing
properties in Japan that are expected to become redevelopment zones in the future, andworking with local developers in Taiwan to propose rebuilding of aging housing.
In the PPP (public-private partnerships) and concessions field, we will continue to aim atparticipating in PFI projects (food service centers, government buildings, gymnasiums, etc.) in
which we excel.
In Hong Kong, together with the management, operation, and maintenance of the Eastern
Harbour Crossing and Tate's Cairn Tunnel, tasks which have already been outsourced, we willcontinue activities designed for obtaining orders and secure profits by taking management
efficiency into consideration.
In the biomass fuel development and sales field, we have developed black bark pellets, ahigh-quality biomass fuel. The company aims to contribute to carbon neutrality by using woodtree bark, which is normally handled as waste, as a raw material.

Biomass fuel development and sales
Infrastructure renewal method
development and sales● Nursing care/welfare equipment and sales● Construction equipment rental services(e.g. steel frame erection jigs)●●

The Kumagai Gumi Group Corporate Report 2023

11

Our Value Creation Story

Roundtable Discussion with Kumagai Gumi Group Company Presidents

Participants (from left to right)
Techno-Space
Creates Co., Ltd.

President andRepresentative Director

NaoyukiYamashita

Kumagai Gumi
Co., Ltd.

President

K&E Co. Ltd.

President andRepresentative Director

Hiroyuki
Kitagawa
Hiroshi
ShimuraTaiwan KumagaiCo., Ltd.

President

GAEART Co., Ltd.

Representative Director

Eiji Morita

FATEC Co., Ltd.

President

Technical Support
Representative Director
Co., Ltd.
Technos Co., Ltd.

President andRepresentative Director

General contractor business

GAEART Co., Ltd.

https://www.kumagaigumi.co.jp

P34-35

Building
Construction

P36-37https://www.gaeart.com
Overseas
Projects

P38-39Construction-related
Peripheral Businesses

P40-41

Kumagai Gumi implements its projects in close collaboration with its
group companies by effectively utilizing and mutually complementing
the technologies, expertise, products and management resources heldby these companies, so as to maximize its collective capabilities.
Corporate Information ➡ P82

12

Tadahiko
ShinyaShuheiIshizuka
Takayuki
Aono

Manufacture and sales of road pavement and asphalt mixture, etc.

Kumagai Gumi Co., Ltd.

Civil
Engineering

Yasunori
SakuranoWorking together as a group

SDGs initiatives are an importantmanagement issue for the Kumagai
Gumi Group

What we need to do in order to theworth of our existence as a corporate
Group that society requires

Sakurano The presidents of the eight Group companies
gathered here today all have very different careers andpersonalities, and I feel that this serves as a force thatdrives the Group forward. Considering that each company
is involved in adiverse range ofbusiness activities,
have there been
any recent changes
in the businessenvironmentthat
you are particularly
aware of ?
Ishizuka I think that a major change has definitely
been how companies are responding to environmental
issues such as carbon neutrality. Road paving, one of
GAEART’s main businesses,emits a large amount of CO2.
Since reducing CO2 emissions is also an industry-wide
challenge, we are also considering the joint developmentof CO2 reduction technologies with other companies.
Kitagawa K&E is working to raise employees’
awareness of carbon neutrality initiatives. We would liketo enhance our proposal capabilities in order to focus onenvironmentally-friendly building renovation.
Morita At Technos, we are studying the use of renewableenergy at our Toyokawa Factory. In the renewable energy
sector, we are also considering participation in the
PPA* business jointly with Kumagai Gumi regarding not
only to address environmental issues but also to create
future business opportunities. At the Head Office, we arepromoting various activities linked to the SDGs while also
referencing Kumagai Gumi’s related initiatives.

Sakurano The Kumagai Gumi Group is unique inthe construction industry considering that its Group
companies are responsible for a high percentage of its
consolidated sales.What strategies will be important inorder to enhance the value of the corporate Group while
taking advantage of similar characteristics?
Kitagawa We at the Kumagai Gumi Group have been
involved with society and customers for many years
through our respective businesses. Just as how K&E
renovates buildings that were constructed by Kumagai
Gumi, I think business will expand by having each Group
company work together to cover services for the entire
lifecycle of a building.
Ishizuka GAEART has been forming joint ventures with
Kumagai Gumi for an increasing number of projects. In
addition to this kind of collaboration in business, there aremany themes that should be addressed together in areasthat form the foundation of a company, including carbon
neutrality initiatives and human resource development.
I would like for us to aim to become a corporate groupwhere employees of each company can take pride in theirwork.
Morita In terms of collaboration in business, I think it will
be important to do so not only in Japan but overseas aswell. Technos is promoting business development in Asia,
collaborating with Taiwan Kumagai Co., Ltd. in Taiwan.
Shinya We at Taiwan Kumagai would like to actively
promote human resource exchange and other activities.
For example, Kumagai Gumi and Group companies could
send their employees to our company in Taiwan to learn
about global construction management and technology.
By doing so, I believe we can enhance our experience inglobal business together as a Group.

* PPA: Power Purchase Agreement

Building renovation

Construction in Taiwan

K&E Co. Ltd.

Taiwan Kumagai Co., Ltd.

https://www.k-and-e.co.jp/

Established

November 1963

Headquarters

8-27 Shinogawamachi, Sales
Shinjuku-ku, Tokyo

Representative

Shuhei Ishizuka

Capital¥1,000,000,000¥46,997,000,000(FY ended March 2023)

No. of employees 767 (as of March 2023)

GAEART Co., Ltd. is expanding nationwide as a company thatmeets various infrastructure needs, from new construction tomaintenance management, through infrastructure development
including paving for roads, airports, harbors, and bridges, andthe manufacturing of asphalt mixtures as paving materials.

January 2001
2-7-2 Fujimi,
Chiyoda-ku, Tokyo
Stage Bldg. 15F
Representative Kazuhisa Iwama(from July 2023)

Our Value Creation Story

A discussion on what kind of group the Kumagai Gumi
Group should become in order to be of value to society

Contributing to sustainability

http://www.taiwankumagai.com.tw

Established

CapitalHeadquarters

Sales¥300,000,000¥20,582,000,000(FY ended March 2023)

Established
Headquarters

No. of employees 373 (as of March 2023)

As one of our management principles is to be a “company that
contributes to a building stock recycling-oriented society,” wepropose and realize comprehensive renovations that increase
added value of buildings and asset value under the name of the
Total Renewal System.

Representative

CapitalDecember 1974
Section 1, Dunhua South Sales
Road, Taipei, Taiwan
Room 8 (1408), 12F,
No. 205

Tadahiko Shinya¥800,000,000NT$¥37,007,000,000(FY ended December 2022)

No. of employees 364 (as of December 2022)

Since its founding in 1974, Taiwan Kumagai Co., Ltd. has built
a best-in-class track record in Taiwan as a Japanese generalcontractor, introducing Kumagai Gumi’s technology to Taiwan,
as well as its own initiatives.
The Kumagai Gumi Group Corporate Report 2023

13

Value Creation Story: Roundtable Discussion with Kumagai Gumi Group Company Presidents

WEB Kumagai Gumi Grouphttps://www.kumagaigumi.co.jp/en/company/group/index.html

Developing “people” by making fulluse of our Group strengths
Morita Technos established a new job system in
FY2022. The new job system is completely gender-free,
has eliminated part-time positions, etc., based on a fair
and transparent evaluation system.
Shimura Since around 70% of Technical Support
employees are female, I would like to focus on creating
an environment where female employees can aspire toadvance their careers. I would like to see more women in
managerial positions as well.
Kitagawa K&E has recently started having female
employees serve as construction site managers. We aretrying to develop human resources based on the concept
of assigning the right person to the right position. An
example of this would be to have a female construction sitemanager working together with young male construction
workers.

Civil Engineering, Renovation, and Production of Construction Machinery and Materials

Technos Co., Ltd.

https://www.technos.info
CapitalFebruary 1996
2-1 Honohara, Toyokawa, Sales
Aichi Prefecture
Representative Eiji Morita
No. of employees
Established
Headquarters

Aiming to be a corporate group where
everyone can continue to work with asense of satisfaction
Sakurano Lastly, please share a few words about the
future of the Kumagai Gumi Group or your respective
Group company.

Trading company specializing in construction

FATEC Co., Ltd.

https://fatec-tech.com/¥470,000,000¥5,247,000,000(FY ended March 2023)
147 (as of March 2023)

Technos manufactures segments for shield tunnels, construction
materials/equipment, engages in civil engineering and renovation,
conducts environmental surveys, including contaminated soil
surveys, and projects that respond to the finding of those surveys,
basic construction; and operates a leasing business for a steel
construction method called ACEUP.

14

Thoughts about the future

June 1989
2-1 Tsukudocho,
Shinjuku-ku, Tokyo
Representative Takayuki Aono

Ishizuka Since being appointed President of GAEART
in April of this year, I have been continually thinking about
what kind of company GAEART should aspire to be. The
most important thing is definitely our employees. We will
work to the fullest to create an environment where our
employees can work with pride and enjoyment.
Kitagawa In Japan, I am sure you know that there isa long-established management philosophy called sanpo
yoshi (meaning good for the seller, buyer, and society),right? At K&E, employees have formed a committee topromote the implementation of our version of Sanpo
Yoshi. We aim to be a company that can contribute moreto the Kumagai Gumi Group and society.
Shinya Taiwan Kumagai received an order for theconstruction of Taipei Twin Towers C1 and D1 in FY2022,
which will be super high-rise twin towers built in front of
Taipei Main Station. We will continue to cherish the humble
and sincere attitude that we have cultivated as a Japanesegeneral contractor and will grow to be an indispensable
construction company for Taiwanese society.
Morita I believe that a company can only be as good as
its president. As I grow more, so do my employees. With
this in mind, I would like to make Technos grow to become
a company that is more attractive to society.
Aono I believe that our role is to increase the added
value of the Group through the broad sales of unique
technologies developed by Group companies as“products.”
Yamashita In working drawing production, which is oneof Techno-Space Creates’ main businesses, it takes a long

Working drawing production and education¥20,000,000¥360,000,000(FY ended March 2023)
No. of employees 10 (as of March 2023)

CapitalNovember 1993
Sales
3-12-12 HigashiIkebukuro, Toshima-ku,
Tokyo 9F, Showa Building
Representative Naoyuki Yamashita
No. of employees

CapitalEstablished

Sales

Headquarters

FATEC Co., Ltd. is a general trading company that offers
construction materials and equipment developed with stateof-the-art technologies. We provide not only products but also
technologies for their utilization.

Obituary
K&E Co., Ltd. President and Representative Director
Hiroyuki Kitagawa passed away suddenly on July 7,2023.
As of September 2023, K&E Co., Ltd. Chairman and
Representative Director Kazuhisa Iwama is also
serving as President.
As the roundtable discussion was held on April 24,
2023, any information related to Mr. Kitagawa wascurrent at that time.

Technical Support Co., Ltd.

https://www.technsp.co.jp/

Headquarters* PPA: Power Purchase Agreement

Work outsourcing and insurance agency

Techno-Space Creates Co., Ltd.

Establishedtime to acquire specialized skills, partly due to the progressof BIM. I want Techno-Space Creates to be a company
where employees are motivated and want to continue
working forever.
Shimura Due to the progress of DX, work for supporting
the introduction of new systems is increasing. I would liketo link this to the next stage of Technical Support’s growthand contribute to the Kumagai Gumi Group by performing
work for the Group.
Sakurano In order for the Kumagai Gumi Group toachieve its vision of becoming a leader in the construction
service industry that society requires, it is important
to increase group company-based collaboration andestablish a presence as a corporate group. Moving
forward, I would like for us to continue holding discussions
like this whenever there are opportunities to do so andconnect them with the growth of the Kumagai Gumi Group.

Our Value Creation Story

A corporate culture in which employees are
motivated to work

Shinya We also have female employees at Taiwan
Kumagai who are working as assistant construction
site managers. Of course, I would like to see a female
employee become a full construction site manager atsome point while I am still serving as President of Taiwan
Kumagai.
In any case, the promotion of diversity, including
women’s empowerment in the workplace, will be an
important issue for the Kumagai Gumi Group in the future.
Sakurano I
agree. In the
future, I thinkthat there
will also besome womenparticipating inthis roundtablediscussion aspresidents.

https://www.tsp-kumagai.co.jp/¥30,000,000¥862,000,000(FY ended March 2023)
62 (as of March 2023)

Techno-Space Creates Co., Ltd. operates businesses such as
execution scheme drawings, various applications, architectural
working drawings, and BIM creation.

July 1995
2-1 Tsukudocho,
Shinjuku-ku, Tokyo
Representative Hiroshi Shimura¥70,000,000¥591,000,000(FY ended March 2023)
No. of employees 44 (as of March 2023)

Established

CapitalHeadquarters

Sales

The company is developing an outsourcing business for clerical
work requiring expert knowledge, and also offers insurance plans
as an agency handling both life and non-life insurance.

The Kumagai Gumi Group Corporate Report 2023

15

Our Value Creation Story

The Kumagai Gumi Group’s Value Creation Process
Our Value Creation Story

The Kumagai Gumi Group conducts business activities on the basis of its Group Vision, to contribute to the resolution ofsocial issues and to be of service to our stakeholders.

Management capitalBusiness activities

OutputOutcomes

FY2022 performance

Awareness of risks and opportunities related to ESG

Financial capital

Total assets 376.7 billion yen
Manufacturing capital

Materiality

Awareness ofsocial issues

Enhancing ofcorporate governanceYuuei Kyoryoku Kai

Climate changeIntellectual capital

Collapse in the
supply anddemand balanceof resources

Number of trademarks held 82
Number of patents held 540
Research and development
expenses 2.8 billion yen

Aging ofinfrastructure

Formation ofenvironmentallyconsiderate businessE

KumagaiGumi’sESG/SDGs
strategyS

Achievement ofsustainablecommunities

Diesel oil
Kerosene
Water

76,500 m3
17,058 kl
39 kl
349,000 m3

P ro

as

Gas

Population decline
Decline ineconomic power

usin

rse

Electric power 34,801 kWh

OnsiteO veNatural capital(non-consolidated)

Decline in urban
competitivenessal B

Overseas sales sites 7

Farsight

esses

Renewal Center 1

Kumagai
Gumi Group
VisionStatementher

Machinary center 1

Inefficient urban
infrastructure

Insight

Awareness of social issues,and the society we seek ➡P5

jec

ts

G o v ernan c e

Constr u c

ti

re
o n-

la

ted

Strengthen our position as the company of choice, and our earning power

16

Sustainability of the company

Equipment center 1

Natural disasters

n
ctio
tru
ns

Domestic sales sites 114
Technical Research &Development
Institute 2

1.9%

Casualty frequency rate (Kumagai Gumi only)

0.69

Number of work overtime(monthly average / Kumagai Gumi only)

21.4 hours

Number of Cases of Serious Violationsof Law and Regulations (Kumagai Gumi only)

0 casesCustomers andlocal communities

Quality That
Inspires Happiness
Global environment /Local communities

Sustainable
Coexistencewith Nature

The society we seek

Sales

Coexistence in
Mutual Prosperity

A society where people
can live comfortably

For employees

A society where theeconomy continues to grow

Human Resource
Development

Basic Policy

89.9 billion yen

208.1 billion yen

Overseas Construction Business

Shareholders and investors

Return to
Shareholders

41.2 billion yen

Domestic Group Companies Busineses

64.3 billion yen

Construction-related peripheral (ordinary profit)

Long-term vision

A sustainable society

Domestic Civil Engineering

Domestic Building Construction BusinessSociety in which limited
resources are recycled andpeople, the community,
and nature continue
to be enriched

Partner companies /Business partners

Synchronizedri pSocietal capital

Buil
din
gC
o

g
rin
e
ne

Pe

consolidated 4,406 people

Mixed waste discharge rate
(Kumagai Gumi only)

Community
collapse

Civ
il E
ng
i

non-consolidated 2,635 people-12.2%Creation of
rewarding
workplaces for all

Human capital

Number of employees

CO2 Emissions reduction rate (Scope 1+2)

Strengtheningof relationships
with stakeholders

G

Manufacturing sites 32

The Value We Provide to
Stakeholders

ESG/SDGs Indicators

Sustainability of society

875

Number of design rights held 69

FY2022 results

Global Environment

Alteration of nature(negative)

Bolster overall construction
business
Accelerate Construction-related
Peripheral Businesses
Developing new businessdomains
Strengthen managementfoundation

0.8 billion yen

Stakeholder engagement ➡P62

The Kumagai Gumi Group Corporate Report 2023

17

Our Value Creation Story

FY2022 Highlights* Numbers are rounded down to the nearest 100 million yen.

Orders received (Kumagai Gumi only)

Sales

Operating income

Ordinary income

Capital expenditures by companies remained
steady and were at the same level as in theprevious fiscal year.

In addition to multiple construction interruptions,factors such as delays in construction starts due
to design delays and soaring prices resulted inlower revenues.

A decline in revenues and the impact of
unprofitable construction projects orderedduring a period in which we faced difficult
market conditions caused the gross profit
margin on completed work to decline,
resulting in a significant decrease in profits.

Profits declined due to a decrease in operating
profit.

Orders received

Sales

348.6 billion yen
500

500
billion yen

400

400

389.1

436.2 450.2 425.2

2.8%

11.5 billion yen

403.5

283.4

300

FY2018 FY2019 FY2020 FY2021 FY2022

Ordinary profit
margin ()

12.2 billion yen

ROE (

4.7%

8.0 billion yen

3.0%

Net assets (■))

169.9 billion yen

50

8

50

20

750

billion yen 6.8%

billion yen%

billion yen

6

40

6

40

15

600

4

30

4

30

10

450

5.8

40

6.2
5.3

26.5

25.4

28.1
22.7

2.8
2

11.5

0

5.9

26.6

25.7

6.3

5.6

28.4

3.0

23.7

20

2

12.2

10

FY2018 FY2019 FY2020 FY2021 FY2022

0

13.7

20
10

11.5

10.2

19.4

17.9

13.3

9.5

4.7

FY2018 FY2019 FY2020 FY2021 FY2022

5

300

0

150

43.2
38.1

8.0

Capital adequacy
ratio (
)

45.1%
45.6

40
30

374.8 379.6 371.1 376.7
353.7

134.9 148.0

20163.8 169.3 169.910
00FY2018 FY2019 FY2020 FY2021 FY2022

50

45.1 %

39.5

15.9

0

0

0
FY2018 FY2019 FY2020 FY2021 FY2022

Ordinary profit (■)

376.7 billion yen

Profit attributable toowners of parent
(■)

8

10

0

0

The capital adequacy ratio declined as there
was only a slight increase in net assets as we
returned profits to shareholders.

%

20

100

100

Profits declined due to a decrease in ordinary
profit. The decrease in ordinary profit also led toa significant decline in ROE.

50

30

200

200

Total assets, net assets & capital
adequacy ratio

billion yen 6.8

350.2 348.6

325.0

Net profit and return on equity (ROE)
attributable to owners of parent

Total assets (■)

Operating profit)
margin (Operatingprofit (■)

403.5 billion yen

billion yen 454.0

300

Our Value Creation Story

Financial Information

FY2018 FY2019 FY2020 FY2021 FY2022

Completed Projects
Civil Engineering

Building Construction

Overseas Projects

Civil Engineering

Building Construction

Overseas Projects© Crow Holdings Development
Eastern Harbour Crossing (EHC) MOM Project (Hong Kong)

Asakusa Station (Ginza Line)
Civil engineering work associated with theextension of the return line

Orderer: Hong Kong SAR, People’s Republic of China

Orderer: Tokyo Metro Co., Ltd.
Dogenzaka-dori (Tokyo Prefecture)
Orderer:
Pan Pacific International Holdings
Corporation (PPIH)
Yoko Kusakabe,Yuri KabutoSaint Etoile Corporation
Koichi Hoshino and Takeo Hoshino18* Operation and maintenance project which was ordered in
FY2019

Nagoya Inner Circular Route Bridge Repair
Project (Takaoka construction section)(Aichi Prefecture)

Southstone Yards Office-B (Texas, USA)
Business Owner: Southstone Yards Office B, L.L.C.

Orderer: Nagoya Expressway Public Corporation
APA Hotel & Resort
Osaka Umeda Station Tower(Osaka Prefecture)* Participated in the development of an ESG-conscious officebuilding
Construction started in August 2022, and scheduled to becompleted in October 2023

Orderer: APA Home Co., Ltd.
APA Mansion Co., Ltd.

The Kumagai Gumi Group Corporate Report 2023

19

Value Creation Story: FY2022 Highlights

Non-financial information

Dividend per share & payout ratio
Although profit attributable to owners ofparent decreased from the previous fiscal
year, the company paid dividends as plannedat the beginning of the fiscal year inaccordance with its policy of stable dividends.

Dividend per share (■)

Payout ratio (

)

72.4%

130 yenCapital investment and research& development expenses

CO2 emissions (Scope 1+2)

Capital expenditures increased mainly in realestate designed for business and rental use as
well as in machinery and equipment. Researchand development expenses remained at thesame level as in the previous fiscal year for thedevelopment of new construction methods, etc.

Although the purchased amount of renewableelectric power increased on a non- consolidated
basis, total CO2 emissions and emissions
intensity increased due to an increase in sales
at consolidated subsidiaries.

Capitalexpenditures (■)

Research and development
expenses (■)

4.8 billion yen 2.8 billion yen(Kumagai Gumi Group overall )CO2 total discharge
volume (■)

2

100

8

20

yen

%

billion yen 7.4

10,000 t-CO2

6

15

120

120

120

100

130
72.4

35.0

35.1
28.8

31.2

40

30

20

0

0
FY2018 FY2019 FY2020 FY2021 FY2022

2

2.3

2.6 2.6 2.5 2.7

t-CO2/billion yen

21.1

18.6

17.9

20.0 20

4.8

4.2

4

2

40

24.7

60

90
60

80

CO2 discharge volume &emissions intensity ()

81,000 t-CO 20.0 t-CO /billion yen

150
120

Our Value Creation Story

Financial Information

10

2.7

2.8

0

9.6

9.2

0

8.4

7.6

8.1

5

2019

2020

2021

2022

2,497 (4,032)

2,578 (4,154)

2,620 (4,259)

2,626 (4,338)

2,635 (4,406)

Number of female employees

348 (633)

376 (677)396 (731)

409 (764)

430 (823)

Number of female managers

48 (74)54 (83)58 (96)66 (106)69 (112)Rate of male employees taking childcare leave (%)

-

-

-

49.0 (39.1)

73.9 (57.6)

Employment rate of persons with disabilities*1 (%)

2.21 (1.97)

2.12 (1.88)

2.09 (1.80)

2.14 (1.93)

2.10 (1.91)

-

44.0

54.3

59.1

68.5 (64.1)

-

-

-

-

59.8 (58.3)

Career positions

-

-

-

-

65.0

Region-limited clerical
positions

-

-

-

-

69.3

0.70

0.44

0.32

0.63

0.69

73

65

50

62 (67)57 (65)

Number of employees

Paid leave
Average rate of paid leave acquisition per person *2 (%)
Wage gap between men and women *3
All employees (%)
Regular employees (%)
Frequency
Number of patent applications
Figures in parentheses are Group consolidated results.

0
FY2018 FY2019 FY2020 FY2021 FY2022

2018

FY2018 FY2019 FY2020 FY2021 FY2022*1 Count at the end of June for each FY.
*2 Total number of days of leave taken / Total number of days of leave granted x 100 (%)*3 Average annual wage for women / average annual wage for men x 100%

Completed Projects
Civil Engineering

Civil Engineering

Building Construction

Kumaoi Power Plant Reconstruction Project (Hokkaido Prefecture)
Orderer: Electric Power Development Co., Ltd.
Civil Engineering

NIDEC Park C Building (Kyoto Prefecture)
Orderer: NIDEC Corporation

Building Construction

Group companies

Okayama Distribution Center (Okayama Prefecture)

Yuasa Gobo Road Hidakagawa pavement work
(Wakayama Prefecture)

Orderer: Makita Corporation
Building Construction

Orderer: West Nippon Expressway Company Limited
Construction: GAEART Co., Ltd.
Group companies

Okutsu Power Plant Renovation Project related
civil engineering work, Okutsu Power Plant
Renovation Project related removal work
(civil engineering related), and Okutsu Power
Plant Renovation Project related new building
construction (Okayama Prefecture)
Orderer: The Chugoku Electric Power Co., Inc.

Gengxin Construction Heping
Road Residence (Taiwan)
Chubu-Odan Expressway
Yoshiwara Area Cut Earth Slope Disaster
Recovery Project (Shizuoka Prefecture)
Orderer: Central Nippon Expressway Company

20Group companies

Orderer: Gengxin Construction
Construction: Taiwan KumagaiCo., Ltd.
Meijo University Tenpaku Campus ResearchLaboratory III and IV (Aichi Prefecture)

LIMNO Co., Ltd.
Visionary Collaboration Center (Tottori Prefecture)

Orderer: Meijo University

Construction: K&E Co., Ltd.
The Kumagai Gumi Group Corporate Report 2023

21

Strategies for Sustainable GrowthManagement Strategy
Basic Policies

Non-financial Targets

In May 2021, the Group formulated its Medium-term Management Plan (FY2021-FY2023). In taking on our role as aleader in the construction service industry that society requires, we aim to contribute to the realization of a society inwhich limited resources are recycled, and people are healthy and happy, the community is prosperous, and nature ispreserved. To achieve this goal, we are developing business activities in line with our four basic policies.

The Kumagai Gumi Group has identified issues that are considered important to are stakeholders from an ESG perspectivein order to build a sustainable society and achieve growth for ourselves, and pursue both solutions to social issues (social
value) and the expansion of business profits (economic value) through our business activities.

Contribute to the realization ofa society in which limited
resources are recycled andpeople, the community, andnature continue to be enriched

A society where people
can live comfortably

Business
Bolster overall
construction business

Carbon Neutrality

Making the Land More
Resilient to Disasters
Extending the Life of
Infrastructure

Accelerate Construction-related
Peripheral Businesses

A society where theeconomy continues to growManagement Foundation
Strengthen managementfoundation

Although orders remained steady, FY2022 performance was affected by soaring prices and the suspension of major
construction projects, resulting in lower revenues and profits compared to the previous fiscal year. Although the dividend
payout ratio was maintained at a high level, ROE fell below the target level since the dividend amount remained unchanged
regardless of the decrease in profit.
In addition, performance for FY2023, the final year of the plan, is expected to fall below the financial targets, excluding
the dividend payout ratio. We will vigorously promote initiatives in line with our four basic policies outlined in the plan,raise consolidated ordinary income to the 30 billion yen level as soon as possible, and then aim for 50 billion yen as in
our future vision.

Consolidated
sales[In FY2023][In FY2023]

470.0 billion yen

33.0 billion yen

ROE

Dividend
payout ratio

12% or more

22

Consolidated
Ordinary Income

30% target

SocialGovernance

Financial Targets

Medium-term Management Plan (FY2021 to FY2023)

Environment

Developing new businessdomains

Upgrading Urban
Functions andSmart Cities

Consolidated
Ordinary Income

433.1 billion yen

15.7 billion yen
Dividend
payout ratio

53.9%

Numerical
targets during

FY2022
performance[In 2030]
Comparedwith FY2019-25% or more

Comparedwith FY2019

Contribution to
the SDGs-12.2%

Mixed Waste Discharge
Rate

Total amount of mixed waste generated as apercentage of total construction waste generated

2.0% or less

1.9%

Casualty Frequency Rate

Number of casualties due to occupational
accidents per 1 million total actual working hours

0.5 or less0.69

Number of Overtime Hours
Worked by Employees

Average number of overtime hours worked in one
month

30 hours
or less

21.4 hours

Number of Cases of Serious
Violations of Law and Regulations

Those that have been administratively punished orhave been subject to administrative measures are included

0 cases

0 cases

Investment Plan
Concerns that we perceive to be pressing social issues include carbon neutrality, national land resilience and infrastructure
longevity, as well as upgrading urban functions and smart cities. As a result, we are participating in renewable energy, realestate development, and technology product sales businesses as a business entity, either by investing or holding assets.
We are investing a total of 40 billion yen in DX to strengthen our management foundation, and to develop productivityenhancing technologies and human resources, etc.
Scale of investment

40 billion yen

Major infrastructure renewal

Consolidated
sales

6.1%

Scope 1 All direct emissions of greenhouse gases from the activities of organizations or ones under their control.
Scope 2 Indirect emissions from electricity, heat, and steam purchased and used by the organization.

Bolster overall
construction business

FY2023 forecast

ROE

Main Evaluation Indicators

CO2 Emissions reduction rate (Scope 1+2)

Basic Policy

Business Promotion

A sustainable society

Identify Issues

Starting Point

The society we seek

ESG
Perspective

Medium-term Management Plan

Strategies for Sustainable GrowthLong-term vision

Medium- and large-scale
wooden construction

Accelerate Construction-related
Peripheral Businesses

Developing new
business domains

Strengthen managementfoundation

Renewable energy

Development of technologies
that help resolve social issues

Digital transformation related

Real estate development
Infrastructure management field

Collaborate with other companies tocreate new business opportunities

Technological development related
Human resource development related

In FY2022, the second year of the plan, progress was generally steady, including the acquisition of real estate, whichis the starting point of the redevelopment project, participation in the overseas real estate business, and capital
expenditures for the full redesign of our core systems. During the period of the plan, we have invested approximately
13 billion yen so far and are currently considering investing another 24 billion yen for a total investment of approximately
37 billion yen (approximately 21 billion yen in real estate development in Japan and abroad, approximately 7 billion yen in
renewable energy, approximately 7 billion yen to strengthen management infrastructure, such as core system redesign,
and approximately 2 billion yen in other areas).

The Kumagai Gumi Group Corporate Report 2023

23

Strategies for Sustainable Growth

Financial Analysis
Performance

Regarding investment, we plan to invest a total of 40 billion yen during the term of the management plan. By FY2022, thesecond fiscal year of the plan, we had invested approximately 13 billion yen. Newly developed technologies for highway
renewal construction in response to major infrastructure upgrades are already contributing to earnings. The renewableenergy business is also expected to start contributing to earnings gradually after the completion of the investment plan.
We will continue to invest in fields that are expected to serve as future sources of earnings. In addition, we haveestablished investment and loan criteria and a dedicated screening department to carefully examine business profitability
and risks.

Status of consolidated statement of cash flows Unit: billion yen

-18.8
67.4

Capital Policy/Return to Shareholders
Koji Hidaka

Director, Senior Managing Executive Officer■ Currency and deposits■ Interest-bearing debt

Currency/Deposits and Balanceof Interest-Bearing Debt

Cash and cash Net cash provided byequivalents at (used in) operating
beginning of period activities Cash flow

100 billion yen

Net cash provided by(used in) investing
activities Cash flow

-8.5

80

0.5

0.4

Net cash provided by(used in) financing
activities Cash flow

Translation
adjustment

Cash and cash
equivalents at
end of term

82.4

75.2

60

71.3

67.4
41.0

40
20

41.0

12.8

12.3

12.2

11.9

22.2

0
201９/32020/32021/32022/32023/3

Cash flow from operating activities was a negative 18.8 billion yen due to a decrease in profits and an increase in notes
and accounts receivable - trade, and overall cash flow was a negative 26.4 billion yen also due to capital expenditures,
dividends, and treasury stock repurchases. As a result, the cash deposit balance amounted to 41 billion yen. Meanwhile,
our balance of interest-bearing debt stood at 22.2 billion yen.
In order to secure stable working capital in light of the increased burden of replacement of construction costs due tolarger construction projects, a new syndicated loan of 8 billion yen was arranged to stabilize fund procurement.
We have also established a commitment line of 20 billion yen, enabling us to cope with any sudden demand for funds
while improving the efficiency of fund procurement.

Our basic policy for distribution of profits is to fairly and stably return profits to shareholders, taking into account factors
including our current business performance, our medium- to long-term business outlook, and the business environment,
while striving to enhance internal reserves for the purpose of enhancing our management foundation and expanding
business income. In FY2021, in addition to the ordinary dividend, we decided to repurchase a total of 10 billion yen oftreasury stock during the period of the current Medium-term Management Plan in order to increase shareholder returns
and improve capital efficiency.
In FY2021, a dividend of 130 yen per share and the repurchase and cancellation of approximately 4 billion yen worthof treasury stock, and in FY2022, a dividend of 130 yen per share and the repurchase and cancellation of approximately
4 billion yen worth of treasury stock resulted in a payout ratio of 72.4% and a total return ratio of 121.6% (both years
combined). For FY2023, we plan to pay a dividend of 130 yen per share and repurchase 2 billion yen worth of treasury
stock, which is expected to result in a payout ratio of 53.9% and a total return ratio of 73.2%.
Our ESG Initiative Direction, which we formulated in April 2019, positions reinforcement of relationships withstakeholders as a key issue. We will continue to promote active dialogue with shareholders and investors, and will work
to optimize the balance between investment for growth and return to shareholders.
Payout ratio / Total payouts
20

Medium-term Management Plan and Investment

24

35 billion yen

20
15
10

23.7
1.0
3.6
0.8
15.7

5
0

120
%

17.9
15.9

13.3

72.4
59.6

10

35.0

28.8

31.2

4.7

5.6

5.6

2019/32020/32021/3

94

90

73.2
10.4
53.9

80
35.1

60

30

5.4

5.7

2022/32023/3

Total payout
amountTotal dividends

7.6

97

Profit attributableto owners ofparent Profit

5.6
0Dividend payout
ratio
Total payout
amount2024/3 (forecast)

33.0
2.0

30
25

121.6

15

0

Medium-term Management Plan/Financial Targets (ordinary income)

19.4

billion yen

5

The Kumagai Gumi Group’s Medium-termManagement Plan (FY2021-FY2023) formulated in
May 2021 sets four financial targets to be achieved
by FY2023: consolidated sales of 470 billion yen,consolidated ordinary profit of 33 billion yen, ROE
of 12% or more, and a payout ratio of 30%.
However, during the final fiscal year of theplan, consolidated sales were 433.1 billion yen,consolidated ordinary profit was 15.7 billion yen,
ROE was 6.1%, and the payout ratio was 53.9%, allfalling below targets. This was caused by changes
in economic and social conditions that were notforeseen during planning, such as the prolonged
impact of the COVID-19 pandemic and the surge inmaterial prices caused by the situation in Ukraine.

Strategies for Sustainable Growth

In FY2022, the amount of non-consolidated orders received was 348.6 billion yen
at the same level as the previous fiscal year due to steady orders resulting fromthe execution of public investment-related budgets and increased interest in capital
investment by private companies.
Consolidated sales decreased 5.1% to 403.5 billion yen. Although there wasan increase in construction work carried over from the previous fiscal year due
to receiving a steady flow of orders, slowdowns in progress due to construction
interruptions and other factors, as well as the revision of the start date of large
construction projects due to the COVID-19 pandemic and soaring prices resulted
in a small contribution to sales from the construction projects ordered in the current
fiscal year. In terms of profits, each type of profit fell below those of the previous
fiscal year due to a decrease in sales and unprofitable construction work. Operating
profit fell 49.5% to 11.5 billion yen, ordinary profit fell 48.4% to 12.2 billion yen, andprofit attributable to owners of parent fell 49.7% to 8 billion yen.

12.2
1.0
1.8
1.0
6.6

15.7
0.8

5.5

Construction-related
Peripheral Businesses

0.5

Domestic Group
Company Business

16.5

Overseas Construction
Business

3.5
1.1
8.3

2.6

1.8

2.0

2022/32023/32024/3(forecast)

Domestic Building
Business

8.5
2024/3(Medium-termManagement Plan)

Domestic Civil
Engineering Business

Future Outlook
In the construction market, in addition to solid public-sector investment, private-sector construction investment is also
expected to remain steady. However, the economic outlook remains uncertain due to risks such as a downturn in overseas
economies, rising prices, and supply-side constraints amid the prolonged situation in Ukraine and the progress of global
monetary tightening.
In these times of increasing uncertainty, the Kumagai Gumi Group believes that sincerely addressing social issues
as a leader in the construction service industry that society requires will lead to growth of the Kumagai Gumi Groupand enhancement of corporate value. To this end, we will further strengthen our management foundation throughthe implementation of appropriate financial and capital policies and relentlessly take on the challenge bringing aboutsustainable growth through business promotion.

The Kumagai Gumi Group Corporate Report 2023

25

WEB SDGs

Strategies for Sustainable Growth

https://www.kumagaigumi.co.jp/csr/sdgs/index.html*Japanese only

Sustainability Initiatives
Sustainability Promotion System

Practicing Daily Operations from the ESG/SDGs Perspective

Sustainability Promotion System Diagram

Since FY2022, Kumagai Gumi has promoted “Practice daily operations from the ESG/SDGs perspective” as a policy of
the President. We are instilling the habit for each employee to always be aware of what social issues they can contributeto solving as they go about their work.

Board of Directors

Note: Name changed from “CSR Promotion Committee” to “Sustainability Promotion Committee” in FY2022.

Objective
Number of meetings held
Committee Chair
Members

Sustainability Promotion Committee
Human Rights Policy
Expert Subcommittee

June

2010

Secretariat
Description of activities
Information disclosure

Eco First Company certification

November 2017

Medium-term and Long-term Management
Direction

April

2019

ESG Initiative Direction formulated

August
May

2020
2021

KPI performance reported
Medium-term Management Plan

AugustESG/SDGs Matrix createdDecemberPresident’s Instructions upon Reviewof the Quality and Environment
Management system
President’s Instruction:“Practice daily operations from the ESG/
SDG perspective”

April

2022

Sustainability Promotion Committee
established
OctoberJanuary

April

May

2023

Human Rights Policy Expert
Subcommittee established
Human Rights Policy established/
Process of human rights due diligencecreatedSupport for TCFD recommendations
Sustainability Promotion Department
established“Work Style Reform Action Plan 2023”
established
Added “My SDGs” to Employee
Evaluation Sheet
Signed the United Nations Global
Compact

Examines Kumagaigumi’s overall sustainability promotion measures
Held as appropriate (held 4 times in FY2022, planned to be held 5 times in FY2023)
Manager of the Management Strategy Office
General Manager of the Civil Engineering Management Division, General
Manager of the Building Management Division, General Manager of the
Administration Division, General Manager of the Safety, Quality and Environment
Division, General Manager of the Technical Research & Development Division,
General Manager of International Division, General Manager of the New Business
Development Division, and Persons nominated by the Committee Chair
Sustainability Promotion Department, Management Strategy Office
Examination of policies and systems to promote the sustainability field, etc.
Through the company website, corporate reports, etc.

Kumagai Gumi became the first company in the construction industry to receive Eco First
Company certification
The Kumagai Gumi Group has indicated that it will strengthen its management by incorporating
ESG perspectives.
Kumagai Gumi has identified Materiality and Individual issues that are critical to
the Group’s long-term business development, and set our targets concerning related SDGs.
KPI performance for individual issues based on materiality was reported in the Corporate Report.
Formulated management policies including measures such as establishing concrete CO2
emission reduction targets and strengthening the development of the renewable energy businessWe disclosed the linkage between our business activities and the SDGs as part of our ESG/
SDGs strategy.
Plan and execute business with greater awareness of the relationship between daily businessand ESG/SDGs.
Aim to create a corporate culture that instills in our employees the habit of always being aware ofwhat strategies we ourselves can use to contribute to solving social issues.
Expressed his policy of strengthening internal communication of the ESG and SDGs mindset,
and working to link fiscal-year targets to the SDGs.
The Sustainability Promotion Committee was established for the purpose of expanding therole of the CSR Promotion Committee (its previous form) and examining overall sustainability
promotion measures.
The Human Rights Policy Expert Subcommittee was established as a subcommittee of the
Sustainability Promotion Committee.
For respecting the human rights of all people involved in the Kumagai Gumi Group’s business
operations
We analyze the risks and opportunities posed by climate change for Kumagai Gumi and applying
them to management
To strengthen initiatives through organizational change from Group to department levelsustainability promotion

2. The company will create new value by leveraging the group’s technologies, experience and expertise. We engage in businessactivities that contribute to the resolution of social issues represented by the SDGs.

Responses

Overall impression regarding sustainability
initiatives◦	After a passing score on the “compulsory routine,”
I want you to show what you can do in the“freestyle exercise”

Instilled internal awareness◦ Added an item named “My SDGs” to the Employee Evaluation Sheet	Established the “Sustainability Channel” which provides in-house video
content◦ Implemented second SDGs awareness survey for employees

Strengthening of information communication
capabilities◦	Evaluation of the ESG/SDGs Matrix for its
comprehensive organization

Strengthening of information communication capabilities◦	Human Rights Policy established and Process of human rights due diligence
implemented◦	Announced approval for endorsing the TCFD recommendations and disclosed
information◦ Created GRI Standards Comparison Chart◦ Signed the United Nations Global Compact

Initiatives aimed at carbon neutrality◦	We should recognize carbon neutrality not only interms of risks, but also in terms of opportunities

My SDGsIn FY2023, we added “My SDGs,” an item for selecting 169 targets associated with the SDGs, to the Employee Evaluation
Sheet. Employees select SDGs targets that they believe are closely related to their work and use them as a tool for
dialogue with their superiors and colleagues. In addition, we created a channel for distribution video content called“Sustainability Channel” through which the President and other people in leadership positions such as general managers
and branch managers distribute videos to employees to inform them about “My SDGs,” which employees can chooseon their own.

SDGs Awareness Survey
Kumagai Gumi has been conducting the SDG
Awareness Survey for employees since FY2021 inorder to measure the widespread understanding of
the SDGs within the company. Among the 17 goals of
the SDGs, “Good Health and Well-Being,” was chosen
as the first or second choice among all age groups
during the FY2021 survey. However, in the FY2022
survey, “Sustainable Cities and Communities” was the
top choice for all age groups.

ESG/SDGs Matrix ➡ P28-29
We indicated the relationships between businessactivities based on ESG and the 169 targets of theSDGs (numbers in the table), and visualized the fields
in which Kumagai Gumi contributes to solving social
issues through its business, in the ESG/SDGs Matrix.

The Goals Among the 17 SDGs That Resonated With
Employees as Most Important(changes in the top selections)
FY2022

FY2021

Sustainable Cities andCommunities

Good Health andWell-Being

Good Health and WellBeing

Climate Action

Decent Work andEconomic Growth

Decent Work andEconomic Growth

Affordable and Clean
EnergySustainable Cities andCommunities

Responsible Consumption
and Production

Affordable and Clean
Energy・・・

1. Kumagai Gumi Group has identified Materiality and specific issues to be resolved from Environment, Social, and Governance
perspectives, and will pursue sustainable business activities.

Main Opinions

・・・

ESG Initiative Direction

Response to the points indicated during the 1st Stakeholder dialogue with Knowledgeable Experts* *Held on June 14 2022
Strategies for Sustainable GrowthManagement Committee

Sustainability Promotion Committee

3. Through its business activities, Kumagai Gumi aims to build relationships of trust with its stakeholders and to increase its
corporate value.

26

The Kumagai Gumi Group Corporate Report 2023

27

Strategies for Sustainable Growth: Sustainability Initiatives*1 The key issue “Formation of environmentally considerate business” refers to a strengthening of initiatives for carbon neutrality.

ESG/SDGs Matrix (Kumagai Gumi only)
ESG Initiative Direction

Formation ofenvironmentallyconsideratebusiness(

Carbon neutrality
initiatives*¹

Specific issues

Actions to solve global environmental issues

Achievement of zero emissions

Activities to reduce mixed waste discharge

Initiatives with consideration of biodiversity

Quality and Environment Management System operationand improvement

Initiatives in the forest conservation business
Renewable energy business initiatives
Development of environmentally consideratetechnologies

Securing and developing human resources

Succession of technology

Creation of
rewarding
workplaces for all

Promotion of DX

Promotion of diversity

Achievement of work-life balance

S Society

Promotion of worker health and prevention oflabor accidents

Enhancingof corporate
governance
Proactive
communication
with stakeholders
and others-12.2%

2.0% or less

2.0% or less

1.9%

0 cases

0 cases

1 case3/2 or more

3/2 or more

3/1

Promotion of renewable energy business

Number of initiatives in the renewable energy business5 or more projects

5 or more projects

Domestic 7
Overseas 2

Initiatives for environmentally considerate architecture(ZEB, etc.)

Number of environmental proposals

6 or more projects

6 or more projects

6 projects

Strengthening research for carbon neutrality

Number of technology development initiatives (new projects begun)

4 or more cases

4 or more cases

Achievement of Action plan for active participation by women

Ratio of women in new graduate hires

Annual hiring plan achievement

Number hired

Support for acquiring national qualifications

Rate of acquisition of first-class engineering works(civil engineering / architectural construction)
Rate of acquisition of First-Class Architect qualifications (Design)

Quality and Environment Management System operationand improvement
Renovation of core systems
Standardization of ICT to improve on-site management
efficiency

25% or more
176

132

96%/90% or more

96%/85% or more

94%/87%55% or more

50% or more

51%

Serious quality accidents during construction

0 cases

0 cases

0 cases

Rate of progress of system development

100%

100%

60%

Rate of new on-site implementation

100%

100%

96%

7% or more

—

7.9%

Action plan for active participation by women:
Percentage of new female managers in new manager positions
Rate of increase in the number of female managers(compared with April 2020)
Rate of men taking maternity leave

Promotion of work style reform

Number of overtime work hours

Maintenance and improvement of safety management
standards

25% or more

Frequency

—

4.4
4.7

6.3
6.6

3.7

73.9%
21.4 hours

3.4
3.3
3.4
3.9

20 or more projects

20 or more projects

17 projects

Number of infrastructure operation projects

4 or more projects

3 or more projects

3 projects

3 or more projects

4 or more projects

5 projects

3 or more projects

1 or more projects

5 projects

1.5

Number of initiatives

6 or more projects

4 or more projects

5 projects

1.5

Solving social issues in Asian countries

Number of orders for infrastructure development projects

2 or more projects

2 or more projects

—

1.4
1.5

Creation of new business

Number of initiatives

Commercialization of 1 ormore projects

Consideration of
4 projects

Increase numbers ofparticipation projects andparticipants
25 or more projects

62% increase (139 projects)
18% increase(2,190 participants)
26 projects
3 cases(to continue after FY2023)
2 cases(to continue after FY2023)
7 cases(to continue after FY2023)

Disaster prevention/mitigation

Number of initiatives

Technologies for improved resilience, performance

Enhancement of dialog with institutional investors and others

Promotion of CSR procurement

Information collection due to customer insightinterviews and opinion questionnaires
Compliance with Procurement Policy and Guidelines

Strengthening of information communication capabilities

Non-financial information disclosure

Number of technology development initiatives(new projects begun)

Evaluation by outside experts (compared to previous FY)
Number of Cases of Serious Violations of Law and Regulations
Safety confirmation system response rate
Rate of increase in number of participants in financial briefings(compared to previous FY)

2 or more cases

1 or more cases

2 or more cases

2 or more cases

3 or more cases

3 or more cases

Improved reputation
0 cases

11.3
11.6

9.4

11.a

9.1
9.4

11.6
11.3
11.7
11.a

9.1
9.4
9.5

8.2
8.6
6.3
6.6

10.2
10.3
10.1
10.2
10.3
9.5
9.1

11.6

9.5

4.4
4.5
4.7

5.1
5.5
5.6
5.b

8.5
8.8

9.1

5.5
5.b

8.2
8.5
8.8

9.5

8.5
8.8

9.4

11.6

8.2

9.1
9.4
9.5
9.a

11.2
11.5
11.7
11.a
11.c

6.6
6.b

6.2
6.3
6.4
6.6

4.4

7.1
7.2
7.b

12.4
12.5
12.6

12.2
12.7
12.8

12.2
12.4
12.5
12.6

10.2
10.b

8.2
8.3

9.1
9.4

8.2
8.3
8.7
8.8

9.1
9.4
9.a

10.2
10.3
10.b

8.3

9.5

10.2

11.3
11.7
11.a
11.b
11.c

Improved reputation

Improved reputation

CDP certification, etc.

13.1
13.2
13.3

17.17

15.1
15.2

17.7
17.17
16.6

14.1

15.1

17.17

16.7

11.2
11.3
11.7
11.a
11.b
11.1
11.3
11.5
11.c

16.7

12.4
12.8

12.4
12.5
12.6
12.7

17.16
17.17

13.1
13.2
13.3

14.1
14.2

15.2
15.4

11.3

17.16

16.7

17.7

12.8
1.1
1.2

2.1

3.4

4.7
4.b

10.2
10.3

6.6

9.1
9.a

1.5
3.9
8.2
8.3

9.1
9.4
9.5

8.2
8.5

5.5

13.3

11.5
11.a
11.b
11.c

13.1
13.2
13.3

11.3
10.3

8.5
8.7
8.8

4.7

11.a

10.2

3.4

8.2

4.7
3.9

6.3

7.2

8.5
8.7
8.5
8.8

9.1

12.6

17.17

16.5
16.7
13.1
13.2
13.3

11.5
11.b

11.5
9.1
9.4

15.1
15.2
15.4

12.2
12.4

12.6
12.8

*3

17.7
17.16

13.b

12.6

0 cases

17.17

12.4
12.6
12.7

13.9% reduction

0 cases

15.1
15.2
15.4

12.8

10% increase

0 cases

16.7

17.17
10.2
10.3

10% increase

Zero irregular transactions

13.1
13.2
13.3

15.1
15.2
15.4
15.5

10.2

97.3%

97.8%

14.1
14.2

12.4
12.5
12.6
12.7

100%

100%

16.7
14.1

13.3

100%

100%

13.1
13.2
13.3
13.3

10.2

8.2
8.8

4.4
4.7

12.2
12.4
12.6

12.6

5.b

4.4

0 casesCustomer satisfaction
Maintain and improve social reputation (compared to previous FY)

9.4
9.5

4.4
4.7

Improved reputation No problems with effectiveness0 cases

11.6

8.2
8.5
8.8

3.9

Initiatives for urban redevelopment

Number of projects with employee participation / total number ofparticipants (compared to previous FY)

7.2
7.3
7.b

5.1
5.5
5.b

4.4

70% or more

Number of infrastructure renewal projects (domestic)

Smile Project

4.4
4.5
4.7

30 hours or less

0.69

7.1
7.2
7.a
7.1
7.2
7.a
7.b

9.1
9.5

8.5
1.4

70% or more

Commercialization of 2 or more
projects
Commercialization of 2 or more
projects under consideration
Increase numbers ofparticipation projects andparticipants
25 or more cases

6.3
6.6

6.6

30 hours or less

0.5 or less

11.5
11.6

9.4

3.9

10% increase

0.5 or lessNumber of income-producing real estate business participation projects(domestic)
Number of real estate development business participation projects(overseas)

7.2
7.b

1.5

4 cases(to continue after FY2023)
30.4%

149

Fostering of an organizational climate for understandingof diversity

Development of technologies that lead to resolution of social
issues (excluding the environmental field)
Continued evaluation and improvement of the effectivenessof the Board of Directors
Establishment of internal and external systems to prevent
legal violations
Strengthening the Group’s overall crisis management
response capabilities

Improvement of CS

Number of orders (domestic) / Number of investment projects (overseas)

Reduction of -25% or more Reduction of -25% or more

1 caseDevelopment of technologies that lead toresolution of social issues
Improvement of the effectiveness of the Boardof Directors

Active dialogs with investors

Serious environmental accidents during construction

Performance

3 or more projects

High-seismic-resistance structural system

Strengthening of risk management

CO2 emissions (Scope 1+2) reduction rate(compared with FY2019; target year FY2029)
Total mixed waste discharge rate

Targets

SDGs *2

3 or more projects

Handling of natural disasters(resiliency)

Enforcement of complianceIndicators

FY2022

FY2023
Targets

Number of forest conservation projects

Expansion of real estate business

Achievementof sustainablecommunities

G GovernanceMedium- to large-scale wooden structure business initiative,
expanding orders
Initiatives for forest conservation in collaboration with othercompanies

Infrastructure renewal operation projects

Contribution to local communities

28

Business initiatives
Specific actions

Addressing climate change risks

Initiatives in the wood structure business*3 In addition to selection as a CDP Supplier Engagement Leader, FTSE Blossom Japan Sector Relative Index, MSCI ESG Rating Report “A,” etc. (➡ P64-65)

Strategies for Sustainable Growth

E Environment

Perspectives

Key issues(Materiality)*2 Of the relationships between Kumagai Gumi’s business and the 169 targets of the SDGs, the primarily relevant ones are noted.

12.6
12.7
12.4
12.6

17.14

16.7
16.7
17.14

13.1
13.3
13.2

16.5
16.7
16.7

17.16
17.17
17.14

Supervision: Hidemitsu Sasaya, Professor, Basic Education Organization, Chiba University of Commerce; CSR/SDGs consultant
The Kumagai Gumi Group Corporate Report 2023

29

WEB Dialog with Stakeholders (in Japanese only)

Strategies for Sustainable Growth

https://www.kumagaigumi.co.jp/csr/sdgs/dialogue/index.html* Visit this webpage for more detailed information about the meeting.

Opinion-Exchange Meetings with Knowledgeable Exparts

Evaluation of Sustainability Initiatives

In the pursuit of “Quality That Inspires Happiness,” we aim to be
a company where employees consider their work to be rewarding
Kumagai Gumi wants to communicate our sustainability efforts throughout society and utilize the various
opinions that we gain through this effort in management. As part of this effort, we held an Opinion-Exchange
Meeting with Knowledgeable Experts on April 13, 2023. In this second Opinion-Exchange Meeting with
Knowledgeable Experts, we took a closer look at our sustainability management initiatives as well as our
response to the overtime work limit regulations.

Sasaya President Sakurano introduced Kumagai
Gumi’s ESG and SDGs initiatives, which also reflected
the content of the Exchange Meeting with Knowledgeable
Experts held in FY2022.
Nawa What I think is wonderful is that employees ofKumagai Gumi are steadily putting what was indicatedat the previous meeting into practice. However, demand
from society for initiatives related to the SDGs increases
every year. I would like to
see Kumagai Gumi take aneven more positive-minded“aggressive” approach in the
future.
Suzuki Upon further examination of Kumagai’s financial
data, I found that Kumagai’s
financial soundness is distinguished in the domestic
construction industry and is

Strategies for Sustainable Growth

The company’s sincere attitude regarding sustainability initiatives is highly
appreciated. I look forward to seeing more “aggressive” initiatives being implemented.
highly regarded by foreign institutional investors. Financial soundness is a major prerequisite for sustainability
management. I think it would be good for Kumagai Gumi
to promote its financial
soundness as a strength.
Hamada I feel that Kumagai Gumi’s management
and employees communicate with each other well.
In addition, promoting
employee involvement as
part of your management
strategy, such as “My
SDGs,” which relates employees’ personal goals to
the SDGs items is a positive move.
I think it is important to create an environment inwhich each and every employee can practice this kind of
approach in their daily work as their personal business.

Participants in the Opinion Exchange meetings
Participating experts (from front row, left)(Editorial Writer, Nihon Keizai Shimbun)
Ryo Suzuki
Saori Hamada Director and Work-Life Balance Consultant,
Takashi Nawa

Work-Life Balance Co., Ltd.
(Visiting Professor, Graduate School of Business
Administration, Hitotsubashi University)

Facilitator (front row, right)
Professor, Basic Education Organization, Chiba
Hidemitsu
University of Commerce; CSR/SDGs consultant
SasayaKumagai Gumi Directors (back row, from left)
General Manager of the Civil Engineering
Management Division
Overall Administration
Overall Civil Engineering Management andvice president
President
Overall building management and vice president
General Manager of the Building Management
Division

Koji Okaichi
Koji Hidaka
Yoshihiko Kato
Yasunori Sakurano
Yoshiaki Ogawa
Shin Ueda

At the beginning of the meeting, Mr. Sakurano, President of Kumagai Gumi, introduced our approach to sustainability and related activities.
◦ In April 2019, we formulated the ESG Initiative Direction and have been promoting initiatives since its formulation

Kumagai Gumi’s
Sustainability
Management

Response to theovertime work limit
regulations

30◦ In August 2021, we created the ESG/SDGs Matrix and linked business activities with SDGs (➡ P28-29)◦ Responses to the points indicated during the first Exchange Meeting with Knowledgeable Experts* Added “My SDGs,” a section where employees declare their own SDG-related initiatives, to Employee
Evaluation Sheet* Carried out activities such as enhancing internal and external dissemination of information throughposters, surveys, and various forums and lectures. (➡ P27)

◦ Standards for overtime work limit regulations, regulations that will be applied to the construction industry

and other industries in April 2024, have not yet been established.

◦ In April 2023, we established the Work Style Reform Action Plan 2023. (➡ P45)

We responded to the overtime work limit regulations one year in advance.

What are some useful ideas for developing sustainability management?

It is important to communicate clearly to employees what they should practice ona daily basis
Sasaya Mr. Nawa mentioned that social demand related
to the SDGs is increasing rapidly. What do you think isimportant for Kumagai Gumi to do in order to continue
improving its response?
Nawa I often use the English word “principle” these days.
It means an idea that guides behavior or evaluation. Highgoals such as a “purpose” are important, but in order to
put them into practice, it is also
important to communicate toemployees what they should
do in their daily work in aneasy-to-understandmanner.
I think that attitude is also
indispensable for the activities
connected with “My SDGs,”
which I mentioned earlier.
Sasaya Ms. Hamada said thatwhen promoting measures such as “My SDGs,” it is importantfor employees to treat it as their personal business. Do you
have any suggestions from this?
Hamada In order for employees to make these kinds ofinitiatives their personal business, it is also necessary forthere to be opportunities for them to think for themselves
and reason that prompt them to do so. This is why Kumagai
Gumi is enthusiastic about sending out messages frommanagement.
Sakurano In relation to “My SDGs,” which has been
a topic for some time, video messages are provided on
our in-house portal site by me, the President, generalmanagers, and branch managers, which are watched by
employees.
Sasaya I also felt that the efforts shown in the ESG/
SDGs Matrix, which were highlighted at the last opinion
exchange meeting, have been further improved.

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Strategies for Sustainable Growth: Opinion-Exchange Meetings with Knowledgeable Exparts

Things to be aware of in order to promote work style reform

Ideas for creating a system that considers employee job satisfaction

When it comes to the three basic principles of “earn,” “cut,” and “prevent,”“prevent” must not be forgotten

Sasaya Next, I would like for us to exchange opinions
on responding to the overtime work limit regulations. In
response to the regulations that will take effect in April
2024, Kumagai Gumi has taken action by formulating
Workplace Reform Action Plan 2023 one year ahead ofschedule.
Hamada I think it is very commendable that Kumagai
Gumi is taking action in advance.The key point here aswell is figuring out how to incorporate the concepts of theplan into the actions of each
employee.
Another issue is that skilled
and motivated individuals are
given more work, resulting in
more overtime hours for certain people.
Suzuki The first step in solving the problem of people working long hours is IT utilization,such as the use of AI and robots to pass on the skills andknowledge of experienced employees. In addition, I think thatthe active participation of women could serve as a new approach. As the number of women in the workplace increases,
work styles will change.

32

Okaichi Individualization of tasks is also a major issue
in Civil Engineering, which I am in charge of. There is atendency for the know-how of experienced employees not
to be conveyed well to younger employees
Ueda In Building Construction, we are also actively
working on the utilization of IT including construction
machinery automation, but there are aspects that cannot
be solved through the power of IT alone. For example, indesign departments, the desire to respond to customer
requests results in making repeated design changes,
leading to long working hours. At construction sites, it isnecessary to check safety management with one’s own
eyes. This attitude is what makes our work worthwhile,
so I believe that these types of efforts can be reduced but
not eliminated.
Hidaka I realize how complex this issue is as well.
Employees at the construction site manager level tend
to work longer hours because of their strong sense of
responsibility. If we don’t come up with a system thatconsiders their job satisfaction, I think Kumagai Gumi will
end up losing its positive characteristics.
Hamada One suggestion I have for solving this problem
is to eliminate the individualization of tasks and review
the evaluation standards for human resources so thatmanagers, who are responsible for passing on skills, canwork with pride. Changing these standards will also leadto a solution for the long working hours issue.

Nawa There is a general
trading company that adheresto the three basic principlesof “earn,” “cut,” and “prevent.”“Earn,” as in earning money,is the most important thing
for financial soundness. “Cut”
means to improve the efficiency of tasks by eliminating unnecessary work. The last principle, which we must not forget, is “prevent.” The safety
management that Mr. Ueda has just mentioned is in linewith the principle of “prevent,” and no matter how you pro-

Strategies for Sustainable Growth

Response to the overtime work limit regulations

ceed with eliminating unnecessary work, which is in linewith the principle of “cut,” you must not fail to “prevent”
issues.
Ogawa I agree with Mr. Nawa. Corporate value will notincrease if awareness of the “prevent” principle fades.
Kato Although construction is said to be a highly
individualized business where structures are built toorder, there are many routine tasks that are common tosome extent.
By improving the efficiency of routine tasks, I would liketo promote reforms so that employees can focus on theirprimary duty, which is to support society, and work with asense of satisfaction.

A message to Kumagai Gumi

Communicate to our employees how serious we are as a management team
SasayaOverall, I think that human capital, which has
been an issue recently, andwell-being, which is alsoemphasized in the SDGs, will
be key to management.Lastly,
what are your impressions ofKumagai Gumi’s sustainability
management after exchanging
opinions?
Hamada Regarding the long working hours issue, I hopethat you will make a bold attempt to prepare for the real
work which will starting in April 2024 when the regulations
come into effect.
Suzuki I feel that the degree of seriousness ofmanagement is the key to how to popularize initiatives
such as work style reform.Based on what you have all
said, I can expect to see great things from Kumagai Gumi.
Nawa I could feel once again that Kumagai Gumi’s
management places great importance on employee job
satisfaction. Although the name of the action plan that weare currently working on is Work Style Reform Action Plan
2023, I think it would be interesting to change the first partof the name to “Work Satisfaction Reform.” Rather thantrying to change the way employees work without findingout how they feel about it, I believe that a more positive
cycle will be created if you take action to make work more
rewarding and to pursue Kumagai Gumi’s unique value of“Quality That Inspires Happiness”.
Sakurano Thank you today for your various valuable comments.In order to meet the expectations of ouremployees, management
must decide on new reforms and how to indicate
the direction in which thecompany should head in.
I think we were able toobtain a lot of importantsuggestions from today’s
meeting.

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33

Strategies for Sustainable Growth

Domestic Civil Engineering

Business strategy under the Medium-term Management Plan
Area of focus

EconomyMaterial price hikes anddelivery delays due tointernational instability factors
such as the Ukrainian crisis◦	Material price hikes due to yen
depreciation and other factors◦	

Impact of labor shortage on
quality, construction period, and
cost

◦	

for design, procurement, and construction◦ Improve productivity through advanced use of big data obtainedStrengths

Domestic civil engineering sales

Domestic civil engineering gross profit margin

150

15

billion yen

Private civil engineering
construction performance(electricity, railway, and otherprojects)◦	Creation of responses to mattersthat were comprehensive evaluatedfrom construction projects

100

111.6

122.2

%

121.4
94.1

SocialEnvironment◦

Declining work force◦	

Response to the overtime work
limit regulations (2024)◦	

Advances in DX technology

50

5Abundant amount of existing
construction projects

◦	

0

0
FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(targets)

Accumulated know-how based on
experience in large-scale toll roadrenewal projects◦

Carbon neutrality promotion

Intensified price competition in
the renewable energy business◦	◦Intensifying natural disasters

9.7

9.4

10.0

Record of performance inrenewable energy related facility
construction (including solar power,
wind power and hydroelectric
repowering facilities)

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(targets)

Kumagai Gumi has developed a supply chain management system thatshares, checks, and manages information in real time on the flow ofvarious materials used in for the Cotter Floor slab method for bridges, frommanufacturing to installation. In addition to centrally managing information on
the cloud, construction DX is used to improve work efficiency and productivity
at construction sites, and can also be used for future maintenance andtraceability management.

Accumulation of ICT technology
through unmanned construction
experience◦	Supply chain management system image

Performance in disaster recovery
project related construction◦	

Awareness of domestic civil engineering market conditions and looking backon FY2022
In FY2022, sales fell 4.4% from the previous fiscal year due to slowing progress in large-scale construction projects and aconcentration of orders in the second half of the fiscal year. As a result, gross profit margin was 0.3 points lower than theprevious fiscal year. In terms of orders, we strengthened our efforts in comprehensive evaluation projects, and orders forgovernment works exceeded those of the previous fiscal year. In addition, the company received the 3rd Civil EngineeringAward 2022 from the Japan Federation of Construction Contractors for “Tohoku Expressway Towada Jurisdiction
Expressway Renewal Work.” The construction involved the replacement of five bridge slabs, and the Cotter Floor slab
method for bridges, a technology developed by Kumagai Gumi, was utilized to make further improvements and renovations.
The Cotter Floor slab method for bridges is a new construction method in which precast slabs are installed with 20 mm ofspaces between them which are then connected with mechanical joints (Cotter-type joints). Special joint material is thenused to join the slabs together. I believe that this new construction method, which does not require on-site concrete, willcontribute to improving productivity by shortening the process and saving labor for future highway renewal work.

34

11.3

Cotter Floor Slab Quality Control System◦	Promotion of Green
Transformation, an initiative
for the realization of adecarbonized society

◦	

90.0

10.9

10

◦	

◦	

Transition to a preventative
maintenance style for
infrastructure maintenance

◦	

89.9

12.5

Strategies for Sustainable Growth

Budget execution inaccordance with “the Five-year
Plan to Accelerate Measuresfor National Resilience
Contributing to the Prevention
and Mitigation of Disasters” by
the Cabinet Secretariat

Awareness of risks◦	◦ Strengthen engineering capabilities to provide one-stop services

Unrecyclable waste disposal
facilities

Business environment

Gradual economic recovery
due to the transition to thepost COVID-19 period

scale projects with multiple types of construction

Disaster prevention and mitigation,and national land strengthening

Director and Senior Managing Executive Officer General Manager of the Civil Engineering Management Division
General Manager of the Railway Project Promotion Division◦	◦ Develop management skills to comprehensively handle large-

Renewable energy

Koji Okaichi

Awareness of opportunities

Policy Reinforcement

Major infrastructure renewal

By focusing on human resource development, especially the developmentof young employees, and increasing job satisfaction as well as employee
engagement, we aim to improve our profit margin by increasing eachindividual’s earning power. As a sustainable company, we will implement
actions in accordance with Work Style Reform Action Plan 2023.

Deepening core construction businessInitiatives in FY2023
First of all, I deeply apologize for the false report that had been made during concrete quality testing. In order to preventa similar situation from recurring, we will take preventive measures based on an investigation of the cause and will do ourutmost to restore trust and confidence by reemphasizing compliance education.
We regard human resource development of young employees as the most important issue so that they will be able toacquire the skills that will be required as on-site managers 10 years after joining us. I would like to create a interactive
curriculum that confirms in which it can be confirmed that students have acquired abilities rather than just giving themassignments to complete without really knowing how much they are learning.
Since overtime work limit regulations, regulations that will be applied to the construction industry and other industries,
will take effect in April 2024, we will also work to improve digital literacy by promoting the use of construction management
software (DEKISPART, Buildee, LINE WORKS, etc.) with the aim of improving productivity.
In addition, we will engage in external sales of Cotter-type joints as a construction related business.

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Strategies for Sustainable Growth

Domestic Building BusinessBusiness strategy under the Medium-term Management Plan

Policy Reinforcement

Area of focus
Production, commerce, and logistics

Amid an ever-changing economy and society, we will always take on
new business opportunities and pursue growth in Building Construction.
Taking “construction with integrity that considers safety, quality, and theenvironment” to be the starting point of our business, we will contribute to
our customers and to society through Building Construction.

EconomyStrengths
Record of performance in constructionof facilities for logistics (refrigerated andfrozen) and food production◦	Record of performance in construction ofenvironmental facilities (waste disposal)◦	Record of performance in high-rise
residential building construction◦	

Extensive Record of performance in the
medical and welfare market◦	Improvement of productivity throughutilization of ICT◦	Improved quality of operations andproductivity due to utilization of diverse
human resources◦	

Demand for medical and welfare
facilities due to the aging population◦	Advances in DX technology◦	Diversification of society

Environment

Social◦	

Social demand for decarbonization
and wood-utilizing buildings◦	Needs of society for energy
conservation, ZEB, ZEH◦	Demand for buildings adapted to
BCP◦	

Declining work force
Response to the overtime work limit
regulations (2024)

◦	
◦	

Weather anomalies resulting from global
warming◦	Suspension of construction due tonatural disasters such as earthquakes
and typhoons◦	Incurring of disaster recovery costs◦	Medium- and large-scale wooden building
construction technologies from thepartnership with Sumitomo Forestry Co., Ltd.
◦	Record of performance acquiring ZEB,
ZEH, and other environmental certifications◦	Seismic isolation and vibration control
technologies◦	Awareness of domestic building construction market conditions and looking
back on FY2022
In Domestic Building Construction, orders declined in FY2020 due to the impact of COVID-19, resulting in a 11.7%
decrease in sales in FY2022 compared with the previous fiscal year. Gross profit margin decreased by 2.6 points
compared to FY2021 due to the impact of the continued rise in prices due to yen depreciation and higher prices forresources. On the other hand, as the COVID-19 pandemic is coming to an end, construction investment is looking
brighter and domestic building construction orders in FY2022 increased 3.3% compared to the previous fiscal year.
Looking at individual markets, in addition to medical and welfare facility construction and housing construction, areasin which we excel, the order mix was balanced, including orders for the construction of distribution facilities, large-scale
sports facilities, and commercial facilities.
In addition, in the field of medium- to large-scale wooden buildings,we have developed environmentally-friendly
λ-WOOD II, a wooden fire-resistant material that reduces costs and improves workability. Construction of office buildings
using this material is underway in central Tokyo. We intend to strengthen sales activities for the construction of officebuildings, educational facilities, and housing that incorporate wood-related technologies and grow medium- to large-scale
wooden building construction as one of the pillars of our construction business.

36◦ Strengthen of front loading utilizing ICT/BIM

Domestic building construction sales

Domestic building construction gross profit margin

300

15

billion yen

200

195.0

229.5

236.9

235.7

208.1

220.0

%

10

100

5

0

0
FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(targets)

10.9

9.5

10.0

Strategies for Sustainable GrowthMaterial price hikes and delivery delays
due to international instability factors
such as the Ukrainian crisis◦	Decrease in construction investment due
to inflation◦	Concerns about increased credit risk

construction market

Environmentally-friendly renewal field

Awareness of risks◦	◦ Bolster the ability to quickly identify and adapt to changes in the

Urban redevelopment

Business environment

Expansion of e-commerce market
scale◦	Expansion of infrastructure facility
demand◦	New housing demand resulting
from work-style reform and telework
dissemination

design, and construction

Medium- and large-scale wooden construction

Shin Ueda◦	◦ Improve the ability to respond to customers by integrating sales,

Medical and welfare services

Director and Senior Managing Executive Officer
General Manager of the Building Management Division

Awareness of opportunities

Deepening core construction business

10.3
7.7

8.1

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(targets)

Medium- to Large-scale Wooden Structure BusinessWe are constructing a variety of medium-to large-scale wooden structures.
In the Kaga Project, a fire-resistant wooden building construction project currently underway in Sapporo, the heightunder the beams is ensured by using hybrid laminated perforated beams made of wood with steel frame fire-resistantcoating.
For the wood hybrid office “H¹O Shiba Park” under construction in central Tokyo,the cost of beams and pillars has
been reduced and workability has been improved thanks to using “environmentally-friendly λ-WOOD II”. We aim to use
sustainable wood by separating timber from coated materials with an eye to future building recycling.

Initiatives in FY2023
Our company has been improving and reforming work styles with a focus on improving productivity. At each workplace,
we have set up a Wi-Fi and are using ICT tools to coordinate information more closely than ever before. We havealso improved construction efficiency by developing technology to replace human welding of steel frames by utilizing
robots. In addition, we have introduced a flextime system for employees at work sites, and are working to create a work
environment that is highly productive and easy to work in.
Domestic construction investment is picking up due to an increase in inbound tourism and other factors, and wewill vigorously engage in order-taking activities in various markets, including the lodging market. In recent years,
urban redevelopment projects have been increasing in central urban areas and other areas of Japan, and specialized
departments at Headquarters and branches work together to support redevelopment projects.

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Strategies for Sustainable Growth

Overseas Projects

Business strategy under the Medium-term Management Plan

Deepening core construction business
Policy Reinforcement

Area of focus

In Asia and other regions, we will address SDGs issues such as traffic
congestion and environmental pollution, infrastructure development anddevelopment projects for economic growth, decarbonization fields such as
renewable energy, and support for Japanese companies entering overseas
markets. By doing so, will contribute to society and our customers throughconstruction and related businesses.

Urban infrastructure development in Asia

Akira Yamazaki

Awareness of risks
Changes in political, economic, andsocial conditions in each country(including contingency responses)◦	Fluctuations in exchange rates andinterest rates◦	Soaring equipment and transportation
costs

Strengths

Economy◦	Robust demand for infrastructure development
to bring about economic growth in the Asian
region◦	Active support for infrastructure exports (ODA,etc.) by the government of Japan◦	Expectations for the PPP business in eachcountry for infrastructure maintenance,
management, and operations

Environment

Social◦	

Crisis events such as infectious
diseases, natural disasters, terrorism,
and coup d’état◦	Compliance issues and delays
in decision-making in developing
countries◦	

Delays in the development of related
legal systems and transmission line
infrastructure◦	Development investment related risks
such as changes in the real estatemarket◦	Demand for a decarbonized society,such as the use of renewable energy andmedium- and large-scale wooden buildings indeveloped countries◦	◦ Strengthen human resources

Taiwan Kumagai Co., Ltd. (Taiwan)
Taiwan Kumagai Co., Ltd. was established in Taiwan in 1974 as a Kumagai Gumi Group company andis one of the leading Japanese-affiliated general contractors in Taiwan.
In recent years, Taiwan Kumagai has been involved in the construction ofStrong relationships of trust with domestic andoverseas customers◦	some of Taiwan’s representative landmarks, such as TAIPEI 101, which was
the tallest building in the world when it was completed, and the Tao Zhu Yin
Yuan residential super high-rise, with its innovative design reminiscent of thehelical structure of DNA. In June 2022, Taiwan Kumagai is aiming for further
growth through new initiatives, such as the new construction of the Taipei Twin

Business alliances with strong domestic andoverseas partners◦	Extensive record of performance in overseas
projects (including PPP)◦	Extensive record of performance in domestic
infrastructure development (human resources
and technology)◦	Towers C1 and D1 in front of Taipei Station.

Conceptual image of the completed
Taipei Twin Towers C1 and D1Kumagai India Pvt. Ltd. (India)
Kumagai Gumi has been expanding its business in India since the construction of the Delhi Metro in 2005. Kumagai
India Pvt. Ltd. (hereinafter “KIPL”) is a Kumagai Gumi Group company that wasestablished in Ahmedabad, Gujarat in 2016 to support Japanese companies inIndia.

Business collaborations with renewable energy
companies and companies in Japan◦	Collaboration with Sumitomo Forestry Co., Ltd.
in the development of medium- to large-scale
wooden structures◦	

Looking back on FY2022
Civil Engineering We have won an ODA project for the construction of a sewage system in the center of Jakarta, thecapital of Indonesia, and are proceeding with contract negotiations while preparing for construction in cooperation withvarious parties concerned.
Building Construction In Taiwan, our local subsidiary Taiwan Kumagai received an order for the construction of superhigh-rise twin towers in front of Taipei Station. This an other orders will expand sales to the 50 billion yen level. In India,
we have worked hard to build a design and construction system while working
Medium- and large-scale wooden construction
on small projects. In Vietnam, we have opened an office in Ho Chi Minh City inaddition to Hanoi through which we engage in construction projects.
Project Development We received a subsidy from the Japanese government
for an offshore wind power generation project in southern Vietnam, and began
studying the possibility of working with a leading local renewable energy company
and a Japanese company on that project. In cooperation with Sumitomo ForestryCo., Ltd., we participated in the development of an ESG-conscious office in Dallas(Texas, USA).
PPP In FY2022, we signed two new contracts to provide infrastructure© Crow Holdings Development
maintenance and management services in Hong Kong. In total, we are currently
providing services under four contracts in that region.
ESG-conscious office in Dallas (Texas, USA)38

alliances with domestic and overseas partners

Strategies for Sustainable Growth

Awareness of opportunities
Vigorous economic activity after the COVID-19
pandemic and the start of projects resulting
from such activity◦	Robust economic growth in Vietnam,
Indonesia, India and other countries◦ Strengthen construction system through business(Taiwan, Vietnam, Indonesia, India)

Initiatives of Overseas Group Companies (Local Subsidiaries)

Business environment◦	Support for Japanese companies entering the Asian market

Expand the Group’s market share in Taiwan

Managing Executive Officer
General Manager, International Division◦ Put projects together from the initial stage

As India is currently a giant market with the world’s largest population,
Japanese companies are rapidly expanding their production bases there.
Kumagai Gumi has positioned India as one of the most important bases foroverseas business and will vigorously invest human resources to expand its
business by bringing together all of its company-wide capabilities.

Delhi Metro construction work

Initiatives in FY2023
Civil Engineering Jakarta Sewerage Development Project (Zone 1), which has a contract value approximately
24.3 billion yen, has been started. We are also bidding for the construction of Zone 6, which is a similar ODA project thatwill be awarded to the successful bidder in the future. There is also a pro bono ODA project in Ho Chi Minh City, Vietnam
related to sewerage which we are also considering.
Building Construction Taiwan Kumagai will strengthen its human resources while focusing on collaboration and otheractivities in Southeast Asia. In India, where economic growth is expected, our customers are strengthening measures
including facility expansion and carbon neutrality. In Vietnam, where economic development is steady, customers arerushing to expand their business. We will establish a construction system so that we can be more useful to them than ever.
Project Development For the offshore wind power project in Vietnam, we will proceed with discussions with the local
government and related parties, and formulate projects, including the receipt of new subsidies. In addition, we will actively
promote the ESG-conscious real estate business in the US in collaboration with Sumitomo Forestry Co., Ltd.,including
construction technology support.
PPP By introducing Japanese infrastructure maintenance and management technology in cooperation with roadcompanies in Japan, we will deepen and expand PPP operations in Hong Kong and examine the possibility of businessin regions other than Hong Kong.
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Strategies for Sustainable Growth

Construction-related
Peripheral Businesses

Business strategy under the Medium-term Management Plan

Evolve our construction-related peripheral businesses
Policy Reinforcement

Area of focus

Construction-related Peripheral Businesses, which include renewable energy, real estatedevelopment, and technology product sales that we undertake as a business entity, greatly
contribute to the sustainable growth of the Kumagai Gumi Group.
We will accelerate business through collaboration with Sumitomo Forestry Co., Ltd. andother companies to create solid sources of revenue.

◦◦

Wind and solar power generation business (including overseas projects)

Real Estate Development◦

Urban renewal/urban development projects

Infrastructure operation
business

Masao Kajiyama◦

Real estate development projects, including business alliance with Sumitomo Forestry as well as overseas projects◦

Toll road operations◦

PPP (public-private partnerships) and concessions including overseas projects◦

Biomass fuel development and sales

Infrastructure renewal method development and sales
Nursing care/welfare equipment development and sales◦ Construction equipment rental services (e.g. steel frame erection jigs)
◦
◦

◦

◦

◦

Improve professional skills andaccumulation of expertise in such areas asproject structuring and business operations
Accelerate joint research and development
within the Group companies as well as
the mobility of management resources,
including the use of highly-skilledindividuals
Strengthen partnerships with companies
and other organizations beyond the scopeof the Kumagai Gumi Group

Strategies for Sustainable GrowthTechnology product sales
business

Senior Managing Executive Officer
General Manager of the New Business Development Division

Woody biomass power generation business, including a business alliance with Sumitomo Forestry

Renewable Energy BusinessStarted the black bark pellet business using domestic tree bark as a raw material and established a business operation company

Business environment
Awareness of opportunities
Trend toward making central districts ofregional cities more compact◦	 xpansion of PPP/PFI/concession
Ebusiness and infrastructure operation
business◦	

Economy◦	◦	SocialSales/rental risk of reserved floors
in redevelopment projects, etc.
Business feasibility ofredevelopment projects due tosoaring building costs◦	

New housing demand due to aging ofsociety and work style reform◦	

Carbon Neutral Green Growth Strategy◦	Procurement of renewable energyderived power sources, expansion of PPA

◦	

◦	

◦	
◦	

Strengths
Knowledge and a record of performancein real estate development◦	Track record in PPP/PFI/infrastructure
operation business in Japan andoverseas◦	

Knowledge of real estate investment
related to accommodations, extensive
record of construction performance◦	

Resumption accepting foreign visitors to
Japan

◦	

Environment

Awareness of risks

Assurance of business continuity
and profitability
Concerns about fuel procurement

◦	

Costs

◦	

Changes in social institutions andtighter regulations, etc.

Record of performance in high-rise
residential building construction

Kumagai Gumi, together with Kiyomoto Co., Ltd. has
successfully developed a decarbonized biomass fuel called
black bark pellets (hereinafter “BBP”). In May 2023, we began
construction of a BBP manufacturing plant and establisheda joint venture company, Local Energy System Co., Ltd., tooperate the business. BBP contributes to the reduction of CO2
emissions by utilizing bark generated during lumber processing,which was treated as waste until now

Conceptual image of the completed black bark pellet
manufacturing plant

Urban Redevelopment Project “Iwaki Station Namiki-dori District”

Initiatives in the renewable energy
and related businesses; record of
performance related to internallyprocured electricity

We have been carrying out business as a designated service agent in the
Namiki-dori area near Iwaki Station since December 2019. After approvalof the rights conversion plan in June 2021, the commercial building was
opened in April 2024, with all construction to be completed in December
2024.

Looking back on FY2022
In the renewable energy business, we are participating in a project for the construction of a wood biomass power plantin Iidate, Fukushima Prefecture with the aim of restoring and revitalizing forestry industry in Iidate and other areas of
Fukushima Prefecture. The plant is scheduled to start operation in the spring of 2024 which will generate 7,500 kW ofpower.
In the technology product sales business, we have started a business to manufacture and sell black bark pellets, adecarbonized biomass fuel, with the aim of contributing to the realization of a decarbonized society and stable supply ofelectricity.
In the urban redevelopment business, we are steadily constructing new facility buildings in the Nishi-Shinjuku 5-chome
Chuo-Minami District and the Iwaki Station Namiki-dori District, where we are promoting the business as a designatedagent.

40

Conceptual image of the completed
construction of the Iwaki Station Namikidori District

Initiatives in FY2023
We will contribute to the realization of a decarbonized society through offshore wind power generation, biomass power
generation, solar power generation, hydroelectric power generation, and the production and sale of black bark pellets.
In addition, the group to which the Company belongs has won the bid for the Hachioji Station South Exit Maintenanceand Operation Project. We will continue to strengthen our efforts in the PFI business, the concession business, andinfrastructure operation businesses to capture long-term profit-earning opportunities.
As part of our real estate development business, we collected information on redevelopment areas and properties
located in front of stations that are expected to be rebuilt in the near future, and as of the previous fiscal year, wepurchased three real estate properties in areas other than those around the east exit of Iidabashi Station. While managing
these properties as income-generating properties, we will consider future development.

The Kumagai Gumi Group Corporate Report 2023

41

WEB Human Resources-related DataManagement Foundation

https://www.kumagaigumi.co.jp/csr/employee/date/index.html* Japanese only

Diverse Human Resources

Main initiatives in fiscal 2022 and evaluation by society

Human capital management

2022

Held a lecture on LGBTQ to provide an opportunity to learn about the basic knowledge and renew

July awareness about the issues and challenges faced by affected people

Fundamental concept
Kumagai Gumi Group views human resources as its “capital,” and believes that allowing them to maximize theircapabilities leads to an increase in medium- to long-term corporate value. To this end, we are focusing on securing anddeveloping human resources, and creating a workplace environment conducive to healthy functioning. The constructionindustry is currently facing a severe lack of capable human resources due to shortages of young engineers and other staff
as well as skilled technicians who are retiring. With this in mind, Kumagai Gumi is not only promoting active participation
by women, but also creating a system for reemployment of elderly persons and a job return system, as well as focusing
on registering non-regular employees as full-time employees.

2023

About recruitment

Certification/
Registration

November Received the “Silver” PRIDE Index, an indicator related to LGBTQ initiatives
Company employees presented a lecture on DE&I at the “Number One Brand Training” held by the

March Tanabe Consulting Group◦ Received the “Best Balance Award” from Shinjuku Ward, Tokyo◦ Registered as a company supporting the Tokyo Metropolitan Government’s “Children’s Smile Movement” program

Business status since promoting diversity
Classification by indicator
Employee satisfaction

As a diversity company
Kumagai Gumi is working toward creating a workplace environment where everyone can work in a lively manner,
regardless of gender, age, nationality, gender identity, sexual orientation (LGBTQ), or disabilities, and promoting work
style reform with the goal of boosting business performance.

Workplaces where women can play active roles
We formulated the 4th Action Plan (January 2023 to March 2026) based on the Act on Promotion of Women’s Participation
and Advancement in the Workplace. The three quantitative goals of this plan are as follows:
Achievements of the Action Plan for Promotion of Participation by Women
Quantitative Targets

42

FY2015

FY2022Average monthly overtime hours

FY2015-FY2022
Comparison-28.3 hours

Number of women in managerial positions(persons)

1169

6.3 times

Female engineers assigned to the site

(persons)

14

33

2.4 times

Ratio of full-time female employees

12.6%

18.7%

1.5 times

Ratio of male employees taking childcare leave

2.3%

54.3%

23.6 times

Ratio of male employees taking leave for spouse’s childbirth

40.0%

58.7%

1.5 times(persons)

21

44

2.1 times

Balancing work andnursing care

Number of employees taking and nursing care leave (persons)747

6.7 times

Elderly employees

Number of re-employment hirees

228

305

1.3 times

Promotion of
women’s workplace
advancement

Promotion structure
Kumagai Gumi established the “Diversity Promotion Committee” composed of General Managers of divisions and chairedby the President, and involves diversity promotion managers elected by the head office, branches and group companies
to create a promotion structure. A “Work Style Reform Working Group” with representatives of divisions has also been
established to examine various systems and measures to promote diversity and work style reform horizontally acrossthe company.
The Diversity Promotion Department of Kumagai Gumi is in charge of operating and enhancing the effectiveness ofthese groups to consolidate the promotion of human resources’ activities and work style reform.

Management Foundation

Kumagai Gumi works to resolve the advancing age of employees and imbalances among generations, and engages inrecruitment activities with an awareness of diversity. Based on information including future business performance trends,
we formulate recruitment plans for hiring new graduates and mid-career employees that take into consideration the total
number of employees, job types, age distribution, and other factors 5 and 10 years ahead. In fiscal 2019, we also set up
a job return system.

OctoberCompany employees presented a lecture at the “Working Women Leadership Development andTraining” session held by the Fukui Prefectural government under the “4th Fukui Prefecture Plan for
Gender-equal Society.”
Held a lecture on health covering topics like the differences in male and female hormone balance, basic
knowledge on trying to conceive, and male and female menopause

Number of employees working shorter hours(persons)

Current state of employment of persons with disabilities
Expanding the period of the “Week for Persons with Disabilities” (December 3-9 every year) as stipulated by the Basic
Act for Persons with Disabilities, Kumagai Gumi has established every December as our own “Month for Persons with
Disabilities” since FY2021. During the “Month for Persons with Disabilities,” we run an e-learning program to provide
a deeper understanding of persons with disablities. We also invited interns who are students from special education
schools, installed barrier-free facilities in the Headquarters office building, added automatic doors and slopes at employee
entrances, and modified elevators and restrooms. These are part of our efforts to create workplace environments that
ensure that a diverse range of employees can work with peace of mind.

Status of retiree reemployment

Increase in the percentage of women among new
graduate hires to 25% or more

FY2022 results

30.4% (34 / 112 persons)

Increase the ratio of new female managers amongst newly
appointed managers to 7% or more

Achieved July 2023

25.0% (8 / 32 persons)

70% or higher rate of acquisition of childbirth-related
leave by men

FY2022 results

73.9% (34 / 46 persons)We operate employment-related systems under the premise of employment until the statutory retirement age of 65, andcontribute to the expansion of reemployment of retirees who wish to continue working. As of April 2023, 313 reemployedretirees are working in the company.

The Kumagai Gumi Group Corporate Report 2023

43

Management Foundation:

Diverse Human Resources

WEB Together with Employees

https://www.kumagaigumi.co.jp/csr/employee/index.html* Japanese only

Development of human resources

Promotion of work style reform

Aiming to develop human resources under the idea of “Enrich the self, create the future, and support people,” Kumagai
Gumi undertakes a variety of initiatives. In April 2019, we formulated the Human Resources Development Plan that sets
our directions in this area.
Our corporate philosophy structure and vision for human resources
Conceptual structure of Kumagai Gumi
Insight, Onsite, FarsightGroup Vision

Promote the realization of our Group
Vision Formulate an image of
employees as “Kumagai Gumi’svision for human resources”

Enhance our unique Worksite Excellence,create unique value (“Quality that Inspires
Happiness”), and continue to support customers
and society throughout every era

As part of work style reform, Kumagai Gumi implemented systems like telework, staggered working hours and a flextime
system, focused on measures to improve productivity and streamline operations like revising business processes andimplementing DX, and also worked on reforming awareness.
The new “Work Style Reform Action Plan 2023” was created this fiscal year, being the year before work style reform
laws that apply to the construction industry come into effect. In addition to these actions, we will be implementing a rangeof work style reform throughout the entire company, including promoting further diversity to working styles, creating evenbetter workplace environments, and streamlining business operations.
Work Style Reform Action Plan 2023
Action Plan

◦ Focus on reforming employee awareness with regular messages sent from the president◦ Achieve visualization of number of overtime hours worked

Vision forhuman resources

Management Foundation◦ Work on achieving continuous business efficiency and equalization◦ Ensure full compliance with various regulations and operational rules for reducing overtime work

Roles and duties
Our Company’s Code of Conduct

Health management

Support for certification and outside education

We encourage the acquisition of official qualifications such as Professional Engineer and 1st-Class Architect. We also conduct supplementarylectures and mock examinations for examinees, and support employees’ skill advancement.

Communication in personnel evaluations and work performance

We conduct goal setting interviews at the beginning of the term, progress confirmation interviews at the mid-point of the term, self-evaluation
confirmation interviews at the end of the term, and finally an interview on evaluation results, for a total of four interviews a year between employees andtheir superiors. Employees are able to state their wishes regarding future workplace assignment and skill development to the Human Resources andGeneral Affairs Department in the form of a “Career Plan Declaration” via our in-house application system at any time, without going through superiors.

Achieving high training participation rates

At the time of training, in addition to the information provided to the trainee themselves, the trainee’s department office / branch managers andsupervisors are also notified, as part of efforts to create an atmosphere conducive to participation in training.
FY2022 attendance status of training by rank
By target
Category

Participants(persons)

27

24

88

744

31

148

104

70

832

8

OJT trainer training

93

90

96

720

8

Newly appointed manager training

41

39

95

624

16

Name of training
Newly appointed line director training

Role training Evaluator training
Training
at time ofpromotion

Total training hours
Training rate
Training hours
Total hours
per person(%)

Eligibletrainees(persons)

Newly appointed beginning manager training

26

23

88

368

16

Newly appointed instructor training

78

77

98

1,232

16

Manager positions 5th-year training

63

57

90

912

16

Year-specific 3rd-year training
training
Young employee follow-up training
New employee training

96

96

100

1,536

16

108

108

100

5,616

52

112

112

100

19,712176

Kumagai Gumi views the health of employees as the most vital of our management resources, and have developed
systems for the comprehensive support of employees’ health. Every fiscal year, we formulate an employee healthpromotion plan, and carry out health promotion activities that seek an upward spiral in PDCA activities.
We have been recognized
Annual Plan for the Promotion of Employee Health (FY2023)
by the Health and Productivity
Management Organization(1) Initiatives to prevent work-related accidents among employees(2) Assessing working hours and approaching high-risk individuals
Recognition Program of the Ministry(3) Conducting general health examinations and approaching high-risk individualsof Economy, Trade and Industry and(4) Implementation of stress checks and approach to high-risk persons
theTokyo Stock Exchange, as a(5) Efforts in individual cases(6) Initiatives to maintain and promote the physical, mental, and social health ofcorporation that practices excellent
employees
health management.

Initiatives for employees with higher risks
All employee health checkup results undergo careful checking by industrial physicians. For employees requiring followup, we provide continuous support along with recommendations for consultations and interviews. To prevent brain andcardiac disease and mental health disorders caused by overtime hours, we offer accumulated fatigue checklists for
eligible employees and every month provide consultation with industrial physicians to persons who request it. In addition
to this, we provide special follow-up through visits by occupational health experts, interviews with employees, and othermeasures to address workplaces in special environments, such as overseas or at disaster reconstruction sites.

Initiatives for mental health
We carry out stress checks, employee training (self care and organizational care), and support for return to the workplace,among a wide range of activities that extend from primary to tertiary prevention.

* In addition to the above, “Next-generation executive development training” is held as selective training once every several years. The most recent training was for 20
participants in the General Manager class held in fiscal 2021.

44

The Kumagai Gumi Group Corporate Report 2023

45

Management Foundation

WEB Technology/Services

https://www.kumagaigumi.co.jp/en/tech/index.html

Technologies of Solving Social
IssuesFundamental concept

Kumagai Gumi patent heat map(340 patents over 5-year period from 2017)Management Foundation

Kumagai Gumi established the Technical Research & Development division in2017. And the division is closely aligned with the Building Management Division and
Civil Engineering Management Division. The fruits of this coordinated approach isevident with our array of technological development, including medium- and largescale wooden construction technology and carbon neutral technology.
The construction industry thus far had taken an empirical approach to makeadvances in engineering, but there has been a growing challenge associatedwith the training of human resources armed with a broad scope of knowledge,
like IT literacy required for initiatives in the data sciences sector that will be taken
Shinjiro Omoto
General Manager ofin the future. The aging population issue of employees is also one that the entire
Technical Research & Development Divisioncompany is facing. In addition to making generational changes in a methodicalmanner, we also recognize the need for cases in which processes should be led byyounger employees rather than seasoned experts.
We will also be working actively on initiatives aimed at securing public competitive funds as a means of boosting ourtechnological competitiveness. We are working on projects like SIP (Cross-ministerial Strategic Innovation Promotion
Program), PRISM (Public/Private R&D Investment Strategic Expansion Program), Moonshot R&D Program, and the
Project for Promoting the Development of Innovative Technologies for Outer Space Autonomous Construction, andmoving forward will continue to take on the challenge of addressing complex issues—from responding to disasters andachieving carbon neutrality to implementing digital transformation—to boost company growth and contribute to society.

(1) IP landscape	Identify key areas that our company excels at and other fields
we can compete against other companies with based on AI text
mining analysis of our intellectual property information.
(2) Backcasting with the future image of Kumagai Gumi	Identify technological challenges from projects like the “Future
Urban Development” outlined below, and hold repeateddiscussions on backcasting with the future image of Kumagai
Gumi.
With the two approaches to information analysis described above,
we are formulating strategies and systems capable of developing thetechnologies required over the short and long term.

Details of intellectual property rights
In line with promotion of DX, digital measurements, automated control and similar patents accounted for approximately
20% of all patent applications submitted in FY2022. In addition, patent applications related to wooden structures, which
is our priority field, and ones related to nursing care, which is a new business field, each account for 10%. We are also
actively filing for patents based on the results of joint research and joint development with companies in other sectors,
universities, and other research institutions, accounting for approximately 42% of all patent applications. The design
applications we have filed are not only limited to goods like conventional equipment and materials, but we are also
working on protecting the designs of proprietary our wooden structures in particular.

Renewal of laboratory facilities (Recycling Engineering Lab)
Kumagai Gumi has long been involved in environmentally considerate research and development like research related toconservation of the natural environment, development of soil and environmental remediation and improvement methods,
and development of effective CO2 utilization technologies, as it aims to achieve a recycling-oriented society. Microalgae is
one promising substance in particular that we are currently focusing on,
as it allows fixation of CO2 by photosynthesis, or sequestration from themicroalgae. Kumagai Gumi is focusing on technological development
for mass producing this microalgae and exploring new types of usefulalgae, and examining whether such ventures can be developed into
viable businesses.
Our research facilities were renewed in fiscal 2022 with the aim offurther accelerating these R&D efforts and fostering greater interaction
between research staff.

Information sharing during technological development“Future Town Development” project
From FY2021, we have organized activities for working groups comprising
young employees from the Technical Research & Development Division withthe aim of achieving not only greater convenience with the use of advanced
technology, but also to design the types of “towns” the members would like tolive in 30 years from now. Working group members repeatedly brainstomed
and formulated six concepts. One topic of discussion was about the type oftechnology that helps to enrich our souls—the conclusion we reached was“flying through the air = floating.” Based on the six key concepts and thisidea of “floating,” we came up with a design for towns we would want tolive in. This “town” incorporated numerous technologies related to “floating,”
like protecting the entire town from disasters with magnetic levitation. It also
features renewable energy like microalgae power generation, medium-tolarge-scale wooden structures, and unmanned construction—all of which
represent the core technologies developed by Kumagai Gumi.

Six Concepts
1. “Town” coexisting with nature
2. “Town” with the ultimate disaster protection
3. “Town” fostering interaction between its
residents
4. “Town” transformed with digitaltechnology
5. “Town” with equality for all lifestyles
6. “Town” where people and goods movein harmony

Information related to our technological development strategy is regularly analyzed and discussed by the Technology
Strategy Development Committee. In particular, a new technological development policy is planned to be drafted in linewith the new Medium-term Management Plan from fiscal 2024 and on, with a key focus on the following topics.

46

The Kumagai Gumi Group Corporate Report 2023

47

Management Foundation:

Technologies of Solving Social Issues

Development and technology timeline
E Technologies for contaminatedsoil purification

E Nekko Chip Construction Method
for slope greening

S New Kumagai Gumi Style RC Beam S
Construction Method

E Obtained JHEP certification for the creation of
firefly habitats

E CELBIC (environmentally friendly

Environmental protection

for CO2 emissions reduction

Creation of firefly habitats

Development of wooden fire-resistant components

Floor vent based air conditioning

Environmental protection

Environmentally-friendly construction materials

ZEB-related technology

Environmental purification

for large-scale building construction

Algae cultivation

concrete)

Recycling-oriented societyCore material
Fire-resistant coated layer
Reinforced gypsum board

S Wooden Earthquake-resistantHanging Wall Construction
Method using cross laminatedtimber (CLT)

Structure of environmentally-friendly type λ-WOOD IIS STEP Construction Method
Ground reinforcement
AZ-Grout
Submersible non-separating injection grout

Me-A Construction Method

methodPile earthquake resistance
RPG Construction Method

Wooden earthquakeresistant element

KSCP Construction
MethodConstruction
foundation

for tunnel boring

S Twin wall construction method

Civil engineering construction

Steel sheet

Wooden hanging wall
(CLT)
Steel
columnCotter floor slab
For road renovation work

KM21TMfor building structures

C-shaped metal section

Fully mechanized technology
for mountain tunnels

ATOMiK composite wall

Management Foundation

Enlarged nodes foundation

S Headgear pile construction

Network-enabled unmanned
construction

Connecting rail H-shaped metal member

Construction foundation

Half rigid pile construction
Construction foundation
SP Concrete
Super performance concrete

Taishin-wrap Construction Method
Seismic reinforcement for civilengineering projects

Drying shrinkage control technology
STK anchors Ground anchor foundation

When H-shaped metal member is inserted

Concrete technology
Fire-resistance technology for ultra-highstrength concrete
Concrete technology
Particle size decision systems

KS Wooden Buckling-restrained Brace
Earthquake-resistant component
which combines wood in its design

Sunrise Bit Method
Shield tunnelingConcrete technology

Laminated veneer lumber (LVL)

Repair Ace
For concrete cross section repairs
CCB Construction Method
PSS-Arch Construction Method
for tunnel boringfor suppressing cracking in concrete walls

Flora Tender
Assistive walker

for tunnel boring

G Bridge inspection robot

for infrastructure maintenance

NS Floor - features a dry, noise-insulating double
floor structure
for floor impact noise reduction

Robot for the automatic
measurement of cracks
in concrete floors

G Kumagai Magnet Light Alarm (KMLA) Sensor
Deformation visualization sensor

Leveling work support application “VOISL”
Improves productivity
Silent void

Twin Wall Construction Method

G Low-frequency sound camera

Silent handrail

for visualizing low-frequency soundAluminum lattice handrail to prevent wind vibration

Electromagnetic wave absorbing building
materials

AI-based calculation of seismic isolation
foundation concrete fill rate
Improves productivity

Building materials

48

Steel frame structurebuilding frame
KS Wooden Buckling-restrained
Brace is incorporated into thebuilding’s structural frame

Floor impact sound insulation slab

G Silent duct

for visualizing soundSteel brace

Super Ecomax
Long-distance pumping injection material
Curved Tunnel Roof Construction Method

G Sound camera

Plywood

Silent duct

The Kumagai Gumi Group Corporate Report 2023

49

WEB DX Initiatives

Management Foundation

https://www.kumagaigumi.co.jp/ir/management/dx/dx/index.html* Japanese only

Promotion of DX

DX promotion structure

Priority Measures Implemented in FY2023
Raising digital literacy of all employees

IT Strategy Committee
Established as a committee for a centralized approachto accelerating IT, from formulating Kumagai Gumi’s DX
policies to implementing various measures.
The Representative Director and Vice President of thecompany in charge of Technology is assigned to supervise
DX implementation.

Objective

Decide on DX strategies, identify the state of DX implementation

Number of meetings

As required (5 times in FY2022)

Chairperson

Director in charge of Technology

Committee Members

General Manager of the Civil Engineering Management
Division, General Manager of the Building Management
Division, General Manager of the Administration Division,
General Manager of Technical Research & Development
Division, General Manager of the Management Strategy
Office, members designated by the Committee Chair

Secretariat

DX Promotion Department, Management Strategy Office

Fostering human resources data scientists
To utilize digital platforms in a more sophisticated manner and achieving data-driven management, Kumagai Gumi
is focusing on securing human resources data scientists capable of converting and building up stored data used foranalytics, and then analyzing and summarizing the output results.

Establishing a digital platform
This platform consolidates a vast range of data obtained from core systems and various apps, including business figures,construction management records, sales information, images, videos, and tacit knowledge. Information analyzed fromthis data is leveraged to achieve data-driven management and business operations.
Illustration of established digital platform

In September 2021, Kumagai Gumi established the Kumagai Gumi Group “DX
Policy.” The DX Policy outlines the means of “Realizing our Group Vision throughDigital Technology” by applying the approach “Insight, Onsite, Farsight.” In May
2022, Kumagai Gumi was also accredited as a “DX Certified Business Operator”
established by the Ministry of Economy, Trade and Industry.

Customers

Improvement of
the digital literacy of
all employees

WEB Kumagai Gumi Group DX Policy

Sales

50

Discovery of DX
specialists from among
existing employees

Securing of data scientists

Digital platform
creation
Renovation ofcore systems

Digital platform creation

Employees will be digitally
proficient● We will be a secure company
with a BCP in place● Advanced utilization of
BIM/CIM information●

Weather
data

Opportunities for data scientists

Public Data

Financial
Data

Land pricedata

Disasterdata

Traffic/Humanflow dataetc.

*1 Bill of Material●

Digital platform creation

Accurate andvisualized
information
supports
decisionmakingExternal data

Vision for FY2024
Employees will actively use thedigital tools made available to them
● Measures for security risks will
be in place● We will transition to 3D
production systems

Data accumulation(automatic data collection)

Visualization

Improvement of the digital
literacy of all employees

Data collection andintegration maintenanceVision for FY2026

Analysis

Establish our concept ofideal, digitally-proficienthuman resources

Digital platform

Start of DX
specialist education

OutputData accumulation

Start of digital literacy
education for all employees

Number of working hours significantly decreased due to improved work
efficiency, remote management, etc● Worker shortages no longer an issue due to prefabrication and use of robots● Complete transition to BIM/CIM

Mid-career hiring & M&A

Maintenance

BIM/CIMKDS (Kumagaigumi Deep Smarts) data
BOM*1 PLM*2
Personnel and qualification information
Safety and environment information
Academic papers, technical data, videos, chat functionality, etc.
Data conversion

Employees will actively
use the digital tools madeavailable to themConstruction

Core Systems & Groups of Applications●

Human resource retention
and participation in
activities to acquire moredigital human resources

Estimation and
Procurement

Owners, Users, and Managers

Information

Vision for FY2030

Employees will be
digitally proficient

DesignSpecialty Constructors

Suppliers

Data

DX Promotion Medium-term Roadmap
All employees will be digitally proficient● Management decisions will be accelerated using
data visualization● Zero serious incidents

External Designers

Work flow

https://www.kumagaigumi.co.jp/ir/IR_DX_20210930.pdf* Japanese only●

Management Foundation

DX Policy

Kumagai Gumi stores and recognizes the importance of effective data, and provides training for DX and digital literacy to all
employees so that they embrace the mindset for implementing DX, in order to harness this data throughout day-to-day operations.

*2 Product Lifecycle Management

State of initiatives◦ Operation of the new Construction WAO core system was launched this fiscal year at model work sites around Japan.

This project is being advanced with the view to achieving full-scale operation by Spring of 2024.
◦ A deployment policy has been developed for ICT and other tools used at civil engineering and construction workplaces.
Making ICT tools available for use at all workplaces will help increase productivity and shorten working hours.
The Kumagai Gumi Group Corporate Report 2023

51

ESG Initiatives

WEB The Commitment of Eco First

https://www.kumagaigumi.co.jp/en/csr/environment/ecofirst/index.html

Environment

Environmental Issues and Target

Decarbonizedsociety

Reduction of CO2 emissions*1 in business activities
Target for Kumagai Gumi only

Reduction of mixed waste discharge●

Target for Kumagai Gumi only

Initiatives in
the renewableenergybusiness

Construction mixed waste discharge rate*2
Maintain at 2% or less

Fundamental concept of environmental management
Aiming for a society in which limited resources are recycled, and people, the community, and nature continue to beenriched, the Kumagai Gumi Group is working to achieve a sustainable society by setting individual issues and targets
for addressing climate change risks, achieving zero emissions, and undertaking initiatives that take biodiversity into
consideration.

Electronic manifest use

ESG Initiative
Direction
Safety and Health,Quality andEnvironment Policy
Biodiversity Initiative Direction
Environmental target
Annual plan

Medium- to long-Term targets forEnvironmental Preservation(The Commitment of Eco First)
Goals to promote the transition to a
decarbonized society◦Scope 1+2	Compared to 2020, a 25% reduction

In June 2010, Kumagai Gumi became the first company inthe construction industry to receive Eco First Company
certification. We are fulfilling our social responsibility as acompany engaged in the construction business, and are
advancing six initiatives to realize a sustainable society.
These include clarifying and preventing to the utmost
possible extent the environmental impact that can occur
through our business.

The Commitment of Eco First (extract)
1. We will promote the transition to a decarbonized society, to combat
climate change through our business activities.
2. We will promote the formation of a recycling-oriented society throughbusiness activities.

by 2030, and carbon neutrality in 2050
◦Scope 3	Compared to 2020, a 13% reduction
by 2030, and a 37% reduction by 2050

3. We strive for a society that coexists with nature and promote initiatives
with consideration for biodiversity.

Goals of promoting the formation of arecycling-oriented society

5. We will actively participate in environmental conservation activities incommunities.

◦ In

aspiring to achieve zero final waste disposal,
advance the 3Rs and maintain a mixed constructionwaste discharge rate of 2.0% or less

Enforcement of separation of plastic garbage
Promotion of green purchasing

In the future, we will further reduce fossil fuels used in heavy machinery and vehicles in our business activities and actively
introduce renewable energy. In addition, we will further accelerate decarbonization by promoting ZEB, which contributes tosignificant energy savings in the buildings we provide, and by working on renewable energy generation projects.

52

Development ofenvironmentallyconsideratetechnologies

Initiatives
in the forest
conservation
business

Target for Kumagai Gumi Group
2050: Adoption rate of 100%Society thatcoexists with nature

Initiatives withconsiderationof biodiversity

Promotion of environmentallyconsiderate technologies(Technology Research andDevelopment Division)

Promotion of considerationof biodiversity(Construction, Technology
Development Divisions)Target for Kumagai Gumi only (FY2021 to FY2025)●●

Technology development, application: Total 25 cases or more
External publications (press releases, academic papers): Total 10 or more

*1 CO2 emissions				

Scope 1: Direct emissions from fuel combustion (use of heavy machinery, vehicles, etc.)
Scope 2: Indirect emissions from the use of electricity, etc. supplied by other companies
Scope 3: Indirect emissions from upstream/downstream areas of business activities other than Scope 1 and 2 (materials procurement, operation ofbuildings, disposal, etc.)*2 Construction mixed waste discharge rate (%) = amount of mixed waste generated (t) / total construction waste generated (t) * Including from demolition work,
materials buried underground, and construction sludge*3 Electronic manifest use rate (%) = number of electronic manifests / (number of electronic manifests + number of paper manifests)

Business Activities and Environmental Impact Kumagai Gumi Non-consolidated (domestic) Results for FY2022

INPUT
Principal material inputs

Construction
Division

Steel rod

65,000 t

Sales 88.9 billion yen

Cement9,000 tTunnels, dams,
land development, etc.

Wet concrete

1,410,000 t

Steel frame

34,000 t

Principal energy inputs
Electric power 30,315,000 kWh
Diesel oil

17,026 kl

Kerosene

18 kl

Water
OfficeDivision

Civil Engineering

333,000 m3

Electric power 4,440,000 kWh
Paper

91,000 kg

Water

16,000 m3

Business
activities
Building
Construction

Compliance with environmental conservation laws
Amid the COVID-19 pandemic in FY2020, we undertook
the following initiatives to prevent violations ofenvironmental laws and regulations, and strove to comply
with environmental laws and regulations.
1. Education on environmental laws and regulations in
intensive employee training at Headquarters, by the
Headquarters manager in charge of environmental
regulations (6 times)

Scope 1+2CO2 emissions

Construction
Division

OfficeDivision

Sales 208.1 billion yen
Offices, hospitals,
schools, etc.

OUTPUT
57,000 t-CO2

NOx emissions

73 t

SOx emissions

114 t

Waste discharge
Total gross output

500,000 t

Recycle/reduction

470,000 t

Net discharge

31,000 t

Scope 1+2CO2 emissions

2,000 t-CO2* Greenhouse gases other than CO2 (CH4, N2O,
HFC, PFC, SF6) are not emitted through ourbusiness activities

ESG Initiatives(➡ P60-61)

Achievementof zeroemissions

Recycling-oriented
society

6. We will actively disclose environmental information and strive to build
partnerships with stakeholders.

As an “Eco First” company, Kumagai Gumi has engaged since 2010 in initiatives aimed at the achievement of a sustainable
society.
In February 2021, we joined the RE100 initiative, and we are working to shift all of the electricity used in our business activities torenewable energy. We have obtained SBT certification as we work to achieve the targets for our medium- to long-term greenhousegas emissions goals. In the area of information disclosure, the CDP gave us a Supplier Engagement Leader rating, the highest
Supplier Engagement Assessment rating, for the second consecutive year.
In January 2023, Kumagai Gumi expressed its support for the “Task Force on Climate-related Financial Disclosures (TCFD).”

Scope 32030: 13% reduction compared to 2020
2050: 37% reduction compared to 2020

Adoption of renewable electric power
Initiatives
in the wood
structurebusiness

Promotion of 3Rs (Reduce, Reuse, Recycle)

4. We will strive to develop, improve, and popularize technologies andmethods with consideration for the environment.

Formation of environmentally considerate business (Initiatives in FY2022)●

Target for Kumagai Gumi only
Utilization rate*3 95% or more

Kumagai Gumi environmental structure
The Commitment of Eco First

Addressing
climatechange risks

Scope 1+2
2030: 25% reduction compared to 2020
2050: 100% reduction compared to 2020

2. Education for branch managers, etc. (2 times)
In FY2022, no fines or penalties were levied due tolegal violations, and no suits were filed.

Environmental incidents

One environmental incident occurred in FY2022.
(1) Dust leaked outside during asbestos removal work
The causes of the incidents have already been determined,
and efforts will be made to prevent the recurrence ofsimilar incidents.

The Kumagai Gumi Group Corporate Report 2023

53

Environment

ESG Initiatives

WEB Procurement Policy

https://www.kumagaigumi.co.jp/en/csr/partners/
procurement/index.html

Promoting the Transition to a Decarbonized Society  Individual Issue: Addressing Climate Change Risks

Promoting the Formation of a Circulating Society Individual Issue: Achieving Zero Emissions

Kumagai Gumi is focusing on introducing renewable electric energy to achieve carbon neutrality by 2050. At the sametime, we are working to reduce CO2 emitted from diesel oil during the operation of heavy machinery and vehicles throughthe practical application of new technologies and streamlining of construction work.

Kumagai Gumi has set a target of reducing our mixed construction waste discharge rate to 2.0% or less by taking
action to cut mixed waste on the way to achieving zero discharge, which is a specific issue laid out in our ESG Initiative
Direction. We are focusing on promoting 3R practices (reduce, reuse, recycle), thorough separation of plastic waste, andpromotion of green purchasing.

CO2 Emission Targets (total emissions) (Kumagai Gumi only)
Scope 1+2

Target90,000 t-CO2

Promotion of 3R practices

Actual performance
2050 Target

2030 Target

Carbon Neutrality

25% reduction compared with FY2020

Basis

80,00070,00050,000

Scope 2
Electricity derived
from fossil fuels

40,00030,000The

Action (2): Switch to renewable energy for electric
power

Com

Reuse
Use materials at multiple work sites, primarily
materials for temporary use

Action (3): Apply energy-saving construction
methods, new technologies
f Ec
o Fir
st
Scope 1: Diesel oil, etc.

20,00010,000

mitm
e

nt o

0

2020

Scope 3

Target5,000,000 t-CO2
4,000,000

Basis

2035

Actual performance

Social target

37% reduction compared with FY2020

Actions

ent of Eco First

1,000,000
0

2025

2030

2050

2045

2050 Target

2030 Target

2,000,000

2020

2040

13% reduction compared with FY2020

The Commitm

3,000,000

2030

2025

Develop ZEB, ZEH, and other technologies
Design wood structures and develop technologies
for their construction● Sales of medium- to large-scale wooden structuresand commercialization investment● Design of renewable energy related facilities,
development and application of related construction
technologies● Promotion of renewable energy business● Development and application of technologies
related to national land strengthening

2040

2050

2045

2030 target

2050 target

58,400 t-CO2

Compared to 2020 25% reduction

Compared to 2020 100% reduction

Scope 3

3,782,000 t-CO2

2,941,100 t-CO2

Compared to 2020 13% reduction

Compared to 2020 37% reduction“Kumagai Gumi Procurement
Policy” and “Procurement Policy
Guidelines” establishedEstablished in 2021, reflecting
the perspective of the SDGs on
achieving a sustainable society inthe field of procurement
Declaration of corporate social
responsibility, including theenvironment and human rights, fromthe procurement stage

In 2008, Kumagai Gumi, together with the Japan Water Agency, established the Hotaru (Firefly) Biotope at the Oyama
Dam (Hita City, Oita Prefecture). In 2015, we obtained JHEP certification* for the biotope for the purpose of quantitatively
evaluating of our efforts to contribute to the conservation and enhancement of biodiversity—at the time, it was the first
biotope in Japan to be certified for fireflies. The certification was renewed in November 2020. We will continue focusing
on conservation and management of the biotope into the future, and take a proactive approach to promoting it as symbolof the rich natural environment in Hita City and environmental activities for the conservation, recovery and creation of
ecosystems.
* Japan Habitat Evaluation and Certification Program(2) Creation of renewable energy sources

A renewable energy menu comprising [Electricity + Environmental
Value] from electrical utility● Electricity consumption used for construction in FY2022

8,000 MWh■
■ Renewable electric power
Non-renewable electricity

6,000

5,720

5,765

5,825

5,505

914

1,401

1,549

2,038

1st quarter2nd quarter3rd quarter

4th quarter

2,000
0

FY2022 results (Kumagai Gumi only)
Total amount of separated plastic waste
7,900 tElectronic manifest use rate
92.5% (Target: 95% or more)

FY2022 results (Kumagai Gumi only)
Construction mixed waste discharge rate
1.9% (Target: maintain at 2.0% or less)(1) Purchase of renewable energy menu

4,000Management system
Operation and management of the Quality
and Environment Management System

Operation in accordance with
the Purchasing Management
Regulations established in 2003,
which stipulate the basic principles
of green purchasing.

There were 94
sites that adopted
renewable energy
using this method in
FY2022. The FY2022
adoption target
at sites (ratio ofrenewable energy for
temporary power used
for construction) was
10%, but we achieveda ratio of 19.5%.

Create [Electricity + Environmental Value] with our own renewable energy sources
Captive-consumption solar power generation systems installed at
the Tsukuba Technical Research & Development institute, Fukui head
Office and Karuizawa Lab began generating power from FY2021.
◉R esults at Tsukuba TechnicalResearch & Development InstituteRenewable energy value transaction 770,116 kWh(3) Procurement of environmental
certificates

ESG Initiatives

To achieve its goals of carbon neutrality in 2050,
Kumagai Gumi joined the RE100 initiative and obtained
SBT certification, is shifting all electricity used inbusiness activities to renewable energy, and expanding
businesses with the aim of reducing CO2 emissions
by 25% by 2030, compared to 2020 levels. Three
specific approaches are being adopted for introducing
renewable energy: (1) Purchase of renewable energy
menu (2) Creation of renewable energy sources (3)Procurement of environmental certificates.

Purchase of construction
materials and equipment

Individual Issue: Initiatives with Consideration for Biodiversity

74,300 t-CO2

Adoption of renewable electric power

A new set of Separation Procedures for
Plastic Waste was established in October
2021 to promote the separation, proper
disposal, and recycling of plastic waste.

Striving for a Society That Coexists with Nature

Scope 1+2

Case Examples of Carbon Neutral Initiatives

Promotion of green purchasing

●

2035

FY2022 results

RecycleEmphasis on voluntary waste separation activities(1) Priority outsourcing to superior industrial waste
disposal service providers(2) Education on waste separation(3) Foremen’s meeting activities at construction
sites

Enforcement of separation of plastic waste●

Greenhouse gas reduction targets for Kumagai Gumi only
Basis year 2020 (FY2019 performance)

Overall 3R Plan
Identification of incoming materials, quantities byproduct, and available disposal options
ReduceProposals to clients and designers at theconstruction planning stage, followed by
implementation

Action (1): Improve consumption efficiency, etc.

60,00054

WEB Environmental Data

https://www.kumagaigumi.co.jp/en/csr/environment/
en_environmentaldata_202301_1.html

Procurement of only [Environmental
Value] from electric power markets tooffset imports

Environmental certificates: J-Credit
Green Power Certificate
FIT Non-fossil Certificate, etc.

A captive-consumption solar power generation system witha storage battery system as a BCP measure was adopted at
our Tsukuba Technical Research & Development Institutein January 2022. At peak, this generated more than 30% of
the electricity used for operations at the Technical Research& Development institute. Procurement of FIT Non-fossil
Certificates is also helping to achieve carbon neutrality.
The Kumagai Gumi Group Corporate Report 2023

55

Environment

ESG Initiatives

WEB Disclosures based on TCFD recommendations

https://www.kumagaigumi.co.jp/en/csr/environment/tcfd/index.html◦ Results of scenario analysis

Disclosures based on TCFD recommendations
In January 2023, Kumagai Gumi expressed its support for the “Task Force on Climate-related Financial Disclosures(TCFD).”
We identified and assessed climate risks and opportunities, and analyzed scenarios to gain a better understanding of
the medium- to long-term impact they would have on our business activities.

Items within the identified “Risks” and “Opportunities” that were deemed to affect businesses most significantly were analyzed for theirfinancial impact in the year 2030. Analyses were conducted on two main scenarios—a 4°C warming scenario assuming an increasein average temperature of 4°C worldwide by 2100 compared to that before the industrial revolution, and a 1.5°C warming scenario
assuming an increase in average temperature of around 1.5°C.
Both scenarios indicated that the increase in profits was forecast to exceed any negative impacts, renewed awareness of the importanceof measures for addressing “Risks” and “Opportunities,” and demonstrated that those measures aligned with the business strategies
defined in the Medium-term Management Plan (FY2021 to FY2023) and other targets.
Financial Impact

Strategy formulation process
Process 2
Set scenarios◦L ist out risks andopportunities in each
operating divisions(short-term, mediumterm, long-term)◦D efine impact on

businesses◦ Evaluate importance

56

Process 3
Evaluate impact on
business◦D etermine financial◦S et multiple scenarios◦C onfigure parameters

related to risks andopportunities with highimportanceaspects affected by risks
and opportunities◦E xamine financial impact

trial formulas◦T rial calculation offinancial impact based on
formulaProcess 4
Examine remedial
measures◦D etermine state ofmeasures for risks andopportunities◦E xamine response

measures to enhance
resilience against risks
and opportunities

Acute physical risks

Physical risks

Chronic physicalrisks

EnergysourcesMore stringent
regulations governing
GHG emissions(introduction of carbon
pricing, etc.)

Details

1.5°C

Scenario

4°C◦Energy conservation during◦Increase in business costs due

to procurement of construction
materials and introduction of charges
and emissions trading systems for
GHG emissions

construction stages

Large

Small

construction sites and on-site
employees affected by natural
disasters and construction delays
caused by supply chain interruptions◦Decrease in asset value of real estateholdings due to natural disasters

machinery

supply chains

Small

Large

Increase in demand
for renewable energy
related businesses

orders following health problems andmore severe worker shortages due
to worsening working conditions on
construction sites

Small

Mediumtechniques less affected by thenatural environment◦Consider moving real estate awayfrom disaster hazard areas

environments such as measures toprevent heat stroke◦Develop and implement laborsaving construction methods andtechnologies to raise productivity◦Design renewable energy related◦Increase in sales and demandfor construction due to increase
in renewable energy related
investments◦Develop and implement construction◦Make improvements to working

in work efficiency at construction sites

Increase in averagetemperature

carbon pricing◦Enhance and operate BCP, including◦Increase in labor costs due to decline◦Decline in sales due to stagnation of◦Introduction and operation of internal◦Decarbonization of construction◦Increase in costs to respond toMore frequent andintensifying natural
disasters

Measures

Scenario

MediumSmall

facilities, and develop andimplement construction technologies◦Promote renewable energy businesses◦Design wooden structures, andIncrease in demand for
medium- to large-scale
wooden structures

Increase in demand forenergy-saving buildings
Expansion of national
resilience markets◦Increase in sales of medium- tolarge-scale wooden structures withminimal GHG emissions and allows
fixation of CO2◦Increase in sales of buildings withexcellent energy efficiency andminimal GHG emissions

Large

MediumLarge

Medium◦Increase in sales of technology,

products and construction fordisaster prevention, mitigation andrestoration

develop and implement construction
technologies◦Provide investment for the operationand commercialization of medium- tolarge-scale wooden structures◦Develop and implement ZEB/ZEH-

related technologies◦Develop and implement technologies

Large

Large

contributing to national resilience(disaster prevention, mitigation andrestoration technologies)

Risk Management
Kumagai Gumi is working toward identifying and reducing risks that affect business activities as well as maximizing
opportunities, by isolating and assessing the risks and opportunities of important matters on an individual basis, andmaking decisions at the Management Committee and Board of Directors. Each operating division also isolates andassesses the risks and opportunities present within their business processes, examines the required measures andupdates their annual plans. The state of these initiatives are monitored every quarter, with the results reported to theManagement Committee. Reports and discussions on environmental risks and opportunities, including those related toclimate change, are made by the “Sustainability Promotion Committee,” which are in turn reported to and discussed by
the Management Committee and Board of Directors.

ESG Initiatives

Process 1
Evaluate importance ofrisks and opportunities

Products and services“Risks” associated with climate change were deemed to be originating from “Transition” such as more stringent regulations
governing GHG emissions, and those originating from “Physical” changes such as more frequent and intensifying natural
disasters. Meanwhile, “Opportunities” associated with climate change include an increase in demand in new markets.
Kumagai Gumi identified the “Risks” (categorized as “Transition Risks” and “Physical Risks”) and “Opportunities”
associated with climate change over three time frames: Short-term (generally within 3 years); Medium-term (generally
from 3 to 10 years); and Long-term (generally more than 10 years).

MarketStrategy

Opportunities

Kumagai Gumi discuss key management matters,
Control
Board of Directors
including climate-related issues, at its “Management
Control/GuidanceCommittee” (Chairperson: President). The “Sustainability
Promotion Committee” (Committee Chair: General
ReportManager of the Management Strategy Office) has
Execution
Management Committee
also been established as an organization to assist theManagement Committee.
The “Sustainability Promotion Committee” is composed
Sustainability Promotion Committeeof the General Managers of Business Divisions. Focusing
on ESG/SDGs perspectives, the committee considers
broad measures that will contribute to long-term growth
Head and Branch Departments
and establishment of a sustainable society. It coordinateswith the Management Committee and other committees
in order to tackle environmental challenges, including issues related to the climate, and to examine measures aimed atachieving environmental targets.
The Board of Directors receives reports on climate change related matters obtained with the above process, andoversees the state of initiatives.

Risks

Governance

Policies, laws
and regulations

Factors

Transition risks

Category

Indicators and Targets

As part of “The Commitment of Eco First” and “SBT” certification, Kumagai Gumi sets targets for reducing greenhousegas emissions (Scope 1, 2, 3) and the amount of discharged mixed construction waste, and discloses results of thoseefforts. We joined the RE100 initiative in February 2021 and are actively adopting renewable electric energy with the viewto achieving carbon neutrality.
We have also created an “ESG/SDGs Matrix” to clarify the relationship between businesses and SDGs and disclose
the indicators, targets and performance of a range of individual issues, including reduction targets for greenhouse gas
emissions.
The Kumagai Gumi Group Corporate Report 2023

57

ESG Initiatives

ESG Initiatives

Web Safety management

WEB Quality Management

https://www.kumagaigumi.co.jp/en/csr/safety/index.html

https://www.kumagaigumi.co.jp/en/csr/quality/index.html

Occupational Health and Safety

Quality Control

Occupational Health and Safety Policy

Fundamental concept of quality control

In the conduct of its business, the Kumagai Gumi Group prioritizes respect for human life and maintains high healthand safety management standards to prevent labor accidents and improve health. We comply with social norms, laws,
our internal standards, and other rules, and have established a Safety and Health Management System to provide a
workplace environment that is safe and secure.
Incidents can also be searched and used for reference toStructure of the Management System
ensure better prevention recurrence. The results of safety
Kumagai Gumi provides comprehensive training inand health patrols are compiled into a database and used
response to reports of occupational accidents, and hasfor risk management, and we are developing a system fordeveloped a structure for reporting to management quickly
drafting formulating workplace Safety and Health Control
and accurately, regardless of severity. We also obtained
Plans. We are also leveraging DX here, with initiatives
the industry’s first company-wide certification under the
including implementing paperless Safety and health patrols
COHSMS (Construction Occupational Health and Safety
and trialling remote patrols.
Management System) program launched in 2008 by
Safety and health education for employees
the Japan Construction Occupational Safety and Health
We have established educational guidelines, and are
Association (JCOSHA). In 2018, we received a renewal
conducting education on occupational health and safetyof our “NEW COHSMS” certification, which addresses theand relevant systems at headquarters and branches.
changing environment of the construction industry andIn FY2022, after taking sufficient measures to prevent
the ISO45001 international standard.
COVID-19 infections, we conducted training for each
Sharing information on health safety andemployee rank in a group training session hosted byprevention recurrencecompany headquarters.
In April 2021, we introduced the “Safety Portal System” toaccumulate and centralize data. This enables sharing andimplementation of information on disasters and accidents,
facilitating a prompt response by the departments involved.

We comply with social norms, laws, our internal standards,
and other rules, and have established a Safety and HealthManagement System. We operate this system with a high level of
efficacy in response to changes in the business environment. We
strive to improve the capabilities of our employees, specialized
contractors and others through education and training, and we
provide construction services that meet the expectations of ourcustomers and users so that we can foster their trust through our
superior comprehensive capabilities.

Structure of the Quality andEnvironment Management System

Kumagai Gumi obtained ISO9001 certification in 1996 andISO14001 certification in 1997. With the aim of assuring reliable
quality and manufacturing products with minimal environmental
impact, we implement the PDCA cycle for continuous improvement
in all processes, from receiving orders to providing aftercare.

Enhanced initiatives for
elder workers

We conduct awareness training to encourage workers to take advantage of their wealth of experience while
being aware of physical decline, encourage nearby workers to provide verbal safety warnings, promotevisualization of fall prevention measures, and have in place age restrictions and a permit system for work that
could result in a fall.

For the safety/security offoreign workers

Many foreign workers are active in the construction industry, and labor accidents involving these workers
have increased accordingly. We have translated our own Workers’ Basic Education booklet into four foreign
languages to support education for business operators.

Safety and health patrols

A program is conducted at all construction sites at least once a month to check for violations of laws andregulations and the implementation status of the health and safety management plans. In preventing fall
accidents, we aim toward creating work environments in which safety belts are rendered unnecessary, rather
than simply relying upon them.

Quality and Environmental
Expert Subcommittee
System Audit Team

Department Heads

Branch Managers
Overall Branch Quality andEnvironment Control Manager
Branches

Branch Quality andEnvironment Committee

Group Leaders

Branch Quality and Environmental
Expert Subcommittee
Branch System Audit Team

Department Heads/
On-site Managers

Plan

OrderedOrdered construction handover meeting
construction
Assessment of required quality,
handover meeting

Identification of policies/risks/
opportunities Annual plan

project properties, etc.

Purchasing/construction

Customers/Society/Environment/Stakeholders

Identification of risks and opportunities
Inspection of blueprints
Construction work study groups

Planning

Headquarters/branch management departments

Project operation/management
ExecutionDo

QCDSE patrol

Guidance/support

Management resources(Human resources, technology, information, etc.)

Review by the President(Management review)

Progress management/
integrated management

Review/
improvement

Act

Checking/
Inspection

Planning/review
Project supervision
Aftercare

Review by the President

ESG Initiatives

Due to an incident in which a self-employed worker who had not received employer-provided worker safety
instruction was engaged in dangerous work, we have strengthened the instruction by which self- employedworkers receive training.

Division Heads

Patrol by partner company

Order receipt/design/planning

Safety risk management and supervision by top management

Enhanced safety guidance
for self-employed workers

Quality andEnvironment Committee

Group work forconstructions
Individual projects (sites)

Main Safety and Health Initiatives

Headquarters

Conceptual diagram of the Quality and Environment Management System

Safety and Health Initiatives
The President serves as the chief executive overseeing safety and health, and a Branch Safety and Health Committee isestablished at each branch, headed by each Branch Manager in order to deliberate and decide on matters. During Safety
Week, the President, Vice Presidents and other members of senior management (executives in charge of safety, quality
and environment) conduct patrols to raise awareness of safety.

President
Overall Quality andEnvironment Control Manager

Improvement/aftercare

Inspections
Internal inspections
System audit

Check

Independent inspection
by partner companies

Inspection and evaluation

Status of occupational accidents (including skilled construction workers at construction sites)(total at the end of each fiscal year)

FY2019FY2020

FY2021

FY2022Frequency

0.70

0.44

0.32

0.63

0.69

Severity

0.02

0.02

0.28

0.10

0.77

17 cases

13 cases

9 cases (1)16 cases

15 cases (2)Number of accidents involving leave of 4 days or more (death)58

FY2018Inspection by customer

Site study tour/briefing

System audit

Internal inspections
The Kumagai Gumi Group Corporate Report 2023

59

ESG Initiatives

WEB Human Rights

https://www.kumagaigumi.co.jp/en/csr/human_rights/index.html

Human Rights

The Kumagai Gumi Group recognizes the diversity of all officers and employees and respects the human rights ofeveryone involved in our business. We established the “Kumagai Gumi Group Human Rights Policy” (hereafter, thisPolicy) in January 2023, and conduct human rights due diligence.

Kumagai Gumi Group Human Rights
PolicyThe Kumagai Gumi Group established its Human Rights
Policy in January 2023, based on the “Kumagai Gumi
Code of Conduct (April 1998)” that Kumagai Gumi draws
on for the actions it takes. In addition to taking into
account the human rights of all officers and employeesof the Kumagai Gumi Group, business partners, suppliers
and other relevant parties are requested to endorse thisPolicy, in order to respect human rights and ensure there
are no violations.

Board of Directors
ReportExecution

Established January 2023

Control/GuidanceManagement Committee

The Kumagai Gumi Group conducts human rights due diligence based on the Human Rights Policy.
Human rights due diligence process3

1. Scope of application
	This Policy applies to all officers and employees of Kumagai
Gumi Group.

1

2

Identify negative impacts

Examine facts

Suspend/correct
negative impacts

2.	Respect and compliance with standards, laws andregulations
	The Kumagai Gumi Group endorses and respects
international standards related to human rights, outlining thefundamental human rights that should apply to everyone
around the world.

Identify items in Kumagai

Examine the facts by

Respond quickly if there

engaging in dialogue withare negative impacts,

affected people to checkand suspend or makewhether human rights arecorrections to those

adversely affected.

impacts.

3.	Respect of human right through all business activities
	The Kumagai Gumi Group prevents negative impacts onhuman rights that may occur through business activities,
and takes responsibility for respecting human rights.
4. Implementation of human rights due diligence	The Kumagai Gumi Group has developed a system forhuman rights due diligence, and will implement it continually.

Promotion structure
Control

Kumagai Gumi Group Human Rights Policy (excerpt)

Implementation of human rights due diligence

5. Relief and corrective action	In the event that human rights are adversely affected, theKumagai Gumi Group takes corrective action to provide relief.
6. Education and training	The Kumagai Gumi Group provides appropriate educationand training for all officers and employees.

Gumi Group’s businessactivities with a highpossibility of adversely
impacting human rights, andthat pose a significant risk.

4Disclose information

Regularly disclose
progress of initiatives,and share details withstakeholders.

Conduct questionnaires
Kumagai Gumi considers that there is a possibility of human rights being adversely affected when dealing with “foreigntechnical interns” in business activities, and in February 2023 conducted a questionnaire on human rights due diligence
for ten suppliers accepting foreign technical interns (receiving a 100% response rate).
While the results of the questionnaire did not reveal any significant human rights risks, we notified some companies
to make corrections or improvements to living environments. Suppliers that were given the questionnaire were provided
with feedback, and were also requested to implement appropriate systems for accepting foreign technical interns and toensure they respect human rights.

7. Dialogue and consultation

Sustainability Promotion Committee
Human Rights Policy Subcommittee
Division and Branch Departments

60

8. Disclosure of information
	The Kumagai Gumi Group regularly discloses initiatives forrespecting human rights.

Human Rights Policy Subcommittee key events
2022

2023

October

Examined details of the Human Rights Policy
Examined details of human rights due
diligence

November

Finalized the Human Rights Policy (tentative)
Decided on details of human rights due
diligence

December

Decided on questionnaire details
Deliberation at Sustainability Promotion
Committee, Management Committee and
Board of Directors

January

Decided on persons eligible for questionnaire

February

Conducted questionnaire

March

Education for human rights
Educational materials related to human rights are made available on the intranet, to and used for human rights education
for new employee training. We use this as an opportunity to deepen understanding of human rights through a broad rangeof topics, including social discrimination, discrimination toward LGBTQ persons and persons with disabilities, harassmentin general, and human rights violations on the Internet. In FY2023, courses were held for partner companies.

ESG Initiatives

Board of Directors
Receives reports from teams implementing activities, monitors the state ofinitiatives, and provides guidance when necessary
Management Meeting
Discusses important management matters
Sustainability Promotion Committee
Examines all measures contributing to long-term growth of the company anddevelopment of a sustainable society from an ESG/SDGs perspective
Human Rights Policy Subcommittee (newly established in October 2022)
Develops the Human Rights Policy and conducts human rights due diligence
Subcommittee chairperson: General Manager of the Management Strategy Office
Subcommittee members:
General Manager of the Human Resources and General Affairs Department,
General Manager of the Civil Engineering Department, General Manager ofthe Architectural Project Department, General Manager of the Purchasing
Department, General Manager of the Subcontractor Alliance Promotion
Department, General Manager of the Administration Department,International Division.
General Manager of the Sustainability Promotion Department, members
designated by the Subcommittee Chair (including from group companies)

	The Kumagai Gumi Group holds ongoing dialogue andconsultation with stakeholders regarding business activities
that affect human rights.

Prevention of harassment
We provide e-learning for all employees. About 80% of employees undergo the program, which covers (1) power
harassment, (2) sexual harassment, (3) harassment related to pregnancy, childbirth, childcare leave, and nursing careleave, (4) dealing with harassment, and (5) a confirmation test. We also make prevention of harassment a mandatory
item in managerial training.

Reported results at Sustainability Promotion
Committee, developed measures based on
results

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61

ESG Initiatives

Stakeholder Engagement

Engagement with Employees
Giving Back to Employees

We are working on achieving sustainable growth and improving productivity by developing the capabilities and improving
the skills of employees in line with the Multi-Stakeholder Policy. Specific initiatives include improving compensation for
employees, providing group training by rank, and supporting employees obtain official qualifications.

Relationships with Stakeholders

Systems for listening to employees’ needs

Kumagai Gumi engages in dialogue with stakeholders, and to build even better relationships with them, established the“Multi-Stakeholder Policy” in April 2023. Creating value with shareholders as well as a broad range of stakeholders is a
key factor, so corporate management is focusing on coordinating efforts with multi-stakeholders.

CS activities

Customer Consultation Office

SDG Awareness Survey

Customer insight questionnaires
Questionnaire survey 3 years after deliveryof structure

Number of consultations in FY2022: 399(441 in FY2021)
Same-day initial response rate of 100%
achieved for 7 consecutive years

Administered in FY2022,with 1,297 of employees responding
Stress check
Administered in FY2022,with 92.9% of employees participating

For customers

For employees

Shareholders and investors

Partner companies / Business partners

General Meeting of Shareholders

Procurement Policy /Procurement Policy Guidelines

Held in June each year

Presented in April 2021

Financial statement briefings
2 held in FY2022
including 2 times with top
management in attendance

Kumagai Gumi has established a staff association for the purpose of fostering communication between the company
and employees, thereby contributing to the development of the company. Every year from FY2020, we have solicited
requests from all employees regarding the company, and established a forum where branch representatives of the staff
association and the President exchanged opinions. To date, we have received some significant suggestions including
items the company should consider, and we will continue to identify employee requests through staff meetings andexamine them in detail with the view to implementation.

For employees

For customers

CS hearings
Kumagai Gumi senior management directlylistens to customers’ frank thoughts

WEB Together with Employees

https://www.kumagaigumi.co.jp/csr/employee/index.html* Japanese only

Kumagai Gumi

Shareholders
and investors

Declaration of Partnership
Partner companies/
Business partners

Small meetings

Presented in September 2020
Human Rights Policy
Presented in January 2023

4 held in FY2022
including 4 times with top
management in attendanceYuuei Kyoryoku Kai

For local
communities

8 branches nationwide / 875 companies(as of April 01, 2023)
Safety and Health Tournament and Model
Work Site Presentations were held

Individual meetings/teleconferences
71 held in FY2022
including 2 times with top
management in attendance

For local communities
Site study tours

Academic support

Social contribution activities

Nearby residents are briefed on
the details of the construction
project

Sites are opened to the
public, and explanations areprovided to residents andothers in the neighborhood

Environmental education
provided at local elementary
schools, junior high schools,
and high schools

No. of participating
employees in FY2022:
2,190 total

Engagement with Customers

WEB Together with Suppliers

https://www.kumagaigumi.co.jp/csr/partner/index.html* Japanese only

Compliance with Procurement Policy and Procurement Policy Guidelines

Kumagai Gumi has established a Procurement Policy and Procurement Policy Guidelines to promote sound businessactivities. Our aim is to improve governance and compliance in our procurement activities, and to work with partnercompanies and business partners to increase added value throughout the value chain.

Yuuei Kyoryoku Kai
The Yuuei Kyoryoku Kai is an organization of 875 Kumagai Gumi partner companies (as of April 1, 2023). It engages in
activities under a policy of Kumagai Gumi and Yuuei Kyoryoku Kai working together as close partners to take action in allareas of QCDSE and to promote the creation of positive workplace environments.

Business improvement and creative refinement proposal program
Together with our affiliates, we operate a business improvement and creative refinement proposal program with aim of
improving business and work efficiency and cutting costs.

Engagement with Shareholders
and Investors

WEB To our Investors

https://www.kumagaigumi.co.jp/en/ir/index.html

In FY2022, we continued from the previous year with our promotion of IR activities designed to help us cope with theongoing COVID-19 pandemic, such as using online tools for individual meetings/teleconferences and small meetings
with investors in Japan and overseas, and holding financial results briefings in a hybrid in-person and online format. We
also focused on engagement with shareholders to build stable relationships of trust.
Following organizational change in FY2023, we established the new Sustainability Promotion Department, comprising
the Sustainability Promotion Group and the IR Group. This covers one of our stated ESG/SDGs strategies, “Enhancing
Dialogue with Investors,” providing the opportunity to actively exchange opinions on performance trends, management
strategies, returns to shareholders, as well as environmental and social issues and governance initiatives. Details of this
dialogue are made available to members of the Board of Directors and related departments to be utilized as a means ofraising corporate value.

ESG Initiatives

Construction briefings

Involvement with Business Partners

WEB Together with Customers

https://www.kumagaigumi.co.jp/csr/consumer/index.html* Japanese only

We deliver “Quality that Inspires Happiness”
Kumagai Gumi established the Customer Satisfaction (CS) Promotion Office (current Sustainability Promotion
Department) in 1998, and established Customer Consultation Offices at all of our branches the following year. We work
toward organizational collaboration that enables us to deliver “Quality that Inspires Happiness,” and earns the esteem of
our customers. The customer satisfaction (CS) functions of Kumagai Gumi are placed within the Management Strategy
Office, and the organization is designed to directly update our management with feedback received from customers.

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The Kumagai Gumi Group Corporate Report 2023

63

Stakeholder engagement

ESG Initiatives

Engagement with Communities

WEB Together with Communities

https://www.kumagaigumi.co.jp/csr/region/* Japanese only

Kumagai Gumi Smile Project, our social contribution activity platform
The “Kumagai Gumi Smile Project” social contribution activity platform makes use of a matching gift mechanism. We
total the number of employees who have participated in social contribution activities, and make monetary donations that
contribute to society based on that number for each fiscal year.
In FY2022, 1,112 employees took part in 139 instances of activities, with the company donating 15.19 million yen
in social contribution expenses for FY2023. The donations were applied to recipients including our KUMAGAI STARPROJECT social contribution activities, disaster relief funds, as well as support for organizations working on social
issues.
Following on from last year, through the United Nations High Commissioner for Refugees (UNHCR), 1.5 million yen
was donated as humanitarian aid to people in difficult living conditions in Ukraine and other areas in crisis, and 1.5 million
yen was donated to as emergency relief for people still affected by the major earthquake that hit Turkey and Syria.
Kumagai Gumi will continue supporting the following organizations in FY2023:● Japan Cancer Society● Zenkoku Kodomo Shokudo Shien Center Musubie (Local network bases that serve meals)● Kosodate Hiroba Zenkoku Renraku Kyogikai (Activities to support Childcare in the community)● Japan Inclusive Football Federation (providing support from FY2023)

Signed and joined the UN
Global Compact

Supports TCFD recommendations

CDP Supplier Engagement Assessment“Supplier Engagement Leader” rating

CDP Climate change category“B-score Rating”

Entry into international
Initiative “RE100”

Entry into “Japan Climate Leaders’Partnership (JCLP)” as a supporting member“SBT Initiative”
certification

Ministry of Economy,
Trade and Industry
Accredited as“DX Certified Business Operator”

Support for “Keidanren Initiative for
Biodiversity Conservation”* For each employee participating in social contribution activities, 1 point is credited to the platform. 1 point is calculated as 10,000 yen in social contribution costs.
* Social contribution donations for FY2023 comprise the sum of FY2022 activity points and carryover points.

Evaluation by society and participation in initiatives“Eco First Company”
certification

Registration as“ZEB planner”

Registration as“ZEH Developer”

External commendations
2022

AugustJapan Federation of Construction Contractors (Nikkenren) Award 2022 Japan Federation of Construction Contractors
The 3rd Civil Engineering Award for the “Tohoku Expressway Towada District Renewal Work”
2022 ACECC Civil Engineering Project Award The Asian Civil Engineering Coordinating Council (ACECC)
2022 ACECC Civil Engineering Project Award Aso Ohashi Bridge Area Slope Disaster Restoration Project
FY2022 Award for Meritorious Land and Transport Administration Kyushu Regional Development Bureau, Ministry ofLand, Infrastructure, Transport and Tourism
Excellent Young Engineer Taishi Setoguchi, Civil Engineering Department, Kyushu Branch

OctoberJapan Wood Design Award 2022 Japan Wood Design Association
Kumagai Gumi Fukui Head Office Kumagai Gumi Co., Ltd. / Sumitomo Forestry Co., Ltd.
Lifestyle Design Category	Improvement of Sound Insulation and Convenience Using Composite Wall of CLT
Earthquake-resistant Wall and Dry Soundproof Wall at H¹O Aoyama
Kumagai Gumi Co., Ltd. / Nomura Real Estate Holdings, Inc. / Sumitomo Forestry Co., Ltd.
Wooden Earthquake-Resistant Hanging Wall Construction Method
Kumagai Gumi Co., Ltd. / Laboratory of Woodbased Materials & Timber Engineering,
Graduate School of the Tokyo University / Meiken Lamwood Corp.
H¹O Aoyama Kumagai Gumi Co., Ltd. / Nomura Real Estate Holdings, Inc. / SumitomoSocial Design Category	Forestry Co., Ltd.

January

February

1st SDGs Architectural Award (Small and Medium Architectural Category)Institute for Built Environment and Carbon Neutral for SDGs
Review Board Incentive Award Kumagai Gumi Fukui Head Office“Health and Productivity
Management Organization
Recognition Program”(Large-scale enterprise category)Receipt of “Silver” rating inPRIDE Index that evaluatescompanies’ LGBTQ efforts“Child-rearing support
company” certification“Eruboshi” certification
Acquisition of highest
3-star certification

Selection as constituent brand in MSCI Japan
Empowering Women Index (WIN)
Selection as “Nadeshiko
Brand” enterprise

Inclusion in “New Diversity
Management Selection 100”

FY2022 Energy Conservation Grand Prize Award for excellent energy conservation equipment, Best Products andBusiness Models Category

ESG Initiatives

2023

September

THE INCLUSION OF KUMAGAI GUMI CO., LTD. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICEMARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF KUMAGAIGUMI CO., LTD. BY MSCI OR ANY OF ITS AFFILIATES.
THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE
TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

The Energy Conservation Center, Japan

Chairman Prize of ECCJ

“Hybrid Hot-Water System for Housing Complex”
Noritz Corporation / Kumagai Gumi Co., Ltd.

Shinjuku Ward Work Life Balance Promotion Outstanding Company Award
Best Work Life Balance Award Kumagai Gumi Co., Ltd.

April

64

Shinjuku WardJapan Resilience Award 2023 Association for Resilience Japan
Excellence Award, Corporate & Industry Category Noritz Corporation / Kumagai Gumi Co., Ltd.

Selection as constituent brand of S&P/
JPX Carbon Efficient Index

Selection as a constituent of the“FTSE Blossom Japan Sector Relative Index”

The Kumagai Gumi Group Corporate Report 2023

65

ESG Initiatives

List of the Board of Directors
Shin Ueda*1 Mr. Tatsuru Sato is a Non-executive Director (part-time).
*2 Mr. Sakae Yoshida, Mr. Shigeru Okada, Ms. Kimie Sakuragi, and Mr. Masaya Nara are Outside Directors.
*3 Mr. Akio Yamada and Ms. Miho Ueda are outside Audit & Supervisory Board Members.

Masahiro
Kawanowa

Koji Hidaka
Yoshiaki Ogawa

Akio Yamada
Miho Ueda

Yoshihiko Kato

Koji Okaichi

Tatsuru Sato

Yasunori Sakurano

President and Representative Director

CEO and President
April
April
April
June
April

1981
2010
2011
2012
2014

April
April
April

2015
2017
2018

Joined Kumagai Gumi Co., Ltd.
General Manager of the Human Resource Division, Administration Headquarters
Executive Officers
Directors
Managing Director Managing Executive Officer General Manager of theManagement Administration Division
General Manager of the Corporate Planning Division
Senior Managing Director, Senior Managing Executive Officer
President and Representative Director (current), CEO and President (current)

Yoshihiko Kato

Representative Director

Executive Vice President
All Civil Engineering, In charge of Technology
April
April
April

1982
2013
2014

June
May

2016

April
April
April

2017
2020
2021

Joined Kumagai Gumi Co., Ltd.
Executive Officer/Deputy General Branch Manager of the Tohoku BranchManaging Executive Officer, General Manager of the Civil Engineering
Management Division
Managing Director
General Manager of the Railway Project Promotion Division of the Civil
Engineering Management Division
Senior Managing Director, Senior Managing Executive Officer
Director, Executive Vice President (current)
Representative Director (current)
All Civil Engineering (current) In charge of Technology (current)

Yoshiaki Ogawa

Representative Director

Executive Vice President, All Architecture
In charge of Occupational Health and Safety, In charge of Quality and the Environment
1982
2011

April
April
April
June
April
April

2012
2013
2017
2020
2021

Joined Kumagai Gumi Co., Ltd.
Executive Officer, General Manager of the Architectural Construction
Department, Kansai Office
Deputy General Branch Manager of the Kansai Office
Managing Executive Officer, General Branch Manager of the Kansai OfficeSenior Managing Executive Officer, General Manager of the Building Management Division
Senior Managing Director
Director, Executive Vice President (current)
Representative Director (current), All Architecture (current)
In charge of Occupational Health and Safety (current)
In charge of Quality and the Environment (current)

Koji Hidaka

Director
Senior Managing Executive Officer, All Administration, In charge of Compliance

April
April
April
April
April
April
June
April
April
April

66

1981
2012
2013
2015
2016
2017
2018
2020
2021
2023

Joined Kumagai Gumi Co., Ltd.
Deputy General Manager of the Administration Division
Executive Officers
General Manager of the Administration Division
In charge of Discipline, In charge of Personal Information Protection
Managing Executive Officer
Managing Director
Director (current), Senior Managing Executive Officer (current)
In charge of Compliance (current)
All Administration (current)

Shin Ueda

Director
Senior Managing Executive Officer, General Manager of the
Building Management Division
April
April

1984
2014

June
April

2015
2017

April
April
June

2020
2021

Joined Kumagai Gumi Co., Ltd.
Executive Officers
Deputy General Branch Manager of the Tokyo Metropolitan Area Office, General
Manager of the Architectural Construction Department, Tokyo Metropolitan Area Office
Project Management Office
Managing Executive Officer, General Branch Manager of Tokyo
Metropolitan Area OfficeSenior Managing Executive Officer (current)
General Manager of the Building Management Division (current)
Director (current)

Koji Okaichi

Director
Senior Managing Executive Officer, General Manager of the Civil Engineering Management Division
General Manager of the Railway Project Promotion Division of the Civil Engineering Management Division
April
April

1984
2016

April
April
April
April
April

2017
2018
2019
2020
2021

June

Joined Kumagai Gumi Co., Ltd.
Executive Officers
Deputy General Manager of the Civil Engineering Management Division,
General Manager of Civil Engineering, Civil Engineering Management Division
General Branch Manager of the Kansai Office
Managing Executive Officer
Kansai Yume Project Office Director, Kansai OfficeSenior Managing Executive Officer (current)
General Manager of the Civil Engineering Management Division (current)
General Manager of the Railway Project Promotion Division of the Civil
Engineering Management Division (current)
Director (current)

Tatsuru Sato
April
April
June
April
June
April
April
June
June

1978
2011
2012
2013
2016
2018
2022

Sakae Yoshida

Yasunori Sakurano

Director *1

Joined Sumitomo Forestry Co., Ltd.
General Manager of the Human Resource Division of the above company
Executive Officer of the above company
Managing Executive Officer of the above company
Director of the above company
Senior Managing Executive Officer of the above company
Representative Director of the above company (current), Executive Vice
President and Executive Officer of the above company (current)
Audit & Supervisory Board Member, Kumagai Gumi Co., Ltd.
Director, Kumagai Gumi Co., Ltd. (current)

Shigeru Okada
April
June
June
June
June
April
April
April
June
June

1975
2005
2008
2010
2011
2016
2017
2018
2021

1981
1995
1998
2003
2007
2019
2021

September 1990
April

2009

June
April
January

2011
2014
2017

March
January
June
June

2019
2020
2021
2022

April
April
April
January

1981
2009
2010
2015

Director *2

Joined Dainippon Ink and Chemicals Inc. (current DIC Corporation)
Factory Manager, Sakai Factory, DIC Corporation
Factory Manager, Chiba Factory of the above company
Executive Officer and General Manager of the Production Supervising
Division of the above company
January 2018 Advisor to the above company
June2020 Director, Kumagai Gumi Co., Ltd. (current)

1986
2009
2010
2013
2015
2018
2021
2022

November

Audit & Supervisory Board Member *31978 Joined Peat Marwick International accounting office (current KPGMAZSA LLC)
1982 Registered as Certified Public Accountant
2009 Partner, KPMG AZSA LLC
2017 Opened Offices of Akio Yamada, Certified Public Accountant (current)
2018 Nittan Valve Co., Ltd. (now NITTAN Corp.) Outside Auditor (current)
Auditor, Pfizer Health Research Foundation (current)
External Auditor, Rakuten Insurance Holdings Co., Ltd. (current)
2021 Outside Auditor, Uchida Yoko Co., Ltd. (current)
2022 Audit & Supervisory Board Member, Kumagai Gumi Co., Ltd. (current)

April
August
July
June
July
October
June

April
April
May
April
June

1999
2005
2016
2017
2018

June

2021

December 2022
June

Standing Audit & Supervisory Board Member

Joined Kumagai Gumi Co., Ltd.
General Manager of the Financial Management Department, Administration Division
General Manager of the Legal & Compliance Department, Administration Division
Outside Audit & Supervisory Board Member, Geostar Corp.
General Manager of the Finance Department, Administration Division
Deputy General Manager of the Administration Division
General Manager of the Examination Department, Administration Division
Standing Audit & Supervisory Board Member (current)

Miho Ueda

Director *2

Joined Yasuda Trust & Banking Co., Ltd. (Now Mizuho Trust &Banking Co., Ltd.)
Executive Officer and General Manager, Investment Planning
Department, Mizuho Trust & Banking Co.
Standing Audit & Supervisory Board Member of the above company
Senior Managing Director, Mizuho Real Estate Sales Co., Ltd.
Registered as Attorney
Joined Torikai Law OfficeOutside Audit & Supervisory Board Member, Tamron Co., Ltd. (current)
Partner, Torikai Law Office (current)
Outside Audit & Supervisory Board Member, Riso Kagaku Corp. (current)
Director, Kumagai Gumi Co., Ltd. (current)

2023

Audit & Supervisory Board Member *3

Registered as Attorney
Lecturer of law at College of Law and Politics, Rikkyo University
Mediator at Rikkyo University ADR Center (current)
Partner, Sunrise Law Office (current)
Outside Director, Traders Holdings Co., Ltd.
Substitute Audit & Supervisory Board Member of GECOSSCORPORATION (current)
Outside Director, Regal Corporation (current)
Director, Japan Handball Association
Outside Director (Audit Supervisory Committee Member) of Mullion
Co., Ltd. (current)
Audit & Supervisory Board Member, Kumagai Gumi Co., Ltd. (current)

Senior Managing
Executive Officers

Managing Executive Officers

Executive Officers

Kenji Kishi

Akira Yamazaki

Makoto Wakabayashi

Hideki Masumori

Hideyuki Tsukuda

Kazuhiko Kawamura

Deputy Branch Manager of the Tokyo
Metropolitan Area Office
General Manager of the Kanto
Architectural Construction Department,
Tokyo Metropolitan Area Office

Yoshio Hagita

Yuzuru Hirano

Fumiaki Yamashita

Tsuyoshi Kinoshita

Takahiko Kashihara

Hiroyasu Yaguchi

General Manager of Civil Engineering,Tokyo Metropolitan Area Office

Tomohiko Igarashi

Branch Manager of the Hokuriku Office
General Manager of the Special
Project Management Office, Hokuriku
OfficeMasaki Ohno

Sakae Yoshida

April
February
April
June
April
April
April
June

Akio Yamada

Director *2

Joined Fukutake Publishing Co., Ltd. (current Benesse Holdings, Inc.)
Supervisor, Publications Department, Publishing Division of the above company
Section Manager, Business Ethics Committee of the above company
Manager, Corporate Ethics and Compliance Office of the above company
Standing Audit & Supervisory Board Member of the above company
Project Professor, The University of Aizu (current)
Outside Director, Toyobo Co., Ltd. (current)
Outside Director, Isuzu Motors Ltd. (Audit Supervisory Committee Member) (current)
Director, Kumagai Gumi Co., Ltd. (current)

Masaya Nara

Masaya Nara

Masahiro Kawanowa

Director *2

Joined Showa Sangyo Co., Ltd.
Executive Officer of the above company
Managing Director of the above company
Senior Managing Director of the above company
President and Representative Director of the above company
Chairman and Representative Director of the above company
Chairman and Director of the above company
Director of the above company
Special Advisor to the above company
Director, Kumagai Gumi Co., Ltd. (current)

Kimie Sakuragi
March
April
NovemberJanuary
June
April
June
June

Kimie Sakuragi

Branch Manager of the Tokyo
Metropolitan Area Office

Masao Kajiyama

General Manager of the New Business
Development Division

General Manager of the Administration
Division
General Manager of the Safety, Quality andEnvironment Division
In charge of Marketing, Architectural
Management Division
In charge of New Business Planning Promotion,
New Business Development Division
Branch Manager of the Tohoku Office

Masato Yamashita

In charge of Marketing, Architectural
Management Division
Deputy Branch Manager of the Tokyo
Metropolitan Area Office
General Manager of the Tokyo Architectural
Construction Department, Tokyo Metropolitan
Area Office

General Branch Manager ofthe Kansai Office
Branch Manager of the Hokkaido
OfficeGeneral Manager of theArchitectural Design Management
Division, Architectural
Management Division
General Manager of the
Administration Division

Testuo Ono

Branch Manager of the
Nagoya Office

Daisuke Hayashi

Deputy General Manager of theArchitectural Management Division
General Manager of the Marketing andManagement Division, Architectural
Management Division

ESG Initiatives

April
April

Shigeru Okada

Yasufumi Kubota

Deputy General Manager of the Civil
Engineering Management Division

Hideyuki Sakai

Deputy General Manager of theArchitectural Management Division
General Manager of the Architectural
Deputy Branch Manager of the Chugoku Deputy Branch Manager of the Hokuriku Office Management Department,
Shikoku Office
General Manager of the Marketing andArchitectural Management Division
Administration Division, Hokuriku Office
Takeshi Nakayama
Masaharu Yamashita
Deputy Branch Manager of the Tokyo Deputy General Manager of the Special Project Branch Manager of the Kyushu Office
Management
Office,Hokuriku
OfficeMetropolitan Area Office
Deputy General Branch Manager of the
Kansai Office
General Manager of the Architectural
Construction Department, Kansai Office

Taiji Ito

Branch Manager of the Chugoku
Shikoku Office
The Kumagai Gumi Group Corporate Report 2023

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ESG Initiatives

WEB Corporate Governancehttps://www.kumagaigumi.co.jp/en/company/governance.html

Corporate GovernanceEvaluation of the effectiveness of the Board of Directors
Once a year, Kumagai Gumi Directors and Audit & Supervisory Board Members take part in an anonymous questionnaire
survey evaluating the effectiveness of the Board of Directors, and the results of which are verified by the Board of
Directors to consider improvements. From the FY2018 evaluation onward, we are conducting reviews of our evaluation
item settings and evaluation results through external experts.

Fundamental concept
In order to make our Management Philosophy of “We aim to serve as a corporate group that contributes to society
through business activities centered on construction” a reality, we consider enhancement of the efficacy of our corporate
governance a priority issue.

Corporate governance system

2015

Outside Directors
Processes for nomination anddetermination of compensation
Executive compensation

Company with Audit & Supervisory Board

Number of
Directors

11

Outside Directors: 4
Female executives: 1 (Outside Director)

Number of Audit &Supervisory Board
Members3

Outside Audit & Supervisory Board Members: 2
Female executives: 1(Outside Audit & Supervisory Board Member)

Number of Independent
Directors

6

4 Outside Directors + 2 Outside Audit & Supervisory
Board Members

long-term strategic topic by revising reported matters◦Exchange opinions after the end of the Board of Directors

Key Measures for
FY2021 Issues for
Improvement

General Shareholders Meeting
Appointment

Appointment

Consultation

Nomination &Compensation
Advisory Committee(Board of)
Directors

ReportAppointment
AuditsAudit & Supervisory
Board Members(Auditors Committee)

Accounting AuditorSupervisionBusiness Execution
Management Committee

AuditsInstruction

AuditsExecutive Officers(including those
concurrently
serving as Directors)(Internal audit functions)AuditsOperating
Division

2016

2017

2018 ・・・・・

2020

2021

2022

Guidance

Administration Division
Legal & Compliance Department(checks & balances)2023

Introduction of Executive Officer system
Discontinuation of Directors in roles below Vice President
Change in the number of Directors in the Articles of Incorporation (from 18 to 12)
2 persons (including 1 woman)3 personsmeeting◦Promotion of discussions for revising the Nomination &Compensation Advisory Committee system and aiming toachieve a future executive structure◦Report of business status to the Board of Directors meetingby Presidents of group companies◦Exchange opinions between Outside Directors and top
management of group companies
Themes to be addressed over the short to medium term
◦Promotion of discussions and studies aimed at developing
the new Medium-term Management Plan◦Further promotion of delegation of authority throughrevisions to standards for agendas*◦Further strengthening of compliance and group governance*◦Promotion of discussions aimed at further strengthening
initiatives for sustainability
Themes to be addressed in the medium to long term
◦Promotion of discussion of medium- to long-term themesthat should be addressed for sustainable growth*◦Studies related to future executive structure and compensationby the Nomination & Compensation Advisory Committee

Instruction

Instruction

Audit Office

Key Issues for
Improvement
Shared from FY2022
Evaluation* Ongoing issues fromprevious term

4 persons

Establishment of Nomination & Compensation Advisory Committee Decided to have Outside Director
serve as Committee Chair
Adoption of stock compensation system

Improvement of the effectiveness of internal controls
Kumagai Gumi reviews internal rules and management conferences appropriately, and otherwise improves and operates
structures to assure appropriateness in work, based on our Basic Policy to Establish Internal Control Systems. In addition,
the Kumagai Gumi Group as a whole undertakes the improvement and operation of internal control with the aim ofmaintaining the reliability of our financial reporting, based on the Financial Instruments and Exchange Act.

68

◦Board of Directors support structure (including the◦Promotion of methodical discussions for each medium- to

Institutional
designImplement effectiveness evaluation

Appointment of 1

◦Board of Directors agenda

In FY2022, we conducted the selfevaluations on the left, and based on
the findings of the reviews by outside
experts, we confirmed that the Board
as a whole is appropriately carryingout its role and responsibilities, andwe determined that the efficacy of theBoard of Directors overall is secured.
Based on the issues for
improvement shared as a result of the
FY2021 evaluation, we implemented
improvement measures, and also
worked to invigorate discussions at
the Board of Directors meetings byholding exchanges of opinions after
the meeting’s proceedings and otheroccasions.

Nomination & Compensation Advisory Committee
Concerning the procedures for determining the nomination (including dismissals)
and amounts of compensation (including system design) for Directors and Executive
Officers, the Nomination and Compensation Committee (which performs thefunctions of both the Nomination Committee and the Compensation Committee),consisting of the President and Representative Director and Outside Directors, hasbeen established as a consultative body to the Board of Directors.
In FY2022, the Nomination and Compensation Committee met seven times, withall members in attendance at each meeting. In FY2022, we are considering theevaluation of the performance of Directors and Executive Officers in terms of theircontributions to the FY2021 business results, the individual remuneration amounts
for FY2022, and the executive structure for FY2023 and beyond.
From FY2023, the Chairperson was changed from the Representative Director andPresident to an Outside Director.

Directorship Composition(since April 1, 2023)

Chairperson

Shigeru
Okada

Outside Directors

MemberYasunori
Sakurano

President,
Representative
Director

Member

Sakae
YoshidaOutside Directors

Member

Kimie
Sakuragi

Outside Directors

MemberMasaya Nara Outside Directors

ESG Initiatives

Separation of oversightand execution of business
Clarification of responsibility◦Board of Directors operation

Nomination & Compensation Advisory Committee)

Overview of institutional design (since June 29, 2023)

Major changes in strengthening of Corporate Governance2001・・・・・

Main Evaluation
Items◦Improvements from the previous year

Drawing on the aims of the Corporate Governance Code, Kumagai Gumi
has adopted a corporate governance structure that comprises a Board of
Directors, a Board of Corporate Auditors, and an independent accounting
auditor to enhance the effectiveness of our corporate governance.
To achieve clarity in management responsibilities and to build an
optimal management system in response to changes in the businessenvironment, the term of office of Directors is set to one year. We also
employ an executive officer system to ensure that the duties of directors
are executed efficiently. We also appoint four Outside Directors who
provide counsel to management from an objective standpoint.
The nomination of Directors and Executive Officers and amounts ofcompensation are determined by the Board of Directors on the basisof reports by the Nomination & Compensation Advisory Committee,
composed of the President and Representative Director and Outside
Directors, to ensure objectivity and transparency.
With regard to Audit & Supervisory Board Members, we appoint
Outside Audit & Supervisory Board Members from among persons who
have appropriate experience and capabilities and who have knowledgeof finances, accounting, and legal matters, in order to conduct audits
with high efficacy.
Regarding accounting audits under the Companies Act and the
Financial Instruments and Exchange Act, we undergo impartial audits
by GYOSEI & CO.

Improvement of the effectivenessof the Board of Directors◦Board of Directors composition

Support System for Outside Executives
We have a system in place that facilitates understanding of our business activities to ensure the smooth executionof duties by Outside Directors and Outside Officers. The Secretarial Department of the Management Strategy Officeand the Corporate Planning Department play a central role in providing materials for Board of Directors meetings andadvance explanations of agenda items to Outside Directors. They also hold meetings to exchange opinions among
Outside Directors, and inspect branch offices and construction sites.
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Corporate Governance

ESG Initiatives

Directors’ compensation and selection of Outside Executives

Board of Directors Skills Matrix

Compensation for Directors is based on a system of compensation linked to shareholder interests, functioning appropriately
as an incentive to continuously improve corporate value. When determining individual compensation, our basic policy is
to set an appropriate level based on responsibilities, and, within the limit of the total amount of compensation for Directors
decided at General Meetings of Shareholders, determine amounts through the Board of Directors based on findings
reported by the Nomination & Compensation Advisory Committee.
Compensation for Audit & Supervisory Board Members is determined through deliberation by Audit & Supervisory
Board Members, within the limit of the total amount of compensation for Audit & Supervisory Board Members decided atGeneral Meetings of Shareholders.
Compensation, etc. for Directors and Audit & Supervisory Board Members (FY2022) (¥ million)
Executive category

Total amount by type of compensation, etc.

Total amount ofcompensation

Fixed compensation

Bonus

Stock compensation

Number of Eligible
Executives

278 (40)256 (40)- (-)

22 (-)

11 (4)

Directors(Outside Directors among these)

Audit & Supervisory
Board Members

41 (21)(Outside Audit & Supervisory
Board Members among these)

41 (21)

- (-)

- (-)

6 (3)

* The stock-based compensation noted is the amount of provisions for stock benefits for Directors recorded in FY2022.

Image of compensation composition for Directors (excluding Outside Directors and Non-executive Directors)

Toward realizing our long-term Vision and achieving our Medium-term Management Plan goals, we have defined eighttypes of skill items required for the Board of Directors, which will play a central role in this effort.
In appointing each Director, Kumagai Gumi takes into account each Director’s duties and experience, while paying
attention to ensure that the skill items required by the Board of Directors are appropriately allocated and that diversity andbalance are maintained on the Board of Directors.
The following is a list of skill items that the Board of Directors should have and that are specifically expected of each
Director (Skills Matrix).
Skill items that our Board of Directors should have and that are particularly expected of each Director (up to 4 skill
items for each Director)
Position

Yasunori
Sakurano

President,
Representative
Director
CEO andPresident

YoshihikoKato

President,
Representative
Director
Executive Vice
President

All Civil Engineering
In charge ofTechnology●●

Yoshiaki
Ogawa

President,
Representative
Director
Executive Vice
President

All Architecture
In charge ofoccupational Healthand Safety, quality
and the environment●●

Figures in parentheses indicate the standard compensation ratio of total compensation

Amount of monetary compensation
Compensation according to position (fixed amount) (63%)

Stock-based compensation
Amount corresponding toperformance contribution (27%)

Share issuance trust(10%)

1. Monetary compensation (a) Compensation according to position (fixed amount)(b)	Amount corresponding to performance contribution: This portion is paid according to the degree of performance contribution in theprevious year (determined by the degree of achievement on a company-wide and departmental basis and degree of individual roleachievement) within a range of 0 to 150% of the performance contribution.
		The performance contribution is based on deliberation by the Nomination & Compensation Advisory Committee, and determined by thethe Representative Director and President.
2. Stock-based compensation	A stock compensation system employing trusts, by which the company grants points based on position, etc. each fiscal year, and,generally at the time of retirement, grants shares of stock based on the cumulative number of points.
		 Standards and procedures for share issuance is determined by the share issuance regulations defined by the Board of Directors.
Payment of bonuses is also considered if performance significantly exceeds that of plans.
Compensation for Outside Directors and Non-executive Directors is only the compensation for Directors (fixed amount) of the monetary compensation.

Sakae
Yoshida○He has a track record of participation in corporate management, primarily
as an executive in charge of production divisions in different industries.

Board ofDirectors

18 times /18 times

Shigeru
Okada○

He has a track record of participation in corporate management, primarily
as a Representative Director and President in different industries.

Board ofDirectors

18 times /18 times

Kimie
Sakuragi○

She has a track record of participation in corporate management, primarily
as a Standing Auditor in different industries.

Board ofDirectors

18 times /18 times○

He has a track record of participation in corporate management, primarily as
an Executive Officer and Standing Auditor in different industries, as wellas an attorney.

Board ofDirectors

14 times /14 times○

He has a track record of participation in key government office positions
and corporate management in other industries, and it is anticipated that
he will provide appropriate auditing of the company’s management froman objective standpoint.

Board ofDirectors
Board ofCorporate
Auditors

16 times /18 times
15 times /15 times○

He has a track record of practical work as a certified public accountant, and
it is anticipated that he will provide appropriate auditing of the company’s
management from an objective standpoint.

Board ofDirectors
Board ofCorporate
Auditors

14 times /14 times
11 times /11 times○

She has a track record of practical work as an attorney, and it is anticipatedthat he will provide appropriate auditing of the company’s managementfrom an objective standpoint.

Outside Directors

MasayaNara

Outside Auditors

YutakaTakehana(resigned June 2023)

Akio
Yamada(appointed June 2022)

Miho Ueda(appointed June 2023)

Sales
Marketing●GlobalHuman
Technology Compliance
Finance Sustainability resource
Risk
R&D
Accounting (ESG/SDGs) development
ICT (DX) Management
Diversity

●

●

●

●

●

●

●

All Administration
Directors
Senior Managing In charge of
Executive Officer Compliance●

Shin Ueda

General Manager
Directorsof the Building
Senior Managing
Management
Executive Officer
Division

●

●

●

●

Koji Okaichi

General Manager of
the Civil Engineering
Management
Division
General Manager of
Directors
Senior Managing the Railway Project
Executive Officer Promotion Divisionof the Civil
Engineering
Management
Division

●

●

●

●

●

●

Tatsuru
Sato

Directors(Non-executive
Director)

●

●

Sakae
YoshidaDirectors(Outside Director)●●

Shigeru
Okada

Directors(Outside Director)

●

Kimie
Sakuragi

Directors(Outside Director)●●

MasayaNara

Directors(Outside Director)

●

●

●

(3) (4)(3) (4)

●

●

●

●

●

●

●

ESG Initiatives

Reason for appointment(appointed June 2022)

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Attendance(Number of times attending /Number of meetings)

Independent
Executive

Responsibilities

Koji Hidaka

Reasons for appointment of Outside Executives / Attendance at Board of Directors meetings (FY2022)
Name

Corporate
Management
Management
Strategy

Directors
Name

●
●

●
●

Relationship with Medium-term Management
Plan Business Strategies(1) Bolster overall construction business(2) Accelerate construction-related peripheralbusinesses(3) Develop new business domains(4) Strengthen management foundation(1) - (4)(1) (2) (3) (1) (2) (3)(1) - (4)(3) (4)(3) (4)* These descriptions do not indicate all the knowledge, experience, and abilities possessed by each Director.

-

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ESG Initiatives

WEB Risk management

https://www.kumagaigumi.co.jp/en/company/compliance.html

ComplianceInterviews of Partner Companies

Fundamental concept
Compliance system
Kumagai Gumi’s compliance system consists primarilyof three internal functions: Autonomous functions by
Headquarters and branch offices, support functions by the
Administration Division and other specialized divisions,and auditing functions by the Audit Office.
In addition, the Legal Compliance Audit Committee, anorganization independent of management, periodicallycarries out evaluations of the company from an outsider’spoint of view and advises management of any problems
uncovered, in order to strengthen the enforcement ofcompliance.

Support functions

Instruct

Administration divisions, etc.
Company-wide Legal Complianceand Legal Support Systems
Systems improvement
and legal support

External evaluation
functions
Legal Compliance
Audit Committee

From July 2022, partner companies have been interviewed to determine whether Kumagai Gumi employees haveforced them to engage in misconduct, for the prevention and early detection of fraudulent processing of expenses orinappropriate transactions during transactions with partner companies. If partner companies are forced to engage infraudulent actions by Kumagai Gumi employees, they are requested to notify the company internal hotline. If partnercompanies took part in those fraudulent actions, measures are taken to suspend transactions with that company. These
measures are enacted to prevent such fraudulent actions from taking place with suppliers.

Autonomous functions
AdviseManagement

Instruct

Evaluation by outsiders

Head and Branch Offices
Enforcement of prior judgments
Auditing and corrective
advising measures

Auditing functions
Audit findings

Legal Compliance Audit Committee

Audit Office
Unbiased audits

The Legal Compliance Audit Committee is composed ofinternal company committee members as well as outsidecommittee members who include attorneys and otherexperts. It convenes every year.

Eradication of anti-social forces
In the Kumagai Gumi Code of Conduct, our company declares that we take a firm stance against anti-social forces.
We have established a program for dealing with anti-social forces, and educate our employees on specific ways of
eliminating such forces.
We have incorporated provisions regarding anti-social forces into agreement that we use for transactions with partnercompanies, and focus on collecting written pledges prior to concluding agreements with transacting partners.

Prevention of collusion/bribery
Compliance Promotion Initiatives
All employees submit a written pledge
To raise all employees’ awareness in enforcing compliance with laws and ordinances, every year all executives and staff
members of Kumagai Gumi Group submit a written pledge concerning compliance (100% submission rate).

Compliance training and compliance reinforcement month
To improve basic understanding of compliance, from October 2022 through February 2023 our company conducted aninternal training program on topics including antitrust law, bribery, and corruption, targeting employees of Kumagai Gumi
as well as group companies, from a perspective of strengthening the group’s compliance structure.
Kumagai Gumi has designated October as the month to strengthen compliance, in an attempt to enhance employees’
awareness of compliance and to re-examine potential risks in daily work.

Internal whistleblower system
Whistleblowers

Means ofwhistleblowing

Kumagai Gumi andgroup companies

E-mail/Telephone

Full-time
Senioremployees employees
Contract
Part-time
employees employees
Advisors

Temporaryemployees
etc.

Partner companies

Verbal / Telephone
FAX / Postal mailE-mail*Anonymity possible

Contact desk
Midosuji Legal
Profession
Corporation

Status of legal suits and violation of laws (including administrative
sanctions and administrative measures)
As of the end of March 2023, our company is involved in seven civil cases in Japan. In FY2022, no serious legal violations(including administrative sanctions, administrative measures, etc.) occurred that involved measures such as suspensionof designated bidding at a national level.

ESG Initiatives

The Kumagai Gumi Group has set up a hotline forquickly assessing, correcting, and preventing problems
involving compliance. We are working to forecast androot out compliance violations by accepting a wide rangeof whistleblower reports, including from our employees,
group company employees, and partner businesses.
We have also introduced a leniency program (measures
for reducing penalties for whistleblowers) to encourage
people involved in violations to voluntarily supply details.

Kumagai Gumi’s Compliance Rules of Conduct stipulate that in accepting orders for construction work, we shall not
engage in any acts that impair the fairness and impartiality of bidding, including acts in violation of criminal laws and antimonopoly laws. And we established Regulations Concerning Compliance with the Anti-monopoly Law and Preventionof Corruption and Bribery, regarding prohibited acts by executives and staff members, and measures to be taken in
response to violations in April 2022.
Other means include training and the collection of pledges, to ensure that employees are not involved in violations, andwe have built a structure to prevent the occurrence of violations through an internal reporting system.

Legal &
ComplianceDepartment● Implementation of factual

investigation● Examination of recurrence

prevention measures● Enactment of appropriate

measuresReporting on investigation findings and response(except where anonymous)

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ESG Initiatives

WEB Risk Management

https://www.kumagaigumi.co.jp/en/company/compliance.html

Risk Management

Fundamental concept

Business Continuity Plan (BCP)The Kumagai Gumi Group is working to accurately identify and respond to risks associated with our business activities,
in order to achieve sustainable growth and earn the trust of society.

Risk Management System

The Kumagai Gumi Group recognizes the risks associatedwith business activities, and has established the special
committee on the right to prevent problems related to risk
from occurring, and to respond in an appropriate mannerin the even that problems do occur.
Risks that the Kumagai Gumi Group is aware of are
outlined in “Recognized Risks” below.

Legal Compliance
Audit Committee
Board ofDirectors

Management
Committee

Compliance
Committee

Insider Information
Management Committee

Crisis Management
Committee

Crisis Management
Subcommittee

New Business
Development Committee
Sustainability
Promotion Committee

Operation of the Safety Confirmation Communication System
Human Rights Policy
Subcommittee

Quality andEnvironment Committee
Information
Strategy Committee

Prevention of insider trading
Disclosure Media

Page of this Report

Trends in construction investment
Fluctuations in construction materials market
conditions and labor prices
Shortage of workers with construction skills
Securing human resources
Business expansion overseas
Effects of natural conditions and natural disasters on
the construction business
Pandemics

Securities ReportP34-37, 40-41

Business strategy(Civil Engineering, Building Construction
and Construction-related Peripheral
Businesses)

P42-45

Diverse Human Resources

P38-39Business strategy (Overseas Projects)

P34-37, 40-41

Business strategy(Civil Engineering, Building Construction
and Construction-related Peripheral
Businesses)
Business Continuity Plan (BCP)

P59

Quality control

Occupational disasters and accidents in theconstruction business

P58

Occupational Health and Safety

Impairment of fixed assets and investment securities

P24-25

Financial Analysis

Customer and business partner trust

P74-75

Risk Management

Compliance violations

P72-73Compliance

Environmental issues (CO2 emissions, environmental
incidents)

P54-55

EnvironmentMore stringent regulations governing GHG emissions
WEB Climate Change

Increase in average temperature
Non-compliance with legal systems for resource
recycling

WEB Resource
Recycling

Interruption of business due to destruction of thenatural environment related to biodiversity

WEB Coexistencewith Nature

Human rights violation risks

WEB Human Rights

Private information leakage risks
Cyber risks

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WEB Risk Management

P56-57

P52-55Disclosures based on TCFD

The Kumagai Gumi Group complies with the Financial Instruments and Exchange Act and related laws and regulations,and has established Internal Regulations on the Prevention of Insider Trading to enhance the effectiveness of compliance.
Based on these regulations, we have established an Insider Information Management Committee for managing information
related to important facts, in order to perform information management across the company.
The Insider Information Management Committee issues notifications four times a year to alert officers and employees
who may come into contact with insider information on a daily basis. If these officers and employees intend to buy or sell
Kumagai Gumi shares, a system is in place that permits buying or selling at certain times only if the Insider Information
Management Committee has verified that the transactions do not fall under the scope of insider trading.

Information security
Kumagai Gumi established the “Information Security Policy” in 2007, and takes concrete measures to protect information
assets from unauthorized access, leakage, falsification, loss, disaster, and other threats. We respond to security risks,
which are becoming more sophisticated every day, by continuously conducting targeted attack e-mail training and security
education, and when a problem occurs, share information with related departments and respond promptly.

ESG Initiatives

P75

Construction work defects

More frequent and intensifying natural disasters

We operate a system that allows confirmation of safety status, as confirmation of the safety of employees is the mostimportant matter when preparing support systems based on BCP. The system also allows the safety of group company
employees and partner companies to be verified, as part of an overall system the Kumagai Gumi Group has in place toensure business continuity.

Information Strategy
Subcommittee

Recognized Risks
Business and other risks

In the event of a major disaster, Kumagai Gumi will make every effort to provide emergency support and restoration workof infrastructure in respond to requests from customers and local residents. We have formulated a Business Continuity
Plan (BCP) as a basic policy for contributing to prevention of secondary accidents, the restoration of urban functions, thesafety of local residents, and the recovery of the economy.
We have also established a permanent Crisis Management Committee to maintain and improve the effectiveness of
the BCP, formulating fiscal year plans for BCP activities based on the PDCA cycle. We coordinate with group companies
and partner businesses to conduct annual disaster response drills, and we review and improve our plans based on
the results of these drills and other factors.

Protection of Private Information

recommendations

Environment

P60-61

Human Rights

P75

Protection of private information

P75

Information security

Kumagai Gumi has established fundamental rules and regulations, such as the Basic Principle, the Privacy Policy, and
the Personal Information Protection Regulations, and engage in initiatives to properly handle and protect the personal
information of all stakeholders. We ensure through compliance training and other means that all officers and employees
are aware of the importance of protecting personal information, and continuously improve the management system andframework.

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WEB

ESG Initiatives

https://www.kumagaigumi.co.jp/company/director’s-interview-2023.html* Japanese only

Round-table with Outside Directors
Reminding all employees the importance of “trust”
to become a source of pride for anyone working with
Kumagai Gumi.

Decisions and monitoring of medium-term management strategies are exact key
roles for which the Board of Directors meeting is responsible
Yoshida I think the actual discussions of the Board of
Directors are very lively. Improvements have been madeso that Management Committee documentation andminutes are available for viewing before the Board of
Directors meeting, making it clear to see what is being
implemented.
Sakuragi I feel that there is a lack of discussions on thecore management topics when it comes to medium-term
management strategy.The key roles of Board of Directors
meetings is precisely to make the appropriate decisions
and monitor progress of medium-term management
strategies.
Yoshida It is clear that significant changes have been
made compared to the many years ago, but there iscertainly ample margin to make even more improvements.
Mr. Nara, you suggested narrowing down who attends theBoard of Directors meetings in order to inject a greater
sense of tension?
Nara When I mentioned that there is a lack of discussions
regarding this type of company-wide management
strategy, I think this is a common issue that affects many
Japanese companies, and not just Kumagai Gumi inparticular. I think some drastic changes are also required,like narrowing down and spending more time on topics
being discussed, narrowing down attendees of Board of
Directors meetings, and having the Director in charge ofa particular topic taking the responsibility and explaining
it themselves.

Restoring trust by going back to the very basics of sustainability
Kumagai Gumi appoints Outside Directors to bring diverse perspectives into management and to enhance its
corporate governance. We had an open discussion with four Outside Directors—Mr. Sakae Yoshida, Mr. Shigeru
Okada and Ms. Kimie Sakuragi, as well as Mr. Masaya Nara who was newly appointed in June 2022.

Everyone is honest and sincere. On the other side, there is often a lack of diversity.

76

Nara When I look at meetings of the Board of Directors,
I can see some situations where a tougher stance could
be taken.
Okada I think that the disadvantages Mr. Sakuragi istalking about refers to people following our internal logic
too closely and becoming too inward-focused. I feel that
there is still a lack when it comes to viewing situations
from the outside based on a broader perspective.
Yoshida I pretty much agree with the points you have
all raised.Everyone is so considerate and careful. Thenagain, this means the company is lacking when it comesto embracing a more diverse way approach or way of
thinking about things. If changes can be made in thisregard, discussions held at the Board of Directors may
take on a broader scope.

Sakae Yoshida

Sakuragi Kumagai Gumi is moving ahead with sustainability management, but one of the key requirements forthis approach is gaining trust from society. One of the best
attributes of Kumagai Gumi that you have all touched on
is its sense of honesty and sincerity. It is a shame that
this particular moment of misconduct has cast doubt onthese qualities. As an Outside Director, the key areas I
want to see with the response the company takes will be ifinternal ethics are being prioritized, if third parties are
satisfied with remedial measures, and if there is a proper
sense of accountability present.
Nara When it comes to the construction industry, any
incidents occurring during construction work may affectsociety significantly, especially is human lives are
involved. With this in mind, every effort must be made toensure there are not shortcuts made with quality control.
Yoshida I personally think that this particular incident is a
result of Kumagai Gumi’s shortcomings where things tend
to be kept internally. The most fundamental concept ofkeeping promises with customers was swept aside due tothis inward thinking. We need to make sure that everyone
is clearly aware that incidents like this are simply notacceptable.

The Kumagai Gumi Group Corporate Report 2023

ESG Initiatives

Yoshida Mr. Nara, it has been a year since you wereappointed as Kumagai Gumi’s Outside Director—what isyour impression so far about Kumagai Gumi?
Nara A great question. Everyone is so polite and kind.
There are many situations where I am reminded of this.
Yoshida I felt the same way when I was appointed as
Kumagai Gumi’s Outside Director. I feel exactly the sameway even now.
Sakuragi At the round-table discussion last year, I said
that my impression of Kumagai Gumi was that it is acompany that places great importance on people-topeople relationships. I think that this can be rephrased
as a company with a strong bond. This sense of unity isnaturally a good thing, but looking back over the past year,
I feel that some disadvantages have become evident.

Okada In May 2023, Kumagai Gumi issued a false
report pertaining to construction work for the Hokkaido
Shinkansen Yotei Tunnel (Arishima). As an Outside
Director who praised highly Kumagai Gumi’s honest
and sincere approach, this was certainly an extremely
disappointing incident. I want the company to go back tothe basics and focus on restoring trust.

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Round-table with Outside Directors

Personnel expenses are an investment for sustainable growth, rather than a cost
Sakuragi One area that is lacking in discussion whenit comes to sustainability is that of human capital. In
addition to objective assessments, issues that need to beaddressed include a lack of information in some key areas,
like how Kumagai Gumi’s compensation and personnel
systems compare with other examples generally seen
throughout society, what type of awareness do employees
have while working, or if there is any sense of planning fortraining of human resources who will be holding the reinsin the future.
Nara I think that there is a synergistic relationship

Kimie Sakuragi

between sustainability and business. Human capital is thebest example of where this is evident. Personnel expenses
should be viewed as an investment for the future insteadof a cost, so improvements should be made for employeecompensation or developing unique personnel systems or
training programs—I personally think more effort should
be made to create an atmosphere that boosts employee
motivation. More in-depth talks should be held to uncoverways of raising engagement with employees.
Yoshida I feel the same about the issues you haveraised. Kumagai Gumi has established the Sustainability
Promotion Committee and is working on addressing a
range of initiatives, but these topics need to be discussed
in more detail at Board of Directors meetings.
Okada On the other hand, initiatives aimed at promoting
SDGs have achieved considerable success. Last year, I
said that I wanted efforts related to SDGs to be viewed
as matters for individuals rather than for the company.
Initiatives like My SDGs launched in Spring are perfect
examples that exemplify this idea.
Sakuragi More than the My SDGs initiative, I feel that
Kumagai Gumi is, in a way, a company that is better at taking
a bottom-up approach. This is definitely a great quality, but
at the same time, maintaining a top-down approach is also
important. I hope to see the top management—ourselves
included—to delve into more detail about what approach totake for sustainability, or how to incorporate this approach
into the management strategy.

Nara I agree with you on the topic of business portfolios.
The approach to take for the strategies, future image
and new businesses when it comes to civil engineeringand architecture should be discussed with a proper
understanding of the facts involved. There is a lot ofadvice being provided by Outside Directors, and this canbe used as material for some very detailed dialogue.
Yoshida Out of the four of us, I am the only one who has
experience being involved in development of Kumagai
Gumi’s current Medium-term Management Plan. Looking
back at the process for developing the previous plan, I
felt there was ample consideration given to the objective
and other policies. In contrast, there seems to be a lackof specific reviews when it comes to measures, and being
unable to make up the discrepancies is evident with thecurrent business performance. More time needs to be
spent discussing methods for increasing earning power.

Aim to become a “good company” trusted by stakeholders
Sakuragi The main initiative to focus on for the time
being is rebuilding relationships of trust. All of the top
management and each and every employee needs toseriously take on board any feedback received fromstakeholders, and make a fresh start. Last year, I said that
I wanted Kumagai Gumi to aspire to be a good company.
Every single person need to revamp their awareness

More detailed discussions for achieving medium- to long-term growth78

maintaining a clear vision of the overall objectives, frompolicies through to measures.
Sakuragi It is the executive officers who have the mostin-depth knowledge when it comes to their businesses.
As an Outside Director, I hope to focus on discussions
based on identifying what changes are occurring with thebusiness environment, including social and market trends.
These factors need to be properly understood, otherwise
the underlying approach to the entire planning process
may take a wrong turn. I also want to see the topics ofcapital costs and business portfolios being discussed in
more detail.

Shigeru Okada

and aim to become a good company that is trusted bystakeholders.
Nara While this may sound a little abstract, we want
to work on enhancing the Kumagai Gumi Brand that
includes stock price, profitability and sustainability.I think
the ideal figure will be becoming a company that is trusted
by members of local communities and shareholders
alike, where Kumagai Gumi employees and anyone else
working for the company feel a sense of pride.
Okada Catering to stakeholders is of course important,but I think that it is actually the employees for which themost attention needs to be paid. I want Kumagai Gumi
to become a company where any employee is highly
motivated with their work, and engage with a sense of
pride with their family members and acquaintances.
Yoshida I had the opportunity to visit numerous civilengineering and architectural work sites over the past
year. One thing I felt on my visits was that employees are
the best asset that Kumagai Gumi has. I noticed that mostemployees work enthusiastically with a sense of pride anda strong feeling of responsibility. As an Outside Director, I
hope to focus my own efforts to ensure that Kumagai Gumi
evolves to become a company that provides satisfaction
to each and every employee.

The Kumagai Gumi Group Corporate Report 2023

ESG Initiatives

Yoshida Kumagai Gumi will embark on a new mediumterm management plan from next year. What are some of
the topics you think Board of Directors meetings should
be covering?
Okada This is the first time I will be involved in
Kumagai Gumi’s process for developing a medium-term
management plan. Current circumstances are making it
extremely challenging to achieve the goals of mediumterm management plans due to sudden changes occurring
throughout the business environment, like the COVID-19
pandemic or soaring prices for construction materials.
This circumstances need to be taken into account, while

Masaya Nara

79

WEB To our Investors

https://www.kumagaigumi.co.jp/en/ir/index.html

Key Financial Data over 10 Year Period
Unit: millions of yen

Orders received

Performance80th term

81st term

82nd term

83rd term

84th term

85th term

86th term

2014 / 32015 / 32016 / 32017 / 32018 / 32019 / 32020 / 32021 / 32022 / 32023 / 3

291,024

329,495

293,558

284,711

381,784

454,007324,959

283,361

350,236

348,647  Civil Engineering  Building Construction

115,764

109,463

103,718

129,891

155,751

92,371

100,106

110,826

101,273

190,219

213,730

184,094

180,992

251,892

298,255

232,587

183,255

239,409247,373Sales

328,900

362,090343,647

344,706

374,019

389,058

436,151

450,232

425,216

403,502

Gross profit

18,35929,03839,06841,08040,23045,53045,49848,084

43,46633,211

5.6

8.0

11.4

11.9

10.8

11.7

10.4

10.7

10.2

8.2

SG&A expenses

11,75012,934

14,52815,945

17,18819,06520,05720,015

20,723

21,728Operating income

6,608

16,10424,54025,13523,041

26,46425,44028,06922,743

11,483

2.0

4.4

7.1

7.3

6.2

6.8

5.8

6.2

5.3

2.8

Ordinary income

6,791

15,65825,77225,35822,682

26,55325,71828,40023,732

12,236

Profit attributable to owners of parent
Comprehensive profit

4,299

5,458

12,092

16,433

15,783

13,312

19,447

17,92515,850

7,973

6,313

6,683

12,157

16,947

14,098

12,956

17,851

21,414

15,267

10,007

Net assets

50,46153,55164,93380,288126,374

134,883

148,034

163,835

169,302

169,860

Total assets

235,929

255,514

255,525

271,908

333,665

353,718

374,841

379,573

371,096376,650

Property, plant and equipment

14,08015,053

15,745

17,19919,504

24,83625,34725,65827,451

29,309Interest-bearing debt

21,161

19,93817,821

15,422

14,47912,84912,258

11,88912,15322,197

20.7

21.0

25.4

29.5

37.9

38.1

39.5

43.2

45.6

45.1

Cash flows from operating activities

21,816

18,262

4,234

8,625

17,641-12,398

345

6,572

8,258

-18,826

Cash flows from investing activities-369-3,042-448-3,090-14,010-7,379-2,298-4,306-3,395-8,458Cash flows from financing activities-1,472-1,338-2,926-4,02430,856-6,126-5,361-6,112-9,686456

Cash and cash equivalents at end of term

57,60971,702

72,42273,926

108,532

82,44675,15571,33567,40440,974142.09143.27173.76215.03

2,707.51

2,894.41

3,177.22

3,516.06

3,751.08

3,894.10

19.71

15.72

32.35

43.99

389.63285.48417.34384.68342.13179.64

Dividend per share (yen)

－

2.00

4.00

7.00

90.00

100.00120.00120.00120.00130.00

Payout ratio (%)

－

12.7

12.4

15.9

23.1

35.0

28.8

31.2

35.1

72.4

255

375

286

290

3,420

3,460

2,501

3,005

2,710

2,659

12.9

23.8

8.8

6.6

8.8

12.1

6.0

7.8

7.9

14.8

Capital adequacy ratio (%)

Per-share information Book-value per share (BPS) (yen)Earnings per share (EPS) (yen)Stock price indicators Stock price at end of term (yen)Price-earnings ratio (PER) (multiple)
Price-to-book value ratio (PBR) (multiple)
Number of shares issued at the end of the period

Other

79th term

100,805   Operating income margin (%)

Cash flow

78th term

Orders received (Non-Consolidated)   Gross profit margin (%)

Financial status

77th term

Return on equity (ROE) (%)
Ordinary income to total assets ratio (ROA) (%)

1.8

2.6

1.6

1.3

1.3

1.2

0.8

0.9

0.7

0.7

277,544,607

377,544,607

377,544,607

377,544,607

46,805,660

46,805,660

46,805,660

46,805,660

45,411,660

43,900,360

9.3

10.9

20.4

22.6

15.3

10.2

13.7

11.5

9.5

4.7

3.1

6.4

10.1

9.6

7.5

7.7

7.1

7.5

6.3

3.3

Capital investment

1,272

2,018

2,234

3,187

4,183

7,374

2,636

2,500

4,192

4,799

Research and development expenses

1,374

1,285

1,516

1,784

1,987

2,348

2,581

2,660

2,725

2,812

951

1,045

1,268

1,344

1,684

1,911

2,062

2,011

2,004

1,869

3,510

3,579

3,702

3,798

3,892

4,032

4,154

4,259

4,338

4,406

Depreciation
Number of employees*1 The company performed a stock merger at a ratio of 1 share per 10 shares of common stock, effective October 1, 2017.
*2 The dividend per share of 90 yen in the 81st term includes a dividend of 20 yen per share to commemorate the company’s 120th anniversary.

80

The Kumagai Gumi Group Corporate Report 2023

81

Number of employees
Scope of Business

Domestic sites

Overseas Offices
Group companies

43,900,360 shares

Share Unit

100 shares
37,817
Sumitomo Mitsui Trust Bank, Limited

Number of shareholders:
Administrator of Shareholders
Registry

To investigate, survey, plan, design, execute,and supervise construction works, and toprovide technical guidance, provide
comprehensive engineering, management, andconsulting services as well as related
contracted construction businesses.

Fiscal Year
Base Date for Annual Dividend
Ordinaly General Meeting of Shareholders

Hokkaido Branch, Tohoku Branch,
Tokyo Metropolitan Area Branch,
Nagoya Branch, Hokuriku Branch,
Kansai Branch, Chugoku Shikoku Branch,
Shikoku Branch, Kyushu Branch,
Okinawa Branch, Technical Research &Development instituteVietnam, Indonesia, Myanmer
GAEART Co., Ltd.
K&E Co. Ltd.
Technos Co., Ltd.
Techno-Space Creates Co., Ltd.
FATEC Co., Ltd.
Technical Support Co., Ltd.
Taiwan Kumagai Co., Ltd.

From April 1 through March 31
March 31
June of the Year

Treasury stock
62,704 shares (0.1%)

Securities firms: 42
1,971,171 shares(4.5%)

Financial
institutions:Shareholder
Composition
Number of shareholders:
37,817 people
Total number of shares
outstanding:
43,900,360 shares

Foreigninvestors:

275

10,153,356 shares(23.1%)

Other Japanese
corporations: 446
11,132,912 shares (25.4%)

Administration Division

Legal & Compliance Department
Human Resources and General Affairs Department
Diversity Promotion Department
Finance Department
Examination Department
Accounting Department

Safety, Quality and Environment Division

Safety Promotion Department
Quality and Environmental Management Department
Subcontractor Alliance Promotion Department

Civil Engineering Management Division

Civil Engineering Department
Civil Engineering DX Promotion Department
Sales Promotion Department
Marketing Department
Electric Power Marketing Department
Railroad Marketing Department
Estimate Center
Civil Engineering Technology Department
Infrastructure Renewal Business Department
Bridge Innovation Business Department
Environmental Business Department
Machinery and Materials Department
Dam Technology Department
Tunnel Technology Department
Shield Technology Department
Comprehensive Evaluation Department
Geological Technology Department
Civil Engineering Design Department

45

9,658,983 shares(22.0%)

Individuals and others:

37,008

10,921,234 shares (24.9%)

Railroad Project Promotion Division

Building Management Division

Planning Promotion Department
Marketing and Management Department

Marketing Department No. 1
Marketing Department No. 2
Urban Development Department
Solution Sales Department

Architectural Management Department

Architectural Project Department
Architectural DX Promotion Department
Purchasing Department

Building Engineering Department

Kumagai Gumi turnover

The company performed a stock merger at a ratio of 1 share per 10
shares of common stock, effective October 1, 2017. Kumagai Gumi
turnover and Kumagai Gumi stock price prior to the stock merger havebeen retroactively revised accordingly.

Kumagai Gumi stock price

Stock price

TOPIX

5,000

Architectural Design Management Division
Turnover150,000,000

4,000

120,000,000

3,000

90,000,000

2,000

1,000

30,000,000

0

0

2013
3

2014
3

2015
3

2016
3

2017
3

2018
3

2019
3

2020
3

2021
3

2022
3

2023
3

Architectural Design Planning Department
Architectural Design Administration Department
Quality Control Department
Architectural Design Department 1
Architectural Design Department 2
Architectural Design Department 3
Structural Design Department
Earthquake-resistant Design Department
Environmental Design Department

International Division

Administration Department
Project Management Department
Project Development Department

New Business Development Division

New Business Planning Promotion Department
Infrastructure Business Promotion Department
Renewable Energy Business Department

Technical Research & Development Division

Planning Group
Technical Research & Development Division
New Technology Innovation Center

60,000,000

2012
3Architectural Production & Engineering Department
Architectural Structure & Engineering Department
Architectural Environment & Engineering Department
Medium- to Large-Scale Wood Structure Promotion Office

Stock Trading Data

82

Corporate Planning Department
Sustainability Promotion Department
Secretarial Department
Public Relations Department
DX Promotion Department

Audit Office

Capital

Total number of shares
outstanding

Fukui Office

Incorporated

Total Number of Shares
Authorized to Be Issued

Management Strategy Office

Headquarters

Founded1861
The Tokyo Stock Exchange Prime Market
71,400,000 shares

Stock Exchange Listing

Directors/Branch Managers Meeting

Representative

Securities CodeBoard of Corporate Auditors

OfficeBoard of Directors

Headquarters

Management Committee

Stock Information

Kumagai Gumi Co., Ltd.
2-1 Tsukudocho, Shinjuku-ku, Tokyo
2-6-8 Chuo, Fukui, Fukui Prefecture
Yasunori Sakurano, President andrepresentative Director.
January 1, 1898
January 6, 1938
30.1 billion yen
4,406 consolidated; 2,635 non-consolidated

President

Company name

Organizational Chart (as of July 1, 2023)(as of March 31, 2023)

Legal Compliance
Audit Committee

Stock Information(as of March 31, 2023)

Audit & Supervisory Board Member

Corporate Information

Hokkaido Branch
Tohoku BranchTokyo Metropolitan Area Branch
Nagoya Branch
Hokuriku Branch
Kansai Branch
Chugoku Shikoku Branch
Shikoku Branch
Kyushu Branch
Okinawa Branch

The Kumagai Gumi Group Corporate Report 2023

83

The artwork on the cover comprises works by children from Tsukudo Elementary School, adjacent to the Kumagai Gumi
Headquarters in Shinjuku, Tokyo, on the theme of the environment.
* Kumagai Gumi supports opportunities to foster a mindset that treasures nature and environment in the children who will lead the next generation.
Our work with Tsukudo Elementary School includes environmental learning and cleanup of the local area.

Kumagai Gumi Co., Ltd.
2-1 Tsukudocho, Shinjuku-ku, Tokyo 162-8557, Japan
https://www.kumagaigumi.co.jp
Inquiries
Management Strategy OfficeSustainability Promotion Department

TEL 81-3-3235-8114 FAX 81-3-5261-9665
E-mail sustainability@ku.kumagaigumi.co.jp