30％ Club JapanInvestor Group
Progress Report
vol.3
January 2024

1

Contents
1.

30% Club Japan IG met with female directors from JICPA

2.

Best practices of engagements on gender diversity

3.

How the engagement is designed – lessons from 30% Club IG
collaboration in France

Disclaimer: The English version is a translation of the original in Japanese and is for
information purposes only. In case of a discrepancy, the Japanese original will
prevail.

Met with female directors from JICPA
On October 10, 2023, the 7th meeting of the Support Committee for NonCertified Public Accountants was held. This time, the D & I Promotion
Committee of the Japanese Institute of Certified Public Accountants (JICPA)
joined us for the meeting, bringing the total number of participants to over
40. The participants discussed the importance of increasing the number offemale directors. Discussion agenda also included the dialogue between
investors and directors, the skill matrix, and the training for directors, aswell as the gap between 30% female on the board and the current reality.
The nomination process of female directors was also raised as an issue forthe future. One of the interesting topics was the director’s experience ofthe management, which should have the different definition between eachlisted companies.

3Met with female directors from JICPA
We have received the following messages from the representatives of both groups.

Ms. Yoshiko Hayama Independent director of Sugi Holdings, a professional
researcher at the Japanese Institute of Certified Public Accountants (JICPA),
said, "I always receive a lot of insights from this opportunity, and I try to bring thevoices of investors to the board. I really appreciate the insightful message from themembers of the 30% Club Investors Group."
Minoru Matsubara, Managing Executive Officer and Leader of Best Practices Subgroup,
Resona Asset Management said “During this meeting, we received many suggestions fromindependent directors/auditors from JICPA. This time, we were divided into small groups andhad a frank dialogue. In particular, we received many useful suggestions for our future
engagement activities, such as challenges of the board of Japanese companies, the board‘sexpectations for investors, and the tips to check the effectiveness of the board. I would like toexpress my sincere appreciation to all participants."

4Best practices of engagements ongender diversity
Company A in chemical industry – A global chemical company
included in the TOPIX 100.
Issues identified: In the past, through proxyvoting and engagement opportunities, theinvestor has discussed about the company's
corporate governance issues, including thecomposition of the board and the separation ofmanagement and monitoring. In particular, thelack of female directors and the insufficientrefreshment of long-term tenure outside
directors are serious issues. Having
strengthened our engagement with the company
after the 2022 Annual General Meeting.
The dialogue with the company: The company
explained that they put more emphasis on
effectiveness than formality of corporate
governance. Since the company recognized thesignificant contribution of the existing outside
directors to the board, they have not replaced
long-tenured independent directors. However,
the investor reiterated that they recognized theimportance of well-prepared succession planningof independent directors. Also, the company
understand urgent requirement for gender
diversity of the board and would like to improve
the situation.

Outcomes: A female director was nominatedfor the 2023 Annual General Meeting ofShareholders. At the same time, oneindependent director, whose tenure had
exceeded 10years retired from the board. Also,an internal directors, whose title was anadvisor, was announced.
Future steps: The board still has two longtenured outside directors and we need towatch the situation carefully. However, thecompany has improved transparency of theirgovernance, for example, they disclose aninterview with independentdirectors‘ contributions to the boards in atimely manner. With regard to the newlyappointed female independent director, theinvestor will need to confirm her contributions
to the board, while continuing dialogue withthe company to further improve the board
diversify.

5Best practices of engagements ongender diversity
Company B in auto parts industry – A global auto parts company
included in the TOPIX 100.
Issues identified: : The human capital managementand diversity promotion policies are less visible toinvestors. We have discussed the following points below
with the Chairperson of the Board of Directors, senior
management and others.
1. Policy on Board composition from a diversity
perspective, reasons for not joining the 30% Cluband approach to setting the proportion of female
directors.
2. Policy on appointment of internal candidates,
measures to strengthen the pipeline andsuccession plans. The number of female directors
increased by one in 2023 and the ratio of female
directors improved to 25% by outside
appointments.
3. Measures to improve female leadership as diversity
is important even though the proportion of female
managers in Japan is sill low, and the Company
aims to improve female leadership in the future.

Securing and utilizing diverse human capital is essential toaccelerate portfolio management, and the next medium-term
management plan also focuses on human creativity and ismoving forward.

The dialogue with the company: The increase fromtwo to three female directors in 2023 is a significant
achievement. They want to promote internally in thefuture. They will increase diversity not only in terms ofgender but also age, experience and nationality basedon skill sets.

Outcomes include (1) sharing the focus of global investors
through collaborative engagement, (2) confirming thecommitment of the Company and Board of Directors and (3)improvement in the ratio of female directors to 25%.

The Company understands and agrees with the idea of a30% Club. They are focusing not only on achieving the ratioof female directors, but also on increasing female managers
over the medium to long term. In order to increase female
managers, they are working to promote the focused training
and appointment of candidates and is targeting a 30%
recruitment rate of female new graduates.
While the ratio of female managers is high at overseas sites,
the company recognizes that there is still a gap in Japan as achallenge. Priority is being given to increasing the ratio offemale recruits. They are continuing to develop systems andstructures and are considering expanding them asappropriate in the future.

Future Steps: Discussion will continue on the (1) timeline forfurther increasing the female director ratio, (2) progress in
the Management Development Program, (3) theconsideration of human capital-related items in executive
6remuneration.

Best practices of engagements ongender diversity
Company C in retail industry – A global specialty retailer in theTOPIX Mid 400
Issues identified: Although Company C had one
female director on the board, it had not been able
to develop female managers at senior
management level to follow her, making it difficult
to maintain sustainable diversity on the board. Inaddition, the chairman, who has been on the board
for more than 20 years, still has the right torepresent the company, and there are many
challenges in overcoming the sense of stagnationon the board and in succession planning.
The dialogue and outcomes: Engagement withinvestors has increased in recent years, together
with the new CEO's management reforms.
Encouraged to improve the independence anddiversity of the Board and to replace long-serving
internal directors, one female director (internal)
retired, while three new female external directors
were appointed at the AGM in November 2022,
dramatically increasing the proportion of female
directors from 11.1% to 37.5%.
In terms of disclosure, the first numerical diversity
target has been set at 50% female at store
manager level or above by 2030. The company
also intends to disclose the age, gender and ethnic
composition of its workforce by 2030.

Company C has introduced a three-day working
week from 2021 to help employees balance workand childcare. The Diversity, Equity & Inclusion
Committee, established in 2022, holds roundtablediscussions and workshops chaired by the ESG
officer and employee volunteers. In addition, thecommittee conducts employee surveys to create
an inclusive work environment, and the company
continues to take steps, including increasing midcareer recruitment, to promote and establish a
broad level of diversity.
Future steps: The investor will continue toencourage the company to implement specificmeasures to develop female managers. CompanyC is discussing linking the achievement of its
sustainability goals by 2030 to the long-term
incentive compensation of its executives. It is
expected that the KPIs in line with its own
sustainability goals will be developed at an earlystage and that the improvement of the executive
remuneration system will further accelerate thecompany's diversity initiatives.

7Best practices of engagements ongender diversity
Company D in beverage industry – A beverage company in theTOPIX Mid 400
Issues identified: Although the company claims
to be a top global beverage manufacturer, its
awareness and commitment to promoting
women was low, and the ratio of female
managers was the lowest among food andbeverage manufacturers in Japan.
The dialogue with the company: The investor
presented the current status of women'sadvancement, such as comparing the ratio offemale executives in the industry to thecompany's CEO, vice president and relevant
director, and discussed the importance ofadvancing women to achieve management'svision and increase corporate value.

Afterwards, the company reported on theprogress of initiatives such as appointing womenas overseas product development managers, andmade the following positive comment: ‘Asconventional measures such as awareness raisingand training are not enough to promote theadvancement of women, we are increasing thenumber of positions where women can play anactive role, particularly in the planning andresearch departments, so that more female
managers can be developed.’
Outcomes and future steps: As a result of theongoing dialogue, the company's initiatives anddisclosure on diversity are rapidly improving,such as setting and announcing targets not only
for the ratio of managers, but also for the gender
pay gap.
Although the company is moving away from thelowest level, the investor will continue to monitor
and engage in dialogue on measures that will
enhance corporate value, such as promoting
more female employees in the areas of productplanning and overseas strategy.

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Best practices of engagements ongender diversity
Company E in textile industry – A textile and apparel company in
the TOPIX Mid 400
Issues identified: Company E's management
philosophy had not been brushed up and gave
the impression that it was outdated compared totoday’s gender perceptions. The investor wasalso concerned that the company’s culture might
be an obstacle to promoting women andincreasing corporate value.
The dialogue with the company: First, theinvestor explained that reforming management
philosophy and culture is essential to increasing
company value, and also provided concrete ways
to address this issue through case studies ofother companies. Company E commented:
Discomfort with the management philosophy has
also been expressed by the younger generation
within the company. However, there is strong
resistance from the older generation to revise
the management philosophy that has been inplace since the company was founded. Although
we have worked on this several times in the past,
we have not yet been able to achieve it. This
time we want to revise the management
philosophy and increase employee involvement
in order to strengthen our brand.

Outcomes and future steps: As a consequence, Company
E renewed its management philosophy with a focus on theyounger generation and overseas employees, with theactive advice of the outside directors. While the company
still intends to foster a challenging culture, one outside
director suggested that unconscious bias and a sense ofhorizontal alignment within the company were factors
hindering growth potential. The investor suggested that
there was a need to review the performance appraisal
system and increase mid-career recruitment to address
unconscious bias. The investor has requested a dialogue
with the outside director concerned, during which both sides
shared an understanding of the challenges the company
faced in reforming its culture and discussed future initiatives,using case studies from other companies.

Company E continued to reform its management structure
by replacing top management, increasing the number ofoutside directors and appointing female directors to its
operating company. The investor requested a dialogue with
the new top management to discuss the new management
structure and their strategies for increasing corporate value,and confirmed the need to change the negative culture thatstill exists to create an environment where women canactively seek leadership positions. The investor will continue
to closely monitor the progress of changes at Company E
9and engage with it from an investor perspective.

Best practices of engagements ongender diversity
Company F in wholesale industry - in the TOPIX Mid 400
Issues identified The investor shared theconcern on the challenging governancestructure situation, such as unclear decisionmaking process of the remuneration; forexample, the compensation amount of theelderly chairman and vice chairman exceedsthat of the president. In addition, many of the
independent directors were from business
partners and also no female directors wereappointed, which seems to indicate the unclear
governance structure and the closed nature ofthe board.
The dialogue with the company: The
investor asked that the governance systemshould be reviewed first, since the lack ofappointment of female directors appears toreflect an attitude of not accepting objections.
At the same time, we informed that now ourproxy voting guideline requires more than afemale director of the board. The company
responded, “We are currently discussing this at
the Nomination and Compensation Committee“.

Also, the investor discussed about theseniority-based personnel system. In casethe company needs to expand their futurebusiness field, they would need to revise
traditional employment practice and increase
the ratio of female employees. The company
responded, “We agree to those concerns. We
have received good feedback and would liketo discuss those issues with ourmanagement."
Outcomes and future steps: One female
independent director was nominated at June
2023 Annual General Meeting. This isregarded as a step forward in improving
governance. Going forward, in addition toclarifying the roles of internal directors andstrengthening the independence of outside
directors, the investor will continue toencourage the strengthening of its humancapital, which should enable the med tolong-term growth.

10Overseas activity

How the engagement is designed⚫

Active engagement involves direct dialogue with companies that have significant room forimprovement. Soft engagement involves communicating the investor group's expectations fordiversity reporting to a broader range of companies via email or by providing guidance.

⚫

A compliance clause is included in the investor group’s charter to ensure the engagement is not an
act in concert. Or they will remind companies at the engagement that it is not a concerted action.
Active engagement

⚫

⚫

⚫

Objective✓ Demand for improvement in femalerepresentation and diversity reporting etc.
Target companies✓ Companies with big room for improvement(e.g., the following are areas identified by theFrench group)• Financials & Real Estate: High female
employment but few women in management• STEM: Traditionally male-dominated area
• Consumer: High female employment but few
women in management
Engagement format✓ Direct dialog between company and investor
group (preferred face-to-face)

Soft engagement⚫

Objective✓ Outline investor group expectations forcorporate diversity reporting⚫

Target companies✓ Wider range of companies (e.g. major indexconstituents)⚫

Engagement format✓ Prepare and/or email guidance that outlines
investor group expectations(e.g., the following are KPIs emailed by the Frenchgroup)•

Governance, Talent Attraction, Job Quality,
Promotion, Retention, WLB, Equal Pay,
Sexual Harassment, SC, Certification/Audit,
Women Empowerment Principles

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