To Create a Vibrant Environment for
All Members of Society
The Taisei Group creates “safe, secure, and attractive spaces” and“high value” in harmony with the nature, and strives to build a global society
filled with dreams and hopes for the next generation.

Our Structure of Values and Policies
Taisei Group Philosophy

Taisei Spirit
Taisei Group
Philosophy

To Create a Vibrant Environment for
All Members of Society

Active and Transparent Culture /Value Creation / Evolution of Tradition
Key Concepts That All Taisei Group Officers andEmployees Must Adhere to in Order to Pursue
and Realize the Taisei Group Philosophy

Objectives to be Pursued by the Taisei Group(Goals)Taisei Spirit
Materiality

Action Guidelines for Taisei
Personnel and the Taisei Group
as a Whole
Individual Policies

Customers

Overall
Principles ofConduct

Shareholders /Investors

OverallManagement
Perspective

Suppliers

TAISEI VISION 2030
Medium-Term Business Plan
(2021– 2023)

Employees

Local
Communities

To pursue the Taisei Group Philosophy “To create a vibrant environment for all members of society,” all officers
and employees share the “Taisei Spirit,” and carry out corporate actions based on the “Overall Principles ofConduct,” namely the Action Guidelines for Taisei Personnel and the Taisei Group as a Whole and Individual
Policies, and the “Overall Management Perspective,” namely TAISEI VISION 2030 and the Medium-TermBusiness Plan (2021–2023).
The Taisei Group aims to create new social value while contributing to the realization of a sustainable
society, by using the wishes and expectations of our stakeholders to identify social issues in the course of
these actions, and resolving those issues.

1 T A I S E I ANNUA L R EPORT 2021

Group Slogan** The Taisei Group Philosophy, the Taisei Spirit and the Action Guidelines for Taisei Personnel and the Taisei Group
as a Whole can be summed up in the following slogan.

Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole

Taisei Spirit
Active andTransparent
CultureWe value diversity and, through open and active communication lines andnetworks both internal and external to the Taisei Group, seek to cultivate
a transparent and active corporate culture in which all of our officers andemployees are able to reach their full potential.

● Cultivating an open corporate culture❶❷ Securing a pleasant working environment●❸ Respect for fundamental human rights●
and diversity

Value
Creation

Not limited to our understanding of society at large, we carefully take into
account the needs of our clients and using all of the technology andknow-how at our disposal, together with our passion for innovation andingenuity, seek to construct innovative and valuable engineering projects
that inspire and impress our clients.

❹ Creating a vibrant environment for all●
members of society❺ Striving to create value●❻ Pursuing customer satisfaction●❼ Ensuring and improving safety and quality

EvolutionofTradition

We aim to instill within the Taisei Group the Japanese tradition of monozukuri(precise, superb craftsmanship) and continually challenge ourselves toprovide ever more valuable contributions to society and ensure our continued
development and growth as a respected corporate group.

● Respect for traditions❽❾ Promoting partnerships with subcon●
tractors and suppliers❿ Promoting environmental conservationand creation⓫ Communication with local communities●⓬ Conduct in the international community⓭ Appropriate disclosure of information⓮ Fulfilling social responsibilities●

Individual Policies ⃝Environment ⃝Social ⃝Governance⃝ Environmental Policy⃝ Social Contribution Policy⃝ Code of Conduct on the Use of Social Media⃝D
 eclaration of Taisei Corporation
on Biodiversity Preservation⃝ Quality Policy⃝ Policy on Business Continuity in Times of Disaster⃝ IR Policy⃝ Environmental Targets⃝ Risk Management Policy⃝ Health and Safety Policy⃝ Fundamental Policy to Enhance Operational
Compliance Systems⃝ Information Disclosure Policy⃝ Human Rights Policy⃝ Policy on the Protection of Personal Information⃝ Procurement Policy⃝ Fundamental Corporate Governance Policy⃝ Tax Policy⃝ Declaration of Partnership Building⃝ Policy on Intellectual Property

Important Issues to Be Addressed by the Taisei GroupESG

Environment

Materiality❶ Realization of a sustainable and environmentally friendly society❷ Ensuring quality and improving technology❸ Technical development for realizing a sustainable society

Social❹ Promotion of supply chain management❺ Thorough management of occupational health and safety❻ Cultivation of technical staff and securing human resources❼ Realization of an attractive working environment that is good to work in

Governance❽Thorough compliance and restructuring of group governance system
TA I SE I A N N UA L R E P O R T 2 0 2 12

CONTENTS

05 About the Taisei Group

11 Strategy for Sustainable Growth

05 Our History

11 Message from the President

08 The Taisei Group’s Now / Present

17 TAISEI VISION 2030 andMedium-Term Business Plan

09 11-Year Financial and Non-Financial
Summary

19 Group Business Strategy
22 Key Sustainability Issues
25 Overview of Sustainability-Focused
Management and Medium-TermBusiness Plan Initiatives

27 Towards Sustainable Value
Creation

27 Sustainability of the Taisei Group33 Feature on Sustainability: Article No. 1
Environment: Talk on the SDGs
• Information Disclosure Based on
the Recommendations by TCFD
• Carbon-Recycled Concrete,
T-eConcrete®/Carbon-Recycle
was Developed
41 Feature on Sustainability: Article No. 2
Social: Response to DX
43 Feature on Sustainability: Article No. 3
Governance: Round-Table Talk byExternal Members of the Board

47 ESG Section
47 Environment Section• Realization of a Sustainable andEnvironmentally Friendly Society

75 Explanation and Analysis ofBusiness Results

114 Data Section
114 ESG Data

75 Explanation and Analysis ofBusiness Results

117 Glossary

53 Social Section• Ensuring Quality and Improving
Technology• Technical Development for Realizing
a Sustainable Society• Promotion of Supply Chain
Management• Thorough Management ofOccupational Health and Safety• Cultivation of Technical Staff andSecuring Human Resources• Realization of an Attractive Working
Environment That Is Good to Work in

78 Business and Other Risks

119 Outline of the Company

81 Consolidated Balance Sheets

120 Taisei Corporation Organization
Chart

58 Restructuring of the Group
Governance System• Thorough Compliance /Restructuring of the Group
Governance System

108 Independent Auditor’s Report

59 Management Members
63 Our Basic Approach to Corporate
Governance
70 Risk Management / Compliance

3 T A I S E I ANNUA L R EPORT 2021

83 Consolidate Statements of Income
84 Consolidate Statements ofComprehensive Income
85 Consolidate Statements of Changes
in Net Assets
87 Consolidated Statements of Cash
Flows
88 Notes to Consolidated Financial
Statements

118 Third-Party Opinion

121 Overseas Network

Information Structure and Information Provision on Websites

Financial Information

Non-Financial Information

The Taisei Group Annual Report 2021
Investor Relations

Sustainability

https://www.taisei.co.jp/english/ir/

https://www.taisei.co.jp/english/csr/

Financial Results
C O M M U N I C AT I O NCorporate Governance Reporthttps://www.taisei.co.jp/english/ir/library/results/

https://www.taisei.co.jp/english/profile/governance/

Medium-Term Business Plan

Sustainability Activities

https://www.taisei.co.jp/english/ir/plan/

https://www.taisei.co.jp/english/csr/performance/iso26000/

Taisei Group Annual Report 2021

Referenced Guidelines

Editorial Policy

Integrated Reporting Framework (The International Integrated
Reporting Council [IIRC])

This report is intended to provide investors, shareholders,and other stakeholders with an easy-to-understandoverview of the Taisei Group’s value creation process as awhole, such as business models, competitive advantages,
strategies, and foundations for realizing the Group
Philosophy, and initiatives for sustainable enhancement ofcorporate value and resolution of social issues.
Further details about the initiatives related toEnvironment, Society, and Governance (ESG) andsustainability are available in the corporate social
responsibility (CSR) section on Taisei Corporation’s
official website.
https://www.taisei.co.jp/english/

Scope of Coverage This report covers the activities of Taisei Corporation andthe Taisei Group companies (consolidated subsidiaries)
as of March 31, 2021, unless otherwise noted.

Period of Coverage The fiscal year ended March 31, 2021 (April 1, 2020 toMarch 31, 2021). Some contents concern the data forthe previous fiscal year or the most recent activities.

Date of Issue

November 2021

Note Regarding Forward-Looking Statements
This report has been produced in an environmentally friendly manner. It is printed
on lightweight paper to reduce the use of timber resources and transportationenergy, using vegetable oil-based ink.

Major External Evaluation (As of July 1, 2021)

As disclosure guidelines for materiality that lead to the preparation of this report andthe value creation process, we refer to this framework, which is a guideline fordisclosure of non-financial information.

Guidance for Integrated Corporate Disclosure and Company-Investor Dialogues for Collaborative Value Creation (Ministry of
Economy, Trade and Industry)
This guidance is widely used in Japan to improve the quality of dialogue withinvestors.

GRI Standards for Sustainability Reporting
We refer to this standard, which is a guideline for information disclosure regarding
sustainability. The status of information disclosure can be found in the ESG data of
this report and the Comparative Table with Global Reporting Initiative (GRI)
Standards on our website.

ISO 26000
We refer to this International Organization for Standardization (ISO) guidance
standard as a guideline for CSR activities. The status of our activities is reported on
our website.

Environmental Reporting Guidelines (2018 Version) (Ministry of
the Environment)
Environmental reports have been prepared with reference to these guidelines, andsome of them are also included in this report.

Task Force on Climate-Related Financial Disclosures (TCFD)
In July 2020, we endorsed the TCFD Recommendations and disclosed information
based on the recommendations in this report.

WEB

ISO 26000 / Comparative Table with GRI Standards

https://www.taisei.co.jp/english/csr/performance/iso26000/
Third-Party Opinions and Third-Party Assurance on This Report• Kanji Tanimoto, Doctor of Business Administration (DBA), Professor, School ofCommerce, Waseda University• “Independent Assurance Report” on the environment data and indices by Ernst &Young ShinNihon LLC

Note: The inclusion of Taisei Corporation in any MSCI index, and the use of MSCI logos,
trademarks, service marks, or index names herein, do not constitute a sponsorship,endorsement, or promotion of Taisei Corporation by MSCI or any of its affiliates. The MSCI
indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos aretrademarks or service marks of MSCI or its affiliates.

TA I SE I A N N UA L R E P O R T 2 0 2 1

4About the Taisei GroupOur History
The Legacy of Kihachiro OKURA

Untiring Pioneer Spirit to
Explore New Era andExpand BusinessAt the time of great upheaval, our founder Kihachiro
OKURA chose a career as an entrepreneur with hisforesight, and tirelessly continued exploring uncharted
fields. His spirit has been passed on to this day inTaisei Corporation.

Establishing a Construction
Company to Support
Japan’s Modernization
Foundations of the Business
The history of Taisei Corporation began when Kihachiro
OKURA established Okura Gumi Shokai, which corresponds
to a general trading company today, in 1873. In 1887, hejoined hands with Eiichi SHIBUSAWA, who was his ally
sharing the same vision and was called the father of capitalism in Japan, and Denzaburo FUJITA, a major figure of
the Kansai business world, to create the first corporation in
the construction industry in Japan: Nippon Doboku Co.,
Ltd. Later, this company recruited up-and-coming engineers from all over Japan and performed pioneering
projects one after another, including the Tokaido Line andthe lock and tunnel at Lake Biwa, making a significant
contribution to the modernization of Meiji Japan.

1883
Rokumeikan, a building for entertaining foreign guests anddiplomats, in its heyday during the Meiji era

5 T A I S E I ANNUA L R EPORT 2021

Kihachiro OKURA, the founder of Taisei Corporation(Photo courtesy of Okura Cultural Foundation)

1890
The lock and tunnel at Lake Biwa, which becamea pioneer modernistic civil engineer work

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Remarkable and Audacious Anecdotes of Kihachiro,an Outstanding Entrepreneur of the Time1882–
Episode >> A first in Japan: Sparkling

Demonstration of Arc Lamps!

Kihachiro was one of the promoters of the Tokyo Electric Light
Company (later became TEPCO). He thought it was importantto let people know what electrical light is; in 1882 he installed
arc lamps as street lamps in Ginza, and conducted a major
publicity campaign.
These arc lamps are the first electric lights that Japanesepeople saw on the street. Their brightness, which was said tobe that of 2,000 candles, attracted much public attention.
People hailed the lamps saying “the brightest is the sun, next
comes the moon, and next come arc lights,” and flocked toGinza nightly to see them. The gathered people looking up at
the lamp were captured in a Japanese-style woodblock print,
and reported to every corner of Japan.

A Picture of the Construction of Electric Lamps in Tokyo’s Ginza(1883, Electric Power Historical Museum)

1896–
Episode >> His Vigorous Effort in Taiwan

Impressed Then Prime Minister
Hirobumi Ito

After the First Sino-Japanese War, the Government-General wasestablished in Japan’s new territory, Taiwan. It was decided topromote industrialization there, and this required the cooperationof Japanese companies. Despite the active involvement of theJapanese government, many companies were reluctant tocooperate. Kihachiro voluntarily went to Taiwan, however.
Struggling with the climate and contagious diseases unique tothe tropical island, he spearheaded projects such as installing
telegraph wires and reconstructing the railroad between Taipei
and Keelung. Hirobumi Ito, who was the prime minister at thattime, visited the work site, and was deeply impressed by
Kihachiro’s effort. The prime minister gave him a calligraphic
work of his own, written as “Kaibutsu Seimu*.”* A quote from I Ching (Book of Changes). It means to develop the newand achieve what people want

1927–
Episode >> Everyone Inspired by His

Emotional Encouragement!
The First Underground Railroadin the Orient Built Solely by
the Hands of Japanese

The post-WWI recession and the Great Kanto Earthquake,
among others, negatively impacted fundraising for the Tokyo
Underground Railroad between Ueno and Asakusa (now theTokyo Metro Ginza Line) and delayed the commencement ofwork. In this situation, it was Kihachiro who volunteered to takeup the challenge. While a number of technical issues were
anticipated, Kihachiro, who was then 89 years old, energeticallyencouraged the project members to complete the work without
getting advice from foreigners. He covered construction costs inthe form of payment by bill, and put all his energy into this work.
As a result of the earnest efforts of inspired employees, the firstunderground railroad in the Orient was successfullycompleted in 1927.

1927
Tokyo Underground Railroad (Ueno–Asakusa)
Adopted the cut-and-cover method, which digs into
the ground to make a tunnel and backfills it
after completion

TA I SE I A N N UA L R E P O R T 2 0 2 1

6

Our History

The Legacy of Kihachiro OKURA

Taisei Spirit, Which Has Been Passed on throughToday, and to Be Passed on to the Future
Each and every Taisei Corporation employee has poured their dreams and passions into every single
project, and established trust and a track record.
This spirit has been passed on to the current era of Reiwa, through the four eras of Meiji, Taisho,Showa, and Heisei.

1964 Mt. Fuji Summit Radar Site2013 Bosphorus Strait Crossing Railway Tunnel

2019 Japan National Stadium

2021 Shin-Aso Ohashi Bridge

Work That Made the Impossible Possible
The radar site was built in 1964 at the highest altitude
above sea level in Japan, under severe weather conditions. The site has actively worked as a major typhoon
monitoring facility for 35 years.

A Very Japanese and World-Class Stadium
Blending in with the green environment of Meiji-jingu
Gaien, looking at 100 years from now and to preserving
the precious greenery of the area, Mori-no Stadium(“Stadium in Forest”), a stadium open to everyone, hasbeen born in 2019. We constructed a robust and longlasting stadium featuring high durability, long service life,easy maintenance, use of natural energy, and restricting
areas of use according to the scale of events held there.

(Republic of Turkey)
Connecting Europe and Asia with an Undersea Tunnel
This is a big project that was said to have been theearnest wish of the Turkish people for 150 years. Orchestrating many of the world’s first tunnel technologies, we
completed the work in 2013.

(Kumamoto)Shin-Aso Ohashi Bridge, a Symbol of Kumamoto’s
Reconstruction, Opened
This bridge has been constructed to replace the former Aso
Ohashi bridge which fell down in the Kumamoto earthquakes in 2016. With thoroughly streamlined construction
operations and various technologies and ingenuity, thebridge was put in service 16 months earlier than the standard construction period. The bridge is expected to
improve the convenience of people’s lives, and further
revitalize tourism.

1946 & 1956

1967 & 1997

2021–

Episode >>Episode >>And now...

Change of Company Nameand Listing of Shares

Received the First Imperial Invention
Award in the Construction and Civil
Engineering Field

Aiming to Realize a Sustainable
Society

In 1946, Okura Gumi changed its
name to Taisei Corporation andbecame a non-family firm, which israre among Japanese construction
companies. Taisei Corporation listed
its shares on Tokyo Stock Exchange
in 1956, for the first time as acompany in the construction industry.

7 T A I S E I ANNUA L R EPORT 2021

In the construction and civil engineering field,
Taisei Truss (Taisei Corporation’s uniquethree-dimensional truss structure) and thespherical shield production process (a tunnelingmethod) were awarded the Imperial Invention
Award, which is given to the best invention of
the year, in 1967 and in 1997, respectively.

Taisei Corporation will contribute to therealization of a sustainable future at allstages. It will do this by constructing
buildings that support global green
growth strategies and utilizing disasterprevention and mitigation technologies
to protect society and people’s lives
from disasters.

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

The Taisei Group’s Now / PresentGroup Domestic Building
Construction BusinessNet sales composition

57.9%

Sales

¥857.3 billion

Construction of offices,
commercial facilities,
factories, schools,
hospitals, etc.

12

1 Construction Work of New Buildings in Redevelopment Area of Yotsuya Station District (Shinjuku-ku, Tokyo)
Owner: Urban Renaissance Agency
2 (Tentative Name) Otemachi 1-4-2 Project (Chiyoda-ku, Tokyo)
Owner: Otemachi 142 Tokutei Mokuteki Kaisha

Group Domestic Civil Engineering BusinessNet sales composition

27.7%

Sales

¥410.7 billion

Construction of tunnels,
bridges, dams, railways,
expressways, etc.

Group Overseas Construction
Business
Net sales composition

3.5%

Sales

¥52.3 billion

Construction in Taiwan,
Vietnam, Singapore,and the Philippines

12

1 Fiscal Year 2017 Interim Storage (Futaba 2 Area) Soil Storage Facilities Work (Futaba-gun, Fukushima)
Owner: Ministry of the Environment
2 Port of Tokyo Bay Port Road Nanboku Line (Koto-ku, Tokyo)
Owner: Ministry of Land, Infrastructure, Transport and Tourism

Package ‘A’ - Passenger Terminal
Building and Associated Works on
Bandaranaike International Airport
Development Project Phase ll Stage 2(Democratic Socialist Republic of
Sri Lanka)
Owner: Airport and Aviation Services(Sri Lanka) Ltd.

Group Real Estate Development
Business
Net sales composition

8.6%

Sales

¥126.8 billion

Redevelopment, publicprivate partnership/private
finance initiative (PPP/PFI),
property management,
and condominium sales
projects

Kosugi-machi 3-chome East District Redevelopment Project
Owner: Kosugi-machi 3-chome East street District Urban
Redevelopment Union

Group Engineering BusinessNet sales composition

1.9%

Sales

¥28.1 billion

Engineering of production
facilities and warehousesin the fields ofpharmaceuticals, foodproducts, and logistics

Pharmaceuticals:
Manufacturing facility for highly potent
active pharmaceutical ingredients

Note: Net sales from other businesses (incidental businesses, etc.) other than the above were ¥5 billion (0.3% of total net sales).

TA I SE I A N N UA L R E P O R T 2 0 2 1

8About the Taisei Group

11-Year Financial and
Non-Financial Summary
TAISEI CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2011 through 2021

Millions of Yen

Financial Highlights (Consolidated)(except for per share figures)

March 31, 2011

March 31, 2012

March 31, 2013

March 31, 2014

March 31, 2015

Revenue:
Net sales:
Construction contracts
Real estate development (and other)Total% change from previous year

¥ 1,079,139
138,980
1,218,119(15.5)%¥ 1,171,927
151,577
1,323,504
8.7%¥ 1,254,291
162,205
1,416,496
7.0%¥ 1,321,289
212,184
1,533,473
8.3%¥ 1,404,530
168,740
1,573,270
2.6%

Costs and expenses:
Cost of sales
Selling, general and administrative expenses
Total
Operating income
Income before income taxes
Income taxes
Net income attributable to owners of parent

1,100,022
81,803
1,181,825
36,294
19,3748,514¥
10,883

1,206,014
81,004
1,287,018
36,486
16,673
15,480¥1,181

1,304,677
76,213
1,380,890
35,60632,82812,399¥20,051

1,402,446
77,254
1,479,700
53,773
46,593
14,120¥32,0891,425,295
77,5581,502,853
70,417
66,98028,755¥38,177

¥

¥

¥

¥

¥

Per share data of common stock(in yen and dollars):
Net assets
Net income attributable to owners of parent
Cash dividends
Financial ratios:
Net income attributable to owners of parent
as a percentage of total revenue
Total costs and expenses as a percentage of total revenue
Dividends paid as a percentage of net income
Financial position data:
Current assets
Current liabilities
Total tangible fixed assets
Long-term liabilities
Shareholders’ equity
Net assets
Other data:
New orders received during the year
Contract backlog at the end of the year
Shares issued (thousands)¥

253.94
9.58
5.00

255.601.04
5.00

299.8417.60
5.00

335.4228.17
6.00

418.61
33.52
8.00

0.9%

0.1%

1.4%

2.1%

2.4%

97.0%
52.2%

97.2%
482.3%

97.5%
28.4%

96.5%
21.3%

95.5%
23.9%

847,467
808,052
232,000
235,607
290,282
290,598¥

982,931
921,196
212,639
219,101
284,714292,602¥ 1,012,639
907,281
206,076
292,514299,336
343,300¥ 1,076,213
946,097
181,051
268,802327,067
384,166¥ 1,136,497
984,762
169,973
258,373
370,140
492,114¥ 1,254,095
1,607,390¥ 1,379,572
1,663,459¥ 1,404,407
1,651,370¥ 1,645,896
1,763,793¥ 1,765,743
1,956,266

1,140,269

1,140,269

1,140,269

1,140,269

1,171,269*1 U.S. dollar amounts were translated from yen, for convenience only, at the rate of U.S. $ 1 = ¥ 110.71*2 The net assets per share and the net income per share are calculated assuming that the consolidation of shares took place at the beginning of the year, 2017, because the consolidationof shares, at the ratio of 1 share for 5 shares, was implemented on October 1, 2017.

Major Non-Financial Data
Number of Employees(Persons)
20,00016,000

Number of employees(Consolidated)
Female ratio(Non-consolidated)

17.9
14,032

Accident Frequency Rate / Accident Severity Rate
Number of employees (Non-consolidated)
Male
FemaleFemale managers ratio(Non-consolidated)

18.1

18.4

14,433

14,562

(%)

(%)
2.0

25.0

18.6
14,620

12.5

4.5

0.0

Accident frequency rate
(Construction industry)
Accident severity rate
(Non-consolidated)

1.65

1.7

3.2

3.8

8,000

8,501
1,524

8,490
1,541

8,507
1,570

8,572
1,602

0.4

4,000

6,977

6,949

6,937

6,970

0.2

0.41

2020

0.62

(FY)

0.36
0.35
0.34

0.42
0.26

0.22
0.14

0.0

2019

1.80

0.58

0.6

0.44

0

2018

1.83
1.66

Accident frequency rate
(Non-consolidated)

0.65

12,0002017

Accident frequency rate
(Taisei Group companies)

2017

2018

2019

2020

(FY)

• Frequency rate: The number of fatalities and injuries at worksites per one million
cumulative working hours• Severity rate: The severity of illnesses and injuries represented by the number of
workdays lost over one thousand cumulative working hours

9 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Thousands of
U.S. Dollars*1

Millions of Yen(except for per
share figures)(except for per share figures)

March 31, 2016

March 31, 2017

March 31, 2018

March 31, 2019

March 31, 2020

March 31, 2021

March 31, 2021

¥ 1,394,677
151,212
1,545,889(1.7)%¥ 1,342,455
144,798
1,487,253(3.8)%¥ 1,445,277
140,221
1,585,498
6.6%¥ 1,511,724
139,154
1,650,878
4.1%¥ 1,612,498
138,833
1,751,331
6.1%¥ 1,326,663
153,479
1,480,142(15.5)%$

1,348,302
80,1191,428,421
117,468
117,797
40,996¥
77,045

1,260,968
85,462
1,346,430
140,823
135,190
44,793¥90,566

1,318,880
84,7581,403,638
181,860
182,297
55,508¥ 126,788

1,409,418
88,136
1,497,554
153,324
160,777
48,075¥ 112,572

1,492,654
90,922
1,583,576
167,755
174,785
52,601¥ 122,088

1,261,344
88,282
1,349,626
130,516
135,41742,820¥92,554

$

¥

¥

¥

¥

¥

¥

$

36.90
4.00
1.18

442.6765.85
16.00

2,483.01
392.8720.00

2,975.02*2
561.36*2
85.00*3

3,302.86
511.90130.003,550.03
573.14130.004,084.81
442.66130.00

5.0%

6.1%

8.0%

6.8%

7.0%

6.3%

92.4%
24.3%

90.5%
25.5%

88.5%
22.3%

90.7%
25.4%

90.4%
22.7%

91.2%
29.4%

11,983,226
1,386,316
13,369,542

11,393,225
797,417
12,190,642
1,178,900
1,223,169
386,776
836,004¥ 1,112,305
927,777
177,529
211,767
437,533
521,278¥ 1,223,572
986,994
175,983
202,271
485,396
570,814¥ 1,327,487*4
1,022,626
188,397
218,952*4
563,913669,020¥ 1,200,437
924,791
219,745
198,995
610,565
722,390¥ 1,299,023
957,438
204,400
178,642
673,730
753,916¥ 1,241,013
841,147
206,199
185,055
718,593
844,420$

11,209,584
7,597,751
1,862,515
1,671,529
6,490,769
7,627,315¥ 1,671,061
2,081,438¥ 1,655,036
2,249,221¥ 1,743,498
2,407,221¥ 1,693,859
2,450,202¥ 1,680,052
2,378,923¥ 1,650,627
2,549,408$

14,909,466
23,027,802

1,171,269

1,146,753

224,541

224,541

224,541

224,541*3 Total annual dividends per share as of March 31, 2018 is ¥ 85.00 ,which is the sum of the interim dividend per share of ¥ 10.00 and the year-end dividend per share of ¥ 75.00.
Due to the consolidation of shares at the ratio of 1 share for 5 shares implemented on October 1, 2017, the year-end dividend per share of ¥ 75.00 reflects this consolidation,
while the interim dividend per share of ¥ 10.00 does not.
If the interim dividend per share is calculated based on the consolidation of shares, it would be ¥ 50.00, making the total annual dividends per share ¥ 125.00.
*4 Effective from the year ended March 31, 2019, the Group retrospectively applied “Partial Amendments to Accounting Standard for Tax Effect Accounting” (ASBJ Statement
No. 28, February 16, 2018). The Group applied this change retrospectively and restarted the 11-Year Summary from the year ended March 31, 2018, accordingly.

Research and Development Expenditure / Number of Patent
Applications filed, Number of Patent Rights Registered(Billions of Yen)
15.0

12.0

9.0

Research anddevelopment
expenditure(Consolidation)

11.6
235

Number of patentrights registered(Non-consolidated)

Number of patentapplications filed(Non-consolidated)

13.5(Cases)
350

280

250

191

202

Total CO2 emissions(Non-consolidated)

340
245

0

2020

At construction stage: Reduction rate of CO2 (%)
emissions per construction cost (intensity)*(Non-consolidated)
100

368

318

361
261

75

267

216
50

140

0

2019

Total CO2 emissions(Taisei Group companies)

200

70

2018

300

210

188

3.0

2017

400

266

169

6.0

(103tCO2)

14.2

12.4

219

CO2 Emissions

(FY)

100

28.4

28.9

2017

2018

30.3

32.0

25

0

0

2020

2019

(FY)

* Compared to FY1990 (a base year for emissions target)

TA I SE I A N N UA L R E P O R T 2 0 2 1 10

Strategy for Sustainable Growth

Message fromthe President

To Be a Pioneering Corporate Group
Contributing to the Development of a
Resilient Society

Yoshiro AIKAWA
President and Chief Executive Officer,
Representative Director

11 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Since founded in 1873, the Taisei Group has worked on numerous projects while adapting to thechanges of Japanese society, including modernization, postwar reconstruction, economic growth,and globalization. At the same time, our Group has been involved in the development of safe, secureand attractive cities and the improvement of social capital, and contributed to restoration andreconstruction from large-scale natural disasters and the building of the national resilience of Japan.
By so doing, we have fulfilled our social responsibility as a member of the construction industry.
Building on this background, our Group recently established our 10-year plan: TAISEI VISION 2030.
In order to be “a pioneering corporate group contributing to the development of a resilient society
where people can live affluent and cultural lives,” and pursue the Group Philosophy “To create avibrant environment for all members of society,” we will strive to build a global society filled withdreams and hopes.

Reviewing the Previous Medium-Term Business Plan (2018–2020)
In fiscal 2020, the Japanese economy continued to be in a tough situation overall. As the COVID-19 pandemic
had a significant impact on the global economy, corporate earnings have been weak mainly in non-manufacturingsectors, and uncertainty over the employment and income situations has been protracted. In the constructionindustry, while public investment was steady, private capital investment declined due to poor corporate performance, and construction investment remained at a level lower than the previous year. The situation for the TaiseiGroup also continued to be difficult. In addition to the pandemic, the competitive environment became fiercer due
mainly to a downturn after completion of the projects related to the Tokyo 2020 Olympic and Paralympic Games.
In this business environment, we achieved some of the targets set in the Medium-Term Business Plan
(2018–2020), such as those for the dividend payout ratio and interest-bearing debt, but regrettably failed toachieve the targets for the final year in terms of sales and profits.

Summary of Previous Medium-Term Business Plan (2018–2020)
Medium-Term Business Plan (2018–2020) Numerical Management Targets(Billions of Yen)

Net sales

FY2020Medium-Term Business Plan target

FY2018results

FY2019results

FY2020results¥1,870.0¥1,650.9¥1,751.3¥1,480.1

Operating income¥187.0¥153.3¥167.8¥130.5

Net income attributableto owners of parent¥130.0¥112.6¥122.1¥92.6

12% or higher

16.2%

16.6%

11.6%

About 25%

25.4%

22.7%

29.4%*

Interest-bearing debt

Less than ¥300.0 billion¥217.4 billion¥208.1 billion¥219.0 billion*

Net interest-bearing
debt(Maintaining permanent stateof substantive debt-free management)¥(250.3) billion¥(274.5) billion¥(275.3) billion*

40% or higher

39.0%

39.7%

44.9%*ROE
Dividend payout
ratio

Capital-to-asset
ratio* Achieved the targets under the Medium-Term Business Plan (2018–2020).

TA I SE I A N N UA L R E P O R T 2 0 2 1 12Strategy for Sustainable Growth Message from the President

Medium- to Long-Term External Environment and Structural Changes
The Taisei Group has identified medium- to long-term external environment and structural changes that will
occur in the coming ten years, such as the evolution of sustainability management based mainly on
Sustainable Development Goals (SDGs) to be achieved by 2030 and business model transformation utilizing
data and digital technologies, as three “X’s” (transformations). We think that these three X’s will force our Groupto transform itself as they interact with one another.
IX

Industry Transformation
The first is a structural problem of the construction industry; simply put, it is industry restructuring. As the construction
market matures, competition is expected to remain harsh if the current number of construction companies does notdecrease. Also, in terms of the industry structure, securing a labor force has become an urgent issue as Japan’s
population ages and the birthrate declines.
Against this background, we think that a certain level of restructuring is necessary for the construction industry todevelop as an attractive industry, fulfilling the missions demanded by society, such as the development and maintenance of infrastructure that is essential for social life and the provision of an abundant living environment.
In order to independently respond to this momentum of industry restructuring, our Group aims to expand its
business scope through M&A with the objective of tapping into sectors with future growth potential, and of overcoming sectors and areas in which Taisei Corporation has weakness.

SX

Sustainability Transformation
The second is response to the issue of sustainability, as represented by such themes as SDGs and ESG. The issuesof carbon neutrality, climate change, and diversity and inclusion have attracted much attention globally in the past
year. They are now commonly understood as issues not only for Japan, but also for the entire world. It has becomea major challenge for our Group to resolve these issues in connection with, not separately from, our business, andcarry the challenge to our sustainable growth and enhancement of our corporate value.

DX

Digital Transformation
The third is response to digital transformation. In the construction industry, utilization of digital technologies and datais still in the process of development. If our Group can quickly adopt DX across the entire business and achieve adrastic improvement in productivity of on-site production process, swifter decision-making, and creation of newservices, we will acquire a dominant competitive strength. Conversely, however, it is our recognition that the time
will come soon when we cannot beat the competition without proceeding with DX.

Explanatory Chart of TAISEI VISION 2030 and Medium-Term Business Plan (2021–2023)
Taisei Group Philosophy
Taisei Spirit

Medium- to Long-Term Vision:
TAISEI VISION 2030
Our 10-year vision: TAISEI VISION 2030 is formulated, based on the three“Xs” (transformations) coming to the forefront as a result of the COVID-19
pandemic, as well as Taisei Group Philosophy and Taisei Spirit.

Medium-Term Business Plan (2021–2023)• Key issues to be focused on over the next three years are identified in orderto achieve TAISEI VISION 2030, considering the current business environment.
• The key issues are classified into business issues and sustainability issues.
• In addition to the initiatives targeting our existing businesses, the initiatives
expanding our business scope through M&A will be implemented.

13 T A I S E I ANNUA L R EPORT 2021

Medium- to Long-Term External
Environment and Structural Changes• COVID-19 acted as a trigger for the issues that were
underlying or that we had yet to tackle to come to thesurface at an accelerated pace.
• Major waves of transformations are emerging, interacting with
one another among the three “Xs” (transformations): IX(Industry Transformation); SX (Sustainability Transformation);and DX (Digital Transformation).

IX

SX

DX

Summary of Previous Medium-TermBusiness Plan (2018–2020)• Our net sales and profit target failed to be achieved under a fierce
competitive environment due to uncertainty by the COVID-19
pandemic and a downturn after completion of the projects
related to the Tokyo 2020 Olympics and Paralympic Games.
• Rapid responses were required against the medium- tolong-term external environment and structural changes,
which surfaced as a result of the current competitiveenvironment and the COVID-19 pandemic.

Current Market

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

TAISEI VISION 2030
In order for our Group to pursue sustainable growth, it is important to determine how to respond to medium- tolong-term external environment changes and structural changes. In addition, it is also crucial for all Group
employees to strive to realize our vision, maintaining a high level of engagement, which means that theemployees keep trust in our Group and have a willingness to voluntarily contribute to the realization of our vision.
Furthermore, this pursuit of the vision is nothing other than the embodiment of our Group Philosophy “To createa vibrant environment for all members of society” and the Taisei Spirit, the mindset that all executives andemployees uphold in pursuing the Group Philosophy.
Based on this idea, after a series of discussions in the Management Committee and the Board, our Groupdefined its medium- to long-term vision as “The Ever-Evolving CDE3 (cubed) Company: A pioneering corporategroup contributing to the development of a resilient society where people can live affluent and cultural lives.”“CDE3” refers to the business domains we are involved in. “C” stands for “Construction,” meaning our Group’s
core building construction and civil engineering businesses. We will continue to explore these businesses evenfurther. “D” and “E” stand for “Development” and “Engineering,” respectively, and they will be growth engines
for our Group going forward. The above “CDE” and added “Energy” and “Environment,” both of which form
the foundation constitute “CDE3 (cubed).”In TAISEI VISION 2030, I give utmost importance to the “development of a resilient society.” This is a
mission assigned to us in the construction industry, and I would like to tackle it ahead of others.

Medium-Term Business Plan (2021–2023)
In order to achieve TAISEI VISION 2030, our Group has identified the key issues to be focused on over the next
three years, while considering the current business environment, in the Medium-Term Business Plan (2021–2023).
We classified and organized the key issues to be focused on over the next three years into businessissues and sustainability issues, not by projecting the future as an extension of the present and the past,
but by doing our best based on what we should be like in 10 years’ time. Going forward, we will develop
the foundation of sustainability management before working on various businesses.
Regarding business issues, we established strategies for the key issues by Group segment.
First, in the Group Domestic Building Construction Business, we will aim to secure superiority in an increasingly competitive environment of the customer order, and work mainly on expanding the sector specialized inbuilding renovation and enhancing productivity.
In the Group Domestic Civil Engineering Business, we will enhance the teams to win bids in early contractor
involvement (ECI) projects where we can utilize our strengths as a group, and in the sectors such as wind
power generation facilities and expressway renewal where growth is expected.
As for the Group Overseas Construction Business, we will build the systems to ensure our profits bypromoting both localization and operations at overseas offices, and collaborating with alliance partners.
In the Group Real Estate Development Business, we will strive to maximize Group synergies by optimizing
our portfolio and establishing a stable income foundation.
In the Group Engineering Business, where our Group has a competitive strength, we will further enhance
the pharmaceuticals and other sectors in which we have an advantage, while expanding to new sectors suchas the fine chemicals sector for semiconductors and electronic devices, and developing new sales channels inthe business of transporting and delivering pharmaceuticals.

TA I SE I A N N UA L R E P O R T 2 0 2 1 14

Strategy for Sustainable Growth Message from the President

Regarding sustainability issues, in the Energy and Environment area, we will accelerate our initiatives toward
carbon neutrality in order to acquire front-runner status in the environmental sector.
Following the carbon neutrality declaration of the Japanese government, our Group revised its
Environmental Targets, and set the target of “virtually zero” CO2 emissions from business activities by 2050.
This falls in Scope 1 and 2 emissions of supply chain emissions. To achieve this target, we will aim to own 100
MW of renewable energy sources by fiscal 2030 to cover our Group’s electricity consumption.
As for Scope 3 emissions, we will promote green procurement in the upper stream areas, such as thedevelopment and use of carbon-recycle concrete. Also in the lower stream, we will reduce CO2 emissions fromusage of buildings after delivery through such measures as developing and commercializing next-generation,
high-performance zero-energy buildings (ZEBs).
In the safety area, our key issue is “to achieve zero fatal accidents and zero serious accidents,” and in addition
to the measures implemented so far, we will promote the utilization of digital technologies in this area too.
In the technical development area, our Group will use its technological capability to contribute to the industrial fields specified in the Green Growth Strategy of the Japanese government that are expected to growthrough a virtuous cycle of the economy and the environment.
In the DX area, we will build an integrated platform to collect and visualize internal data by fiscal 2023, anddevelop a foundation to establish a highly efficient production process utilizing data.
In the workstyle reform area, we will promote further diversity and inclusion and establish a comfortableworking environment to enable employees to leverage their diverse range of skills to the maximum possible
extent. At the same time, in the governance area, we will work to maximize Group synergies by enhancing
effectiveness of the Group governance systems.
In addition, the Taisei Group revised its materiality (important tasks that must be addressed) in reference tointernational codes of conduct and standards such as the United Nations Global Compact and ISO 26000. We
have clarified the whole picture of our Group’s sustainability management: we identify key measures and otherspecific measures of the Medium-Term Business Plan based on the materiality, and they lead to the realizationof the SDGs and our Group’s environmental targets, Taisei Green Target 2050.
In starting the Medium-Term Business Plan, I think it is crucial that all executives and employees of ourGroup understand the details of TAISEI VISION 2030 and the Medium-Term Business Plan (2021–2023), sharea high motivation and sense of mission for achievement, and exert their ability to the fullest. As President, I
myself exercise leadership to resolve the issues and achieve the targets of the Medium-Term Business Plan
(2021–2023) in the next three years, and beyond that, strive to realize TAISEI VISION 2030.

Numerical management targets in the last fiscal year (FY2023) of the Medium-TermBusiness Plan (2021–2023) (Consolidated)(Billions of Yen)(a) FY2020 results(b) Numerical management targets in thelast fiscal year (FY2023) of
the Medium-Term Business Plan

Difference(b)-(a)

FY2030 targets in TAISEI VISION 2030
(Reference)

Orders received

1,650.6

1,950.0

299.4—

Net sales

1,480.1

2,000.0519.9

2,500.0

Operating income

130.5

140.0

95

—

Net income attributableto owners of parent

92.6

100.0

74

150.0

ROE

11.6%

About 10%—

About 10%

Dividend payout ratio

29.4%

About 25%

—

—

—

—

Net interest-bearing
debt

Substantive debt-free(275.3)

15 T A I S E I ANNUA L R EPORT 2021

Maintaining state of substantive
debt-free management

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Towards a New Era
In my view, the aim of the Company is to contribute to society by continuously providing customers with abundant value, satisfaction and excitement, and by enhancing the happiness of stakeholders. Sincerely accepting
the wishes of all our stakeholders including customers, shareholders/investors, suppliers, employees, and local
communities, and responding to them with better-than-expected results—I think this will not only enhance ourcompetitive advantage, but also contribute to the realization of a sustainable, resilient society. To realize that, I
think it is essential to promote invigoration and diversity of employees while carefully nurturing our “Active andTransparent Culture,” persistently advance “Evolution of Tradition” by integrating traditional technology(maintenance) and future technology (innovation), and contribute to society with unique “Value Creation” for ourcustomers. In short, it is essential for all of our employees to share the Taisei Spirit of “Active and Transparent
Culture,” “Evolution of Tradition” and “Value Creation,” and our reason of existence is to put them into practicein daily business operations.
Uncertainty over the future domestic construction market, shortage of human resources, and sustainability
issues including climate change—various issues and risks are ahead of us, and as they pile up, the roles andresponsibilities that companies are expected to assume are changing.
Kihachiro OKURA, the founder of Taisei Corporation, squarely faced many challenges in turbulent days, andcontinued tackling uncharted fields. Inheriting his pioneering spirit, we at the Taisei Group will continue ourprocess to independently transform existing business models along with the times, solidify the foundation forsustainable growth, come up with innovations leading to the resolution of social issues, and create new value.
Through this process of new value creation, we will keep working for the new era.
We would appreciate our stakeholders’ high expectation towards further growth of our Group as well as
your continuous and invaluable cooperation and support..

TA I SE I A N N UA L R E P O R T 2 0 2 1 16

Strategy for Sustainable Growth

TAISEI VISION 2030 andMedium-Term Business Plan

The Taisei Group analyzed the reasons for the failure to achieve the goals of the previous Medium-TermBusiness Plan, and identified the medium- to long-term external environment and structural changes.
Based on this analysis, we formulated TAISEI VISION 2030, our medium- to long-term vision in line with
the Taisei Group Philosophy and other factors. As for the newly launched Medium-Term Management
Plan (2021–2023), we have positioned it as “Focus on efforts to realize TAISEI VISION 2030.”

TAISEI VISION 2030 andMedium-Term Business Plan (2021–2023)
The Ever-Evolving CDE

3(cubed)Company

A pioneering corporate group contributing to the development ofa resilient society where people can live affluent and cultural lives
Achieving safety andsecurity

Basic stance
Rough indicators ofnumerical performanceGroup net sales

Group net income

ROE

About ¥2.5 trillion

About ¥150.0 billion

About 10%

Customers, suppliers, and society

Returns through CDE3

Shareholders

Dividend payout ratio 25-30%

Employees

To promote further diversity and inclusion, establishing a comfortableworking environment, personnel systems, and salary plans thatenable employees to leverage their diverse range of skills to the
maximum possible extent

Returns to stakeholders

Proactive
response to
major waves oftransformations
as a pioneer

Optimal utilization of “Human Capital,” “Technology”
and “Intelligence”

IX

Increasing pressure
for constructionindustry restructuring

SX

Moving to solve
environmental andsocial issues throughour businessDX● To establish our competitive superiority by enhancing
Toward an era where
digital transformation
productivity, speeding up decision-making,determines competitivenessand creating new services● To expand our business scope through M&A and other means● To target the front-runner status in the environmental sector, accelerating our initiatives toward

carbon neutrality● To promote further diversity and inclusion, establishing a comfortable working environment,

personnel systems, and salary plans that enable employees to leverage their diverse range ofskills to the maximum possible extent

Group net sales
Group net sales
Group net sales¥2 trillion¥1,480.1 billion

Group net income

Group net income¥100.0 billion¥92.6 billion¥2,500.0 billion
Group net income¥150.0 billion

2020

2023

2030

Previous Medium-Term Business Plan

Medium-Term Business Plan

TAISEI VISION 2030

(2018-2020)17 T A I S E I ANNUA L R EPORT 2021

(2021-2023)

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Medium-Term Business Plan (2021–2023) | Key Issues● Key issues to be focused on over the next three years are identied in order to achieve TAISEI VISION 2030, considering the current

business environment.
● The key issues are classfied into business issues and sustainability issues.
● In addition to the initiatives targeting our existing business, the initiatives expanding our business scope through M&A will be implemented.
Group Domestic Building Construction BusinessTo establish our superiority in a fierce competitive environment

Group Domestic Civil Engineering BusinessTo develop the systems to establish solid business foundations

C

Construction

BusinessrelatedD

Development

E

Group Overseas Construction BusinessTo build the systems to ensure our profits for establishing the stable business foundations

Group Real Estate Development BusinessTo build the stable income foundations in the Group development businessby optimizing the portfolio of our real estate and pursuing investment efficiency

Group Engineering BusinessEngineering

To leverage our strengths to expand the scope of our businessTo target the front-runner status in the environmental sector, accelerating our initiatives toward carbon neutrality
Energy andEnvironment

Sustainabilityrelated

Scope 1 and 2

To achieve our target of “virtually zero” CO2 emissions from business activities (carbon neutrality)

Scope 3To enhance the performance of our Zero Energy Buildings (ZEBs), and expand green procurement

To build the foundation based on sustainability
To achieve zero fatal accidents and zero serious accidents

SafetyFoundation
Development

Technical development

To promote the technical development to solve environmental and social issues through open innovation
To innovate the production systems, and reform the workstyles through digital transformation (DX)DX
Workstyle reform
Corporate governance

To promote the measures that emphasize an attractive working environment as well as diversity and inclusion
To maximize synergies by rebuilding the Group governance systems

Medium-Term Business Plan (2021–2023) | Numerical Targets and Investment Plans● Numerical targets for FY2023 * The following numerical targets and indicators do not include assumptions of any future M&A.

ROE

About

10%

Group net sales ¥2 trillion

Dividend
payout ratio

About

Net
interest-bearing
debt

25%

Group operating income ¥140.0 billion

Maintaining state of
substantive debt-freemanagement

Group net income ¥100.0 billion● Investment plans

Investment
amountThree years¥250.0billion*1

Environmentrelated investment
Three years¥60.0 billion*3

in technical
1. Investment
development*2¥60.0 billion⃝Of the environment-related investment amount,items included in investment in technicaldevelopment and business-related investment

2. Investment in information*2¥60.0 billion

Investment in technical development(1) Digital transformation(DX)¥30.0 billion(2) Existing systems¥30.0 billion

and personnel-related
3. Capital¥15.0 billion
investment
4. Business-related¥125.0 billion
investment*1 Not including M&A investment*2 The Items 1 and 2 above include someoverlapped amount.

M&A investment⃝M&A investment, etc. for expanding ourbusiness scope to be allocated separately

Technical development that
contributing to industrial sectors
expected to grow, through a virtuous
cycle for the economy and environment ¥42.0 billion

Business-related investment
Investment in renewable energy
businesses¥18.0 billion*3 Included in investment amountTA I SE I A N N UA L R E P O R T 2 0 2 1 18

Strategy for Sustainable Growth TAISEI VISION 2030 and Medium-Term Business Plan (2021–2023)

Group Business Strategy

Building Construction
Senior Managing Executive Officer,
Members of the Board;
Chief of Architecture & Engineering
Division (Integrated);
Chief of Building Construction Division

Yoshihiro TERAMOTOGroup Domestic Building Construction Business
Key Issue

To establish our superiority in a fierce competitive environment● Market Scenario

General BuildingWork:

The impact of COVID-19 is expected to continue until
fiscal 2021, but we expect a gradual recovery as
COVID-19 is brought under control. However, thecompetitive environment is expected to remaindifficult as the future outlook remains unclear.

Building Renovation There is a significant potential demand for building
renovation work, and we expect this market toWork:● Group Net Sales

1,225.0(Billions of Yen)

857.3
2015

2016

2017

2018

2019

2020

2023 (target)

exceed average yearly performance from thesecond half of fiscal 2021.

● Key Measures

To enhance the systems to improve the Group’s competitiveness in securing orders for new construction≫ To develop the systems for Value Engineering (VE) proposals and construction proposals by adding more staff
to specialist teams and utilizing digital technologies and data
≫ To deepen relationships with customers by such measures as returning to our origins in prioritizing outwardfacing activities, and set our sales policies and targets more promptly

To expand the sector specialized in building renovation through organizational restructuring≫ To establish the teams specialized in building renovation at Head Office and branches, and unify the organizations
for promoting building renovation

To enhance the productivity by utilizing digital technology, and consolidating operations, etc.
≫ Nationwide rollout of consolidated worksite operations utilizing specialist teams

To expand the business scope through utilization of M&A, etc.

≫ To achieve success in the telecommunications sector, where growth is expected, as well as the sectors andareas where the Group lags behindGroup Overseas Construction Business
Key Issue

To build the systems to ensure our
profits for establishing the stablebusiness foundations● Market Scenario ┃ Building

Taiwan: The impact of COVID-19 is limited, and theconstruction market remains strong.

Vietnam: While the investment to factories by Japanesecompanies is limited, there is a vibrant real estatedevelopment market, and it is trending toward amoderate recovery.

● Key Measures ┃ Common (Building and Civil engineering)

To shift from the systems focusing on large-scale
projects to the systems striving to ensure an optimal
mix of different project sizes, by promoting both
localization and operations at overseas offices, andcollaborating with alliance partners

19 T A I S E I ANNUA L R EPORT 2021

● Key Measures ┃ Building

To build local networks by placing more and younger
local sales staff
To focus on allocating human resources to the airport
sector, where the Group is internationally competitive

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Civil Engineering
Executive Vice President,
Representative Directors;
Chief of Civil Engineering Division;
In charge of Safety

Shigeyoshi TANAKAGroup Domestic Civil Engineering Business
Key Issue

To develop the systems to establish solid business foundations● Market Scenario

Private The market is expected to shrink as a result of COVID-19 and
Sector: recovery will take time. Growth is expected in the renewable● Group Net Sales

470.0(Billions of Yen)energy sector, but it will be after fiscal 2024 that there is anaffirmative effect on our business.

410.7

Public Affirmative impact on the Group is limited by public investSector: ments, such as the measures for prevention and mitigation ofdisasters, and the measures aimed at building the national
resilience of Japan.
It is expected that the weight of expressways and otherrenewal construction will increase.
● Key Measures

2015

2016

2017

2018

2019

2023 (target)

2020

To develop the systems to enhance the Group’s competitiveness in receiving orders≫ To identify more ECI* projects, etc. where we can utilize our strengths as a group, and develop theorganization to win bids thereof≫ To develop company-wide backup systems to win discretionary contracts and design changes* ECI: Early Contractor Involvement; A method where the contractor participates from the design stage

To enhance the teams to win bids in the sectors where growth is expected, etc.

≫ To enhance the teams and personnel to win bids of the projects related to dams, wind power
generation facilities, and expressway renewal

To expand the scope of our business through M&A and other means≫ To expand the sectors where we have a competitive advantage, as well as to achieve success in the
sectors where we lag behind● Market Scenario ┃ Civil engineering

Singapore:

Recovery is expected from FY2021 onward,
centered on public investment.

● Group Net Sales

130.0(Billions of Yen)

The Philippines: Demand related to Official Development
Assistance (ODA) projects is relatively strong.

52.3
2015

● Key Measures ┃ Civil engineering

To cut the costs by utilizing the resources of alliancepartners and our supply chain

2016

2017

2018

2019

2020

2023 (target)● Key Measures ┃ New businessTo allocate human resources to the creation of business models besides the construction business, basedon the business forms of global contractors in Europe
and America

TA I SE I A N N UA L R E P O R T 2 0 2 1 20

Strategy for Sustainable Growth TAISEI VISION 2030 and Medium-Term Business Plan (2021–2023)

Real Estate Development
Executive Officer,
Chief of Urban Development
DivisionTakashi YAMAZAKI
Group Real Estate Development Business
Key Issue

To build the stable income foundations in the Group development business by optimizing
the portfolio of our real estate and pursuing investment efficiency● Market Scenario

While there are few concerns surrounding financing andthere are no signs of major fluctuations in the real estatemarket, cautious judgments will continue to be requiredas the market outlook is very unclear.

126.8
118.0

2015

● Key Measures

Real estate:● Group Net Sales(Billions of Yen)

2016

2017

2018

2019

2020

2023 (target)

To build the optimal portfolio based on real estate market conditions, and develop the systems toensure stable profits from development≫ To acquire premium real estate through project control from the upstream stages of urban redevelopment projects andmajor development projects≫ To optimize our real estate portfolio based on a balance of area, application, asset efficiency, and stable revenues≫ To enhance the brand recognition and brand strength of “OBER” condominiums and “TERRACE” rental condominiums

Facility
To secure the properties for facility management with planning and proposals tailored to customers’ needs
management: ≫ To establish an integrated customer support system that covers everything from building construction to facility management
PPP, etc.:

To participate in the PPP business, etc. in order to diversify sources of revenue≫ To establish the operational systems for airport concession projects, and tackle new infrastructure operation businessEngineering
Managing Executive Officer
Chief of Engineering Division

Shinichirou TAKAHAMAGroup Engineering Business
Key Issue

To leverage our strengths to expand
the scope of our business

55.0● Group Net Sales(Billions of Yen)

● Market Scenario

There is generally strong capital investment demand in our target
sectors of pharmaceuticals, food products, logistics, and energy.
● Key Measures

28.1
2015

2016

To strengthen the existing sectors

2017

2018

2019

2020

2023 (target)≫ Pharmaceuticals sector: To utilize our strengths in terms of technology and expertise to enter the next-generation medical sector, including biopharmaceuticals and regenerative medicine≫ Food products sector: To enhance upstream consulting functions, and utilize technical expertise related to automation and labor-saving technology developed in the pharmaceutical sector

To take on new growth sectors≫ Fine chemicals sector: To utilize the technology from the pharmaceuticals sector to enter markets in areas such as semiconductor and electronic device materials manufacturing facilities≫ Logistics sector: To secure competitive superiority in the logistics facility sector, and expand sales channels in the pharmaceuticals transportation and delivery
business, by making use of our expertise related to proposals based on feasibility studies (FS) and the Guidelines on Good Distribution Practice (GDP)To develop the systems for expanding the scope of our businesses≫ To utilize external human resources to expand our production capabilities

21 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Group Infrastructure
Development Plan

Key Sustainability Issues

Energy and Environment
Key Issue

To target the front-runner status in the environmental sector, accelerating our initiatives
toward carbon neutrality● To achieve our target of “virtually zero” CO2 emissions from business activities(carbon neutrality) (Scope 1 and 2)≫ To hold the sources of renewable energy, and reduce the fuel consumption•To launch the initiatives aimed at holding sources of renewable energy, in order to cover theGroup’s consumption of electricity (aiming for 100MW by fiscal 2030)•To examine and introduce the measures to improve fuel usage at construction sites (biodiesel
fuel and fuel additives)● To enhance the performance of our Zero Energy Buildings (ZEBs), and expand green

procurement (Scope 3)≫ To develop and commercialize next-generation high-performance ZEBs, andZEB Demonstration Building: Human
Space Lab
provide energy support services≫ To develop and use the carbon-recycle concrete● To establish a system to manage the Group environmental targets≫ To set the targets for the Group as a whole as we look to obtain SBT recertification in fiscal 2025,
and develop the systems at each Group company to achieve these targets≫ To introduce the systems for measuring and aggregating CO2 emissions data from worksites≫ To promote TSA (TAISEI Sustainable Action*), and expand related measures* The Action is aimed at achieving environmental targets for 2050 based on the participation of all employees and the rollout oftechnologies and initiatives aimed at reducing our environmental impact.
The “TSA Point System” is used for quantitative evaluation of the results of these initiatives at worksites.

SafetyKey Issue

To achieve zero fatal accidents and zero serious accidents● To enhance the patrols by the Company and officers of Safety, Health, and Environment Cooperation Association,etc., ensuring thorough education in order to prevent designated disasters, etc.
≫ To conduct the patrols by persons reporting directly to the three core divisions*1, and officers of Safety, Health,and Environment Cooperation Association, etc.
≫ To encourage the activities of Safety, Health, and Environment Cooperation Association and foremen’s associations, in order to enhance awareness of safety by on-site workers and reduce unsafe behaviors● To conduct the environmental patrols and education (compliance with laws and regulations) in order to eliminate
environmental accidents≫ To conduct the patrols in order to prevent accidents related to asbestos when dismantling and renovatingbuildings (including renewals), etc.
● To promote the health and safety and environmental management through the utilization of digital technologies, etc.
≫ To ensure that all worksites install safety equipment on construction machinery≫ To enhance the frequency of patrols and the people conducting them through the use of wearable cameras≫ To develop and use the safety standards when introducing the technologies for automated and unmanned
construction, etc.
● To enhance the support for all member companies of the Soyukai≫ To enhance and maintain the training for Souyukai*2 members at the Konosu Training Center≫ To support for the registration and use of the CCUS: the systems for career advancement in the constructionindustry (appointment of persons to provide registration guidance, etc.)● To promote the supply chain management aimed at solving environmental and social issues≫ To promote the procurement complying with the “CSR Procurement Guidelines” across the supply chain as a whole≫ To coordinate with suppliers in a way complying with the “Declaration of Partnership Building”*1 Three core divisions: Building Construction Division, Civil Engineering Division, Safety Administration Division*2 Souyukai: Association of key specialized contractors (cooperating companies)

TA I SE I A N N UA L R E P O R T 2 0 2 1 22

Strategy for Sustainable Growth TAISEI VISION 2030 and Medium-Term Business Plan (2021–2023)

Technical Development
Key Issue

To promote the technical development to solve environmental and social issues throughopen innovation● Technical development contributing to industrial sectors expected to grow, through a virtuous cycle for the economy

and environment

Industrial sector*
Offshore wind power

Logistics, people flow,
and infrastructure

Carbon recycling

Details
Bottom-fixed and floating●

Low-cost bottom-fixed and floating substructures and foundations

ICT construction●

Unmanned construction*1, robot construction technologies, 3D printer technologies

Smart cities●

Wireless EV-charging roads

Disaster simulation●

Realtime danger prediction (flooding, etc.)

Green procurement●

Developing and using concrete made with recycled carbon

CO2 recovery and storage●

Evolution of technology related to storing CO2 underground

Use of wood materials●

Housing and building,next-generation PV

ZEBs
Next-generation solar
power cells (PV)

Lifestyle-related industry

Smart communities

HydrogenHydrogen storage andtransportation

Nuclear power

Hybrid construction, combining wood with reinforced concrete and steel,and technology to utilize CLT*2● Next-generation high-performance ZEBs
● Power generation systems integrated with glass and related products
for renewal●

Technology for combining and coordinating regional renewable energy
and devices that require energy●

Demonstration of low-pressure hydrogen transportation systems

New light-water reactors
(LWR)

●

Technology to enhance the safety and economic efficiency of nuclear
power facilities

Foods, agriculture, forestry,
and fisheries

Plant factories●

Efficient cultivation systems that reduce light energy

Resource circulation

Energy recovery●

Technology for using methane gas* Industrial sectors are quoted from “Growth Sectors” in the government of Japanʼs “Green Growth Strategy”

Backhoe (T-iROBO® Excavator)

Crawler dumper (T-iROBO® Crawler Carrier)Vibratory roller (T-iROBO® Roller) Bulldozer (T-iROBO® Bulldozer)*1 Unmanned construction technology: T-iROBO® series*2 Technology utilizing CLT:
Inside of a wind tunnel test building (before wind tunnel
installation)● Technical development where the Company has a competitive edge

Details
Special technology for applying tolarge projects
Technology contributing to higher
added value and higher quality

23 T A I S E I ANNUA L R EPORT 2021●

Large-scale foundations, tunnel construction-related, building large underground spaces, etc.

●

Disaster prevention and mitigation technology, new materials, structures and frameworksystems, engineering technology, renewal technology, wellness technology, etc.

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data SectionDX
Key Issue

To Innovate the production systems, and reform the workstyles through digitaltransformation (DX)
1 To establish Digital Twin based on
coordination with the BIM/CIM design andconstruction cloud

External coordination〔Planning〕〔Proposal〕

7Starting coordination

3 To establish the production process in avisualized and efficient ways through stateof-the-art digital technology

Digital humanresources〔 O&M 〕
〔Renewal 〕

Data collection

6

Data utilization

Integrated
platform

5

4〔Construction 〕

31

2 To improve the systems for providing
procurement-related information〔 Design 〕

4 To build an integrated platform
5 To secure digital human resources, andestablish a rotation system

1〔Construction planning 〕〔 Estimation 〕2〔 Procurement 〕

6 To establish a business in the operations
and maintenance (O&M) area
7 To shift to a style of data-based sales throughmaking proposals at the optimal timing

Workstyle Reform and Governance
Key Issue

To promote the measures that emphasize an attractive working environment as well as
diversity and inclusion● To establish the workstyles and the working environments that enable a diverse range of humanresources to fully perform their abilities≫ To expand mid-career recruitment of diverse human resources, such as human resources familiar
with digital transformation (DX), studying and implementing the plans for their compensation andother benefits≫ To study and implement the plans to establish the workstyles where female employees, elderly
employees, and others can fully perform their abilities, respecting such employees’ changes in life
stage, level of abilities, and ambitions≫ To study and implement the compensation and personnel systems reflecting employees’ positions,
responsibilities, and results

Key Issue

To maximize synergies by rebuilding Group governance systems● To clarify the functions of the Group Head Office≫ To clarify the roles of corporate divisions at Group Head Office and business divisions≫ To study the approaches to Group corporate governance systems that take into consideration

expansion in the scope of the Group’s businesses● To establish the effective systems to manage Group companies, etc.

≫ To revise the basic framework related to Group management≫ To appropriately operate the systems for internal control within the Group based on establishing“three lines of defense”

TA I SE I A N N UA L R E P O R T 2 0 2 1 24

Strategy for Sustainable Growth TAISEI VISION 2030 and Medium-Term Business Plan (2021–2023)

Overview of Sustainability-Focused Management andMedium-Term Business Plan Initiatives
International disclosure standards, code of conduct,and standards of behavior:● GRI Standards● UN Global Compact● ISO 26000

Represents the seven core subjects of ISO 26000.

Materiality (Important issues to be addressed)

E●① Realization of a sustainable andenvironmentally friendly society●② Ensuring quality and improving technology●③ Technical development for realizing asustainable society●④ Promotion of supply chain management

Environment

Consumer issues

Environment
Consumer issues
Community

Fair operating practices
Human rights

S⑤ Thorough management of occupational●
health and safety⑥ Cultivation of technical staff and securing●
human resources●⑦ Realization of an attractive working

environment that is good to work inG⑧ Thorough compliance and restructuring of●
the Group governance system

25 T A I S E I ANNUA L R EPORT 2021

Labor practices

Human rights
Labor practices
Consumer issues

Human rights
Labor practices

Organization governanceFair operating practices

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

TAISEI GreenTAISEI
GreenTarget
Target2050
2050⃝Decarbonized Society

CO2 emissions from business activities: virtually zero

⃝Recycling Oriented Society Final disposal rate of construction waste: 0%⃝Nature Co-Existing Society Minimize the impact on the natural capital⃝Safety Secured Society

Provide value with zero social and environmental risks

Relationship withSDGs, etc.

Key measures under the Medium-Term Management Plan
● To achieve our target of “virtually zero” CO2 emissions from business activities (carbon neutrality) (Scope 1 and 2)

Environment● To enhance the performance of our Zero Energy Buildings (ZEBs), andexpand 要る？
green procurement (Scope 3)←「へ」

Environment● To establish a system to manage the Group environmental targets

Environment● To conduct the environmental patrols and education to eliminate environmental accidents● Technical development where the Company has a competitive edge

SafetyDX● To establish the production process in a visualized and efficient ways throughDX● To develop and commercialize next-generation high-performance ZEBs and develop and use

Technical Development

state-of-the-art digital technology

the carbon-recycle concrete● Technical development contributing to industrial sectors expected to grow, througha virtuous cycle for the economy and environment● To establish a business in the operations and maintenance (O&M) area
● To shift to a style of data-based sales through making proposals at the optimal timing● To promote the supply chain management aimed at solving environmental and social issues, etc.

•To promote the procurement complying with the “CSR Procurement Guidelines” acrossthe supply chain as a whole•To coordinate with suppliers in a way complying with the “Declaration of Partnership Building”● To improve the systems for providing procurement-related information

DX
SafetyDX● To promote the health and safety and environmental management through the utilization

Safety● To promote Roadmap to fiscal 2024 for “addressing long working hours”● To enhance the support for all member companies of the Soyukai•To enhance and maintain the training for Souyukai members at the Konosu Training Center•To support the registration and use of the Construction Career Up System (CCUS)● To establish the workstyles and the working environments that enable a diverse

range of human resources to fully perform their abilities•To expand mid-career recruitment, studying and implementing the plans for theircompensation and other benefits•To study and implement the plans to establish the workstyles where female employees,
elderly employees, and others can fully perform their abilities● To secure digital human resources, and establish a rotation system

Work Style Reform
SafetyWork Style Reform

Employment

Compliance with the
Revised Labor Standards
Act (FY2024)

Achievement of the targets of
the General Employers Action
Plan based on the Act on
Promotion of Women’sParticipation and Advancementin the Workplace (FY2025)

DX● To clarify the functions of the Group Head Office

Governance● To establish the effective systems to manage Group companies, etc.

Governance● To build an integrated platform

Safe city

DX

Safetyof digital technologies, etc.

Infrastructure

Technical Development● To enhance the patrols by the Company and officers of Safety, Health, and Environment

Cooperation Association, etc., ensuring thorough education in order to prevent
designated disasters, etc.

Climate change

Technical Development● To establish Digital Twin based on coordination with the BIM/CIM design andconstruction cloudEnergyDX

Applicable items of the infrastructure development plan

TA I SE I A N N UA L R E P O R T 2 0 2 1 26

Towards Sustainable Value Creation

Sustainability of
the Taisei Group

Sustainability of the Taisei Group
Sustainability Framework
To pursue the Taisei Group Philosophy “to create a vibrant environment for all members of society,” all officers andemployees share the “Taisei Spirit,” and carry out corporate actions based on the Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole and Individual Policies “Overall Principles of Conduct” and “Overall Management
Perspective” and Medium-Term Business Plan. The basic principle of sustainability is to realize a sustainable society inthe course of these actions through the wishes and expectations of our stakeholders, while being aware of the issuesof sustainable society and contributing towards their resolution.
Our Structure of
Values and Policies

Individual Policies and Standards on Sustainability

Environment
Taisei Group Philosophy

Taisei Spirit• Environmental Policy • Environmental Targets• Declaration of Taisei Corporation on
Biodiversity Preservation

Social• Quality Policy • Safety and Health Policy• Procurement Policy • Human Rights Policy• Social Contribution Policy

Governance• Risk Management Policy• Policy on Business Continuity in Times ofDisaster• Fundamental Policy to Enhance Operational
Compliance Systems

Overall Principles
of Conduct• Information Disclosure Policy• Policy on Intellectual Property• Policy on the Protection of Personal Information• Code of Conduct on the Use of Social Media• Fundamental Corporate Governance Policy• IR Policy• Tax Policy

Overall Management
Perspective

Individual
PoliciesWEB

Our Structure of Values and Policies
https://www.taisei.co.jp/english/profile/philosophy/

ISO 26000 and CSR Activities
The Taisei Group identifies CSR issues extracted fromthe Action Guidelines for Taisei Personnel and the TaiseiGroup as a Whole, Individual Policies and the MediumTerm Business Plan, and the core subjects of ISO
26000, the international guidance on organizationalsocial responsibility, and implements CSR management.
We disclose information on our activities andachievements on the Taisei Corporation’s official
website, and strive to deepen dialogue with our many
stakeholders to enhance corporate value.

○Declaration of Partnership BuildingWEB

Individual Policies
https://www.taisei.co.jp/english/profile/philosophy/policies/

Various committees related to CSR
and ESG(FY2020)• CSR Committee• Compliance Committee

Frequency: three times a year
Chairperson: External expert
Frequency: once a year

• Technology Committee

Chairperson: President, Representative Director• Central Safety

Chairperson: Vice President, Representative Director• Environment Committee

Chairperson: President, Representative Director• Risk Management

Chairperson: Vice President, Representative Director

Committee

Committee

Frequency: four times a year
Frequency: five times a year
Frequency: four times a year
Frequency: once a year

• Central Labor Affairs

Chairperson: Vice President, Representative Director• Digital Transformation

Chairperson: Senior Managing Executive Officer, Chiefof Corporate Planning OfficeCommittee(DX) Promotion
Committee

27 T A I S E I ANNUA L R EPORT 2021

Chairperson: External Member of the Board

Frequency: twice times a year

Frequency: twice a year

About the Taisei Group

Strategy for Sustainable Growth

CSR Promotion System andManagement
The CSR Committee, which is a committee of theBoard, has been established to deliberate on CSR
policies and measures. The CSR Committee, chairedby an External Member of the Board to incorporate an
outside perspective, is composed of eight Members
including the President. It regularly discusses andreports on the revision or abolition of the Action
Guidelines for Taisei Personnel and the Taisei Group
as a Whole, etc., and the Taisei Group’s non-financial
initiatives, including ESG, for the entire Group
including the Company.
The CSR Promotion Office provides education andguidance on CSR with each business division andGroup company, and incorporates CSR activities into
daily business activities.
We have also established various committees todeliberate on important matters related to CSR,
including the Compliance Committee and theEnvironment Committee, which are advisory bodies tothe Management Committee. These committees
discuss policies, systems, and frameworks forpromoting each CSR field.
This
ReportTowards Sustainable Value
Creation

ESG Section

Data Section

CSR Promotion System Diagram
Board

Committees of the
Board

Management Committee

CSR Committee

Environment Committee
Risk Management Committee
CSR Promotion Section,
Corporate Communication
Department,
Corporate Planning OfficeCentral Safety Committee
Central Labor Affairs Committee

CSR
Procurement
Committee*

Digital Transformation (DX)
Promotion Committee
Compliance Committee
Each division

Suppliers

Group companies* Composed of the Corporate Planning Office, Safety Administration
Division, Building Construction Division, Civil Engineering Division, andProcurement Division

Chart of corporate governance system
p.63 Governance Section

Achievements of the CSR Committee in Fiscal 2020
In fiscal 2020, Taisei Corporation held the CSR
Committee three times (in June, February, and March).
The CSR Committee discussed revisions to the TaiseiGroup’s materiality and information disclosure basedon the Task Force on Climate-Related Financial
Disclosures (TCFD) recommendations.

● Committee members•Chairperson: External Member of the Board•Members:

President, Representative Director;
Vice Chairman, Representative Director;
Executive Vice President, Representative
Director, Chief of Civil Engineering Division;
Executive Vice President, Representative
Director, Chief of Business Administration
Division;
Three External Members of the Board•Observer:

Senior Managing Executive Officer, Chief ofCorporate Planning Office•Secretariat:

CSR Promotion Section, Corporate
Communication Department, Corporate
Planning Office● Main items to be discussed•Materiality, operational status of corporate ethics and helplines,
verification of effectiveness, setting of key performanceindicators (KPIs), TCFD recommendations, editing policy ofintegrated reports, etc.

TA I SE I A N N UA L R E P O R T 2 0 2 1 28

Towards Sustainable Value Creation Sustainability of the Taisei Group

Communication with Stakeholders
Customers● CSR procurement questionnaire survey ● Customer satisfaction survey ● Website/Integrated Report etc.

Shareholders/Investors● General Meeting of Shareholders/Securities Report ● IR briefing ● Website/Integrated Report etc.

Suppliers● Holding various training and seminars ● Consultation windows ● CSR procurement questionnaire survey etc.

Employees● Exchanging opinions with the labor union ● Holding various training seminars ● Employee satisfaction surveys● Consultation windows ● Intranet/in-house newsletter etc.

Local communities● Workplace tours/briefings, tours of the Taisei Advanced Center of Technology, and open innovation● Support for global human resource education through scholarships, etc., and support for natural environment conservation activities● Promotion of construction culture through the lending of architectural works etc.

Participation in Initiatives
United Nations Global Compact (GC) / Sustainable Development Goals (SDGs)
To take a more global perspective on CSR and link

The Ten Principles of the UN Global Compact

it to social issues related to sustainability, we
incorporate frameworks for CSR management

Human Rights
Principle 1:such as the SDGs and the GC, and implement
continuous CSR activities in collaboration with
CSR-related organizations such as CARE

Principle 2:

International Japan, an international cooperation

Businesses should supportand respect the protection ofinternationally proclaimed
human rights; andmake sure that they are notcomplicit in human rights
abuses.

Principle 3:

Principle 4:
Principle 5:
Principle 6:

WEB

Global Compact Network Japan
http://www.ungcjn.org/gc/

29 T A I S E I ANNUA L R EPORT 2021

Principle 8:
Principle 9:

Labor

NGO that provides humanitarian assistance inmore than 90 countries.

Environment
Principle 7:

Businesses should upholdthe freedom of associationand the effective recognitionof the right to collective
bargaining;
the elimination of all forms offorced and compulsory labor;
the effective abolition of childlabor; andthe elimination of discrimination in respect of employment
and occupation.

Businesses should support aprecautionary approach toenvironmental challenges;
undertake initiatives topromote greater environmental responsibility; andencourage the development
and diffusion of environmentally friendly technologies.
Anti-Corruption

Principle 10: Businesses should work
against corruption in all its
forms, including extortionand bribery.

This
ReportTowards Sustainable Value Creation
pp.33-36 Talk on the SDGs

This
ReportTowards Sustainable Value Creation
p.30 Materiality of the Taisei GroupAbout the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Materiality of the Taisei GroupThe Taisei Group continually reviews its materiality in light of the impact it has on the Group’s management, as
well as recognizing the interests of society and stakeholders and social issues. In fiscal 2020, we revised some of
the materiality.

High
Social and stakeholder concerns

Environment

Materiality Factors(Important ESG Issues for
the Taisei Group)
SocialImpact on the Taisei GroupHigh

GovernanceConsistent with international
disclosure standards, code of
conduct, and standards of
behavior❶ Realization of a sustainable andenvironmentally friendly society❷ Ensuring quality and improving technology❸ Technical development for realizing asustainable society❹ Promotion of supply chain management❺ Thorough management of occupational
health and safety❻ Cultivation of technical staff and securing
human resources❼ Realization of an attractive working
environment that is good to work in❽ Thorough compliance and restructuring of
the Group governance system

Compliance with regard to the Group
Philosophy and the Individual Policies,
and assessment of impact on theMedium-Term Business Plan

Materiality Identification Process
Tasks and key performance indicators (KPIs) are clarified in accordance with materiality. Efforts are promoted forthese tasks and KPIs to resolve social issues through business activities and create value.
Gathering of views from bothwithin and outside the Company
and approval

Reassessment andidentification of materiality● International frameworks● Views are gathered from● Materiality is identified based

are consulted, andmega-trends relating tosociety and issues are
identified.

within the Company andoutside and, based on
discussions, the degreeof priority and importance are determined foreach item.

on gap analysis with international frameworks such as
the Sustainability AccountingStandards Board (SASB), risk
perceptions expressed by the
TCFD, and the impact onmanagement regarding futurebusiness domain expansion.

Identification ofsocial issues

Resolution ofsocial issues
through businessactivities tocreate value

Materiality is reassessed regularly on an ongoing basis, based on the speedof change of societal conditions.

TA I SE I A N N UA L R E P O R T 2 0 2 1 30

Towards Sustainable Value Creation Sustainability of the Taisei Group

Materiality and KPIs 2020–2023
Materiality(Related ISO 26000)❶ Realization of a sustainable andEenvironmentally friendly society

Scope ofreportNonconsolidated(Environment)

Key performance indicators (KPIs)

At
construction
stage:

At building
operation
stage:

Reduction rate of CO2 emissions per construction
cost (intensity)*
Reduction rate of total CO2 emissions*

Reduction rate of estimated CO2 emissions*Customer satisfaction (Civil Engineering)❷ Ensuring quality and improving technology

Nonconsolidated
Customer satisfaction (Building Construction)(Consumer issues)
Taisei Group❸ Technical development for realizing asustainable society

Productivity (Net sales/number of employees ）Number of patent applications filed
Nonconsolidated(Environment / Consumer issues / Community)

Number of orders received for net Zero Energy Buildings (ZEBs)❹ Promotion of supply chain management

Supplier’s conformity rates with the Taisei Group CSR Procurement
Standards(Fair operating practices / Human rights)
Taisei GroupS❺ Thorough management of occupational
Number of fatal accidents

health and safety(Labor practices)

Worksite registration rate of Construction Career Up System❻ Cultivation of technical staff and securing
human resources

Health management overtime
Nonconsolidated(Human rights / Labor practices / Consumer issues)

Worksite implementation rate of a five-day work week (closed eightdays in four weeks) (Civil Engineering)Worksite implementation rate of a five-day work week (closed eightdays in four weeks) (Construction Building)❼ Realization of an attractive working

environment that is good to work in

Number of female managers
Nonconsolidated(Human rights / Labor practices)G❽Thorough compliance and restructuring ofRate of taking childcare leave by males

Taisei Group

Number of major information security accidents

Nonconsolidated

Attendance rate at compliance training including anti-corruption

the Group governance system(Organization governance / Fair operating practices)* Compared to fiscal 1990 (a base year for emissions targets). The Group’s targets are to be established by the end of fiscal 2021.

31 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Relationship with SDGs
2020
Target2023
ResultPage

4Target

27%

30.3%

41%

52%

54.5%

50%

40%

41.4%

43%

100%

98.6%

100%

100%

90.0%

100%

—

¥67 million¥83 million

230 cases

266 cases

260 cases

5

6

7

8

9

⃝

⃝

⃝

⃝

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●
—

5 projects/year

8 projects/year

—

92.1%

100%

0 cases

5 cases

0 cases

80%

100%

100%

—

Monthly target: 50 hours
Monthly target: 50 hours
Persons who exceeded 720 Persons who exceeded 720
overtime working hours per overtime working hours per
year: 25.4%
year: 0%

—

41.6%

100%

—

32.4%

100%

236 persons

330 persons

100%

100%

100%

0 cases

1 cases

0 cases

—

100%

100%

230 persons

●

●

●

●

10 11 12 13 14 15 16 17

⃝

⃝

⃝

p.47

●

●

p.53

●

●

p.54

●

⃝

●

p.55

●

●

p.56

p.57

●

●
p.58

●

●

●

●

●

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●

●

TA I SE I A N N UA L R E P O R T 2 0 2 1 32

Towards Sustainable Value Creation
Feature on Sustainability: Article No. 1

Environment: Talk on the SDGs

FeatureArticleNo. 1

Aiming to Become a Front-Runnerin the Environmental Sector, We Will
Accelerate Our Efforts to Realize
Carbon Neutrality

Chief of Environment
Division

Shuichi OKUDA

Mizuho Research &Technologies, Ltd.
Deputy Chief ofEnvironment and Energy
Division 2

Masahiko SHIBATA
Profile:Joined Fuji Research InstituteCorporation (current Mizuho
Research & Technologies, Ltd.)in 2001

After the enforcement of the Paris Agreement and the adoption of Sustainable Development Goals (SDGs),
the importance of tackling climate change by the entire international community is rapidly increasing. The
Taisei Group is also accelerating its initiatives to reduce CO2 and pursue carbon neutrality.
We invite Mr. Masahiko SHIBATA, who has for many years have been supporting a number of companies toestablish long-term visions and strategies on environmental and ESG themes. Mr. SHIBATA and Mr. OKUDA,
Chief of Environment Division, who leads the environmental management of Taisei Corporation, talked about
our Group’s specific measures and future challenges.

World’s Trend towards Decarbonization
OKUDA: For the past year, each country in the world
including Japan has been working on carbon neutrality.
Through your research on the trends of many countries
and companies as a consultant, could you please sharewith us how you are seeing it and which direction thetrends will go from here.
SHIBATA: Japan has set the fundamental policy towards
carbon neutrality, then a new market has been created,
and the necessary policies have become clarified. I see

33 T A I S E I ANNUA L R EPORT 2021

that many companies are accelerating their move towards
decarbonization to capture this opportunity because it isforeseen that this will attract public funding in addition to
the capital from the private sector.
The environment policies so far mainly focused onenergy conservation, resource conservation and recycling,
and we cannot deny that they had the aspect of saving
and patience. But now, since it becomes necessary totransform the society itself to realize decarbonization, I feelAbout the Taisei Group

Strategy for Sustainable Growththat the atmosphere of the industry world has significantly
changed in order to capture the demand for goods,
services, and social infrastructure which are generated
during the process of such transformation. Although it may
take some time that these businesses will become profitable, companies set high goals because they consider,from a long-term perspective, they will surely contribute toincreasing profits and corporate values. This point is a bigchange in the world’s view where it was just talking on
how to “reduce the burden on the environment.”

The Taisei Group’s Environmental
Management
SHIBATA: One of the important issues of your company’s
Medium-Term Business Plan is “To target the frontrunner
status in the environmental sector, accelerating our initiatives toward carbon neutrality.” Could you please shareyour future challenges?
OKUDA: It is common in the construction industry to use
the sampling method to survey the estimated amount of
CO2 emission. We also picked up some construction sites
as a sample instead of all of the sites and calculated thetotal emission amount according to the survey results.
Numerous heavy construction machinery of various types
are used at our construction sites per day and therefore it
is very difficult to grasp the amount of fuel used. However,by this method, the construction sites cannot feel any
reduction effect at all. Therefore, we intend to develop andtry the measurement and calculation system of CO2
emissions for each of the construction sites during this fiscal
year and we are planning to introduce the system in thenext fiscal year and later. We believe that the introductionof this system will link to the change of the mind-set of theemployees working at the construction sites.
One additional point is, we intend to establish a system
to manage the Group’s environmental targets. Each Group
company has already been compiling data on the CO2
emissions associated with their business activities, but inorder to be recertified with Science Based Target (SBT) in
fiscal year 2025, it is important to facilitate a Group-widetarget-setting that covers the operation phase after thedelivery to the client in addition to the construction phase,
as well as the establishment of an organizational structure
within each of the Group company to achieve the target.
These are the two big themes for the infrastructuredevelopment plan for the Group.
To prioritize these issues, we have established multiple
subcommittees under the Environment Committee chairedby our President to set up a scheme to work on by across-department structure including our Group companies.

Towards Sustainable Value
Creation

ESG Section

Data Section

Furthermore, we newly organized the “Carbon Neutral
Promotion Department” as a section to promote decarbonization within the Environment Division.
SHIBATA: Currently, there is a strong trend to measure
CO2 emissions of the entire supply chain. Recently, project
owners of the building or infrastructure under construction
have been gradually required to acknowledge and reduce
the CO2 emission amount during the construction phase.
Currently, the CO2 emissions during the construction
phase is calculated by multiplying the construction costsby the average emission factor of the industry. However,this method cannot evaluate the effort of the construction
company to reduce CO2 during the construction phase. It isnatural that project owners would like to know the actual
measured amount of the CO2 emissions by the construction
company and the construction site if project owners want
their ordered building or infrastructure to be constructedwith less CO2 emissions. If so, it will be a new value that
construction companies can provide to the project ownerby completing the construction with less CO2 emissions
and submitting its data through original ideas and innovations which will become one of the criteria in selecting
the construction company. I think your company’s introduction and deployment of the measurement and calculation
system of CO2 emissions measuring is truly a move thatmatches the current era.

Direction of Carbon Pricing
SHIBATA: The symbolic part of carbon neutrality is aboutcarbon pricing (hereinafter “CP”). To realize decarbonization, it is necessary to establish a mechanism that makes
it more cost-effective to use new energy and fuel rather
than petroleum, coal, and gas. Inevitably, the discussion
regarding CP will progress in full-scale. Companies who
invested in new demand need to make the price difference between fossil-derived resources and decarbonizedresources clear in order to show that appropriate profits
will be derived from the investment. For example,
regarding your company’s carbon-recycle concrete, it isassumed that the price is currently higher than that ofordinary concrete. It is important that carbon-recycle
concrete could be used at the same or lower price thanordinary concrete including the effect of its reduction in
CO2 emission.
OKUDA: In the near future, a society that compares
costs including the price of carbon will arrive. Until now,the focus was rather on cost and corporate earnings
compared to the reduction of burden on the environment, but when it comes to decarbonization, costs will
increase and downward pressure on corporate earnings

TA I SE I A N N UA L R E P O R T 2 0 2 1 34

Feature on Sustainability: Article No. 1 Environment: Talk on the SDGs

SDGs Goals 7 and 13
Goals 7:

Goals 13:

Ensure access to affordable, reliable,
sustainable and modern energy for all.

Take urgent action to combat climatechange and its impacts.

may be applied for the time being. However, changing
our mind-set that “we will still pursue (decarbonization)”is necessary. I have the impression that taking an
advanced approach will lead to the realization of asociety that the SDGs are aiming for, and at the sametime, improve corporate value and competitive advantage. We used to be suspicious about this kind of idea.
However, we are now at the stage where the rest of theworld shares this direction.
SHIBATA: Just recently, an organization, which was
jointly established by major asset management companies around the world to target carbon neutralization
through investment, issued a statement, which called fora coordinated global price on carbon. From now andonwards, they will shift their funding to companies thatwork on carbon neutrality while giving importance on thefinancial performance of their investment targets. In aworld where CP is effective, companies pursuing carbon
neutrality can make proper profits. On the other hand, if
companies ended up with high costs as they keep using
expensive hydrogen, asset owners who invested in suchcompanies could not generate a profit. Therefore, thestatement encourages us to actively implement CP. In
addition, advanced environmentally friendly companies
are promoting the implementation of internal carbon
pricing (ICP) as a measure to promote decarbonizationrelated investment and decarbonization measures. Thisis a system to voluntarily sets the carbon price of its own
company to reflect the economic impact of CO2 into its
corporate activity to use it as an incentive for promoting
energy conservation and as a principle for decisionmaking in investments. It also has the aspect of preparing
for CP, which is likely to be implemented in the future.
Your company is making use of ICP?

35 T A I S E I ANNUA L R EPORT 2021

OKUDA: Yes. While we were researching on ICP, wefound that CP is on a steep increase trend in Europe,
which is an advanced environmentally friendly region.
Carbon price of emission trading in the EU is currently
around 6,000 yen/ton (CO2), which is 2.5 times higher
than that of a year ago and may further increase. We are
not sure about the future trends, but we set our ICP pricebased on the predictions by the International Energy
Agency (IEA). I think it is necessary to figure out a better
utilization method in order to make it function as aneffective measure to reduce CO2.
SHIBATA: Since the proper pricing of ICP changes
according to the trend of each country’s system, so wemust watch the latest trends and regularly review it witha mind of future investment. Based on the current
upward trend, I recommend to take the stance ofadopting a one-rank higher level in line with the IEA’s Net
Zero roadmap.
By doing so, you can clearly show your advanced
and motivated attitude. Meanwhile, in order to utilize ICP
effectively, it is important to promote the understanding
and spread the idea inside the company.

Environmental Vision and SDGs
SHIBATA: How will Taisei Group contribute to realizing
the society that SDGs are aiming for and also to thedecarbonization of Japan and the world? How is thatlinked to the sustainable growth of the company?
OKUDA: The long-term vision “TAISEI VISION 2030” weannounced this time is positioned to embody the TaiseiGroup Philosophy “To create a vibrant environment for all
members of society.” We view that “a vibrant environment
for all members of society” overlaps with the society that
SDGs aim to realize. By implementing our efforts towards
carbon neutrality into the long-term vision and the
management plan, the path to sustainability can beclarified, such as contributing to the society through ourbusiness and contributing to the realization of a societythat SDGs are aiming to achieve.
Up until now, our focus prioritized more on our businessand corporate earnings, but now, business strategy,
decarbonization, and from a broader viewpoint, to arrange
the infrastructure development plan for sustainability
including the environmental matters are regarded as a set.

About the Taisei Group

Strategy for Sustainable Growth

The long-term vision and the management plan with
examples such as increasing environment related investments is in line with the trend of the society to put
importance on environment issues. This puts theEnvironment Division in a good position to promote
activities to reduce the burden on the environment.
SHIBATA: Until a few years ago, there was a tendency for
the Medium-Term Business Plan to be established first,
then the CO2 reduction target to be determined to be anumber possible to achieve within the range of theMedium-Term Business Plan. However, this has started tochange recently and companies have begun to draw its
future by incorporating CO2 constraints into the long-term
numerical management targets while taking in the consideration of possible growth. I think your company’s long-term
vision and Medium-Term Business Plan this time areexcellent examples that such factors are reflected brilliantly.

For the Decarbonization of the Entire
Value Chain
SHIBATA: According to IEA’s analysis, the decarbonization of energy from power sources will greatly progress
between 2030 and 2040. On the other hand, it also statesthat the decarbonization of concrete and iron is fallingbehind, and must be promoted. This is probably therequest from the project owner, and the supplier side isalso expected to proceed with implementing its own
measures. However, I believe that general contractors
which design an entire value chain, such as yourcompany, are in the position to change the society forrealizing a decarbonized society by connecting project
owners’ needs with the technology of suppliers and byadding values yourself. In that sense, I think your company
has already had the necessary items such as detailed CO2
emission data and carbon-recycle concrete. Even
watching as an external party, I am confident that you willconduct very exciting and interesting initiatives.
OKUDA: We are also promoting green procurement,
namely, adoption of materials, equipment and building
methods of low environmental impact. It is necessary to
get our clients’ understanding that this is to create arecycling-based society. In that sense, decarbonization will
not proceed without pursuing it with the entire value chain
including the clients. For the upstream part such as
material procurement, we shall cooperate and collaborate
with companies pursuing decarbonization and put priority
in choosing such companies. As for the downstream part,which is after the delivery to a client, we shall share thesame issue of decarbonization with the client, and makevarious proposals to meet the needs of the clients by

Towards Sustainable Value
Creation

ESG Section

Data Section

focusing on the development of technology and therealization of practical use of ZEBs and zero-energy
factories (ZEFs) with higher functions and wooden building
construction. We suppose that more and more clients will
request such buildings for the clients themselves toadvance decarbonization. Therefore, we are also focusing
on research and development in that area.
In addition to that, regarding the renewal of current
existing structures, a market of renewal ZEB and related
technology developments will be formed in the future. So,
we would like to focus on those matters as well.
SHIBATA: I think that a company like yours is in a position
where it can affect national policies. Those who draft
decarbonization policies cannot draft inducing policies
without the existence of leading cases. Once we implemented a case without the existence of inducing policy,
the company’s profitability might temporarily worsen while
it might be difficult for you to assess the effect. Although it
might be an ideal theory, we could come up with a fabulous system in a mid to long-term viewpoint, ignoring its
profitability, to have the government understand how
great it would be, and encourage the government toestablish inducing policies and/or a subsidy program. I
think your company is capable of doing that, and I havehigh expectations that you will.
OKUDA: To become a front-runner in the environmental
sector, it is necessary to proceed with that sort of attitude.
SHIBATA: The decarbonization-related system is making
changes time by time. Although it may not completely
apply to the construction industry, it is important to lookahead and keep adjusting the business model, rather thansticking to the business model that fits into a certain
system in a certain timing. We are living in an era where abusiness based on a certain system formed once cannot
last for 10, 20 and 30 years, and we must assess whether
the business is effective every 10 years.
OKUDA: Thank you very much for sharing your thoughtprovoking comments today. We would like to refer to themin our future activities such as ICP.

TA I SE I A N N UA L R E P O R T 2 0 2 1 36

Feature on Sustainability: Article No. 1 Environment topic 1

Environment topic 1

Information Disclosure Based on the
Recommendations by The Task Force on
Climate-Related Financial Disclosures (TCFD)
These days, abnormal weather phenomena, their associated natural disasters, and the like are occurring
more frequently and on a larger scale than before, and threatening the safety and comfort of our lives.
These changes significantly affect the policies of countries including Japan, resulting in a big trend of
decarbonization from the Kyoto Protocol to the Paris Agreement and the adoption of SDGs, and increase
the expectations for the roles that companies play.
At the Taisei Group, we view the impact of climate change on our business as an important management issue. In fiscal 2018, we reviewed the 2050 Environmental Targets “TAISEI Green Target 2050”
established in 2013. We also agreed on the TCFD recommendations in July 2020.
Furthermore, based on the government’s carbon neutral declaration announced in October 2020, we
will review TAISEI Green Target 2050 again in 2021 and aim to have “virtually zero” CO2 emissions frombusiness activities by 2050. In addition to our reduction efforts, we will work on the value chain, andcontribute to the realization of a decarbonized society. We will continue to promote information disclosurein line with the TCFD recommendations, and aim to realize a sustainable society and improve corporate
value by carefully watching and responding to government measures and social trends related to theimpact of climate change and CO2 emission reduction.

Governance≫ The CSR Committee and the Environment

Committee have been established as meetingbodies to discuss climate change-related
agenda. After discussion by the committees,
the Board meeting deliberates and decides on
the agenda.

≫ The important policies and measures for ESG

in general are discussed by the CSR
Committee, which is one of the committees of
the Board, and the formulation of basic policies and medium- and long-term goals forenvironmental management is deliberated byan advisory body of the Management
Committees, the Environment Committee.

≫ The agenda deliberated and determined by the
Board meeting are passed on to each business
unit and Group company, and are reflected intheir management plan and business operations. In addition, the content will beincorporated into the specific actions ofconstruction worksites. We will also request
the cooperation of our suppliers.

37 T A I S E I A NNUA L R EPORT 2021

Chart of Climate-Related Governance System

Board
Deliberation/
Putting on agenda

Deliberation/
AdviceCSR Committee

Management Committee

Chairperson: External
Member of the Board

Chairperson: President
Deliberation/
AdviceDirection/Supervision

Environment Committee
Chairperson: President

Each division
Guidance/
Cooperation

Suppliers

Support, guidance,cooperation

Group companies

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Strategies≫ We recognize various medium- to long-term risks including the major ones listed below. We conductedscenario analysis on one of them, climate change risk.

≫ Climate change risk includes risk causedby transitions such as the reinforcementof regulations to minimize temperature
increases and changes in the market,
and risk that arises with physicalchanges such as acute abnormal
weather that occurs due to higher
temperatures.

≫ To establish business strategies thatflexibly respond to climate change, we
use multiple scenarios to evaluate theimpact on our business. For the scenario
analysis, we refer to the Sustainable
Development Scenario (SDS) by theInternational Energy Agency (IEA) for the
scenario where transitions will progress,
and the Representative Concentration
Pathways (RCP) scenario by theIntergovernmental Panel on Climate
Change (IPCC), etc. for cases where
physical changes will progress. In thisway, we verify the validity of our business strategy.

Climate change
Uncertainty about the future of
the Japanese market● Price competition intensifies as theconstruction market shrinks.

● It may lead to a decline in profitability

and deterioration of financial status.

Shortage of workers● The shortage of construction workers

due to the shrinking working population
and aging society is directly linked tothe decline in construction capacity.
● There is an urgent need to improve
productivity through technological development and business improvement, and tocreate an attractive working environment.

Major Risks Surrounding the Taisei Group
Spread of infectious diseases● Infection of officers, employees andskilled construction workers affects
business continuity.

● Of concern is the impact of thecancellation or postponement of theclient's construction plan on sales.

Intensifying competition fortechnological development● The utilization of digital technology

and data is being accelerated in theconstruction industry as well.
● Delays in technological development
may result in declining competitive
advantage.

≫ Major risks and opportunities concerning climate change
Classification

Shift

Risk/Opportunity

Impactlevel

Description● Decrease in private construction investment and equipment investment due to the intro-

Market shrinkage and increasein construction cost due to theintroduction of carbon pricing
and tightened CO2 emission
regulations

Risk

Increase in demand for renewal

Opportunity

Increase in demand related toenergy-saving and renewableenergyOpportunity

Increase in averagetemperature during summer

Risk

duction of carbon pricing and the reinforcement of CO2 emission regulations

Medium● Increase in construction costs due to a hike in the prices of building materials and electricity● Increase in costs due to the application of carbon pricing to the CO2 that is generated

by our business activities● Increase in demand for renewal to improve energy efficiency of existing facilities● Increase in demand related to ZEB and smart cities● Expansion of demand for renewable energy-related works such as offshore wind power

Low
MediumMedium● Decline in productivity due to an increase in damage to the health (heat stroke, etc.) of

skilled construction workers and the avoidance of extremely hot hours● Accelerated worker shortage due to the decline in the number of new workers in theMediumconstruction industry because of the degraded working environment

Risk
PhysicalIncrease in severity andfrequency of natural disasters

Risk
Opportunity
Opportunity

Rise in sea level

Opportunity● Work suspension, process delay, and increase in labor and temporary work costs due

to damage to construction worksites, etc.

● Increase in procurement costs and process delays due to damage to suppliers● Increase in demand to improve the resilience of equipment and infrastructure against

intensified disasters● Increase in new construction and relocation works due to growing demand for reloca-

tion from disaster hazard areas● Increase in the capital investment for improved resilience in areas with a flood risk anddemand for relocation from areas with a flood risk

Medium
High
High
High
High

Note: Possible works are classified by the significance of impact as “High,” “Medium” and “Low.”

TA I SE I A N N UA L R E P O R T 2 0 2 1 38

Feature on Sustainability: Article No. 1 Environment topic 1

Countermeasures required for the risks and opportunities identified with scenario analysis arereflected in the Medium-Term Business Plan (2021–2023). They are also incorporated into thebusiness operations of each division. Accordingly, we will reduce the risks associated with climatechange and expand opportunities.

Countermeasures for Climate Change
Response to the market
shrinkage and construction
cost increase due to theintroduction of carbon pricing
and the tightening of laws andregulations
Response to the increase indemand related to renewal,
energy-saving andrenewable energy● Owning renewable energy power sources for the purpose of covering the power

consumption of the Group● Consideration and introduction of fuel improvement measures (biodiesel fuel/fueladditives) for construction worksites● Enhancement of green procurement such as the development and utilization ofcarbon-recycle concrete● Establishment of an organization dedicated to renewal, and expansion of the organiza-tion that handles work related to wind power generation● Development and commercialization of next-generation high-performance ZEB and thedevelopment of energy support services● Technological development that contributes to the industries that are expected to growthrough a virtuous cycle of the economy and the environment

Response to the reduced
productivity of construction
worksites due to abnormal
weather● Reduction of health damage through the nationwide promotion of wellness worksites

and the improvement of working environment during extremely hot hours● Consolidate some of the operations of worksites into specialized organizations such as

digital product centers● Reform the production process at worksites by developing and deploying unmanned

construction technology, robot construction technology, etc.

Response to abnormal
weather, increase in theseverity and frequency ofdisasters and sea level rises● Advancement of infrastructure development technology for national resilience and theimprovement of the proposing skills● Development of real-time flood risk prediction/simulation for heavy rain, etc.
● Securing a business continuity system by building a BCP system with clients andsuppliers and conducting regular training

Risk Management

Indicators and Targets≫ As for climate change risk, we established a≫ In the environmental targets for fiscal 2050

company-wide TCFD Working Group (TCFD WG)
to identify the climate change risk related to eachdepartment’s business and analyze the degree of
impact on the business. We also conduct evaluations relative to risks other than climate changerisk, and confirm that the necessary measures
are being taken. The risks analyzed by the TCFD
WG are deliberated by the CSR Committee andreported to the Board meeting.

≫ In addition, it is consistent with the risks evalu-"TAISEI Green Target 2050," we set the goal of“virtually zero” CO2 emissions from businessactivities. Moreover, we set out “Realization of a
Sustainable and Environmentally Friendly
Society” as one of the materiality (our important
issues), and set KPIs for fiscal 2023 using theCO2 emission reduction rate as an index.

≫ We are trying to reduce CO2 emissions byimplementing key measures of the MediumTerm Business Plan (2021–2023).

ated and identified with the environmental
management system (EMS) based on the international standard ISO 14001.
FY2021

FY2023*

Environmental
Targets

KPI

At construction stage: Reduction rate of
CO2 emissions per construction cost

36%

41%

56%

At construction stage: Reduction rate of
total CO2 emissions

52%

50%

62%

CO2 emission reduction target for eachfiscal year (compared with 1990)

At building operation stage: Reduction rateof estimated CO2 emissions

41%

43%

FY2030*FY2050TAISEI Green Target 2050

55%

We will aim for “virtually zero” CO2emissions from business activities.
In addition to our reduction efforts,
we will work on the value chain, andcontribute to the realization of adecarbonized society.
* To be reviewed during fiscal 2021

39 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Environment topic 2
Aiming to realize a carbon-neutral society by recycling CO2 as a resource

Carbon-Recycled Concrete, T-eConcrete®/
Carbon-Recycle was Developed
Taisei Corporation has developed “T-eConcrete®/Carbon-Recycle,” a carbon-recycle concrete that can makethe balance of CO2 emissions negative. We utilize calcium carbonate produced by having CO2 recovered fromfactory exhaust gas, etc. react with calcium components. We fix CO2 inside concrete by solidifying calcium
carbonate with a binder mainly composed of blast furnace slag, which is an industrial by-product. By doing
so, we have been able to improve issues such as the corrosion of reinforcing rods in concrete and decrease instrength, which had been problems that arose when CO2 was directly taken into concrete. As a result, it has
become possible to take in a large amount of CO2 and make the CO2 balance of concrete negative.
Taisei Corporation has developed a number of environmentally friendly concrete technologies, including theenvironmentally friendly concrete, “T-eConcrete®/Zero-Cement type,” which received the 2014 Environmental
Award (Group-I) from the Japan Society of Civil Engineers, and the Engineering Commendation Award of
ENAA 2021 from the Engineering Advancement Association of Japan. Our existing technologies culminated inthis technology.
It is expected to become concrete that contributes to the creation of a decarbonized and recycling-basedsociety and the realization of a carbon-neutral society by 2050.

Collaboration with the Research GroupThe T-eConcrete Research Group (core company: Taisei Corporation) was established in 2020 aiming tofurther contribute to the reduction of CO2 emissions. Current members are seven civil engineering andbuilding material manufacturers. We provide fundamental information such as a rich store of data and knowhow on materials and construction to the member companies in charge of product development. Then, eachcompany integrates them into the manufacturing technology of its own products. In this way, we are working
on the development of various concrete products used for the interior and exterior of civil engineering structures and buildings that satisfy customers’ needs.
CO2 Emission Reduction Effect of Environmentally Friendly
Concrete “T-eConcrete®”
Ordinary concrete

Zero cement-type

-20

0

20

40

60

Cut section(diameter 10 cm)

Distribution of fixed CO2 After pH indicator was sprayed(carbon as white dots) (pink indicates strong alkalinity)

CO2 utilization

Carbon-Recycle-40

Reduction of
CO2 emissions

80

100

Ratio of CO2 emissions (%)
Note: It was calculated assuming that 0.5 kg of CO2 is emitted during
the production of calcium carbonate with 1 kg of CO2 fixation.

After hardening

Before hardening
Slump 15 cm

Slump flow 60 cm

Left:

Calcium carbonate
powderMiddle: Example of processing
stone-like building
materials
Right: Test sample(Compressive strength 20 to
45 N/mm2)

TA I SE I A N N UA L R E P O R T 2 0 2 1 40

Towards Sustainable Value Creation

Feature on Sustainability Article No. 2

Secial:Response to DX

FeatureArticleNo. 2

Taisei Corporation’s Digital
Transformation

In our Medium-Term Business Plan (2021–2023), we at Taisei Corporation recognize that we areheading “Towards an era where digital transformation determines competitiveness.” As one of the key
issues, we set the target of “To innovate production systems, and reform workstyles through digitaltransformation (DX).” In this way, we are implementing company-wide DX initiatives. Since the activity
satisfied the certification standards set by the Ministry of Economy, Trade and Industry, we obtained
DX certification.
We will continue to working to achieve the medium- to long term vision TAISEI VISION 2030 “TheEver-Evolving CDE3 (cubed) Company: A pioneering corporate group contributing to the development ofa resilient society where people can live affluent and cultural lives,” and accelerating activities.

DX Promotion System
DX Promotion System≫ In October 2020, Taisei Corporation

established a company-wide organization,
the DX Promotion Committee, to accelerate
digitization, and assigned the Chief Digital
Officer (CDO) for the first time in theconstruction industry.

Management Committee
DX Promotion Committee
Chairperson: CDO
Secretary: Information Planning Department,
Corporate Planning Office≫ The DX Promotion Committee formulates

plans and follows up on the implementation
status. After appointing external humanresources including the IT manager of eachdepartment to the cross-departmental
subcommittees established under thecommittee, we will make effective use ofdigital technology and conduct effective
problem-solving in construction work.

Secretariat
Production Process
Subcommittee(Civil Engineering, Building
Construction, Safety)

Service Solution
Subcommittee

Management
Infrastructure
Subcommittee

We shall build a system to work on DX as a whole company. A subcommittee
in each area will discuss the necessary issues, take countermeasures, andpromote DX. Information-sharing and liaison among subcommittees shall bearranged by the secretariat.

DX Policy≫ To promote DX, we have established the DX Policy. Its basic

stance sets three kinds of DX as pillars, aiming to reform theproduction system and work styles with DX.

≫ With “DX of production process,” by utilizing BIM/T-CIM®, AI,
IoT, robots, etc., we ensure quality and lower costs, shorten
construction periods, predict hazards, and reduce environmental load to achieve a drastic improvement in productivity.

≫ With “DX of management infrastructure,” we build a platformthat connects digital technology and data within the Company
and Group companies to accelerate decision-making.

≫ With “DX of service solution,” we utilize facility data, etc.
after completion to provide new services and expand
business domains such as facility O&M*1.

41 T A I S E I ANNUA L R EPORT 2021

1. DX for production process
Transform production systems to dramatically
improve productivity and reduce costs

2. DX for management infrastructure
Transform the organization, processes, andcorporate culture with data-driven management
and accelerate decision-making

3. DX for service solutions
Create new service solutions and increase
competitiveness in the construction businessand surrounding areas
By using "information (digital technology and datautilization)" as our new management resource, we aim to
improve the corporate value of the Group.

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Taisei Group’s construction life cycle and the future of DX
How we want to
be in 2030
Cooperation
with external
parties

City/town

Q&M, RN*

2

Construction platform

Planning/proposal

Digital humanresources
Data utilization

Data collection

Link withvarious apps

DesignConstruction

Construction platform

2023
In 2023, by aggregating and visualizing thedata stored in our existing platforms(Worksite Net, green site*3, etc.), we willbuild an integrated platform that allows
each department and worksite to retrieve
and utilize the data as needed.

Integrated
platform
Procurement/
construction plan

Building/
civil engineering
structure2026
In 2026, starting from the integrated platform,
we will promote collaboration between digitaltechnology, data, and people involving eachdepartment, worksite, and even external
parties. In addition, we will try to reform avertically divided working culture to executebusiness across the construction life cycle.

2030
In 2030, we will realize high-quality andhighly efficient construction by strengthening and expanding internal and external
connections. At the same time, we will aim
to create new value that contributes toand drives the entire construction industry,
such as the operation of a smart citybusiness at the city/town level.

DX of production process + DX of management infrastructure

On-site management system that utilizes video and IoT data, “T-i Digital Field,” was developed
We developed an on-site management system, T-i Digital Field, that visualizes the completion status of a construction site using
images and data obtained with cameras and IoT devices connected to a network. It enables real-time information-sharing among
the people concerned with the construction who are at remote locations.

DX of production process + DX of management infrastructure

Remote patrol system for construction sites using a quadruped walking robot, “T-iRemote Inspection,” was developed
With TechShare Inc., we have developed T-iRemote Inspection, a system that allows you to remotely check the quality and safety atconstruction sites. It has become possible to improve the efficiency of on-site management.

DX of Service solution + DX of management infrastructure

Started collaboration to transform facility operation and maintenance business utilizing AI/IoT
We started collaboration with Microsoft Japan Company, Limited to transform the facility operation and maintenance business
utilizing AI/IoT (preservation of properties’ value, maximization of user satisfaction and improvement of the efficiency of building
operation and management business). It allows us to visualize the soundness of a building immediately after an earthquake and thework status of employees at a production facility.

*1
*2
*3

O&M: Operation & maintenance (with DX, we shall effectively utilize digital technology including the IoT)RN: Renewal work
A system to standardize worksite operations and promote collaboration among the people concerned by utilizing IT and providing a condition
where “If I access the portal, I can process work for the construction site.”

TA I SE I A N N UA L R E P O R T 2 0 2 1 42

Towards Sustainable Value Creation

Feature on Sustainability Article No. 3

Governance:

Round-Table Talk by External
Members of the Board
FeatureArticleNo. 3

To Build a Steady Course for Enhancing
Corporate Value Based on the Future Vision

At the Taisei Group, we have repeatedly discussed what we could and should do for the world envisioned underthe “SDGs—Sustainable Development Goals” over the past year and reviewed the eight items of materiality(important issues to be dealt with) (see pp.30–32).
In this round-table talk by External Members of the Board, discussions are held on how we should face themateriality, the common goals of the Taisei Group, and contribute to achieving social challenges including
SDGs together with various stakeholders, the evaluation of initiatives taken by the Taisei Group, and futureissues and expectations. Through these discussions, we explore the future vision of the Taisei Group for sustainably enhancing corporate value.

External Member Fumiya KOKUBU
of the Board
Profile

1975
2005
2008
2008
2010
2012
2012
2013
2019
2019

This
ReportJoined Marubeni Corporation
Executive Officer
Managing Executive Officer
Managing Executive Officer, Representative Director
Senior Managing Executive Officer
Executive Vice President
Executive Vice President, Representative Director
President and Chief Executive Officer,
Representative Director
Chairman, Member of the Board (current position)
External Member of the Board of Taisei Corporation(current position)

Concurrent
positions

Chairman of the Board of Marubeni Corporation
Outside Director of Honda Motor Co., Ltd.

Reason forappointment

Broad insight and an international perspective as the top managementof a general trading company

Materiality of the Taisei Group

pp.30–32

43 T A I S E I ANNUA L R EPORT 2021

External Memberof the Board
ProfileTakao MURAKAMI

1969
1999
2001
2003
2004
2005
2011
2018
2019

Joined Sapporo Breweries Limited (Present: Sapporo
Holdings Limited)
Executive Officer
Managing Executive Officer
Member of the Board; Senior Managing Executive Officer of
Sapporo Breweries Limited (new company)
Managing Executive Officer, Member of the Board of
Sapporo Holdings Limited
President and Chief Executive Officer, Representative
Director, Group CEO
Chairman of the Board, Representative Director
Honorary Counsellor of Sapporo Holdings Limited(current position)
External Member of the Board of Taisei Corporation(current position)

Concurrent
positions

External Member of the Board of Television Hokkaido Broadcasting Co., Ltd.
External Auditor of FUJIO FOOD GROUP INC.

Reason forappointment

Rich experience in managing multiple companies

About the Taisei Group

Strategy for Sustainable GrowthMateriality Initiatives and TaiseiGroup’s Future Vision
KOKUBU: Countries around the world, including Japan,
are striving, almost as if in a competition, to realize
carbon neutrality by 2050. This is inevitable to realize asustainable society. While the effort towards its realization
involves costs, it also offers opportunities from a mediumto long-term perspective. My expectations for the TaiseiGroup are that the Group clearly sets out the initiatives it
can carry out precisely because of its capabilities. The
Group sets “Technical development for realizing asustainable society” and “Realization of a sustainable
and environmentally friendly society” in its materiality.
These are exactly the issues that are directly linked toExternal Member Atsuko NISHIMURAof the Board
Profile

1979
1999
2001
2004
2008
2012
2014
2016
2017

Joined the Ministry of Foreign Affairs of Japan
Minister/Counsellor of Permanent Mission of Japan to theUnited Nations
Minister of Embassy of Japan in Belgium
Professor of Tohoku University Graduate School of Law
Administrative Vice President of the Japan Foundation
Adviser of Japan Oil, Gas and Metals National
Corporation
Ambassador Extraordinary and Plenipotentiary to Grand
Duchy of Luxembourg
Ambassador Extraordinary and Plenipotentiary for
Women, Human Rights and Humanitarian Affairs
External Member of the Board of Taisei Corporation(current position)

Concurrent
positions

Outside Director of INPEX CORPORATION

Reason forappointment

A broad range of insights, international sense, and objective
point of view based on many years’ experience as a diplomat

Towards Sustainable Value
Creation

ESG Section

Data Section

corporate value. In this sense, I believe that the productsuch as carbon recycle concrete announced by theCompany is timely and excellent ideas. I would like theCompany to play its role as a leader in the constructionindustry by implementing such technical developmentwith foresight.
NISHIMURA: The Taisei Group, in TAISEI VISION 2030
(see pp.14–18), set out the medium- to long-term
vision towards 2030, which is the year of the goal forachieving SDGs. In the vision, with the aim of becoming
the front-runner in the environmental sector, the Group
sets the acceleration of its initiatives towards carbon
neutrality while promoting technical development forsolving social issues as a key policy and has identified“Realization of a sustainable and environmentallyfriendly society” as a materiality. Since there is always

External Member Norio OTSUKA
of the Board
Profile

1973
2000
2002
2004
2007
2009
2015
2018
2019

Joined NSK Ltd.
Executive Officer
Managing Executive Officer, Member of the Board
Senior Managing Executive Officer, Member of the Board
Executive Vice President, Representative Director
President and Chief Executive Officer,
Representative Director
Chairman, Member of the Board
Advisor of NSK Ltd. (current position)
External Member of the Board of Taisei Corporation(current position)

Concurrent
positions

Outside Director of Sojitz Corporation

Reason forappointment

Rich experience in managing multiple companies

This
ReportSkill matrix

p.65

TA I SE I A N N UA L R E P O R T 2 0 2 1 44

Feature on Sustainability Article No. 3 Governance: Round-Table Talk by External Members of the Board

long-term vision to continue evolving. One key toachieving its vision is the “Realization of an attractive
working environment that is good to work in.” I haveobserved the Company’s worksites and realized how
diverse human resources, including women, are fully
demonstrating their abilities. I have high recognition for
the initiatives being taken by the Company with strong
awareness of issues, such as diversity & inclusion, thecreative ideas to develop worker-friendly environment
as seen at wellness worksites and the efforts towards
DX at worksites.
a concern that construction work might affect thenatural environment, I expect the Group will play an
innovative role in implementing environmental initiatives
that are important issues for all human society by using
the Group’s technological, organizational and on-site
capabilities. Such capabilities are symbolized in theGroup’s efforts in completing the new National Stadium,
which impressed the world with its design exhibiting aremarkable harmony with nature.
MURAKAMI: Looking from the aspect of technicaldevelopment, “Ensuring quality and improving technology” is also an important point. Providing highquality, high-value-added buildings and infrastructure byleveraging various technologies represented by TAISEI-iInnovation leads the Taisei Group to achieve competitive
superiority. I also view that such technical development
and penetration of new technologies will serve as thelargest means of social contribution for the Group. In
other words, they will lead to “sustainable cities andcommunities” as set out in the SDGs. I would certainly
like the Taisei Group to more actively voice the need for aconstruction industry that can continue to generateinnovation and to keep taking on challenges towards
achieving new innovation from a long-term perspective
rather than a short-term one.
KOKUBU: The construction industry is a typical industry
that is driven by orders received and cannot go on
without the orders by clients. It is an important mission
to give form to the needs and wishes of clients. But I
believe it is also crucial that we utilize new technologies,
think about making our society a more comfortable place
to live in by giving considerations to such factors as “zeroemissions,” “zero-energy,” and “establishment of infrastructure with resilience to serious disasters,” discuss thesocial value we want to strive for, actively make proposals
and send out such information.
NISHIMURA: It is almost astonishing how workstyles
are becoming more diverse with the progress of digitalization and the expansion of business models beyond
the boundaries of fields due to the COVID-19
pandemic. It is under such drastically changing times
that the Taisei Group has set out its medium- to

45 T A I S E I ANNUA L R EPORT 2021

OTSUKA: Coming from a manufacturing industry, I am
paying attention to “Thorough management of occupational health and safety.” While the Company has an
occupational health and safety system in place, it is very
unfortunate that there continue to be cases where skilledconstruction workers of the supply chain who take ontasks at worksites are involved in accidents. The TaiseiGroup is expected to ensure safety and quality including
the supply chain as cooperating companies.

MURAKAMI: I also recognize that “Thorough management of occupational health and safety” is theGroup’s key issue. I had experiences in my former
position where accidents could not be prevented eventhough education on safety was thoroughly implemented. Industrial accidents cause material losses toboth families and the company. In connection with
“Promotion of supply chain management” and“Cultivation of technical staff and securing humanresources,” it is important to “build human resources”
of all the skilled workers engaging in construction workin order for the Taisei Group to continue achieving
sustainable growth going forward. I look forward toseeing mechanisms and management styles that ensure
quality and safety management integrating those of the
supply chains. The Construction Career Up System(“CCUS”) (see p.57) is a system that leads to appropriately evaluating skilled workers and improving theirtreatment, and I recognize that the Group is actively
taking initiatives in this regard.

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

MURAKAMI: The current Medium-Term Business Plan
sets out ambitious targets, including initiatives towards
realizing carbon neutrality and holding the sources ofrenewable energy, and these were not conventionallyaddressed by the Group. I would like to build a new
history towards the future by demonstrating flexible ideas
without being confined to the Company’s common sensethat has been nurtured over many years and taking onchallenges from scratch. I view that it is the role of theExternal Members of the Board to supervise businessexecution from such a perspective.
OTSUKA: The materiality stating “Thorough compliance and restructuring of group governance system”
presumably refers to governance in relation to eachGroup company. I view that regardless of the existenceof a capital relationship, skilled workers and all otherstakeholders working together are also included here, so
the Company’s concepts and methodologies may not be
always suitable to them and it making this materiality avery challenging. However, it is essential to carry out
proper governance in order to protect the interests ofstakeholders and to effectively disseminate theCompany’s commitment both internally and externally.
While the President sends message on safety and quality
every month, it is important that all employees of theGroup continue to demonstrate that the message isactually put into practice on their day-to-day work at theworksites. I believe that steadily repeating and continuing
this effort will contribute to having skilled construction
workers and cooperating companies deepen theirunderstanding and eliminating industrial accidents andquality defects.

Future Expectations for the
Taisei GroupNISHIMURA: In the recent process of formulating the
Medium-Term Business Plan, I have witnessed before
my eyes the strong motivation of the Taisei Group to
develop the Company into the future. It strives toovercome the social conditions that are changing at anaccelerated pace amid the difficulties of the COVID-19
pandemic and increasing severity in the competitiveenvironment. To date, the Company has been operating
in an extremely important field that serves as the foundation of people’s living and society. As greater focus isplaced on conservation of the natural environment andsustainability, I feel that the role of the Taisei Group,
which sets out an ambitious Group Philosophy—“To
create a vibrant environment for all members ofsociety”—is becoming increasingly important.

OTSUKA: The Medium-Term Business Plan was formulated based on numerous constructive discussions heldby the Management Committee and the Board, and I thinkthat the vision that the Taisei Group should aim for in the
future has become clear. I would like the Group to also
pursue an ideal future vision furthermore. Given the market
structure unique to the construction industry, the market
share among the five major construction companies inJapan is not relatively high. This means that there is stillroom for growth in the Japanese market as well as in theoverseas markets. Expansion of scale is not the mostimportant goal, and there may be difficulties in maintaining
a good balance between scale and the current high profitability. But I feel that it is possible given the technologicalcapabilities and human resources of the Taisei Group.
KOKUBU: As represented by the word, “Sampouyoshi(good for three parties: the seller, the buyer and society) ,”I think that in one sense, building a sustainable society is afield where Japan is strong. The Taisei Group’s roughly
150-year history since its foundation in 1873, during
which time the Group has continued to be a leading
player in the industry, is indeed an easy-to-understandimage of what sustainability is. With solid financial conditions, excellent human resources and innovative technological capabilities at the basis of its history, the Groupalready has an adequate foundation in place for resolvingsocial issues. Since the Group has clearly outlined theroadmap necessary for creating a livable society and abright future, all that is left is the execution. In this sense, I
would like all stakeholders to look forward to the future of
the Taisei Group.

TA I SE I A N N UA L R E P O R T 2 0 2 1 46

ESG Section

Environment Section

Materiality ①

Realization of a Sustainable and Environmentally
Friendly Society▍Policy and Management
Based on the Group Philosophy “To Create a Vibrant
Environment for All Members of Society,” the Taisei Group has
set forth in its Environmental Policy and Environmental Targets,the formation of high-quality social capital through corporate
activities centered on the construction business in harmony withnature, aiming for the “Realization of a Sustainable andEnvironmentally Friendly Society.” The Group also supports andrespects the United Nations Global Compact and other internationally agreed initiatives on the environment, and is proceedingwith efforts in collaboration with various stakeholders.
The construction industry, which is involved in the formationof social capital, is built on the burden on the environment. On
the other hand, environmental problems are becoming more
and more serious on a global scale, and long-term countermeasures are required. In response to these circumstances, in 2018

we revised our 2050 Environmental Targets (TAISEI Green Target2050), and set the 2050 Targets for the realization of four societies: a decarbonized society, a recycling oriented society, anature co-existing society, and a safety secured society. We also
agreed with TCFD (pp.37–39) in 2020, and, following theJapanese government’s decarbonization declaration, partiallyrevised the TAISEI Green Target 2050 and decided to aim forvirtually zero CO2 emissions from business activities by 2050 torealize a decarbonized society.
Going forward, the Taisei Group members will work as one tocontinue contributing to the realization of a Sustainable andEnvironmentally Friendly Society (decarbonized society, recycling oriented society, nature co-existing society, safety secured
society) based on our 2050 Environmental Targets (TAISEI Green
Target 2050).

Correlation between TAISEI Green Target 2050 and TAISEI Sustainable Actiona Sustainable and Environmentally Ftion ofriend
ly So
ealizaR
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Plan:

EMS implementation planof the Head Office andbranches

TSA

Action:Management review,
Improvement of activities

Do:

Activities to reduce environmental impact

TAISEI Sustainable Action

Technology development anddeployment, Effort related toenvironment protection

Check:
Performance
evaluation

ntal management PD
ronme
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Envi

nvironmental Targ
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6

Impact on Corporate Activities / Key Performance Indicators
Negative Impacts● Deterioration of creditworthiness and loss of opportunities to receive orders due toviolation of environmental laws and regulations or environmental accidents.
● Increased costs due to construction suspensions or delays resulting fromshortages of raw materials or electricity, including climate change.

11 12 14 15 17

application of environmental technologies.

● Market expansion due to the reinforcement of infrastructure to address climatechange.

At construction stage: Reduction rate of CO2 emissions per construction
cost (intensity)*
At construction stage: Reduction rate of total CO2 emissions*
At building operation stage: Reduction rate of estimated CO2 emissions*

FY2023 targets

Responsible department41%
Non-consolidated

50%
43%

* Compared to fiscal 1990 (a base year for emissions targets). The Group’s targets are to be established by the end of fiscal 2021.

47 T A I S E I ANNUA L R EPORT 2021

9

● Increased opportunities to receive orders due to development and practicalScope of report

KPIs

8

Positive Impacts

Environment Division

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section■ Environmental Management System (EMS)

Taisei Corporation operates an environmental management
system based on ISO 14001 (hereinafter EMS) on a companywide basis, and has established the Environment Committee
chaired by the President and administered by the Chief ofEnvironment Division.
The Environment Committee mainly deliberates on importantenvironment-related initiatives for environmental managementthat lead to the Environmental Policy, Environmental Targets,and external evaluations, and makes reports to theManagement Committee. Matters such as Environmental Policy
are deliberated in the Management Committee before being
presented to the Board, where they are deliberated and decided.
Every division and branch has an EMS secretariat that operates
under the Environment Committee, and the environmental staff ofeach department facilitates and monitors environmental activities,
and reflects the results in annual Environmental Targets.
In January 2021, we established the subcommittee atconstruction stage to promote CO2 reduction in worksites, thesubcommittee at building operation stage to promote decarbonization technologies and services, and the Taisei Group
Environmental Management Committee to establish Grouptargets and manage progress. In this way, we are developing
our response to the issues in a way that transcends theboundaries of departments and Group companies.
Also in May 2021, we further strengthened our structure towork on decarbonization by newly establishing the Carbon
Neutral Promotion Department in the Environment Division,
with the objective of promoting and supporting the efforts ofTaisei Corporation and our customers to achieve carbon
neutrality by 2050.
Apart from the EMS and Environment Division organizations,
we are also promoting efforts to resolve environmental issues
by establishing organizations such as the CSR Committee,
Central Safety Committee, and the Energy-Saving Promotion
Council which is for appropriately responding to the Act on the
Rational Use of Energy (Energy Conservation Act).

Organization Chart
Environment Committee

Subcommittee atconstruction stage

Company-wide EMS

Subcommittee at building
operation stage

Head Office EMS

Taisei Group Environmental
Management Committee

EMS (ISO 14001) certification
registration
Scope of report: Head Office
and all 13 branches (acquisition
rate: 100%)
Certification Registration: 1998

EMS of each branch■ TAISEI Sustainable Action (TSA), an Initiative to Reduce Environmental Impact

To achieve its Environmental Targets, Taisei Corporation is
implementing TAISEI Sustainable Action (TSA), an environmental
impact-reduction initiative in which all employees participate.
We think it is particularly important for many parties involved inconstruction work, which represents a large part of the CO2
emissions from business activities, to be aware of the importance of reducing environmental impact. Therefore, in addition
to the CO2 Zero Action, which is our basic initiative that has
been conducted at all worksites so far, each worksite is implementing measures based on the TSA Action List in which
effective specific technologies and activities are presented.
In 2020, we developed and adopted the TSA Points
System to evaluate each worksite’s initiatives to reduce
environmental impact by points. This system evaluates by

WEB

Action Guidelines for Taisei Personnel and the Taisei Group as a Whole
https://www.taisei.co.jp/english/profile/philosophy

points initiatives at worksites leading to the reduction ofenvironmental impact, such as the use of fuel-efficient heavymachinery, training seminars on fuel-efficient driving, use of
LED lighting, and use of energy-saving copiers and air conditioners, and visualizes the impact of the initiatives of individual worksites. We will bring about a change in employees’
awareness and behavior by visualizing and quantitatively
evaluating the impact of initiatives, in order to further promote
TSA initiatives.
In addition, we have established an award system for activities aimed at achieving the Environmental Targets. Through thissystem we evaluate activities to reduce the environmental
impact that serves as a model for other divisions, and we work
to raise employees’ environmental awareness.

WEB

Environmental Policy/Environmental Targets/
Declaration of Taisei Corporation on Biodiversity Preservation/
United Nations Global Compact
https://www.taisei.co.jp/english/profile/philosophy/policies/

TA I SE I A N N UA L R E P O R T 2 0 2 1 48

ESG Section Environment Section

Materiality ①

Realization of a Sustainable and Environmentally Friendly Society

For Realization of Decarbonized Society▍Policy and Management
Taisei Corporation has set the achievement of virtually zero CO2 emissions frombusiness activities as one of the 2050 Targets in its 2050 Environmental Targets,
TAISEI Green Target 2050, aiming to reduce CO2 emissions and contribute to therealization of a decarbonized society.
Our two targets for 2030, which are the benchmarks of the TAISEI Green Target
2050, have been certified by the SBT initiative: one is the 62% (vs. fiscal 1990)
CO2 emissions reduction target at the construction stage, and the other is the 55%(vs. fiscal 1990) CO2 emissions reduction target at the building operation stage.
To achieve the CO2 reduction target at the construction stage, we are promoting
initiatives to reduce the environmental impact (TSA) in which all employees participate, as well as initiatives such as cooperating with specialized contractors(suppliers) and encouraging them to conduct conservation activities during
construction and use heavy machinery and vehicles with high energy efficiency.
In addition, we have been working to use ZEB as a temporary worksite office that
had not been considered as a target of energy conservation/CO2 reduction initiatives
due to its short usage period. In 2020 we obtained ZEB Ready certification for the
first time in Japan for a temporary worksite office, and due to this initiative wereawarded the Special Award from the Judging Committee in the Energy Conservation
Grand Prize program of the Energy Conservation Center, Japan (ECCJ).
For achieving the CO2 reduction target at the building operation stage (for use bycustomers), we are promoting the provision of advanced energy conservation and
ZEB technologies and accumulating construction results, while working withcustomers and other various stakeholders in the value chain.
At the Taisei Group, we are implementing initiatives to reduce CO2 emissions at
each phase of the value chain from the planning/design stage considering thelifecycle of the building, through the construction stage including new building
construction, renewal and demolition, to the operation stage after completion anddelivery to the customer, for the realization of a decarbonized society.

2030 Targets Certified by the SBT initiative
By 2030, reduce the Scope 1 and Scope 2 greenhouse gas emissions by 26% from fiscal 2013
levels (62% reduction from fiscal 1990 levels), and the Scope 3 emissions by 25% from fiscal
2013 levels (55% reduction from fiscal1990 levels)■ Acquired ZEB Ready Certification for the New Itami City Hall and

Risks and Opportunities
For the construction industry, rising temperatures in recent years, large-scale typhoons,and disasters caused by extremely concentrated heavy rain pose risk factors such as
interruptions and delays in construction work.
On the other hand, increased demand for net
zero energy buildings (ZEBs), which is ameasure to mitigate climate change, will leadto the creation of opportunities for orders.
Taisei Corporation supports the Challenge
Zero project of Keidanren (Japan Business
Federation). In the field of renewable energy,
it is working on ZEB and began technological development for floating offshore wind
power generation facilities. In addition, we
consider the green infrastructure promotedby the Ministry of Land, Infrastructure,
Transport and Tourism as a means of
mitigating and adapting to climate change
as one of the opportunities to receive orders
through our market expansion aimed atstrengthening infrastructure, and we arepromoting relevant technological development and design proposals.

Scope 1: Direct emissions associated with fuel use forheavy machinery and vehicles at construction worksites
Scope 2: Indirect greenhouse gas emissions associatedwith electricity use at construction worksites
Scope 3: Indirect emissions associated with energy
use during the operational phase of thebuilding delivered

Its Temporary Worksite Office, the First of Its Kind in JapanThe construction of the new city hall building has beenplanned aiming for an environmentally friendly city hall under
the concept of “a city hall that is full of dreams and attractiveness and supports a safe and secure life of residents.”
Kengo Kuma & Associates, the architect office that was incharge of the basic design, set a design concept of “achieving
ZEB Ready certification as a large-scale city hall building over
20,000 m2 while overcoming various challenges that thereconstruction project faces, such as reconstructing the city
hall utilizing the existing building, conceiving a design inconsideration of regional development and scenery, BCP, andseismic isolation.” Taisei Corporation received the order forthis project in a design-build (DB) method, taking charge of
execution design through construction.
In addition to its being planned as a highly heat-insulated
and well-sealed building capable of natural lighting andventilation, the city hall also generates power as it equippedwith a photovoltaic facility with a storage battery for disasters,
achieving a 54% reduction in energy consumption in total.
Thanks to the above measures, this project was adopted as
one of the “resilience-enhancement type ZEB demonstration
projects” of the Ministry of the Environment.

49 T A I S E I ANNUA L R EPORT 2021

Meanwhile, in line with the environmentally friendly conceptof the new city hall, we also worked on reducing CO2 emissions during construction. The temporary worksite office inconstruction work adopted versatile energy-saving technologies, such as a high-efficiency air conditioning system, LED
lighting, and heat pump water heater. These technologies, inaddition to an improved heat insulation capacity, contributed
to the 54% reduction in primary energy consumption
compared to a standard building.
Due to these measures, for the first time in Japan, not only
the permanent city hall building but also the temporary
worksite office obtained ZEB Ready certification.

The new city hall obtained
ZEB Ready certification
under BELS

New Itami City Hall

The temporary worksite
office obtained ZEB Readycertification under BELS

About the Taisei Group

Materiality ①

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Realization of a Sustainable and Environmentally Friendly Society

For Realization of a Recycling Oriented Society▍Policy and Management
The Taisei Group has set forth “Promoting environmental conservation and creation” in the Action Guidelines for Taisei Personnel and the Taisei Group as a
Whole, and clearly stated that it endeavors to reduce environmental impact
through the implementation of energy-saving measures and the “3R” policy(reduce, reuse and recycle) and propose technologies and ideas that will facilitate
the creation of new environments.
As one of the 2050 Targets, Taisei Corporation has committed to achieve the“final disposal rate of consumption byproducts of 0%” in its 2050 Environmental
Targets, TAISEI Green Target 2050. To achieve this target, we aim to reduce thefinal disposal rate to 3.0% or less by 2030. We ensure thorough compliance withlaws and regulations of countries where we operate, and work on setting requirements higher than legally mandated. Based on the understanding that reducing
pollutant and waste emissions is a corporate social responsibility, we are aiming toachieve the 0% final disposal rate of construction byproducts from our construction
business, through reducing and recycling such byproducts, promoting green procurement, and extending the life of buildings.

Risks and Opportunities
There is a growing need to promote sustainable procurement throughout the supply
chain, such as resource conservation, use ofmaterials that can be recycled and reused,
and measures to deal with the problem ofdisposable plastics and other natural environmental pollution caused by waste.
At Taisei Corporation, we are working on
waste management and the recycling ofresources at worksites, adopting materials
and equipment that take into account green
procurement and the lifecycle from thedesign stage, and providing technologies toextend the life of buildings.

■ Recycling of Waste Plastics

Construction materials, packaging materials, and other waste
plastics are sorted thoroughly and properly recycled by
specialized disposal companies. In addition, we are implementing measures to utilize waste plastic by combining itwith waste wood products and creating artificial recycledwood products.

Taisei Corporation supports and promotes the Plastics
Smart Campaign by the Ministry of the Environment.

■ Utilizing the Green Procurement Guideline in Cooperation with Suppliers

In 2001, Taisei Corporation established and put into effect the Taisei
Corporation Green Procurement Guideline to promote the use of materials,
equipment and building methods that have a small environmental impact
during the design, construction, operation and demolition of structures. We
also conduct target management on green procurement items, and thenumber of items adopted in fiscal 2020 was 11.7 items. (See p.113)
By referring to and reflecting the content of the Green Purchase Law (Acton Promotion of Procurement of Eco-Friendly Goods and Services by theState and Other Entities), we review the subject items every year. In fiscal
2020, 94 items were included in the guideline. Company-wide application of
the guideline means we can not only recycle resources but also save energy,
reduce CO2 emissions, save resources, avoid use of toxic substances andpreserve the natural environment.

Award

The“Program for the Promotion of Resource Recycling of Building Materials through More Advanced
Collection Patrol Systems”Received the Ministry of
Economy, Trade and Industry’s Industrial Technology
and Environment Bureau Director’s Award

We operate a “collection patrol system” for many types of waste, including
waste plastics at our construction sites in Tokyo. We received the Ministry of
Economy, Trade and Industry’s Industrial Technology and Environment Bureau
Director’s Award in the 2020 Resource Recycling Technology and System
Awards for a joint initiative for resource recycling of building materials between
Taisei Corporation and our consolidated subsidiary and logistics operator
Network Alliance Corporation. We are working to recycle soil from construction sites within and across worksites, and contributing to waste reduction andeffective resource use of the industry as a whole.

Adoption of Green Procurement Item
(Construction design phase: non-consolidated)
Other items 9%• Greening of roofs, etc.
Structural items 11%• Recycled steel
materials• Plywood form
• High-strength
concrete, etc.

Details of
Adopted Items

Construction items 22%• Heat insulating materials• Vinyl flooring• Heat insulating sash/door• Metal blind• Ceramic tile, etc.

Facilities 58%• LED light• Automatic faucet• Western-style toilet• Automatic cleaning
equipment andbuilt-in urinal• Electric toilet seat
• Highly efficienttransformer, etc.

Provide collection vehicles withefficient collection routes
Travel around construction sites
to collect waste

Transport waste to recycling plants, etc.
Promotematerial recycling
as raw materials
for products

The flow of waste collection

TA I SE I A N N UA L R E P O R T 2 0 2 1 50

ESG Section Environment Section

Materiality ①

Realization of a Sustainable and Environmentally Friendly Society

For Realization of a Nature Co-Existing Society▍Policy and Management
The Taisei Group has set forth “Promoting environmental conservation and creation” in the Action Guidelines for Taisei Personnel and the Taisei Group as a
Whole, and clearly stated that it recognizes the importance of environmental issues
and actively works to promote environmental conservation and creation with aview to realizing harmonious coexistence between nature and human beings.
As one of the 2050 Targets, Taisei Corporation has committed to “minimizing
impact on natural capital” in its 2050 Environmental Targets “TAISEI Green Target
2050.” To achieve this target, we set the goal of implementing 35 or more proposals that take biodiversity into consideration, using such means as our uniquebiodiversity evaluation tools, the Concierge Series.
We identify risks at the construction planning stage and, through the cooperationof related internal departments including the design division, construction/civilengineering work division and the Taisei Advanced Center of Technology, use thevarious technologies owned by the Taisei Group to minimize the adverse impacts on
biodiversity of the local area. In order to clarify its corporate stance on the conservation and creation of biodiversity, Taisei Corporation has agreed to the Declaration of
Biodiversity by Keidanren, and formulated the Declaration of Taisei Corporation on
Biodiversity Preservation in 2010. Since 2020, we have been supporting Declarationof Biodiversity by Keidanren and Action Policy (revised edition).

Risks and Opportunities
There is concern that construction work will
always have a significant impact on thesurrounding environment, including nature.
At the planning stage, we identify risks,
including violations of environmental laws
and regulations, and opportunities to create
added value. From the design and construction stage to the operation and management support after completion, we
provide our customers with solutions that
help create a rich environment while giving
consideration to biodiversity.
We will contribute to the realization of asociety in harmony with nature by appropriately evaluating the value of natural capital,
utilizing it for infrastructure development andbuilding planning, and minimizing the impact
of construction work.

■ Biodiversity-Conscious Investigation, Planning, Construction and Monitoring

Taisei Corporation has adopted mechanisms for identifying
risks in the construction planning stages and following up onthem throughout the entire process from construction tocompletion. If emphasis on consideration of the ecosystem isconfirmed in a project, we employ Ecological Planning, ourproprietary environmental planning tactics, and, based on
research and analysis, propose plans that contribute toharmonious coexistence with nature to the customer. In thisway, we are engaged in appropriate conservation and regeneration of the natural environment.
With Ecological Planning, which equates to a biodiversity
action plan (BAP) under the Convention on Biological
Diversity, we employ various technologies we own to investigate and analyze not only the planned sites but also thesurrounding environment, and plan and execute construction

Award

Initiatives for Nature in Fujisan Nanryo Industrial Park Received the Environmental Award of theJapan Society of Civil Engineers and ENAA’s Engineering Commendation Award

TaiseiCorp.
Fund/technologies
Activity

Environmental 12 enterd
programcompanies
Fund

Regional
Fujinomiya field
NPO
City Provision
Advicethat takes regional characteristics into account, thus creating
quality social capital. Upon completion of the project, we
conduct monitoring and feed back the outcomes in order tostrengthen our technologies.
We have also designed our unique biodiversity evaluation
tools, the Concierge Series. They allow anyone to easily
understand and share information on the environment of theplanned sites, and enable appropriate preservation andcreation of a natural environment. In 2020, we newly
designed Mizube Concierge® as the third of the series after
Ikimono Concierge® and Mori Concierge®. Applying this toprojects that require conservation of rare flora and fauna, we
strive to contribute to the realization of a society that coexists with nature.

10-year Internurturing actionof forests

Environmental
programTokohaUniv.

51 T A I S E I ANNUA L R EPORT 2021

Local
residents

Under the theme of “a manufacturing base where
greenery, people and production come together,”Taisei Corporation is carrying out the Fujisan
Nanryo Industrial Park (Eco-Factory Mt. Fuji)
development project in Fujinomiya City located at
the south foot of Mt. Fuji.
Developing the Fujisan Nanryo no Mori FSPJ
scheme, a sustainable action to nurture forests inFujisan Nanryo Industrial Park
collaboration of industry, government, academia,
Development Project
and local people, we have supported nurturing
forests for more than ten years from completion of construction. This is a pioneering
initiative to balance economic activity and harmonious coexistence with nature in that it
adopts forest nurturing methodology from a medium- to long-term perspective and business model with forest as its theme. We intend to utilize and deploy this as a tool to realize
a nature co-existing society. This initiative was praised externally, and received the 2020
Environmental Award of the Japan Society of Civil Engineers (Group-2) and the 2020
Engineering Commendation Award of ENAA (Environmental Contribution).

About the Taisei Group

Materiality ①

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Realization of a Sustainable and Environmentally Friendly Society

For Realization of a Safety Secured Society▍Policy and Management
The Taisei Group has stipulated “Communication with local communities” in the
Action Guidelines for Taisei Personnel and the Taisei Group as a Whole, and clearlystated that it endeavors, in executing its duties, to prevent the generation ofenvironmental effects such as noise, vibration, and odor, and to protect the living
environment of local residents and neighboring areas.
Taisei Corporation has committed to “aim to provide value with zero environmental risk” in order “to realize a society where safety is ensured” as one of the2050 Targets in its 2050 Environmental Targets, TAISEI Green Target 2050. To
achieve this target, we will work to continue having “zero environmental accidents
by properly managing construction byproducts and complying with environmental
laws and regulations” by 2030.
To achieve these medium- to long-term targets, Taisei Corporation has set
specific, quantitative annual targets and KPIs, and is making efforts while checking
their progress. In addition, we are making efforts to reduce the impact of construction work on the environment, and aiming to continue having zero environmental
accidents while setting the management of toxic substances and polluted water(prevention of water pollution caused by construction wastewater, etc.) as a management priority.

Risks and Opportunities
Environment pollution caused by construction has a significant impact on the surroundings and society. Compliance withenvironmental laws and regulations isalways one of the most important environmental issues. We keep contributing to the
reduction of environmental risks during
construction by promoting the proper
management of construction waste, thedevelopment and application of newtechnologies to cope with the regulations
for soil pollution and the promotion of
methods that reduce the burden on thesurrounding environment.

■ Risk Measures at Worksite

With a “worksite environment patrol,” the Environment Department of the
Head Office and branches conduct an internal audit to check the observanceof the environment law at worksites. As for the findings, we establish corrective and preventative measures for continuous improvement.
At a worksite, based on the Environment Management manual, we provide
environmental education to our employees and specialized contractors. By
sharing the cases that could result in an environmental accident, issuingnotifications of the proper management of toxic substances such as asbestos
and PCB, and reinforcing adequate control and treatment of polluted soil, we
have been raising awareness of the importance of environment management
and the prevention of environment-related accidents. Regarding the management of water resources, Taisei Corporation is working to “prevent waterpollution caused by construction wastewater, and the like” as a management
priority. In fiscal 2020, there were no violations of environmental laws andregulations caused by construction wastewater.

Type

Action (Example)

Noise

Conducted early communication withneighbors in response to complaints
about nighttime concrete-related work.

Water
pollution

Recovered fuel leakage from a crane vessel
with an adsorption mat and implemented
measures to prevent a recurrence.

Vibrations

Changed to work during a factory
holiday in response to complaints about
heavy machinery work in the factory.

Dust

Implemented measures such as spraying
water and installing sheets in response
to complaints about dust from construction work.

■ Complaint to Worksites and Handling Thereof

We take proper measures regarding environment-related complaints
addressed to a workplace, make a record and report using a communication
sheet based on an environment management system (EMS) procedure andshare the information horizontally among concerned departments or within theentire Company as required. In addition, we are properly handling comments
given by citizen groups.

Percentage by Complaint Item
Others 11%
Traffic obstruction
9%
Water pollution
2%
Vibrations 17%

Percentage ofcomplaint
items

Noise 31%

Dust 30%

TA I SE I A N N UA L R E P O R T 2 0 2 1 52

ESG Section

Social Section

Materiality ②

Ensuring Quality and Improving Technology▍Policy and Management
In light of the Taisei Group’s mission to provide customers andsociety with quality construction products and related services
efficiently and continuously, the Taisei Group sets forth“Pursuing customer satisfaction” and “Ensuring and improving
safety and quality” as Action Guidelines for Taisei Personnel andthe Taisei Group as a Whole. Under the Medium-Term Business
Plan, the Taisei Group has set “To innovate the production
systems, and reforming the workstyles through digital transformation (DX)” as one of the priority issues related to sustainability. We are working to improve productivity through partial
optimization of each process in the construction life cycle andthe introduction of digital technology.
Furthermore, Taisei Corporation promotes efficient production activity in line with its Quality Policy along with Individual

WEB

Policies established for each division (Building Construction
Division, Civil Engineering Division, Design Division,
Engineering Division, and Nuclear Facilities Division). Under
the slogan TAISEI QUALITY®, the Group as a whole strives toprovide customers with safe and secure construction products
and aftersales service under a quality control system. Each of
the divisions and the Group companies has obtained ISO 9001
and implements certified quality management. The Civil
Engineering Division and Building Construction Division have
prepared their own manuals and action guidelines, conductcustomer satisfaction surveys after delivery, and work closelywith related divisions to ensure proper quality control andeliminate defects caused by quality.

Action Guidelines for Taisei Personnel and the Taisei Group as a Whole / Quality Policy
https://www.taisei.co.jp/english/profile/philosophy/■ Customer Satisfaction

Building Construction Division
In the Building Construction Division, each branch conducts aquestionnaire survey on customer satisfaction. The survey
questions are on a five-point scale, and include those on
workmanship, usability, and worksite office management
during construction. If there are any low scoring items, weanalyze their causes, establish countermeasures and reflect
them in post-construction review meetings and other opportunities for better understanding. In this way, we aim for greater
customer satisfaction.

Civil Engineering Division
The Civil Engineering Division sets customers’ evaluation
scores on the construction work as an indicator of customer
satisfaction. Adding to that, the division conducts customer
satisfaction interviews.
Each branch reflects the research results in the postconstruction review for further improvement. Going forward,
the Head Office and branches will continue working as one forbetter customer satisfaction.

■ Productivity Improvement Initiatives

Taisei Corporation utilizes T-CIM® and BIM to manage theinformation obtained through planning, design, construction
and operation. We also established the DX Promotion
Committee in fiscal 2020, and build a structure to work on DX
on a company-wide basis. We provide the best service andsolution to each customer, while reviewing our businessprocesses by visualizing performance with productivity perperson (sales/number of employees) as an indicator to raise
each employee’s awareness on productivity. In this way, we
are working together as one group to improve productivity.

8

Impact on Corporate Activities / Key Performance Indicators
Negative Impacts⃝ Interruption or suspension of business and loss of opportunities to receive orders

due to the occurrence of quality defects.

Positive Impacts⃝ Continuous order received by building relationships of trust with customers.

Scope of report

Customer Satisfaction (Building Construction)

KPIs

Customer Satisfaction (Civil Engineering)
Productivity (Net sales/number of employees)

53 T A I S E I ANNUA L R EPORT 2021

13 17

Non-consolidated
Taisei GroupFY2023 targets

Responsible department

100%

Building Construction Division

100%

Civil Engineering Division¥83 million

Corporate Planning Department

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Materiality ③

Technical Development for Realizing a Sustainable Society▍Policy and Management
The Group’s source of Value Creation is technology and,
therefore, the Group’s business is founded on research anddevelopment and intellectual property activities. The TaiseiGroup has committed, in the section “Striving to create value”
of the Action Guidelines for Taisei Personnel and the TaiseiGroup as a Whole, that the “Taisei Group and Taisei Personnel
shall deploy all the technology and know-how at their disposal,and shall continue to strive to create new value through technological innovation and ingenuity,” and “shall strive to further
improve their knowledge and abilities.” At the Group, we havealso stipulated that we “promote technological development tosolve environmental and social issues through open innovation”
as a key issue in the Medium-Term Business Plan. Our
research and development is focused on themes selected interms of contributions to SDGs, under the leadership of theWEB

Technology Committee chaired by the President, and we aredeveloping technologies centering on industrial sectors withgrowth potential such as offshore wind power, logistics, people
flow, civil engineering infrastructure, and carbon recycling.
Meanwhile, in order to further improve the intellectual
property capabilities of all of our group businesses, the Grouphas included “management of information and intellectual
property rights” in the section “Fulfilling social responsibilities”
of the Action Guidelines for Taisei Personnel and the TaiseiGroup as a Whole, and also established the Taisei Group
Policy on Intellectual Property. We are steadily promoting
intellectual property strategies by creating, protecting andutilizing intellectual property, reducing the risks associated withintellectual property, and taking advantage of our brand.

Action Guidelines for Taisei Personnel and the Taisei Group as a Whole / Policy on Intellectual Property
https://www.taisei.co.jp/english/profile/philosophy/■ Patents That Contribute to the Resolution of Social Issues

Article 1 of the Patent Act states that the “purpose of this Act isto encourage inventions by promoting the protection andutilization of inventions, and thereby contribute to the development of industry.” Taisei Corporation promotes business
management with a focus on intellectual property not only tosecure its competitive advantage but also to achieve thisoriginal purpose, and strategically manages and utilizes all
intellectual property including patents, copyright, construction
and business know-how. Due to the strategic and active acquisition and utilization of intellectual property rights, our rate of

granted patents against the number of applications is high at
89.2%, compared with the average rate of all industries of
74.9%*. We will obtain rights for new values by being aware ofcustomers’ needs and having dialogue with them. We will also
contribute to society by developing new technology, offering
technical support at construction sites and utilizing intellectual
property based on a combination of business, research anddevelopment, and intellectual property strategies.
* Average value for the past three years in Patent Administration Annual
Report 2020

■ For the Enhancement of ZEB Performance

A net zero energy building (ZEB) is a state-of-the-art buildingthat achieves significant energy saving by using solar shading
and natural energy through ingenuity in construction planning,high heat insulation, and high efficiency. At the same time, it
greatly reduces annual energy consumption by generatingenergy through photovoltaic and other power generation
systems. By achieving ZEBs and making them popular, theenergy supply demand structure is expected to fundamentally
improve. At the Taisei Group, we have set enhancement of ZEBs
as a key issue in the Medium-Term Business Plan, and our ZEB
initiative is positioned to lead to the achievement of SDGs. As apromising sector to become a growth market going forward, we
will make full efforts to evolve and spread ZEBs.

7

Impact on Corporate Activities / Key Performance Indicators

13 17

Negative Impacts

Positive Impacts⃝ Loss of opportunities to receive orders due to fewer application track records for⃝ Contribution to solving social issues through business by improving technologicaldevelopment of new proprietary technology.

capability and increased opportunities for receiving orders.
Scope of report

KPIs

Number of patent applications filed
Number of orders received for net Zero Energy Buildings (ZEB)

Non-consolidated

FY2023 targets

Responsible department

260 cases

Taisei Advanced Center of Technology

8 projects/year

Energy Division

TA I SE I A N N UA L R E P O R T 2 0 2 1 54

ESG Section Social Section

Materiality ④

Promotion of Supply Chain Management▍Policy and Management
The Taisei Group strives for “promoting partnerships with
subcontractors and suppliers” and “ensuring fair business
transactions” as stated in the Action Guidelines for Taisei
Personnel and the Taisei Group as a Whole, along with theProcurement Policy established in reference to ISO 26000. We
have issued the CSR Procurement Guidelines (formulated in2014) to familiarize suppliers with the contents of their compliance with the guidelines. We also request that CSR activities be
conducted in accordance with the guidelines.
The effort to raise awareness of CSR procurement includes
holding educational training and seminars tailored to individualWEB

responsibility levels such as officers and employees at all levels,
branch managers, procurement managers, worksite managers,
and overseas worksites, etc.; and providing suppliers with
opportunities to participate in meetings with branch managers,
e-learning training, on-site surveys and questionnaires, etc.,
among various other activities. Plans and results of these activities and future developments are discussed at the CSR
Procurement Committee composed of responsible personnel
from relevant divisions including Civil Engineering, Building
Construction, Procurement, and Safety Administration, andreported to the CSR Committee.

Action Guidelines for Taisei Personnel and the Taisei Group as a Whole
https://www.taisei.co.jp/english/profile/philosophy/

WEB

Procurement Policy
https://www.taisei.co.jp/english/profile/philosophy/policies/■ Implementation of CSR Activity Survey on Suppliers>> Risk Management/Assessment
Since 2016, we have been conducting regular questionnaire surveys for suppliers on compliance with our CSR procurement guidelines
and on the systems for managing foreign technical interns. In the fiscal 2020 survey, we broadened the traditional scope of around 500
companies centering on Soyukai, our proprietary organization for core subcontractors, to approximately 1,700 companies with which wehave constant business transactions. We are thus conducting educational activity for a wider range of business partners. Based on thesurvey results, we selected some 50 suppliers that have or need to address social challenges including environmental/human rights
issues and labor problems. After considering and judging whether a site visit is required, we visited about 12 companies, and, while
exchanging opinions with the business owners and the like, requested to enhance CSR activities and educate and instruct their business
partners. In this way, we are striving to enhance efforts throughout the entire supply chain. Meanwhile, we have developed an online
system and conducted the questionnaire survey through it to improve the usability and accessibility for suppliers regarding the survey.
Officer in charge
Organ for consultation
Promotion committee
Secretarial

Chief of Corporate Planning Office
CSR Committee (Committee of the Board)・Important matters related to supply management that have been deliberated are proposed/reported to the Board
via the Management Committee.
CSR Procurement Committee
・The committee organizes and conducts training and explanatory meetings, survey visits, questionnaire surveys,
and the like.
CSR Promotion Section, Corporate Communication Department, Corporate Planning Office>> Collaboration with External Parties
GCNJ’s HRDD Subcommittee, EcoVadis
The Taisei Group participates in the Subcommittee on Human Rights Due Diligence (HRDD) of the
Global Compact Network Japan (GCNJ) which is comprised of companies participating in the United
Nations Global Compact.
In addition, Taisei Corporation has been registered with EcoVadis since fiscal 2019 as a supplier andstarted to disclose required information. We obtained a silver medal in the fiscal 2020 assessment.

4

Impact on Corporate Activities / Key Performance Indicators

9

11 12 13

Negative Impacts

Positive Impacts⃝ Higher cost due to interruptions and delays in construction due to procurement suspension.

⃝ Sustainable procurement of raw materials through procurement risk management.

⃝ Decline in reputation owing to occurrence of human rights risks.

⃝ Improved competitiveness as a result of securing good-quality suppliers.

KPIs

Supplier’s conformity rates with the Taisei Group CSR
Procurement Standards

Scope of report

FY2023 targets

Responsible department

Taisei Group

100%

Corporate Communication Department (CSR Promotion Section)

Percentage of companies with an average score of three or higher (out of five points) in the CSR Procurement Questionnaire distributed to suppliers.

55 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Materiality ⑤

Thorough Management of Occupational Healthand Safety▍Policy and Management
In addition, we have established the Central Safety Committee
where safety management, prevention of environmental accidents, as well as issues related to the safety, health, and environment of specialized contractors are discussed and reported to the
President. A Branch Safety Committee, composed of branch
supervisory health and safety managers, employees, and labor
unions, is also held to communicate with labor unions periodically.
In close cooperation with the Taisei Corporation Safety, Health,and Environment Cooperation Association, which is organized byour cooperating companies across the country, we hold the“Thoroughgoing Safety Convention” and “Safety Promotion
Convention” to prevent accidents and injuries.

The Taisei Group’s safety-first policy is expressly stated in the
Action Guidelines for Taisei Personnel and the Taisei Group
as a Whole that “We strive to maintain a safe and hygienic
work environment and prevent occupational accidents.”
In addition, annual targets in the Health and Safety Policy
are announced by the President in January of each year. In
light of the safety-first policy, our proposal to eliminate accidents and injuries and prevent injuries involving third parties isorganized in the form of the Occupational Health and Safety
Management System (TAISEI OHSMS). Based on this system,
the Company implements the Plan-Do-Check-Act (PDCA)
cycle to raise the level of occupational health and safety.
WEB

Action Guidelines for Taisei Personnel and the Taisei Group as a Whole /Safety and Health Policy
https://www.taisei.co.jp/english/profile/philosophy/

Conceptual Diagram of TAISEI OHSMS (Occupational Health and Safety Management System)
Branch OfficeConstruction Site

Branch Safety Committee

Formulated annually in January

matters requiring priority action, matters requiring
priority management, and identification of particularly
dangerous work and other dangerous work, etc.

•Safety and health education•System enhancement•Dissemination of safety information•Specialized contractors guidance•Implementation•Operation

Instruct

CHECK•Checking

ACT•Improvement

Formulated annuallyin January•Giving worksite patrols and corrective

Safety Council

Accident Analysis Conference andAccident Investigation Committee

and matters for action (company-wide risk
assessment)

Report to

Health and safety management plan/emergency
response plan/basic construction plan

•Giving site patrols and corrective instructions

instructions

corrective instructions•Safety and Health Management Policy forWorksites Paper•Construction Plan and Health and Safety Plan Paper:•Preparation of work-specific construction plan
•Confirmation of construction outlines andwork procedures•Consultation on accident prevention•Meeting on health, safety, and environment ofconstruction work
Instruct •Keeping concerned contractors and workers identified•Safety and health education•Examination of construction plans•System enhancement•Dissemination of safety information•Specialized contractors guidance•Giving internal audits and guidance to branches•Giving Head Office’s selective patrols and•Accident analysis and preventive measures•Identification of hazardous or harmful factors

Reflect

Targets, matters requiring priority action,
implementation plan for branches

Feed backFeed back•Planning•Branch Health and Safety Management Plan Paper:

Feed backReflectannually•President’s Health and Safety Formulated
in JanuaryManagement Policy Paper
Healthand
SafetyManagement
PolicyPaper:
Targets,
•

PLAN

DO

Head OfficeCentral Safety Committee•Accident analysis and preventive measures•Identification of hazardous or harmful
factors and matters for action (branch risk
assessment)

Accident Prevention Council

Report to•Handling accidents and injuries•Identification of hazardous or harmful factors*Risk assessment and a PDCA
cycle are implemented to improvehealth and safety standards
constantly.

and matters for action (worksite risk
assessment)

Review of the system■ Improvement of

Health and Safety Standards

In fiscal 2020, the Company experienced 35 occupational accident leaves excluding fatal accidents, resulting in an accident
frequency rate of 0.35. To ensure health and safety management based on the TAISEI OHSMS, we will thoroughly implement
workplace patrols and safety education for workers.

9Impact on Corporate Activities / Key Performance Indicators
Negative Impacts

11 12 13 15 17

Positive Impacts⃝ Loss of social trust due to the occurrence of fatal accidents.

⃝ Maintenance of social trust through prevention of fatal accidents.

⃝ Lower productivity due to occupational accidents.

⃝ Higher productivity as a result of achieving a safe workplace environment.

KPIs

Number of fatal accidents

Scope of report

FY2023 targets

Responsible department

Taisei Group0 cases

Safety Administration Division

TA I SE I A N N UA L R E P O R T 2 0 2 1 56

ESG Section Social Section

Materiality ⑥

Cultivation of Technical Staff and Securing
Human Resources▍Policy and Management
The construction industry has an industrial structure with alarge number of elderly workers compared to other industries, and the massive retirement of elderly workers is
expected in the near future. Therefore, securing workers
to support the construction industry in the future is anurgent issue.
At Taisei Corporation, we are focusing on the disseminationand promotion of the Construction Career Up System(CCUS), which enables us to objectively and continuously
accumulate and confirm the experience and skills of eachand every construction engineer, which has been difficult toobjectively grasp and visualize in the past, through crossindustrial, unified rules.

WEB

In addition, the working hours of the construction industry
are about 320 hours longer per year than the average for allindustries, a trend that has not changed for many years.
Taisei Corporation has established the Working Hour
Reduction Committee and the Working Hour Reduction
Promotion Committee as internal consultative bodies, andformulates a policy for working hour reduction every year.
In 2017, the Japan Federation of Construction Contractors(hereinafter referred to as Nikkenren), formulated the Action
Plan for the Realization of a Five-Day Work Week as a basic
policy and concrete measures to realize a five-day work weekat construction sites. As a member company of the Nikkenren,
we are working together in the industry as a whole.

Labor Practices

https://www.taisei.co.jp/about_us/csr/performance/iso26000/■ Dissemination and Promotion of Construction Career Up System (CCUS)

We established the CCUS Promotion Roadmap (fiscal 2021–2023) in June 2021. In accordance with the new target of the
Nikkenren, we have determined to achieve 100% for three indicators, namely the service provider registration rate, skilledworker registration rate and working history accumulation rate, by the end of fiscal 2023, and have set annual targets toachieve it. We will continue promoting CCUS and encourage our cooperating companies (suppliers) to register more service
providers and skilled workers.
■ Efforts to Address Long Working Hours / Response to Closures of Worksites on Weekends

Taisei Corporation formulated Roadmap to fiscal 2024 for “addressing long working hours” with annual targets of “health management overtime (total of statutory overtime working hours and holiday working hours),” “regular leave and compensatory leave,”and “closures of worksites.” We have made efforts under the leadership of internal consultation bodies including the Committee
for the Reduction of Working Hours and the Working Hour Reduction Promotion Committee.
In order to change employees’ awareness and behavior, all employees are expected to discuss and carry out practical measures to reduce working hours according to the conditions of individual workplaces. Activities that positively contributed toaddressing long working hours are shared acrossGroup companies and continuously promoted to maintain momentum.

4

Impact on Corporate Activities / Key Performance Indicators
Negative Impacts⃝ Decreased competitiveness and loyalty of employees due to insufficient humanresources development and lack of diversity.

KPIs

Health management overtime

Worksite implementation rate of a five-day work week
(closed eight days in four weeks)

57 T A I S E I ANNUA L R EPORT 2021

11 12 13

⃝ Increased competitiveness and loyalty of employees by fostering excellent anddiverse human resources.
Scope of report

Worksite registration rate of Construction Career Up System (CCUS)
Procurement Standards

9

Positive Impacts

FY2023 targets

Responsible department

100%

Safety Administration Division
Building Construction Division
Civil Engineering Division

Monthly target:
50 hours
Non-consolidated Persons who exceeded
720 overtime working
hours per year: 0%
100%

Human Resources Department

Building Construction Division
Civil Engineering Division

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Materiality ⑦

Realization of an Attractive Working Environment
That Is Good to Work in▍Policy and Management
The Taisei Group is committed to “ensure basic human rights
and diversity” in the Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole, and “respect for diversity”
in the corporate philosophy expressed as the Taisei Spirit.
We are focusing on nurturing a culture that seeks to achieve
diversity and inclusion.
We are focusing on developing a workplace environment
where diverse and talented people can utilize their abilities
taking advantage of their diversity in religion, gender, age,WEBnationality, disabilities, sexual orientation/identity, work style,career, and the like. In May 2021, Taisei Corporation participatedin The Valuable 500, an international initiative to promote active
social participation of disabled people, and is committed tohaving recruitment activities for those who have disabilities anddeveloping an environment where they can work pleasantly.
Also in July 2021, we participated in the My Jinken
Declaration (The Declaration of Human Rights) advocated by
the Ministry of Justice.

Our Structure of Values and Policies /Action Guidelines for Taisei Personnel and the Taisei Group as a Whole
https://www.taisei.co.jp/english/profile/philosophy/WEB

The Valuable 500
https://www.taisei.co.jp/english/ir/news/2021/20210607_release.html■ Promotion of Women’s Participation and Advancement

To further enhance its initiative to promote diversity, Taisei Corporation has formulated a “voluntary action plan on promotion of
women to managerial and executive positions” as well as an “action plan on women’s active participation in the workplace.” The
aim is to promote a change to corporate culture, talent development, expansion of career advancement opportunities, recruitment
and development, creation of a pleasant workplace, and the like.
■ Support of the Balance between Work and Family/Childcare

We are focusing on supporting male employees during childcare through such initiatives as joining the Ikuboss Corporate
Alliance, a network of companies promoting development of ideal bosses for the new era (ikubosses), in April 2017. We also
support balancing work and nursing care by developing a support system that is more extensive than legally required, including
nursing care leave, and holding seminars.

4

Impact on Corporate Activities / Key Performance Indicators
Negative Impacts

59

10 16 17

Positive Impacts⃝ Decline in organizational capabilities and loyalty of employees due to insufficient human⃝ Increased organizational capabilities and loyalty of employees by acquiring and⃝ Difficulty in recruitment activities due to a decline in reputation.

⃝ Maintenance of reputation by preventing human rights risks.

resources development and lack of diversity.

developing excellent and diverse human resources.

Scope of report

KPIs

Number of female managers
Rate of taking childcare leave by males

Non-consolidated

FY2023 targets

Responsible department

330 persons

Human Resources Department(Human Resources Revitalization
Promotion Office)100%

Materiality ⑧

Thorough Compliance / Restructuring of the Group
Governance System
Note: For details, please see Risk Management Compliance on pp.72-76.

10 12 16 17

Impact on Corporate Activities / Key Performance Indicators
Negative Impacts⃝ Decline in reputation due to occurrence of human rights or corruption risks.
⃝ Interruption or suspension of business due to information security accidents.

KPIs

Number of major information security accidents
Attendance rate at compliance training including anti-corruption

Positive Impacts⃝ Continuation of business and creation of business opportunities through appropri-ate risk management.

⃝ Maintenance of reputation through appropriate information management.

Scope of report

FY2023 targets

Responsible department

Taisei Group0 cases

Information Planning Department

Non-consolidated

100%

General Affairs Department

TA I SE I A N N UA L R E P O R T 2 0 2 1 58

ESG Section

Governance Section

Management Members(As of September 1, 2021)

Members of the Board● Attendance at Board meetings:● Attendance at Board meetings:

13 out of 13 meetings (100%)

13 out of 13 meetings (100%)
June 2020
President, Representative Director

June 2021
Chairman of the Board

Takashi YAMAUCHI

Yoshiro AIKAWA

Chairman of the Board

President, Representative Director● Attendance at Board meetings:● Attendance at Board meetings:

13 out of 13 meetings (100%)

13 out of 13 meetings (100%)

April 2021
Executive Vice President, Representative
Director
Chief of Business Administration Division;
In charge of New Business Planning

June 2021
Executive Vice President, Representative
Director
Chief of Civil Engineering Division;
In charge of Safety

Shigeyuki SAKURAI

Shigeyoshi TANAKA

Representative Director

Representative Director● Attendance at Board meetings:● Attendance at Board meetings:

13 out of 13 meetings (100%)

13 out of 13 meetings (100%)

June 2021
Executive Vice President, Representative
Director
Chief of Marketing & Sales Division(Integrated)

Norihiko YAGUCHI

Hiroshi KIMURA

Representative Director

Director

Newly
Appointed

June 2020
Senior Managing Executive Officer
Deputy Chief of Marketing & Sales Division(Integrated), Supervising Marketing & Sales(Civil Engineering) Division; Chief ofMarketing & Sales (Civil Engineering)
Division

Newly
Appointed

June 2021
Senior Managing Executive Officer
Chief of Marketing & Sales Promotion
Division

Atsushi YAMAMOTO

June 2021
Senior Managing Executive Officer
Chief of Architecture & Engineering
Division (Integrated); Chief of Building
Construction Division

Yoshihiro TERAMOTO

Director

Director
External Member Independent Officer

External Member Independent Officer● Attendance at Board meetings:● Attendance at Board meetings:

13 out of 13 meetings (100%)

13 out of 13 meetings (100%)● Concurrent positions:● Concurrent positions:

Outside Director of INPEX Corporation
June 2017
Member of the Board of Taisei Corporation

Atsuko NISHIMURA

Takao MURAKAMI

Director

Director
External Member Independent Officer

External Member Independent Officer● Attendance at Board meetings:● Attendance at Board meetings:

12 out of 13 meetings (92%)

13 out of 13 meetings (100%)● Concurrent positions:● Concurrent positions:

Chairman of the Board of Marubeni
Corporation
Outside Director of Honda MotorCo., Ltd.

Outside Director of Sojitz Corporation
June 2019
Member of the Board of Taisei Corporation

Norio OTSUKA

Fumiya KOKUBU

Director

Director

59 T A IS EI A NNUA L R EP O R T 2 02 1

External Member of the Board of Television
Hokkaido Broadcasting Co., Ltd.
External Auditor of FUJIO FOOD
SYSTEM Co., Ltd.
June 2019
Member of the Board of Taisei Corporation

June 2019
Member of the Board of Taisei Corporation

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Audit & Supervisory Board Members● Attendance at Board meetings:● Attendance at Board meetings:

13 out of 13 meetings (100%)● Attendance at Audit & Supervisory
Board meetings:
14 out of 14 meetings (100%)

Takashi HAYASHI

June 2019
Audit & Supervisory Board Member ofTaisei Corporation

13 out of 13 meetings (100%)● Attendance at Audit & Supervisory

Board meetings:
14 out of 14 meetings (100%)
June 2019
Audit & Supervisory Board Member ofTaisei Corporation

Akihiko NOMA
Audit & Supervisory Board Member(Full-Time)

Audit & Supervisory Board Member(Full-Time)
External Member Independent Officer

External Member Independent Officer● Attendance at Board meetings:● Attendance at Board meetings:

10 out of 10 meetings (100%)

10 out of 10 meetings (100%)● Attendance at Audit & Supervisory● Attendance at Audit & Supervisory

Board meetings:
9 out of 10 meetings (90%)

Board meetings:
10 out of 10 meetings● Concurrent positions:

Yasuhiro SATO
Audit & Supervisory Board Member

Chairman, Member of the Board of
Directors of Mizuho Financial Group,
Inc.
June 2020
Audit & Supervisory Board Member ofTaisei Corporation● Concurrent positions:

Advisor of Chiba Institute of Technology
Special Professor of Chiba Institute ofTechnology

Seishi TASHIRO
Audit & Supervisory Board Member

External Member Independent Officer

June 2020
Audit & Supervisory Board Member ofTaisei Corporation
External Member Independent Officer● Attendance at Board meetings:

10 out of 10 meetings (100%)

Newly
Appointed● Attendance at Audit & Supervisory

Board meetings:
10 out of 10 meetings (100%)

June 2021
Audit & Supervisory Board Member ofTaisei Corporation● Concurrent positions:

Keiko OHARA
Audit & Supervisory Board Member

Founding Partner, Kamiyacho
International Law OfficeDirector, Member of the board(Independent) of Financial ProductsGroup Co., Ltd.
Outside Director of FUJI KYUKO
CO., LTD.

Masamitsu MIURA
Audit & Supervisory Board Member

June 2020
Audit & Supervisory Board Member ofTaisei Corporation

Notes 1: Ms. Atsuko NISHIMURA, Mr. Takao MURAKAMI, Mr. Norio OTSUKA, and Mr. Fumiya KOKUBU are External Members of the Board as defined by the Companies Act, Article 2-XV.
2: Mr. Yasuhiro SATO, Mr. Seishi TASHIRO, Ms. Keiko OHARA and Mr. Masamitsu MIURA are External Audit & Supervisory Board Members as defined by the Companies Act, Article 2-XVI.
3: Ms. Atsuko NISHIMURA, Mr. Takao MURAKAMI, Mr. Norio OTSUKA, Mr. Fumiya KOKUBU, Mr. Yasuhiro SATO, Mr. Seishi TASHIRO, Ms. Keiko OHARA and Mr. Masamitsu MIURA are
independent officers in accordance with the rules of Tokyo Stock Exchange and Nagoya Stock Exchange.

TA I SE I A N N UA L R E P O R T 2 0 2 1 60

Chairman
Takashi YAMAUCHI

Executive Officers
President and Chief Executive Officer

Noriaki KON
Chief of Procurement Division

Yoshiro AIKAWA
Vice Chairman and Executive Officer
Kazuhiko DAI
Executive Vice Presidents
Shigeyoshi TANAKA
Chief of Civil Engineering Division;
In charge of Safety
Shigeyuki SAKURAI
Chief of Business Administration Division;
In charge of New Business Planning
Katsuyuki KANAISupervising Urban Development Division;
In charge of New Business Development
Norihiko YAGUCHI
Chief of Marketing & Sales Division (Integrated)
Takao KANAI
Chief of Marketing & Sales (West Japan) Division
Senior Managing Executive Officers

Yuichi KITAGUCHI
Chief of Marketing & Sales (Building Construction) Division III
Yasumitsu SAKURAI
Deputy Chief of International Operations Headquarters
Shun KITANO
Chief of Safety Administration Division
Shimpei OGUCHI
Deputy Chief of Marketing & Sales (West Japan) Division,in charge of Building Construction
Taku YAMAMOTO
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)
Atsushi SUZUKI
Chief of Nagoya Branch
Makoto OHTA
In charge of Civil Engineering Technology;
General Manager of International Projects Management
Department, Civil Engineering Division
Shinji KAWAMURA
Chief of Kyusyu Branch

Yoshinobu SHIGEJI
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)

Iwao NISHIOKA
Chief of Tohoku Branch

Yasushi YOSHINARI
Chief of Medical & Pharmaceutical Business Division

Akira NAKAYA
Chief of Marketing & Sales (Building Construction) Division II

Jiro TANIYAMA
Chief of Corporate Planning Office

Masahiko OKADA
Chief of Hokushinetsu Branch

Hiroshi TSUCHIYA
Chief of Marketing & Sales (Building Construction) Division I

Yoshio ABE
Deputy Chief of Marketing & Sales (Civil Engineering) Division;
In charge of Olympic and Paralympic Projects

Hiroshi KIMURA
Deputy Chief of Marketing & Sales Division (Integrated),
Supervising Marketing & Sales (Civil Engineering) Division;
Chief of Marketing & Sales (Civil Engineering) Division
Keiji HIRANO
Chief of International Operations Headquarters
Atsushi YAMAMOTO
Chief of Marketing & Sales Promotion Division
Yoshihiro TERAMOTO
Chief of Architecture & Engineering Division (Integrated);
Chief of Building Construction Division
Managing Executive Officers
Kazuhiko HOMBUIn charge of Technology;
In charge of Energy & Environment

Akira EJIMA
Chief of Yokohama Branch
Yasushi KAMEZAWA
General Manager of Design Department,
Civil Engineering Division
Shinsaburo SAWA
Deputy Chief of Marketing & Sales (Building Construction)
Division I
Yoshihiko IKEUCHI
Deputy Chief of Marketing & Sales (Civil Engineering) Division
Ichiro NAGASHIMA
Chief of Taisei Advanced Center of Technology
Kenji SHIRAKAWA
Deputy Chief of Civil Engineering Division;
General Manager of Civil Engineering Department

Masao YOSHIKAWA
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)

Shinichiro TAKAHAMA
Chief of Engineering Division

Takeshi KAGATA
Chief of Kansai Branch

Koichiro OKUHATA
Chief of Tokyo Branch

61 T A IS EI A NNUA L R EP O R T 2 02 1

About the Taisei Group

Strategy for Sustainable Growth

Executive Officers
Weiyu CHUNG
General Manager of Marketing & Business Development
Department (Taiwan), International Marketing & Business
Development Division
Katsuhiko KITAGAWA
In charge of Marketing & Sales (Building Construction),
Marketing & Sales Division (Integrated)
Shinichi HIRAJIMA
Chief of Sapporo BranchToshihiko AOKI
Deputy Chief of International Operations Headquarters(Civil Engineering);
General Manager of Civil Engineering Department
Yasuji YAMAUCHIIn charge of Technology
Shigeo OCHIIn charge of Technology
Miyoshi KATO
Chief of Energy Division;
General Manager of Energy Projects Promotion Department
Masaru KAMATA
Deputy Chief of Marketing & Sales (Building Construction)
Division I

Towards Sustainable Value
Creation

ESG Section

Data Section

Hiroki FUKASAWA
Deputy Chief of Tokyo Branch (Civil Engineering);
General Manager of Civil Engineering Department
Tohru UEMATSU
Chief of Building Renovation Division
Hideki NISHIYAMA
Chief of Shikoku Branch
Mayuki YAMAURA
Chief of Chiba Branch
Takashi YAMAZAKI
Chief of Urban Development Division
Yukio HABA
Deputy Chief of Corporate Planning Office;General Manager of Corporate Planning Department;
General Manager of New Business Planning Department
Yuichiro YOSHINO
Chief of Chugoku Branch
Masahiro YOSHIDAIn charge of Marketing & Sales, Marketing & Sales Division(Integrated)
Yuji TANIGAWA
Chief of Mechanical & Electrical Division

Yuji IJIRI
Chief of Nuclear Facilities Division
Tatsuya SUGAWARA
Chief of International Marketing & Business Development
Division
Junichi KASAHARA
Deputy Chief of Business Administration Division;
General Manager of General Affairs Department
Masato MATSUMURA
Chief of Design Division

Executive Fellows
Toshihiko TSUKA
In charge of Information Planning, Corporate Planning Office

Takaharu YAMAMURA
Deputy Chief of Urban Development Division

Hirotoshi IKEDA
Deputy Chief of Architecture & Engineering Division (Integrated)

Masami SHIMIZU
General Manager of Construction Engineering Department,
Civil Engineering Division

Yozo SHINOZAKI
Deputy Chief of Design Division
Tsuyoshi MARUYA
Deputy Chief of Taisei Advanced Center of Technology;
General Manager of Infrastructure Technology Research
Department

TA I SE I A N N UA L R E P O R T 2 0 2 1 62

ESG Section

Governance Section

Our Basic Approach to Corporate Governance
The Company aims to achieve sustainable development and improvement in the medium- to long-term value of
the Company and its subsidiaries and affiliates (collectively, the Taisei Group) in accordance with the philosophyof the Taisei Group, being “to create a vibrant environment for all members of society” (the Taisei Group
Philosophy) and the so-called “Taisei Spirit,” which embodies our commitment to “Active and Transparent
Culture,” “Value Creation” and “Evolution of Tradition.”
The Company’s fundamental approach to corporate governance is to conduct the management and decisionmaking of the business in a swift, appropriate, fair and transparent manner in order to continue to grow as acorporation in a sustainable and socially responsible manner.
WEB

Fundamental Corporate Governance Policy
https://www.taisei.co.jp/english/profile/governance/

Established Fundamental Corporate Governance Policy
Strengthening the Board’s management decisions and supervisory function
Introduced a System of
Executive Officers●●

Number of Membersof the Board: from 49 to 12

1999

Introduced Independent
External Members of the Board

Established Fundamental Corporate Governance
Policy●Members of the Board: 12

Number of Members of theBoard: 12 (Including 2 External(Including 4 External Members of the Board)

Members of the Board)(Including 4 External Audit & Supervisory Board Members)

2003

Audit & Supervisory Board Members: 6

2015

2021

Chart of Corporate Governance System（As of September 1, 2021)❶ Shareholders / General Meeting of Shareholders
Appointment/Dismissal❾ Accounting Auditor

Appointment/Dismissal❸ Committees within the Board❻ Audit & Supervisory
Board Members/
Audit & Supervisory Board

Cooperation

Audit

6 Audit & Supervisory Board Members(including 4 External Audit &Supervisory Board Members)❼ Audit & Supervisory Board
Members’ Department❹ Management Committee

Support/Guidance/
Cooperation

63 T A I S E I ANNUA L R EPORT 2021

● Governance System Review

Prior
Consultation
and Report

Report/Recommendation

President andChief Executive Officer
Audit❽ AuditingInternal
Department

Audit

Group Companies

12 Member of the Board(including 4 External
Members of the Board)❺ Executive Officers

Appointment/
Dismissal/SupervisionInternal Audit❷ Members of the Board/
Board

Appointment/
Dismissal/Supervision

Cooperation

Cooperation

Appointment/Dismissal

Internal Audit

Report/Recommendation
Direction/Supervision

Operating Divisions

Committee● Executive Personal Committee● Remuneration Committee● CSR Committee, etc.

Operations Committees● Environment Committee● Risk Management Committee, etc.

Special Committee● Compliance CommitteeAbout the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Overview of Corporate Governance System❶ Shareholders / General Meeting of Shareholders
The Company shall endeavor to dispatch the convocation
notice of its General Meeting of Shareholders* at least three
weeks prior to the scheduled date of such General Meeting of
Shareholders in order to provide its shareholders time tosufficiently consider the exercise of their voting rights.
In addition, the Company shall announce the information
through its official website about one week prior to dispatchingeach notice and use a voting right exercise service by scanning
a QR code for smartphones. We also participate in an electronic voting platform for institutional investors.
* Held on June 25, 2021 for fiscal 2020

❷ Members of the Board / Board (Convened 13 times in fiscal 2020)
In order to facilitate the growth of the Company in a sustainable manner and improve its corporate value in the medium
to long term, the Board appropriately fulfills its roles andresponsibilities mainly in (1) indicating the major direction of
its corporate strategy, etc., (2) creating an environment that
supports appropriate risk-taking by senior management, and(3) conducting highly effective supervision of managementand directors from an independent and objective standpoint.
The Board is composed of 12 Members of the Board (eight
Internal Members of the Board and four External
Members of the Board). Nominations of candidates for
Members of the Board are determined by the Board after

deliberation by the Executive Personnel Committee established within the Board.
As of September 1, 2021, one-third of the Members of theBoard were Independent External Members of the Board.
The External Members of the Board (three males and one
female), who have objective viewpoints based on their experience and insight, bring diversity to the deliberations of theBoard while contributing to the strengthening of the supervision of management.

❸ Committees within the Board
For the purpose of invigorating deliberations by the Board,
the Company has established the Governance System
Review Committee, the Executive Personnel Committee, theRemuneration Committee, and the CSR Committee within
the Board. The major members of each committee are
Independent External Members of the Board to clarify
independence and objectivity.

❹ Management Committee
The Management Committee has been established as adecision-making organ for business execution. The authority
to make decisions on business execution delegated to theManagement Committee is set forth in the Regulations ofManagement Committee.

❸ Committees within the Board (As of September 1, 2021)
Name(Frequency)

Governance System
Review Committee

Authority

Consideration of thedevelopment and operationof governance systems(Three times a year)

Name of the authorized members

Chairperson

Atsuko NISHIMURA*

Vice-chairperson

Shigeyuki SAKURAI
Yoshiro AIKAWA

Members(Four times a year)

Remuneration
Committee

Consideration of personnel ofMembers of the Board andExecutive Officers, etc.

(Three times a year)

Fumiya KOKUBU*

Takao MURAKAMI*
Takashi YAMAUCHI Yoshiro AIKAWA

Shigeyuki SAKURAI Atsuko NISHIMURA* Norio OTSUKA*

Chairperson

Norio Otsuka*

Fumiya KOKUBU*

Consideration of remuneration
for Members of the Board andExecutive Officers

Takashi YAMAUCHI
Members

Chairperson

Yoshiro AIKAWA

Shigeyoshi TANAKA

Seishi TASHIRO*

Fumiya Kokubu*
Yoshiro AIKAWA

Members

Yasuhiro SATO*

Shigeyuki SAKURAI Atsuko NISHIMURA* Takao MURAKAMI*
Fumiya KOKUBU*

Consideration of strengthening
the CSR management of theentire Group, including theCompany

Shigeyoshi TANAKA

Members(Four times a year)

CSR Committee

Takao MURAKAMI* Norio OTSUKA*
Takashi HAYASHI

Chairperson

Executive Personnel
Committee

Shigeyoshi TANAKA Norihiko YAGUCHI

Shigeyoshi TANAKA Shigeyuki SAKURAI

Yoshihiro TERAMOTO Atsuko NISHIMURA* Norio OTSUKA*

Keiko OHARA** External Member of the Board

TA I SE I A N N UA L R E P O R T 2 0 2 1 64

ESG Section Governance Section❺ Executive Officers
For the purpose of enabling agile business execution, theCompany has adopted the executive officer system.

❻ Audit & Supervisory Board (Convened 14 times in fiscal 2020)
In accordance with the audit policy and audit plan established by
the Audit & Supervisory Board, Audit & Supervisory Board Members audit the execution of duties by the Members of the Board
independently from the Board by attending the Board and otherimportant meetings, listening to reports from the Members of theBoard,, inspecting important documents, visiting business offices,
Board
etc. Four of the six Audit & Supervisory Board Members are
independent external members with specialized knowledge,
ensuring a neutral and objective monitoring system.
In principle, the Audit & Supervisory Board meets once a month or asotherwise necessary, and receives reports from each Audit & Supervisory Board Members on the status and results of audits. In addition to
statutory matters, the Audit & Supervisory Board discusses and resolves
matters related to the execution of duties by the Audit & Supervisory
Board Members, and receives reports on audit plans and results fromthe Auditing Department and the accounting auditor as needed.

❼ Audit & Supervisory Board Members’ Department
To assist Audit & Supervisory Board Members in the performanceof their duties, the Audit & Supervisory Board Members’ Department has been set up independently of the Board as a dedicatedorganization to support Audit & Supervisory Board Members withthe collection of appropriate information and other tasks.

▍Skill Matrix❽ Auditing Department
Based on the annual auditing plan, the Auditing Department
conducts internal audits of administrative and management
systems as well as the legality and rationality of the management of corporate affairs at all in-house departments andGroup companies.

❾ Accounting Auditor
The Accounting Auditors submit reports on the audit plan and theaudit results to the Audit & Supervisory Board, the Accounting
Department and other internal control departments as needed.
To ensure the external accounting auditors conduct fair andappropriate audits, the management of the Company, Audit &Supervisory Board Members, and the Auditing Department shallhave meetings on a regular and as needed basis, and exchange
their opinions with the external accounting auditors.

❿ Special Committee
To reinforce the promotion of compliance, the Company has set
up the Compliance Committee chaired by an external expert asa Special Committee that responds to consultations with the
President. (see p.72)⓫ Operations Committees
The Company has established operations committees such as
the Environmental Committee and the Risk Management
Committee to deliberate on matters related to the consultation of
the management meeting and the President.

⃝ Specialties and experience required of Members of the Board
Name/Position and Responsibility
Takashi
YAMAUCHI
Yoshiro
AIKAWA
Shigeyuki
SAKURAI
Shigeyoshi
TANAKA
Norihiko
YAGUCHI
Hiroshi
KIMURA

Corporate
Management/
Strategy

Legal/Risk
Management

Finance/
Accounting

Technology

Sales/
MarketingGlobalization

Sustainability

Chairman of the Board

●

●

●

●

President and Chief Executive Officer, Representative Director

●

●

●

●

Executive Vice President, Representative Director; Chief of Business Administration Division; In charge of New Business Planning

●

●

●

Executive Vice President, Representative Director; Chief of Civil Engineering
Division; In charge of Safety●●

Executive Vice President, Representative Director; Chief of Marketing &Sales Division (Integrated)●●

Senior Managing Executive Officer, Director; Deputy Chief of Marketing &Sales Division (Integrated); Supervising Marketing & Sales (Civil Engineering)
Division; Chief of Marketing & Sales (Civil Engineering) Division●●

AtsushiSenior Managing Executive Officer, Director; Chief of Marketing & Sales
YAMAMOTO Promotion Division
Yoshihiro
Senior Managing Executive Officer, Director; Chief of Architecture & EngiTERAMOTO neering Division (Integrated); Chief of Building Construction Division
AtsukoDirector; Chairperson of Governance System Review Committee
NISHIMURA
Takao
Director; Chairperson of Executive Personnel Committee
MURAKAMI
Norio
Director; Chairperson of Remuneration Committee
OTSUKA
FumiyaDirector; Chairperson of CSR Committee
KOKUBU

65 T A I S E I ANNUA L R EPORT 2021

●
●
●

●

●

●

●

●

●

●

●

●

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section▍Effectiveness of the Board
The Board of the Company analyzes and evaluates effectiveness of the Board and discloses the results annually.

Ⅰ．
Fiscal 2020 Initiatives Based on the Fiscal 2019
Evaluation
In fiscal 2020, in order to invigorate and substantiate the deliberations at the Board and further strengthen its supervisory functions,the Company reviewed the governance system and establishedthe Management Committee, a decision-making organ for business execution, and strove for swifter decision-making by delegating a wider range of authority to the executive side.
In the fiscal 2019 evaluation of effectiveness, we identified thechallenges listed below as the Company reviewed the governance system:«Issues identified at the evaluation of the effectiveness in the fiscal 2020»⃝To further enhance discussions from a medium- to long-term

perspective⃝To fully utilize the new governance system to maintain andstrengthen competitiveness⃝To review the operation of the system continuously and flexibly
depending on the situation⃝To prepare concise materials focusing on essential points⃝To make effective use of information equipment for timely
information sharing

Based on the results of the evaluation, the Company
worked on the following in fiscal year 2020:
Enhancement of Deliberations in Formulating a MediumTerm Business Plan
In formulating a new Medium-Term Business Plan (2021–2023),
the Board and the Management Committee strove to enhance
discussions regarding our 10-year vision “Taisei Vision 2030,
2030,”and initiatives for the next three years to realize the vision byholding several meetings and spending sufficient time thereon.
Confirmation of the Operation of the New Governance System
The Governance System Review Committee, one of the committees within the Board, analyzed the agenda of the Board tocompare the content and number of matters taken up for discussion, the time required for discussing them, and so forth withthose for the previous year and verify the appropriateness thereof.
Based on the results of the verification, the Committee examined
the governance system to further improve it, mainly by reviewing
matters to be brought before the Board.
Effective Use of information Devices
By improvement of a cloud environment and effective use oftablet devices, the Members of the Board are provided anenvironment that enables them to view meeting materials in
advance. In addition, a web conference system was introduced
for certain part of the prior briefings for the Board.

Ⅱ. Overview of the Fiscal 2020 Evaluation
The method used to evaluate effectiveness in fiscal 2020, the firstyear of the new system, and the results of the evaluation are as
outlined below.

① Evaluation Method and Process⃝The secretariat prepared a self-evaluation questionnaire(evaluation sheet for the Board) and obtained approval of
its content from the Board, and all Members of Board andAudit & Supervisory Board conducted self-evaluations
using the questionnaire.
⃝The evaluation items in the questionnaire are as listed
below. Items 1–4 consisted of five-grade assessments andfree descriptions, and Items 5 and 6 comprised freedescriptions.
«Evaluation items»
1. Self-evaluation as a member of the Board
2. Structure and operation of the Board
3. Effectiveness of the Board
4. Support system
5. Process and content of deliberation to formulate the Medium-TermBusiness Plan
6. General evaluation of the Board⃝The secretariat collated the results of the selfevaluations, and the External Members of the Board
conducted an overall assessment of them.
⃝At the same time, a lawyer prepared a third-party’s opinion
towards the results of the self-evaluations.
⃝Then the Board deliberated on the effectiveness of fiscal
year 2020 based on the overall assessment and the thirdparty’s opinion.
②Results of the Evaluation of Effectiveness of the Board⃝As the results of analysis, the Board is evaluated asfunctioning effectively through the invigorated, substantial
deliberations on important matters such as the MediumTerm Business Plan and the efficient sharing of materials
under the support system.

Ⅲ. Future Initiatives
In the future, in order to further enhance its effectiveness, theBoard will improve its operation by tackling the challenges
listed below.
⃝To follow up on the Medium-Term Business Plan and focus
on discussions to enhance corporate value in the medium
to long run⃝To narrow down the number of agenda items, simplify
meeting materials and briefings, and take other measures
to secure more time for deliberation⃝To ensure that internal and external executives sharing
awareness and fully exchanging opinions through openended discussion, etc.
⃝To consider specific ways to increase the effectiveness ofgroup governance⃝To review the structure, functions, and discussion methodsof the committees within the Board in a medium to longterm perspective⃝To create an even better environment from the viewpoint of
BCP, such as online conferencing

TA I SE I A N N UA L R E P O R T 2 0 2 1 66

ESG Section Governance Section▍Promotion of Internal Controls▍Implementation of Executive Training

At Taisei Corporation, the Board established the Fundamental
Policy to Enhance Operational Compliance Systems in May
2006 (revised in April 2020) to ensure the systems for conducting operations in an appropriate and efficient manner as aGroup and the reliability of financial reporting. Through thesesystems, we deliver enhanced risk management and compliance. The Company implements various measures, including
training relating to legal compliance with the Antimonopoly Act
with the participation of outside lawyers, mainly for executives
and employees in the sales division.

As necessary training for Members of the Board and Audit &Supervisory Board Members to fulfill their roles and responsibilities, training and materials on related laws and regulations,the articles of incorporation, the Board Rules and internal rulesthat stipulate the Company’s important policies are provided at
the time of appointment.
In addition to the training described above, we provide
opportunities to receive training from outside organizations andexperts on an ongoing basis.
When necessary, we hold worksite visit tours and otherevents for External Members of the Board and External Audit &Supervisory Board Members to deepen their understanding of
the Group and business activities.

WEB

Fundamental Policy to Enhance Operational Compliance Systems
https://www.taisei.co.jp/english/profile/governance/▍Ensuring the Credibility of Financial Reporting
Internal controls on financial reporting based on the Financial
Instruments and Exchange Act are recognized as one of themost important issues for a corporation. We have set up theinternal systems including daily monitoring to ensure thecredibility of the financial reporting disclosed to the public. The
effectiveness of the system is evaluated by the Auditing
Department and audited by KPMG AZSA LLC. The results aredisclosed in the Internal Control Report and in the Audit Reportof Internal Controls. We will fulfill our social responsibility as acorporation by continuing to ensure the effectiveness of theseinternal controls.
In order to continue to operate the internal control systems
relating to financial reporting in a sound manner, we are also
publishing messages from the President, implementing
e-learning, and other campaigns to raise awareness among
executives and employees.

▍Support System for External Members of theBoard and External Audit & Supervisory
Board Members
The Secretarial Department supports the business execution
duties of External Members of the Board, and the Audit &Supervisory Board Members’ Department supports the business execution duties of External Audit & Supervisory Board
Members. Materials and data will be distributed and madeavailable for inspection prior to the meetings of the Board held
in principle once a month. Prior briefings are also held toprovide explanations by internal Members of the Board, etc. on
proposals. Opinion exchange meetings between Members of
the Board are held regularly to share information and promote
cooperation.
These support systems enable the Board to fully and actively
deliberate and express opinions.

ESG study session▍Accountability⃝ Dialogue with Shareholders and Investors
Taisei Corporation established the Information Disclosure
Policy, and has set forth principles for ensuring appropriate
information disclosure and transparency in the Fundamental
Corporate Governance Policy. These policies form the basis forour practice of timely and appropriate information disclosure.
In 2015, the Company established the IR Policy and has
been promoting constructive dialogue through discussions
with shareholders and investors, IR briefings, and the annual
general meeting of shareholders.
Furthermore, we strive for fair information disclosure via the
Taisei Corporation official website, where we publish explanatory material with commentary, summaries of the President’s
speeches and the main question and answer sessions (inJapanese and English) on top of the Medium-Term Business
Plan and materials distributed at results briefings. In addition,
we disclose information to overseas investors in English in ourannual reports and on the Taisei Corporation official English
website. We also report on key business activities and environmental, social and governance (ESG) initiatives in the shareholder newsletter in order to further deepen our shareholders’
understanding of our corporate activities.

WEB

This
Report67 T A I S E I ANNUA L R EPORT 2021

Information Disclosure Policy / Fundamental Policy toEnhance Operational Compliance Systems / IR Policy
https://www.taisei.co.jp/english/profile/philosophy/policies/
Communication with Stakeholders

p.29 Towards Sustainable Value Creation

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section▍Remuneration for Executives① Policies on Determination of the Amount and the
Calculation Method of Remuneration for Executives⃝Policies on Determination of the Amount and the Calculation
Method of Remuneration for the Members of the Board
The remuneration, etc. for Members of the Board of theCompany consists of fixed compensation and performancebased compensation, both of which are monetary compensation, as well as non-monetary performance-based
compensation (stock compensation).
The maximum total amount of fixed compensation andperformance-based compensation (monetary compensation) is
70 million yen per month in accordance with the resolution at
the 146th General Meeting of Shareholders held on June 27,
2006. The maximum total amount of performance-based
compensation (stock compensation) is 35,000 points (1 point =1 share), and ¥100 million per fiscal year respectively in accordance with the resolution at the 160th General Meeting of
Shareholders held on June 24, 2020. The above policy of
remuneration was decided comprehensively considering thematters such as the business scale, content, and performanceof both the Company and the Taisei Group, as well as the duties
and responsibilities of each Member of the Board.
Moreover, with respect to performance-based compensation,
the Company has set performance values that serve as criteria
for monetary compensation and stock compensation and has
established a rule that the ratio of performance-based compensation will increase when performance is favorable compared tothe criteria.
From a medium- to long-term perspective, the Company has aplan to review for reducing the proportion of fixed compensationand increasing the proportion of performance-based
compensation.
However, the compensation for External Members of theBoard shall be fixed compensation only. When determining thedetails of remuneration, etc., the content of remuneration, etc.,
were discussed at the Remuneration Committee, which carries
out preliminary reviews ahead of the Board, held on June 9,2021. (The Chairperson of the Remuneration Committee is NorioOTSUKA, an External Member of the Board. It consists of eight
members including four External Members of the Board.)
Individual remuneration, etc. that reflect his/her responsibility andposition (including the position of Executive Officer when concurrently serving as Executive Officer; the same shall apply hereafter)
have been determined at the Board meeting held on June 25,
2021. We assess that the content is in line with the policy on
determination of the individual remuneration, etc. for theMembers of the Board.
The Remuneration Committee adopts a system that enables
it to appropriately examine the details of remuneration, etc. by
selecting its members from among the Members of the Boardand appointing its chairman and at least half of its members
from among the External Members of the Board.
(Fixed Compensation)
The fixed compensation shall be paid to each Member of theBoard on a fixed date every month during the term of office,and shall be determined according to the responsibilities ofeach Member of the Board, comprehensively taking account of
the Company’s business scale, content, and the duties andresponsibilities of each Member of the Board, and the fixedcompensation to each Member of the Board other than External
Members of the Board, shall be progressively increased
according to his or her position.

(Performance-Based Compensation [Monetary Compensation])
The performance-based compensation (monetary compensation) shall be paid to the Member of the Board on a fixed day ofeach month during the term of office. Since the performanceindicators should be an indicator that approximates theCompany’s added value, the indicator adopted the sum of theamount of (i) net income before income taxes in the nonconsolidated statements of income for the most recent fiscal year and(ii) the total amount of bonuses to be paid to employees for themost recent fiscal year, and provided the systems so thatamount paid to each Member of the Board would be progressively increased according to his or her positional rank.
From July 2021, in order to clarify the linkage between the
responsibilities of the Members of the Board for the Groupmanagement and their remuneration, it was resolved at theBoard held on June 11, 2021, that net income attributable toowners of parent in the consolidated statements of income forthe most recent fiscal year should be used as a revised performance indicator.
(Performance-Based Compensation [Stock Compensation])
The performance-based compensation (stock compensation) is
designed to raise the awareness of Members of the Board tocontribute to improving medium- to long-term business results
and enhancing corporate value by clarifying the policy so as tolink the remuneration of Members of the Board with the TaiseiGroup’s business results and the value of share, and by sharing
with shareholders not only the benefits of a rise in share prices
but also the risk of a decline in share prices. The stock benefit
trust (= Board Benefit Trust) method is adopted, and the date of
the annual General Meeting of Shareholders is the grant date. In
accordance with the “Officers’ Share Benefit Regulations”
established by the Board, each year during his or her term ofoffice, points are granted and accumulated to one (1) share perpoint. In the event that a Member of the Board retires andsatisfies the beneficiary requirements specified in the “Officers’
Share Benefit Regulations,” the Company’s shares equivalent tothe cumulative number of points will be distributed after retirement through prescribed procedures to determine the beneficiary. A part of the payment may be made in cash equivalent to
the market value of the Company’s shares instead of theCompany’s shares.
Net income attributable to owners of parent in the consolidated
statements of income for the most recent fiscal year is used as aperformance indicator because it is an indicator that shows the
final results of the Taisei Group’s business activities. The points tobe granted to each Member of the Board are determined separately for Representative Directors and other Members of theBoard respectively considering the status of achievement ofbusiness performance, duties and responsibilities.
As for the determination of the amount and the points to be
granted for performance-based compensation (monetary compensation and stock compensation), the Remuneration Committee
discusses the following matters to propose to the Board.
(1) Total amount of payment of the remuneration for the Membersof the Board, etc., total points to be granted, the amount of
payment and the points to be granted by position(2) Establishment and revision of the internal rules for remuneration
for the Members of the Board
Now targets and results of indicators associated with performance-based compensation (monetary compensation andstock compensation) are shown on the following page.
TA I SE I A N N UA L R E P O R T 2 0 2 1 68

ESG Section Governance Section(Millions of Yen)

Date of resolution by the Board
Period for the amount of monetary reward

June 25, 2021

June 24, 2020 (Reference)

July 2021–June 2022

July 2020–June 2021

June 25, 2021—

Date of grant of points for stock remuneration
Target or Result

TargetResults

TargetResults

Net income attributable to owners of parent in the most recent
business year

56,00092,554——

Income before income taxes in the most recent business year——

127,000

144,973

Total amount of bonuses for employees borne in the most recent
business year——

(Note)

29,903

Total

—

—

(Note)

174,877

Note: Since no target value is set for the total amount of bonuses for employees, only the result is indicated.

⃝Policies on determination of the amount and the calculation methods of remuneration, etc. for Audit & Supervisory
Board Members
Remuneration for Audit & Supervisory Board Members is determined by consultation of the Audit & Supervisory Board, and themonthly total is limited to ¥12 million based on the resolution of the 134th General Meeting of Shareholders held on June 29,
1994. The amount of remuneration for each Audit & Supervisory Board Member was determined after deliberation by the Audit& Supervisory Board on June 25, 2021.
② Total amount of remuneration, etc. by the category of executives, total amount of remuneration, etc. by type and number
of applicable officers
Category

Internal executives
Number of recipients

Fixed compensation

Performance-based
compensation

Stock compensation

Total amount of
remuneration

Members of the Board

8¥488 million¥224 million¥39 million¥752 million

Audit & Supervisory
Board Members

2

61 million——

61 million

Subtotal

10¥549 million¥224 million¥39 million¥813 million

Category

External executives
Number of recipients

Fixed compensation

Performance-based
compensation

Stock compensation

Total amount of
remuneration

Members of the Board

4¥ 62 million——¥ 62 million

Audit & Supervisory
Board Members

7

50 million——

50 million

Subtotal

11¥112 million——¥112 million

Total amount

Category

Performance-based
Number of recipients
Fixedcompensation
Stock compensation⃝当社の役員ごとの連結報酬等の総額等（ただし、連結報酬等の総額が１億円以上である者）
compensation

Total amount of
remuneration

Members of the Board

12¥550 million¥224 million¥39 million¥814 million

Audit & Supervisory
Board Members

9111 million——

111 million

Subtotal

21¥662 million¥224 million¥39 million¥926 million

Note: Stock compensation represents the amount recorded as expenses.

③ Total amount of consolidated remuneration, etc. by each executive (only for those whose total consolidated remuneration,etc. is no less than ¥100 million)
Name

Total amount ofconsolidated
remuneration, etc.

Executive classification

Takashi YAMAUCHI¥128 million

Yoshiro AIKAWA¥113 million

Amount of remuneration on a consolidated basis, etc. by type
Fixed compensation

Performance-based
compensation

Stock compensation*2

Chairman of the Board*1¥83 million¥38 million¥5 million

President, Representative
Director¥75 million¥33 million¥5 million*1 As of July 1, 2021, Mr. YAMAUCHI’s position is Chairman of the Board.
*2 Stock compensation represents the amount recorded as expenses.

69 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Risk Management / Compliance
At Taisei Corporation, we have formulated a Risk Management Policy and built systems to implement risk management
across the entire Company in order to respond to risk escalation following changes in the business environment.
In terms of handling risk management, we set forth the Basic Risk Management Rules and we identify and selectrisks associated with our business activities, such as quality and technology, laws and regulations, compliance,
information, safety, labor and employment, the environment, natural disasters and others, to reflect these risks inthe operational plans of each division. We work on risk management through the PDCA cycle of reviewing, implementing, evaluating, and improving risk countermeasures.
In particular, in the event of an incident or accident that could have a serious impact on corporate management,
information is centrally handled by the CRO (Chief Risk Management Officer) Secretariat, and reports are made to
the President, who are the chief executives of risk management, and the Board. These risks include elements
related to environmental, social and governance (ESG) such as infectious diseases, safety risks, and bribery. We
share this information with the Risk Management Committee and the Risk Management Council in order to prevent
recurrence of such risks, and implement effective risk management across the whole company.
Company-Wide Risk Management System
Supervision

Board
ReportIncident / Accident Response

President
Chief Executive Officer of Risk Management
ReportInstruction / OrderCountermeasures and Prevention of Reoccurrence

Chief Risk Management Officer (CRO): Chief of Business Administration Division
Supervison of risk management

Risk Management Committee
CRO Secretariat

Risk Management Council
Head Office Risk Management Promotion Committee

Head OfficeWEB

Branch Offices

Group Companies

Branch Offices Risk Management Promotion Committee

Fundamental Policy to Enhance Operational Compliance Systems/Risk Management Policy
https://www.taisei.co.jp/english/profile/philosophy/policies/▍Risk Management System⃝ Promotion of Company-Wide Risk Management System
At Taisei Corporation, we work to continuously operate the risk
management system to appropriately identify and manage risks
associated with business operations. Under the risk management system, the President is the Chief Executive Officer of Risk
Management and the Chief of the Business Administration
Division serves as the Chief Risk Management Officer (CRO).
Each year, we take into account the risks that became apparent
during the current fiscal year to review the risk management for
the following fiscal year through the PDCA cycle and verify theeffectiveness of the risk management system.
Based on the Basic Risk Management Rules, each division of
the Head Office, in cooperation with the branches, reviews andidentifies all risks associated with their business activities andselects the “Head Office-governed risks.” The “Head Officegoverned risks” are then narrowed down to risks that canpossibly have a material impact especially on corporate management. Such risks are selected as “key company-wide risks”
and are subject to risk management across the entire company.
The “key company-wide risks” are determined by the CRO after
deliberation by the Risk Management Committee headed by theCRO. The President and the Board receive reports on the risks
and confirm the operating status of the risk management system
and maintain the effectiveness of the system.
⃝ Business and Other Risks
Taisei Corporation has in place a system to prevent and evaderisks and pursue corrective actions.
Risks that may possibly have a material impact on corporate
management are reported to the Management Committee andthe Board for comprehensively examining and determining thepolicy to handle such risks and reporting the policy under “Business and Other Risks” in the Securities Report.

This
ReportThis
ReportBusiness and Other Risks

pp.80-83 Data Section
Information Disclosure Based on the Recommendations by TCFD

pp.37-39 Towards Sustainable Value Creation⃝ Climate Change-Related Risks
In terms of climate change-related risks, we specify and assess
risks based on various scenarios created and promote initiatives in response to the TCFD Recommendations. (See p.37)
TA I SE I A N N UA L R E P O R T 2 0 2 1 70

ESG Section Governance Section▍Initiatives for Business Continuity Planning (BCP)
To meet its responsibilities as a general construction company
supporting the infrastructure for social and economic activities
even in the event of a major disaster or accident, Taisei Corporation has established the Policy on Business Continuity inTimes of Disaster in 2005 and aims to become a company thatgains the trust of society. Based on this policy, we formulate
the BCP to be implemented in times of disaster, conduct disaster training at least once a year, in which all officers and employees of the Company and the Group companies take part,and fully review and update the BCP based on the results ofthe training and other factors each time.
In recognition of our efforts to improve business continuity
on a continuous and regular basis, we obtained certifications
such as a “BCM rating.” In addition, since 2015 we haveconducted annual joint training with the Japan Federation ofConstruction Contractors and other organizations to establish
a company-wide recovery support system that can immediately respond to requests for assistance.

WEB

Policy on Business Continuity in Times of Disaster
https://www.taisei.co.jp/english/profile/philosophy/policies/▍Information Security Measures
In the construction industry, sharing information with a large
number of stakeholders, such as clients and contractors(specialized contractors, etc.), is essential in the construction process. Therefore, the Taisei Group has set forth“Management of information and intellectual property rights”
under the Action Guidelines for Taisei Personnel and theTaisei Group as a Whole, and has implemented various
measures related to information security. We have alsoestablished the “Policy on the Protection of Personal
Information” and the “Code of Conduct on the Use ofSocial Media.”
At Taisei Corporation, we have compiled a booklet
containing minimum rules to be observed and have been
providing education and guidance to all officers and employees as well as business partners. Since fiscal 2016, we havebeen working to strengthen the information security
environment at our overseas sales offices and worksites. We
also work to strengthen measures against the risk of
information leaks associated with telecommuting (working
from home).
In addition, in order to prevent and mitigate intellectual
property risks such as infringements of rights and technology leaks that have a serious impact on corporate management, we implement thorough risk management in all
business processes.
To respond to the increasingly serious risk of cyberattacks, we established the Taisei-Security Incident
Response Team (SIRT) and work to collect the latest
information on cyber attacks and take measures to prevent

71 T A I S E I ANNUA L R EPORT 2021

cyber attacks in cooperation with external organizations
through the Nippon CSIRT Association, which we joined in
March 2013.
WEB

Policy on the Protection of Personal Information /Code of Conduct on the Use of Social Media
https://www.taisei.co.jp/english/profile/philosophy/policies/▍Response to Risks Related to Infectious
Diseases and Pandemics
New coronavirus (COVID-19) infections have been spreading
widely throughout the world since last year. In response, wehave a system in place where the CRO Secretariat leads theeffort of centralizing information on the infection situation, etc.
at worksites in Japan and overseas and having the entire
Company take a crisis response in a comprehensive andprompt manner. Furthermore, in November 2020, we
realigned the contents of the conventional COVID-19
Response Guidelines and other guidelines so that they could
be adopted for COVID-19 and any new infectious diseases
and formulated the “BCP to be Implemented in the Advent of
Infectious Disease.” Specific countermeasures against infectious diseases are implemented as needed in line with thepolicies of the state and local governments and the guidelinesof the Japan Federation of Construction Contractors andothers. At the same time, we promote telecommuting, split
onsite working, staggered commuting and other such measures on a company-wide basis from the perspective ofconstraining the flow of people and reducing the frequency ofcontact among people.
In addition, from June 2021, with a view to smoothly implementing vaccinations and contributing to the curtailment of
the COVID-19 pandemic, we began workplace vaccination fora total of approximately 30,000 workers wishing to be vaccinated. They included all officers and employees (including
contract workers and dispatched workers) of the Taisei Groupand their families and employees of cooperating companies
entering our worksites nationwide.

● Major Infection-Prevention Measures at Taisei Corporation’s OfficeWork Departments and Worksites① Ensuring handwashing, mask wearing, physical distancing withothers and avoiding 3Cs (closed spaces, crowded places, closecontact settings)② Temperature measurement and hand disinfection at entrances③ Installation of acrylic partitions between seats④ Prohibition of non-urgent business trips and travel acrossprefectures⑤ Avoidance of holding and attending non-urgent gatherings (large
meetings, etc.)⑥ Continuing to implement telecommuting, split onsite working,staggered commuting, etc.
⑦ Active use of online meetings and ICT tools (avoiding businesstrips and face-to-face meetings)⑧ Prohibition of eating and drinking among employees for social
gathering purposesAbout the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Overview of Corporate Governance System
At the Taisei Group, we established the Action Guidelines for
Taisei Personnel and the Taisei Group as a Whole as a basic
principle of corporate behavior and a standard of conduct andjudgment that all officers and employees of the Taisei Groupshould actively practice and comply with.
These Action Guidelines serve as the norm for ensuring
compliance. The Fundamental Policy to Enhance Operational
Compliance Systems clearly sets out that Members of the Board
shall recognize that compliance is at the core of good management and shall faithfully comply with all compliance-related
regulations, including the Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole. These Action Guidelines arealso applied to all Group companies both in Japan and overseas.
Furthermore, as shown in the diagram on the right, the Company has appointed managers, promoters, and implementers ineach division, and has established an internal compliance promotion system. In addition, the Compliance Committee, chaired by
an external expert (lawyer), has been established as the Special
Committee that responds to consultations with the President.
We are working to heighten the awareness among all officers
and employees and further ensure compliance by establishinga system to set stricter disciplinary actions, etc. against any
legal and other violations committed by officers and employees
and to call for compliance with the Antimonopoly Act, implementing various measures based on the recommendations by
the Compliance Committee and compliance training in eachdivision, and taking other steps.

Compliance Promotion System
President
CP*1 Committee

Administrative Structure
Head Office Business Administration Div.

Secretariat

CP General Manager
CP General Promoter(Chief of Business(General Manager of
Administration Division) General Affairs Department)

CP Promotion Section*2

Implementation Structure
Head Office

Branches

Division CP Manager(Chief of Division)

Division CP Manager(Chief of Branch)

Division CP Promoter(General Manager in Charge of
Administration)

Division CP Promoter(Administrative Manager)

CP Implementers(All Department General Managers)*3

CP Implementers(All Department General Managers)*3

All Executives and Employees

All Executives and Employees*1 CP: abbreviation of compliance*2 Promotes and embeds compliance awareness among officers and employees.
Also functions as a secretariat for the Compliance Committee.
*3 All heads of departments are appointed compliance implementers. The heads ofeach department educate and inform all officers and employees in their own
departments about compliance.

WEB

Overall Principles of Conduct
https://www.taisei.co.jp/english/profile/philosophy/▍System and Framework⃝ Compliance Education and Training
At Taisei Corporation, we conduct annual compliance training for
all executives and employees to raise compliance awareness.
In addition, to strengthen compliance across the entire
Group, we regularly hold meetings for legal affairs officers toshare information and opinions on legal affairs issues withGroup companies in Japan. We also hold group compliancehearings to confirm the status of compliance promotion andexchange opinions, and strive to ensure thorough complianceand promote communication.
Furthermore, compliance training is conducted annually forbusiness partners (specialized contractors) and new
employees of the Soyukai (Taisei Corporation’s proprietary

Education/training

Compliance Newsletter(monthly)E-learning training(twice a year)

organization for core subcontractors) to ensure thoroughcompliance throughout the supply chain.
■ Conduct Compliance Questionnaire (Annually)
The Taisei Group conducts the Compliance Questionnaire for all officers
and employees with the aim of understanding the current status andissues related to compliance and further promoting compliance.
The results of the questionnaire are analyzed, measures are
considered, reported to top management, and disclosed to all officers
and employees through the Compliance Newsletter, and necessary
measures are taken in cooperation with related departments topromote compliance.

Themes covered in recent years● Promotion of partnerships with suppliers● Anti-corruption (entertainment and gifts)● Operational results of the Corporate Ethics Helpline● Results of compliance questionnaire, etc.

● The Action Guidelines for Taisei Personnel and the Taisei Group as a Whole● Bribery, harassment, and whistleblowing system● Power harassment● Rules related to contact with other companies in the same industry and in-house leniency system, etc.

TA I SE I A N N UA L R E P O R T 2 0 2 1 72

ESG Section Governance Section▍Whistleblowing and Consultation System
Based on the Whistleblower Protection Act, at the TaiseiGroup, we have established an internal whistleblowing
system (the Corporate Ethics Helpline / Group Helpline /Whistleblowing System) in which executives and employees
as well as external parties (employees of partner companies[primary suppliers] that have a direct contractual relationshipwith the Company) can report and consult on illegal acts
including bribery and other corruption committed byexecutives and employees and acts that violate (or an act
intended to violate) the Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole, and we have establishedconsultation desks in-house and at an external organization(a law firm). The system also allows anonymous reporting toobtain information clues on a wide range of violations. In
addition, to enhance the effectiveness of the system, weFlow of Internal Whistleblowing Based on
the Helpline System

actively conduct educational activities such as distributing
the Help Line Cards summarizing the outline of the system toall officers and employees, and introducing the contents andoperational results of the system through e-learning andCompliance Newsletter.
In response to reports received, we will investigate the facts
and take corrective measures as necessary. In doing so, we
ensure that whistleblowers’ information must be kept
confidential and strictly follow internal rules to ensure thatwhistleblowers are not treated disadvantageously forreporting purposes.
Internal whistleblowing system /Operational results

FY201924 cases

FY202028 casesBoard
CSR Committee
ReportPresident
Whistleblower (anonymous whistleblower accepted)

Compliance Committee
ReportTaisei Corporation and its Group companies
Corporate officers

Employees

Dispatchedtemporary staff

Temporaryworkers

Employees on
secondment
Retired personnel

Whistleblowing/Consultation

Primary suppliers that have a direct contractual
relationship with Taisei Corporation
Employees

WEB

Consultation Desk
Person in charge of implementation:
General Manager of General Affairs Dept.
In-house consultation desk:Manager of Compliance Promotion Office

Response/
ReportInvestigation, discussion on
corrective action, and report

Departmentsin charge

External consultation desk:
Law firm

Contact Information
https://f.msgs.jp/webapp/form/10878_kcq_8/index.do▍Anti-Corruption Policy
At Taisei Corporation, we support theanti-corruption principle of the United
Nations Global Compact which we signed in
2018. Under the Action Guidelines for Taisei
Personnel and the Taisei Group as a Whole,
we have set forth “Ensuring fair trade” and“Maintenance of proper relationships withindividuals or entities engaged in politics and government.” This
indicates that the Taisei Group and Taisei Personnel shall not offer
or promise any unjust money or goods nor provide entertainment or
gifts beyond the social norm to clients and individual officers andemployees of the corporate client and shall not, in their dealings
with politicians and government officials (including foreign
government officials), engage in activities that would violate criminal
laws, such as bribery, or activities that may be understood as such.
We also conduct awareness-raising activities and training regarding
prevention of bribery of politicians and government officials(including foreign government officials) for all officers andemployees while engaging in activities with an awareness of not
being involved in bribery or activities that may be understood assuch at all times.
WEB

Investigation, corrective action

United Nations Global Compact
https:/www.unglobalcompact.org/

73 T A I S E I ANNUA L R EPORT 2021

▍Review of Compliance with the Group’s
Action Guidelines and Handling of Violations
The Taisei Group specifies in its Rules on Enforcement of theCompliance System for the Action Guidelines for Taisei Personnel
and the Taisei Group as a Whole (“Action Guidelines”) that, in theevent that a regular employee or executive has violated the Group’s
Action Guidelines (including anti-corruption, etc.), the facts arereviewed carefully and rigorously by the Board of Directors or theManagement Council, and disciplinary action is taken in accordance with in-house rules.
In the event of a serious violation of compliance against the
Action Guidelines, we thoroughly implement measures to preventthe recurrence of the violation. We also strive to accurately ascertain
the facts by investigating relevant factors, including related persons,course of events, nature and details of the violation, amount ofdamage, and impact on persons of interest, and then report to
relevant authorities as necessary. The perpetrators are subject tonecessary disciplinary action, including dismissal.
There were no cases subject to legal action, such as a fine or
penalty due to corruption, in fiscal 2020. There were also no
employee disciplinary actions and dismissals due to a violation of
the Action Guidelines.

About the Taisei Group

Strategy for Sustainable Growth▍Verification of Compliance with Laws andRegulations (Guidance)
To ensure the legitimacy of bids, Taisei Corporation operates an
in-house system whereby the heads of branch offices confirm
that there are no inappropriate acts in the process of bidding
operations, produce the documents, and keep all bids on file.
Every year, the legal department verifies the legitimacy of bids
and checks compliance with the Construction Business Act, theAntimonopoly Act and the Subcontractors Protection Act.

▍Impartial and Fair Transactions
At Taisei Corporation, we have set forth “Promoting partnerships
with subcontractors and suppliers” under the Action Guidelines
for Taisei Personnel and the Taisei Group as a Whole, and declareestablishing fair and reliable relationships with our partners in the
supply chain and conduct transactions on an equal footing.
Furthermore, we have set out Measures for Dealing with
Anti-Social Forces and Organizations, stipulating that we willtake a resolute stance against anti-social forces and will rejectillegitimate demands. In order to eliminate anti-social forces, wehave included a condition in our contracts, including the basic
contract for specialized subcontractors, declaring that the
supplier is not an anti-social force and that if revealed otherwise,
the contract may be canceled without notice.
In August 2020, we prepared and announced the Declarationof Partnership Building which incorporates prosperous
coexistence for the entire supply chain, new collaboration
regardless of the company’s scale and existing business
relationships, and observance of “Promotion Standards” asdefined in the Act on the Promotion of Subcontracting Small andMedium-sized Enterprises. We disseminate our stance on impartial and fair transactions in connection with preventing corruption
to employees of the Company and Group companies as well as
to our suppliers, including sub-contractors and intermediaries.
We also cover impartial and fair transactions in our CSR
Procurement Guidelines and work to reduce risks so as not to
get involved in transactions with anti-social forces, corruption,bribery, and organizations engaging in inhumane labor.
WEB

Corporate Governance and Internal Controls
https://www.taisei.co.jp/english/profile/governance/▍Thorough Awareness of Structure of Values
and Policies
We created a portable card for the Structure of Values andPolicies which was restructured in 2010 and have worked to instill
and firmly establish it. Since fiscal 2011, we have operated annual
training on the Structure of Values and Policies based on an
e-learning format in order to further spread and consolidate theStructure of Values and Policies while connecting it to social
demands and in-house initiatives.
In fiscal 2020, we conducted an e-learning program for employees on the theme of the Structure of Values and Policies, theTaisei Spirit, and the Action Guidelines for Taisei Personnel andthe Taisei Group as a Whole. The participation rate was 94%.
WEB

Towards Sustainable Value
Creation

ESG Section

Data Section▍Tax Compliance
In August 2020, Taisei Corporation set forth its Tax Policy as a
guideline to comply with laws and regulations concerning tax
affairs and fulfilling its social responsibilities.

Tax Policy
At Taisei Corporation, we set forth the fulfillment of our social
responsibilities by complying with applicable laws and regulations
and in accordance with social norms under the Action Guidelines
for Taisei Personnel and the Taisei Group as a Whole (“Action
Guidelines”).
Based on the Action Guidelines, we set out the following Tax
Policy as a guide to comply with laws and regulations concerning tax
affairs and carry out our social responsibilities.
1. Compliance with Laws and Regulations
We will comply with the relevant laws and regulations concerning
tax affairs at each country and each region where we are engaged
in business activities on the basis of our Action Guidelines.
2. Proper Performance of Tax Obligations
We will duly perform the tax obligations subject to the laws andregulations concerning tax affairs.
3. Enhancing Awareness of Compliance with Tax Laws andRegulations
We will enhance the awareness of compliance with the tax laws
and regulations through education regarding adequate tax practiceand payment.
4. Relationship with Tax Authorities
We will endeavor to maintain the relationship of mutual trust with
tax authorities through faithful and adequate dealing with tax affairs.

WEB

Tax Policy
https://www.taisei.co.jp/english/profile/philosophy/policies/▍Specific Measures for Compliance with the
Antimonopoly Act
Taking the fact seriously that we were indicted on suspicion ofviolating the Antimonopoly Act in connection with the Linear
Chuo Shinkansen construction project, we have implemented
the measures indicated below based on deliberations by theCompliance Committee chaired by an external lawyer andresolution by the Board. We continued to operate and implement
the measures below in fiscal 2020.
1. Revision and tightening of internal rules relating to contracts withcompetitors (September 2018)
2. Reinforcement of procedures to confirm the appropriateness ofthe bidding process (September 2018)
3. Implementation of e-learning for all officers and employees(implemented every fiscal year since fiscal 2018)
4. Implementation of training by an external lawyer for officers andemployees in the sales departments and the technical departmentsthat engage in operations related to taking orders (implemented
every fiscal year since fiscal 2018)

Structure of Values and Policies
https://www.taisei.co.jp/english/profile/philosophy/

TA I SE I A N N UA L R E P O R T 2 0 2 1 74

Data Section

Explanation and Analysis
of Business Results
Fundamental Capital Policy
Taisei Corporation strives to maintain and improve its strong financial foundation in order to enable its stable and continuous growth.
Based on the presumption that the Company will maintain and improve such strong financial foundation, the Company
recognizes the payout ratio and ROE as guidelines for capital policy, considers capital efficiency, and returns profits to stakeholders appropriately while positioning the payment of a long-term stable dividend as a fundamental policy.

Financial Results for Fiscal 2020 and Outlook for Fiscal 2021 and Other Data
Business performance for the period of the Medium-Term Business Plan (2018–2020) (Consolidated)

受注高

Orders Received(Billions of Yen)

2,000
1,500

1,693.9 1,680.1 1,650.6

売上高

Net Sales(Billions of Yen)

営業利益

Operating Income

2,000

1,890.0

1,500

1,650.9

1,751.3
1,480.1

1,640.0

150

1,000

1,000

100

500

500

50

0

0
FY2018FY2019FY2020FY2019FY2020(Forecast)

経常利益
Ordinary Income
経常利益
157.9

(Billions of Yen)

135.9

50
0

20

150

15

112.6

FY2021

92.5

63.0

配当性向

(%)

FY2019FY2020

有利子負債
Interest-Bearing
Debt
320

45

240

29.4

25.4

15

22.7

0
FY2018FY201925
Target in theMedium-term
Business Plan

FY2020

FY2023

16.2

16.6
11.6

10

10

5

Target in theMedium-term
Business Plan

FY2021FY2018FY2019FY2020

FY2023(Forecast)

60

30

FY20210
FY2018(Forecast)

Dividend Payout Ratio

FY2020

(%)

122.0

0
FY2020FY2019

ROE
ROE

200

50

FY201990.0(Forecast)

当期純利益
Net Income Attributable to Owners of Parent
当期純利益(Billions of Yen)

100

93.0

FY2018130.5

FY2018FY2021

173.3

100

167.7

(Forecast)

200

150

153.3

0
FY2018FY2021(Billions of Yen)

200

(Billions of Yen)

217.4

208.1

219.0

FY2018FY2019FY2020230.0160

Maintaining
substantive
debt-freemanagement800
FY2021(Forecast)

FY2023

Cross-Shareholdings(1) Policy on cross-shareholdings
In order to establish and strengthen long-term and stable
relationships of mutual cooperation with its principal business
partners, to enhance its competitiveness, and to improve its
profitability, Taisei Corporation holds shares of such business
partners as cross-shareholdings.
The Company’s policy on cross-shareholdings is to sellsuch shares whose holding, as a result of review, the Boardof Directors (the “Board”) deems inconsistent with the policy
because their holding is economically unreasonable from a
medium-to long-term perspective and because their future
prospects are dim. Thus, the Company believes that the
number of shares held as cross-shareholdings will be reduced appropriately.
75 T A I S E I ANNUA L R EPORT 2021

(2) Verification of the economic rationality ofcross-shareholdings, etc. by the Board
The Board periodically verifies whether it is economicallyreasonable from a medium- to long-term perspective to keep
any of the listed shares held as cross-shareholdings andwhether their future outlook is bright by considering their consistency with the policy and in light of a quantitative comparison of capital costs and return risks.
(3) Criteria for the exercise of voting rights
The Company exercises its voting rights for cross-shareholdings appropriately from the viewpoint of whether holding them
contributes to enhancing corporate value.

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Overview of Business Results
During the fiscal year ended March 31, 2021, in view of the tremendous impact of the COVID-19 pandemic on the world
economy, the Japanese economy continues to face difficulties because of such factors as the vulnerability of corporate
earnings in non-manufacturing industry and prolonged uncertainty as to prospects for employment and employees’
incomes. In the construction industry, although public investment has remained strong, private-sector capital investment
fell significantly due to sluggish corporate performance, and construction investment has not recovered to the previous
year’s level.
Given this situation, the operating results of the Taisei Corporation Group were as follows.
Orders received in the Civil Engineering business and the Real Estate Development business increased. However,orders received in the Building Construction business decreased mainly because the Company received orders for several
large-scale overseas construction projects in the previous fiscal year. Consequently, total orders received decreased 1.8%
year on year to ¥1,650.6 billion.
Net sales decreased 15.5% year on year to ¥1,480.1 billion owing to lower net sales in the Civil Engineering businessand the Building Construction business mainly because several large-scale construction projects were completed or
peaked by the previous fiscal year.
Operating income decreased 22.2% year on year to ¥130.5 billion owing to lower gross profit in the Real Estate Development business, reflecting the sale of highly profitable properties in the previous fiscal year, in addition to lower net sales
in the Civil Engineering business and the Building Construction business. Ordinary income decreased 21.6% year on yearto ¥135.9 billion as non-operating income (expenses) was virtually unchanged from the previous fiscal year. Net income
attributable to owners of parent decreased 24.2% year on year to ¥92.5 billion owing to deterioration of extraordinary
income (losses) mainly because of the recording of reversal of allowance for losses on Antimonopoly Act in the previous
fiscal year. Return on equity (ROE) decreased 5.0 percentage points from the previous fiscal year to 11.6%.
Results according to the reporting segment are as follows (the results for reporting segments include internal transactions between segments).
(1) Civil Engineering
In the Civil Engineering segment, net sales decreased 8.2%
year on year to ¥450.7 billion mainly because several largescale construction projects were completed or peaked by
the previous fiscal year. Operating income decreased 21.4%
to ¥56.0 billion owing to a decrease in gross profit oncompleted construction contracts due to a decline in the
profit margin resulting from the completion of several highly
profitable large-scale construction projects in the previous
fiscal year in addition to lower net sales.
(2) Building Construction
Net sales in the Building Construction segment decreased
21.6% year on year to ¥960.6 billion mainly because several
large-scale construction projects were completed or peakedby the previous fiscal year. Although the profit margin improved because certain large-scale construction projects
whose profitability remained low in the previous fiscal year
were completed in the fiscal year under review, operating
income decreased 22.8% year on year to ¥63.8 billion
owing to a decrease in gross profit on completed construction contracts in line with lower net sales.

(3) Real Estate Development
In the real estate industry, although the vacancy rate in thebuilding leasing market is on an upward trend mainly incentral Tokyo owing to office consolidation and office space
reduction, etc., the overall condominium market continued
to be strongly backed by growing interest in the quality of
the residential environment.
Net sales of the Taisei Group in the Real Estate Development segment increased 12.3% year on year to ¥132.8
billion, because of the sale of properties developed by theCompany and an increase in the number of office buildingsdelivered by consolidated subsidiaries. Operating income
decreased 23.0% year on year to ¥9.6 billion reflecting adecline in gross profit of real estate development operations
because of the sale of highly profitable properties by consolidated subsidiaries in the previous fiscal year.
(4) Other
Net sales decreased 4.0% year on year to ¥13.8 billion, andoperating income decreased 4.6% to ¥1.1 billion.

Major new construction orders in fiscal period under review
ClientProject

Location

Japan Post Real Estate Co., Ltd.

(Tentative name) Construction work of Kuramae projectTokyo

Centara Osaka Special Purpose Company(Tentative name) Construction work of A site project in development project ofNanbanaka 2-chome

Osaka prefecture

Land Transport Authority of Singapore

Contract CR105, Design and Construction of Bored Tunnel between Aviation Park
Station and Loyang Station for the Cross Island Line Phase 1 (CRL1)

Singapore

Japan Water Agency

Construction work of Nanma Dam

Tochigi Prefecture

Kyushu Kumamoto International Airport Co., Ltd.

(Tentative name) Construction work of Kumamoto Airport new building

Kumamoto Prefecture

TA I SE I A N N UA L R E P O R T 2 0 2 1 76

Major construction projects completed in fiscal period under review
ClientProject

Location

Urban Renaissance Agency, East Japan
Rental Housing Branch Office

Redevelopment project of Yotsuya station front areaTokyo

Mizuho Financial Group, Inc.
Japanese Bankers Association
Mitsubishi Estate Co., Ltd.

(Tentative name) Marunouchi 1-3 ProjectTokyo

Ohtemachi142 special purpose company(Tentative name) Ohtemachi 1-4-2 Project

Tokyo

Ministry of the Environment

Interim storage facility for FY2017 (Futaba district two) soilinterim storage facility construction

Fukushima Prefecture

Ministry of Land, Infrastructure, Transport andTourism Kanto Regional Development Bureau

Construction work of port of Tokyo Bay Port Road Nanboku LineNo. 10 area 2 district connecting part and immersed tunnel (No. 7)

Tokyo

Orders received

Millions of Yen

Reporting segment

2020

2021

434,970

463,899

1,117,916

1,040,641

115,812

135,506

Real Estate Development

Civil Engineering
Building Construction

Net sales

Real Estate Development

Reporting segment
Civil Engineering
Building Construction

Millions of Yen

2020

2021

459,109

420,549

1,168,446

922,254

112,422

126,757

Others11,351

10,580

Others11,351

10,580Total

1,680,051

1,650,627

Total

1,751,330

1,480,141

Notes:
1. In Orders received and Net sales, transactions between segments have been eliminated.
2. “Status of production” is not described because it is difficult to define production results of the Group.

Cash Flows(1) Cash Flows from Operating Activities
Net cash provided by operating activities totaled ¥67.4
billion (versus ¥77.4 billion in the previous fiscal year), due
mainly to ¥135.4 billion in income before income taxes.
The main factors behind the ¥9.9 billion decrease
compared with the previous fiscal year included a decreasein accounts payable–other and lower income before
income taxes despite an improvement in the balance ofconstruction-related items mainly due to a decrease intrade receivables.
(2) Cash Flows from Investing Activities
Net cash used in investing activities totaled ¥18.6 billion(versus ¥33.2 billion in net cash provided by investing
activities in the previous fiscal year), due mainly to purchase of tangible fixed assets.
Cash inflows decreased ¥51.9 billion compared withthe previous fiscal year mainly owing to an increase in time
deposits.

(3) Cash Flows from Financing Activities
Net cash used in financing activities totaled ¥37.3 billion(versus ¥66.6 billion in the previous fiscal year), due mainly
to cash dividends paid and acquisition of treasury stock.
The main factors behind the ¥29.3 billion improvement
included proceeds from issuance of bonds.
Accordingly, cash and cash equivalents at the end of the
fiscal year under review amounted to ¥494.2 billion, up¥11.6 billion over the previous fiscal year-end. The balanceof interest-bearing debt for fund-raising purposes amounted to ¥219.0 billion, up ¥10.8 billion from the previous
fiscal year. Of the interest-bearing debt for fund-raising
purposes, non-recourse debt was ¥0.1 billion.

Financial Position(1) Assets
Total assets were ¥1,870.6 billion, a decrease of 1.0% or¥19.3 billion from the end of the previous fiscal year,
principally due to a decrease in trade notes and accounts
receivable (from completed construction contracts).
(2) Liabilities
Total liabilities were ¥1,026.2 billion, a decrease of 9.7% or¥109.8 billion from the end of the previous fiscal year,
mainly reflecting a decrease in accounts payable forconstruction contracts.
77 T A I S E I ANNUA L R EPORT 2021

(3) Net Assets
Despite the acquisition of treasury stock, net assets
amounted to ¥844.4 billion, an increase of 12.0% or ¥90.5
billion from the end of the previous fiscal year, principally
due to recording of net income attributable to owners ofparent and an increase in unrealized holding gains on
securities, net of taxes, due to higher stock prices.
Consequently, the equity ratio rose 5.2 percentage points
to 44.9%.

Data Section

Business and Other Risks

Business and Other Risks
The main risks to which the businesses of the Taisei Corporation Group are exposed and that may have a material
impact on decision-making of investors are described below. In the event that these risks materialize, the Group’sbusiness results, financial position, and social credibility may be adversely affected. The Group recognizes the possibility of the materialization of these risks and strives to avoid it and deal with such risks if they do materialize. Forwardlooking statements herein are based on the judgment of the Group as of the end of the fiscal year ended March 31, 2021.

(1) Market Risk
1) Trend of the construction market
The domestic construction business represents a large
proportion of the Group’s business. Thus, in the event of
sharp contraction of the Japanese construction market or
dramatic change in the competitive environment, orders
received, net sales, and gross profit of the construction
business may decrease. In order to deal with such risk, theGroup is promoting the renovation field, the engineeringbusiness and the real estate development business and ispursuing initiatives to expand the scope of business throughM&A. Moreover, the Group is reinforcing management infrastructure in view of sustainability, including promoting development of technologies that will contribute to resolution ofenvironmental and social issues, such as decarbonization,and innovation of production systems through digital transformation (DX).
2) Fluctuations in prices of materials
If prices of raw materials increase sharply and it is difficult toreflect such increases in contract prices, profitability of
construction projects may deteriorate. In order to deal withsuch risk, the Group strives to reduce costs through centralized purchasing, international procurement, and other measures while monitoring and forecasting the trend of material
prices and continuing initiatives to increase the accuracy of
forecasts.
3) Asset holding risk
The Group holds assets that are valued based on market
prices, such as real estate and securities (risk assets), because of the necessity for operating activities. Such assets
may be impaired if their fair values decline. In order to deal
with such risk, the Group has set a cap for the total of risk
assets and periodically reviews assets held by the Group
from the viewpoint of economic rationality so as to mitigate
the risk.
4) Retirement benefit obligations
If fair value of pension assets declines and the assumptions
for calculating retirement benefit obligations change, such as
the investment yield and discount rate, retirement benefit
expenses may increase. In order to deal with such risk, theGroup has partly introduced a defined contribution pension
plan so as to mitigate the risk.
5) Fluctuations in interest rates
If interest rates sharply increase, funding costs may increase.
In order to deal with such risk, the Group employs financial
instruments, such as interest rate swap derivatives, andreviews each fiscal year the amount raised and funding
methods so as to mitigate the risk.
6) Risks of related or incidental businesses
The Group operates private finance initiatives (PFIs), leisurebusiness, and other businesses related or incidental to thecivil engineering business, the building construction business,and the real estate development business. As the project
period is lengthy in many of these related or incidental

businesses, if the business environment greatly changes,
business profitability may deteriorate. In order to deal withsuch risk, the Group reviews the business plans in responseto change in the business environment so as to mitigate therisk.

(2) Legal Controls over the Civil Engineering
Business and the Building Construction
Business
The civil engineering business and the building construction
business are subject to legal controls such as the Construction Business Act, the Building Standards Act, the Industrial
Safety and Health Act, the Act for Promoting Proper Tendering and Contracting for Public Works, and the Anti-monopoly
Act. Risks with the potential to have a particularly significant
impact on the Group are as follows.
1) Risk of violation of the Construction Business Act
and related laws and regulations
If the Group violates the Construction Business Act and otherrelevant laws and regulations and the competent authorities
impose penalties on or issue guidance to the Group, theGroup may be restricted from conducting operating activities.
In order to deal with such risk, the Group thoroughly confirms
in advance the requirements under the Construction Business Act and other relevant laws and regulations. Also, theGroup conducts activities for raising awareness of its officers
and employees and of specialized contractors and monitors
their compliance statuses.
2) Risk of violation of the Anti-monopoly Act
The Group has established the Action Guidelines for Taisei
Personnel and various other rules on compliance and strives
to ensure thorough compliance. If the Group or its officer or
employee is subject to criminal punishment or administrative
disposition for violation of the Anti-monopoly Act due topersonnel’s miscomprehension or other reasons, the Groupmay be restricted from conducting operating activities. In
order to deal with such risk, the Group has establishedinternal rules concerning procedures to confirm the appropriateness of the bidding process, the internal whistleblowing
system, and other systems so as to prevent violation.
In the event of violation of the Anti-monopoly Act, we willswiftly gather information and strive to accurately identify thesituation and appropriately respond to the matter, while
seeking advice and guidance of lawyers and other experts,
as necessary. At the same time, we will formulate and thoroughly implement recurrence prevention measures. Moreover,the perpetrators are subject to strict disciplinary punishments
based on the rules for disciplinary action.

(3) Risk of Infringement of Intellectual Property
RightsIf the Group’s intellectual property rights for any construction
technology or products and services related to buildings andfacilities are infringed by others, opportunities for receiving

TA I SE I A N N UA L R E P O R T 2 0 2 1 78

orders may be lost or litigation costs may be incurred. Inorder to deal with such risk, patent-related information isshared in a timely manner among the specialized departments. Moreover, internal training is carried out and awareness-raising activities are conducted, including periodic
dissemination of information related to intellectual property
rights, and the Group monitors its intellectual property rights
to ensure their safeguarding.
If any right of the Group is infringed, we will issue warnings to the infringing party and take legal action, as necessary. Moreover, systems are in place for investigation andjudgment by the specialized departments if there is concern
about possible infringement of intellectual property rights ofothers by the Group.

(4) Risk of Inappropriate Financial Reporting
The Group has designed internal control systems to ensure
the appropriateness of financial reporting. If financial reportingis inappropriate owing to personnel’s miscomprehension or
for other reasons, the Company may be delisted or be
subject to rescission of approval to file a blue return (Japanese
tax return system whereby filers can receive advantageous
treatment in the calculation of income). In order to deal withsuch risk, the Group strives to ensure effectiveness of internal
controls, including establishment of rules and manuals,
monitoring of whether accounting processing is appropriately
done in accordance with the manual, and awareness-raising
education for accurate financial reporting.
In the event of inappropriate financial reporting, we willswiftly gather information and strive to accurately identify thesituation. At the same time, information on cases of inappropriate financial reporting will be shared among the administrative departments and other related departments and theGroup will strive to ensure thorough awareness of the importance of appropriate financial reporting. Moreover, the perpetrators are subject to strict disciplinary punishments based on
the rules for disciplinary action.

engineers or workers or for other reasons and appropriatequality is not secured, additional costs associated withrework may be incurred and damages may be imposed on
the Group. In order to deal with such risk, the Group thoroughly operates the quality management systems. At thesame time, we strive to strengthen quality management
capabilities of our officers and employees and of specialized
contractors through such measures as worksite quality
patrols and sharing of previous cases of construction failure.

(7) Risk of Design Flaw
The Group has formulated design management procedures,quality manuals, etc. and established design-related review
systems. However, if a design flaw occurs owing to miscomprehension of personnel or for other reasons and customer
requirements are not satisfied, additional costs associatedwith redesign and rework may be incurred and damages may
be imposed on the Group. To deal with such risk, the Group
has systematized design operations by establishing quality
management systems, etc. and monitors the design processes.

(8) Risk of Process Delays
In the building construction business, the Group strives toensure that construction periods under contracts are appropriate based on examination of preliminary construction plansetc. and implements thorough process management during
construction. However, if delivery of buildings is delayedowing to an accident, trouble, labor shortage, or delay inprocurement of raw materials and equipment, additionalcosts associated with acceleration of construction may be
incurred and damages may be imposed on the Group. To
deal with such risk, the Group has established a systematicmanagement structure and strives to ensure thorough process management through early identification of the laboraffairs situation and grasping of the progress status by meansof patrols by the relevant divisions.

(5) Risk related to Anti-social Forces(9) Risk of Information Leakage and System Trouble

If the Group is approached by anti-social forces at a construction site etc. and engages in any transactions with suchparty owing to miscomprehension or for other reasons, social
credibility of the Group may be damaged and the Group may
be restricted from conducting operating activities. To deal
with such risk, the Group has established a manual on
combatting anti-social forces and strives to ensure thoroughawareness of all the officers and employees about theGroup’s policy on combatting anti-social forces, including by
emailing all officers and employees concerning this issue.
If anti-social forces make unreasonable demands to theGroup, the Group swiftly reports to the police and otherexternal organizations and implements systematic countermeasures. If it is revealed that a counterparty is an anti-social
force after entering into a contract, the Group will consult thepolice, if necessary, and cancel the contract without delay.

If leakage of personal information of the Group or customers
occurs or system failure occurs owing to internal factors,
such as loss or theft of personal computers or smart devicesof the Group’s officers and employees and operational
miscomprehension, or owing to external factors, such as
computer virus infection and cyber terrorism, costs may be
incurred for countermeasures, damages may be imposed on
the Group, and business processes may be delayed orinterrupted. In order to deal with such risk, the Group ensuresthat its officers and employees and specialized contractors
thoroughly comply with information handling rules, guidelines,
manuals, etc. based on the information management regulatory regime. Other measures include continuous updating ofantivirus software, introduction of highly reliable hardware,and implementation of data backup systems. Moreover, theGroup has established an in-house Computer Security
Incident Response Team (CSIRT) in order to reinforce its
preventive measures.
In the event of information leakage or system trouble, theGroup will strive to accurately identify the situation throughcentralization of information and appropriately deal with thematter. In the event of occurrence of a material electronic
information security incident, the in-house CSIRT will work tominimize damage and achieve swift recovery.

(6) Risk Associated with Quality due toConstruction Failure
The Group has formulated operational standards concerning
quality management and construction technology and business process flows and is operating quality management
systems. However, if construction failure occurs owing to
non-compliance with the rules or miscomprehension of

79 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth(10) Risk of Large-scale Disasters
If a large-scale disaster occurs, the head office and branches
may temporarily cease to function and business continuity of
the Group may be put at risk. In order to deal with such risk,
the Group has formulated a business continuity plan (BCP).
For example, in the event of an earthquake of lower 6 intensity on the seven-point Japanese scale, the BCP will automatically come into effect, and the Group will swiftly establish
the countermeasure headquarters to gather information on
damage and conduct recovery work to restore damaged
facilities.
Moreover, we have secured emergency power sources
for the head office and branches and means of communication, established a system for collaboration with industry
associations and specialized contractors, and periodicallyconduct large-scale disaster drills to mitigate the risk.

(11) Risk of the Spread of Infectious Diseases
If there is an epidemic such as COVID-19 or avian flu, and theGroup’s officers and employees, their family members, or
workers of specialized contractors are infected and they
become unable to work, business continuity of the Groupmay be put at risk. To deal with such risk, the Group has
formulated a plan for countermeasures during the epidemic.
As well as raising awareness of its officers and employees
and specialized contractors, the Group stockpiles sanitizers,
face masks, and other personal protective equipment necessary.
During the current COVID-19 pandemic, the Group has
introduced staggered working hours, shift work, and teleworking (working from home). We have suspended nonessential and non-urgent business trips, restricted overseas
travel, and minimized face-to-face participation in internal andexternal meetings. We will implement countermeasuresflexibly while monitoring the situation.

(12) Risk associated with the Working Environment
If the Group is unable to fulfill the employer’s obligation
concerning the working environment and working conditionsof employees, the Group may be held responsible for violation of laws and regulations and a claim for damages may be
filed against the Group. In order to deal with such risk, theGroup has put in place systems for appropriate attendance
management and health management. Moreover, in order toprevent excessive work, we implement measures, such as
review of staffing and contents and allocation of tasks, and
we also encourage employees to take holidays so that the
total working hours will be appropriate.

(13) Risk of Violation of Environmental Laws andRegulations
In the event of violation of environmental laws and regulations
at construction sites etc. of the Group, the Group may besubject to criminal punishment or administrative disposition
or a claim for damages may be filed against the Group. In
order to deal with such risk, the Group has established andoperates an environmental management system and checks
the compliance status through environmental patrols.

(14) Risk of Accidents

Towards Sustainable Value
Creation

ESG Section

Data Sectionof compensation for victims and incurring of additional
construction costs and the Group may be restricted fromconducting operating activities owing to ineligibility to participate in bids.
In order to deal with such risk, the Group is promoting ahealth and safety management structure based on theoccupational health and safety management system. Moreover, we provide health and safety education and guidance toofficers and employees and specialized contractors to prevent occurrence of accidents.

(15) Credit Risk
If a customer’s creditworthiness becomes an issue before theGroup receives the fee for a construction project, collection of
the construction fee may be delayed or the construction fee
may become uncollectible.
In order to deal with such risk, the Group has put in placea systematic project risk management structure and strives toimplement thorough credit management based on specificevidence and objective evaluation.

(16) Contract Risk
If a contract with terms and conditions significantly disadvantageous to the Group is concluded for a project by reflecting
the demand of the owner or the related parties or owing to
the lack of personnel’s understanding of the contract terms
and conditions, profitability of the project may deteriorate
owing to bearing of excessive obligations and the construction fee may become uncollectible. To deal with such risk, theGroup has designed and operates a systematic contract risk
management structure encompassing the sales phase. As
well as thorough application of the screening rules for disadvantageous terms and conditions, the Group requests external experts to evaluate countermeasures, as necessary.
Moreover, we provide in-house training on decision-making
rules etc. to sales personnel so as to mitigate the risk.

(17) Country Risk
The Group operates globally. In the event of terrorism, war,riot, etc. and/or deterioration of the political situation of acountry, business continuity of the Group may be put at risk.
Moreover, if a contract with terms and conditions significantly
disadvantageous to the Group is concluded owing to the lackof understanding of local law and commercial customs,
profitability of the project may deteriorate owing to bearing ofexcessive obligations and the construction fee may become
uncollectible.
In order to deal with such risk, with respect to business
continuity, the Group strives to establish means to ensure thesafety of its officers and employees and a crisis management
system in readiness for an emergency and also collaborates
with the Japanese government, the local embassy of Japan,
external experts, and other parties, as necessary. With
respect to contractual risk, as well as thorough application of
the screening rules, the Group continuously checks thestatus of fulfillment of contractual terms and conditions after
conclusion of a contract in order to mitigate risk.
In the event of occurrence of country risk, we will strive toaccurately identify the situation through centralization of
information and appropriately deal with the matter.

In the event of occurrence of a major accident involving
people and/or structures at construction sites of the Group,
profitability of construction projects may deteriorate because

TA I SE I A N N UA L R E P O R T 2 0 2 1 80

CONSOLIDATED BALANCE SHEETSTAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESAS OF MARCH 31, 2020 AND 2021

Thousands of
U.S. Dollars(Note 1)Millions of Yen
ASSETS

2020

2021

¥

¥

2021

Current assets:
Cash and time deposits (Notes 3 and 4) .....................................

482,723494,308$ 4,464,890

Notes and accounts receivable, trade (Note 4) ............................

615,037

539,838

4,876,145

Cost on uncompleted contracts ..................................................

54,85751,250462,921

Cost on development projects in progress ..................................

105,488

119,828

1,082,360

Other inventories .........................................................................

3,096

2,888

26,086

Other current assets ...................................................................

37,98933,029298,338

Allowance for doubtful accounts .................................................

(167)

(128)

(1,156)

Total current assets ..................................................

1,299,023

1,241,013

11,209,584

Buildings and structures (Notes 9,15 and 18) ..........................

146,673

149,827

1,353,329

Machinery, vehicles and equipment (Notes 15 and 18) ...............................

60,61763,430572,938

Land (Notes 9,15,16 and 18) ...................................................

120,572

120,411

1,087,625

Construction in progress .........................................................

685

2,781

25,120Subtotal ...................................................................

328,547

336,449

3,039,012

Accumulated depreciation .......................................................

(124,147)(130,250)(1,176,497)

Total tangible fixed assets ........................................

204,400

206,199

1,862,515

Intangible fixed assets (Note 15) ..................................................

14,28914,807

133,746

Investment securities (Notes 4, 5 and 6) ..................................

317,622364,0293,288,131

Net defined benefit asset (Note 10) ..........................................

13,205

11,671

105,420

Deferred income tax assets (Note 8) ........................................

12,7473,367

30,413

Other assets (Notes 6 and 13) .................................................

30,22031,231

282,096

Allowance for doubtful accounts ..............................................

(1,510)(1,695)(15,310)

Total investments and other assets ...........................

372,284

408,6033,690,750

Total fixed assets ........................................

590,973

629,6095,687,011

Total assets .................................................

¥ 1,889,996¥ 1,870,622$ 16,896,595

Fixed assets:
Tangible fixed assets:

Investments and other assets:

The accompanying notes are an integral part of these statements.

81 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Thousands of
U.S. Dollars(Note 1)Millions of Yen
LIABILITIES AND NET ASSETS

Data Section

2020

2021

¥

¥

2021

Current liabilities:
Notes and accounts payable, trade (Note 4) ...............................
Short-term loans (Notes 4 and 7) ................................................

491,569
58,401

376,100$ 3,397,164

63,821

576,470

Current portion of long-term debt (Notes 4 and 7) .......................

39,78925,819233,213

Income taxes payable .................................................................

31,956

18,260164,935

Advances received and progress billings on uncompleted contracts ..........

121,646

173,361

1,565,902

Deposits received (Note 4) ..........................................................

146,540

141,861

1,281,375

Allowance for warranty on completed contracts ..........................

3,605

2,395

21,633

Allowance for losses on construction contracts (Note 15) ............

2,270

2,105

19,014

Other current liabilities .................................................................

61,66237,425

338,045

Total current liabilities .....................................

957,438

841,147

7,597,751

Long-term debt (Notes 4 and 7) ..................................................

110,606

130,334

1,177,256

Deferred income tax liabilities (Note 8) .........................................

241

14,530131,244

Deferred income tax liabilities for revaluation of land (Notes 8 and 16) .........

3,280

3,275

29,582Retirement benefits for directors and audit & supervisory board members ........

437

496

4,480

Provision for share-based remuneration for directors ..........................

—

39

352

Long-term liabilities:

Allowance for environmental spending ........................................

2

2

18

Net defined benefit liability (Note 10) ............................................

45,045

17,899161,675

Other long-term liabilities .............................................................

19,031

18,480166,922

Total long-term liabilities ..............................................................

178,642

185,055

1,671,529

Total liabilities .................................................

1,136,080

1,026,202

9,269,280

Net assets (Notes 11 and 19):
Shareholders’ equity:
Common stock
Authorized: 440,000,000 shares
Issued: 224,541,172 shares ....................................................

122,742

122,742

1,108,680

Capital surplus ............................................................................

60,19960,199543,754

Retained earnings .......................................................................

556,305

621,5695,614,389

Less: Treasury stock, at cost (Note 21) ........................................

(65,516)(85,917)(776,054)

Total shareholders’ equity ..............................

673,730

718,5936,490,769

Unrealized holding gains on securities, net of taxes .....................

74,536103,216

932,310Deferred losses on hedging derivatives, net of taxes (Note 13) .........

(44)

(16)

(145)

Accumulated other comprehensive income:

Revaluation reserve for land (Note 16) .........................................

1,231

1,224

11,056

Foreign currency translation adjustments ....................................

(3,165)(3,848)(34,758)

Remeasurements of defined benefit plans, net of taxes (Note 10) .........

3,870

21,675

195,782

Total accumulated other comprehensive income .........

76,428122,251

1,104,245

Non-controlling interests: ................................................................

3,758

3,576

32,301

Total net assets ..............................................

753,916

844,420

7,627,315

Total liabilities and net assets .........................

¥ 1,889,996¥ 1,870,622$ 16,896,595

TA I SE I A N N UA L R E P O R T 2 0 2 1 82

CONSOLIDATED STATEMENTS OF INCOME
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2020 AND 2021

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2020

2021

Construction contracts ............................................................

¥ 1,612,498¥ 1,326,663$ 11,983,226

Real estate development (and other) (Note 9) ..........................

138,833

153,479

1,386,316

1,751,331

1,480,142

13,369,542

Cost of sales (Note 17) ................................................................

1,492,654

1,261,344

11,393,226

Selling, general and administrative expenses (Note 17) ...............

90,922

88,282

797,416

1,583,576

1,349,626

12,190,642

167,755

130,516

1,178,900

5,221

4,947

44,684

2021

Revenue:
Net sales (Note 15):

Costs and expenses (Note 15):

Operating income (Note 15) ............................................................
Other income (expenses):
Interest and dividend income ......................................................
Foreign exchange gains ..............................................................

87

839

7,578

Investment gain on equity method ..............................................

1,070

278

2,511

Interest expenses ........................................................................

(1,112)(970)(8,761)

Provision of allowance for doubtful accounts ...............................

(79)

(215)

(1,942)

Taxes and dues ...........................................................................

(222)

(114)

(1,030)Gains on sales of tangible fixed assets ........................................

1,185

7

63

Gains on sales of investment securities (Note 5) ..........................

497

1,771

15,997

Reversal of allowance for losses on Anti-Monopoly Act ...............

3,043

—

—

Impairment losses on fixed assets (Notes 9,15 and 18) ...............

(1,338)(324)(2,926)

Loss on disposal of fixed assets ..................................................

(78)

(594)

(5,365)

Write-down of marketable and investment securities (Note 5) ..........

(1,502)(1,159)(10,469)

Other, net (Note 5) .......................................................................

258

435

3,929

7,030

4,901

44,269

Income before income taxes ...........................................................

174,785

135,417

1,223,169

Current ....................................................................................

(51,474)(39,649)(358,135)

Deferred ..................................................................................

(1,127)(3,171)(28,642)(52,601)(42,820)(386,777)

Net income .....................................................................................

122,184

92,597

836,392

Income taxes (Note 8):

Net income (loss) attributable to non-controlling interests ...............
Net income attributable to owners of parent ...................................

(96)
¥

(43)

122,088¥

92,554(388)$

836,004

U.S. Dollars(Note 1)

Yen
Amounts per share of common stock:
Net income (Note 19) ..............................................................

¥ 573.14¥ 442.66$ 4.00

Diluted net income (Note 19) ...................................................

—

—

—

Cash dividends applicable to the year (Note 11) ......................

130.00130.00

1.18

The accompanying notes are an integral part of these statements.

83 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2020 AND 2021

Thousands of
U.S. Dollars(Note 1)Millions of Yen
2020

Net income .....................................................................................

2021

2021

¥ 122,184¥ 92,597$ 836,392

Unrealized holding gains on securities, net of taxes .....................

(34,243)

28,684

259,091

Deferred gains (losses) on hedging derivatives, net of taxes .........

1

6

54

Foreign currency translation adjustments ....................................

236

(711)

(6,422)Remeasurements of defined benefit plans, net of taxes ...............

(1,881)

17,811

160,880

Share of other comprehensive income of associates accounted for by the equity method ...............

46

(83)

(750)

Total other comprehensive income ..............................................

(35,841)

45,707

412,853

Comprehensive income .................................................................

¥ 86,343¥ 138,304$ 1,249,245

Owners of parent ........................................................................

¥ 86,182¥ 138,384$ 1,249,968

Non-controlling interests .............................................................

161

(80)

(723)

Other comprehensive income (Note 20):

Comprehensive income attribute to:

The accompanying notes are an integral part of these statements.

TA I SE I A N N UA L R E P O R T 2 0 2 1 84

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETSTAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2020 AND 2021

Millions of Yen

Retainedearnings

Treasury stock

Total
shareholders’equity¥ 60,199¥ 465,127¥ (37,503)¥ 610,565—(29,004)—(29,004)——

122,088—

122,088———(28,013)(28,013)

Sale of treasury stock .........................................................

—

—

—

—

—

Reversal of revaluation reserve for land ..............................

——(2,476)—(2,476)

Changes of scope of consolidation ....................................

—

—

570

—

570

Commonstock

Capital surplus

Balance at March 31, 2019 .................................................

¥ 122,742

Dividends ...........................................................................

—Net income attributable to owners of parent .......................
Acquisition of treasury stock ..............................................

Changes other than shareholders’ equity, net .....................

—

—

—

—

—

Balance at March 31, 2020 .................................................

¥ 122,742¥ 60,199¥ 556,305¥ (65,516)¥ 673,730

Dividends ...........................................................................

——(27,297)—(27,297)

Net income attributable to owners of parent .......................

——

92,554—92,554

Acquisition of treasury stock ..............................................

—

—

—

(20,401)(20,401)

Sale of treasury stock .........................................................

—

(0)

—

0

0

Reversal of revaluation reserve for land ..............................

—

—

7

—

7

Changes of scope of consolidation ....................................

—

—

—

—

—

Changes other than shareholders’ equity, net .....................

—

—

—

—

—

Balance at March 31, 2021 .................................................

¥ 122,742¥ 60,199¥ 621,569¥ (85,917)¥ 718,593

Thousands of U.S. Dollars (Note 1)

Capital surplus

Retainedearnings

Treasury stock

Total
shareholders’equity$ 543,754$ 5,024,885$ (591,780)$ 6,085,539——(246,563)—(246,563)——

836,004—

836,004

Acquisition of treasury stock ..............................................

—

—

—

(184,274)(184,274)

Sale of treasury stock .........................................................

—

(0)

—

0

0

Reversal of revaluation reserve for land ..............................

—

—

63

—

63

Changes of scope of consolidation ....................................

—

—

—

—

—

Changes other than shareholders’ equity, net .....................

—

—

—

—

—

Balance at March 31, 2021 .................................................

$ 1,108,680$ 543,754$ 5,614,389$ (776,054)$ 6,490,769

CommonStock
Balance at March 31, 2020 .................................................

$ 1,108,680

Dividends ...........................................................................
Net income attributable to owners of parent .......................

The accompanying notes are an integral part of these statements.

85 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Millions of Yen
Total
accumulated
othercomprehensive
incomeNoncontrollinginterests¥ 5,738¥ 109,858¥ 1,967¥ 722,390———(29,004)

—

—

—

—

122,088

—

—

—

—

(28,013)

—

—

—

—

—

—

—

2,476

—

—

2,476

—

—

—

—

—

—

—

—

570

Unrealized
holding gains
on securities,
net of taxes

Deferred losses
on hedging
derivatives, netof taxes

Revaluation
reserve for land

Foreign currencytranslation
adjustments¥ 108,782¥ (74)¥ (1,245)¥ (3,343)

—

—

—

—

—

—

—

—

—

—

—

—

—
—

Remeasurements of defined
benefit plans, netof taxes

Total net
assets(34,246)

30

—

178

(1,868)(35,906)

1,791(34,115)¥ 74,536¥ (44)¥ 1,231¥ (3,165)¥ 3,870¥ 76,428¥ 3,758¥ 753,916

—

—

—

—

—

—

—

(27,297)

—

—

—

—

—

—

—

92,554

—

—

—

—

—

—

—

(20,401)

—

—

—

—

—

—

—

0

—

—

(7)

—

—

(7)

—

—

—

—

—

—

—

—

—

—

28,680

28

—

(683)

17,80545,830(182)

45,648¥ 103,216¥ (16)¥ 1,224¥ (3,848)¥ 21,675¥ 122,251¥ 3,576¥ 844,420

Total
accumulated
othercomprehensive
incomeNoncontrollinginterests

Thousands of U.S. Dollars (Note 1)
Unrealized
holding gains
on securities,
net of taxes

Deferred losses
on hedging
derivatives, netof taxes

Remeasurements of defined
benefit plans, netof taxes

Revaluation
reserve for land

Foreign currencytranslation
adjustments$ 673,254$ (397)$ 11,119$ (28,588)$ 34,956

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

(63)

—

—

—

259,056252—$ 932,310$ (145)$ 11,056$

Total net
assets690,344$ 33,945$ 6,809,828

—

—

—

(246,563)———

836,004

—

—

—

—

(184,274)

—

—

—

—

0

—

—

(63)

—

—

—

—

—

—

—

(6,170)160,826

413,964(1,644)412,320$ (34,758)$ 195,782$ 1,104,245$ 32,301$ 7,627,315

TA I SE I A N N UA L R E P O R T 2 0 2 1 86

CONSOLIDATED STATEMENTS OF CASH FLOWSTAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESYEARS ENDED MARCH 31, 2020 AND 2021

Thousands of U.S.
Dollars(Note 1)Millions of Yen
2020

2021

2021

¥ 174,785
9,885
1,338
(213)
131
(492)
3,021
(1,818)(1,881)(3,043)(5,221)
1,112
(87)
1,502
(452)
(1,185)78(1,070)(72,326)(12,382)(8,734)
1,854
10,955(16,383)
21,866(8,607)22,866
2,241
117,740¥ 135,417
10,459324
146(1,209)(165)(27,143)
1,535
17,811—(4,947)
970
(839)
1,159
(1,620)
(7)
594
(278)
75,0903,600(14,780)
167
6,968(115,304)
51,811(4,674)(18,654)(1,448)114,983$ 1,223,169
94,472
2,926
1,319(10,920)(1,490)(245,172)
13,865
160,880—(44,684)
8,761(7,578)
10,469(14,633)(63)
5,365(2,511)
678,259
32,517(133,502)
1,508
62,939(1,041,496)
467,988(42,218)(168,494)(13,079)
1,038,597

Cash received (paid) during the year for:
Interest and dividend received .....................................................
Interest paid ................................................................................
Income taxes paid .......................................................................
Penalty payments associated with Anti-Monopoly Act .................
Net cash provided by (used in) operating activities ...............

5,966(1,106)(39,039)(6,086)77,475

6,142(981)(52,650)—
67,49455,478(8,861)(475,567)—
609,647

Cash flows from investing activities:
Decrease (increase) in time deposits ...........................................
Purchase of tangible and intangible assets ..................................
Proceeds from sale of tangible and intangible assets .....................
Purchase of marketable and investment securities ......................
Proceeds from sale of marketable and investment securities .......
Acquisition of shares of subsidiaries resulting in changes of scope of consolidation ...
Other, net ....................................................................................
Net cash provided by (used in) investing activities ................

30,166(12,991)
23,435(15,005)
14,789(7,114)(19)
33,261

32(12,725)78(12,075)
5,196
—
811
(18,683)289(114,940)
705(109,069)
46,933—
7,326(168,756)

Cash flows from financing activities:
Increase (decrease) in short-term loans .......................................
Proceeds from long-term loans ...................................................
Repayment of long-term loans ....................................................
Proceeds from long-term non-recourse loans .............................
Repayment of long-term non-recourse loans ..............................
Proceeds from issuance of bonds ...............................................
Redemption of bonds .................................................................
Acquisition of treasury stock .......................................................
Cash dividends paid, including those to minority interest .............
Other, net ....................................................................................
Net cash provided by (used in) financing activities ................

(1,523)
23,100(31,027)
181
(8)
—
—
(28,013)(29,004)(353)(66,647)

5,420
25,000(29,533)—(15)
19,882(10,000)(20,401)(27,297)(399)(37,343)

48,957
225,815(266,760)—(136)
179,586(90,326)(184,274)(246,563)(3,604)(337,305)

Effect of exchange rate changes on cash and cash equivalents ......
Net increase (decrease) in cash and cash equivalents .....................
Cash and cash equivalents at beginning of year .............................
Increase (decrease) in cash and cash equivalents resulting from changes of scope of consolidation ...
Cash and cash equivalents at end of year (Note 3) .........................

244
44,333
437,585737¥ 482,655

151
11,619482,655—¥ 494,274

1,364
104,950
4,359,633—$ 4,464,583

Cash flows from operating activities:
Income before income taxes .......................................................
Depreciation and amortization .....................................................
Impairment losses on fixed assets ...............................................
Increase (decrease) in allowance for doubtful accounts ...............
Increase (decrease) in allowance for warranty on completed contracts ....
Increase (decrease) in allowance for losses on construction contracts ...
Increase (decrease) in net defined benefit liability .........................
Decrease (increase) in net defined benefit asset ..........................
Increase (decrease) in remeasurements of defined benefit plans, net of taxes ...
Increase (decrease) in allowance for losses on Anti-Monopoly Act ...
Interest and dividend income ......................................................
Interest expenses ........................................................................
Foreign exchange losses (gains) ..................................................
Write-down of marketable and investment securities ...................
Losses (gains) on sales of marketable and investment securities ......
Losses (gains) on sales of tangible fixed assets ...........................
Losses on disposal of fixed assets ..............................................
Investment losses (gains) on equity method ................................
Decrease (increase) in trade receivables ......................................
Decrease (increase) in cost on uncompleted contract .................
Decrease (increase) in cost on development projects in progress ......
Decrease (increase) in other inventories .......................................
Decrease (increase) in accounts receivables - other ....................
Increase (decrease) in trade payables ..........................................
Increase (decrease) in advances received and progress billings on uncompleted contracts ..
Increase (decrease) in deposits received .....................................
Increase (decrease) in accounts payable - other ..........................
Other, net ....................................................................................

The accompanying notes are an integral part of these statements.

87 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Taisei Corporation (the “Company”) and its consolidated subsidiaries (collectively the“Group”) have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its
related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
The accompanying consolidated financial statements have been reformatted and translated into English (with some expanded descriptions)from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary information,
included in the statutory Japanese language consolidated financial statements but not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using theprevailing exchange rate at March 31, 2021, which was ¥ 110.71 to U.S. $ 1. The translations should not be construed as representations ofwhat the Japanese yen amounts have been, could have been, or could in the future be when converted into U.S. dollars at this or any other rateof exchange.

2. Summary of Significant Accounting Policies(a) Consolidation and equity method
The Company prepares the consolidated financial statements including the accounts of the Company and those of its majority-owned
subsidiaries, whether directly or indirectly controlled. The consolidated financial statements include the accounts of 43 subsidiaries for the year
ended March 31, 2021 (42 subsidiaries for the year ended March 31, 2020).
Newly established TAISEI DEVELOPMENT HANOI was included in the scope of consolidation.
Exclusion of certain small-scale subsidiaries from the scope of consolidation does not have material impact on the consolidated financial
statements.
All significant intercompany transactions, account balances and unrealized gains or losses have been eliminated in consolidation.
The financial statements of non-consolidated subsidiaries, and investments in affiliated companies in which the Group does not have control but
has the ability to exercise significant influence, are accounted for by the equity method.
The financial statements in 17 non-consolidated subsidiaries, mainly consist of EHIME HOSPITAL PERTNERS Co., Ltd. and OMIYA CROSSPOINT Co., Ltd. are accounted for by the equity method for the year ended March 31, 2021.
Investments in 37 affiliated companies are also accounted for by the equity method for the year ended March 31, 2021 (41 affiliatedcompanies for the year ended March 31, 2020).
Newly established 3 companies and other 1 company being increased in importance were included in the scope of equity method.
8 liquidated companies were excluded from the scope of equity method.
Exclusion of certain small-scale non-consolidated subsidiaries and the affiliated company from the scope of equity method does not havematerial effect on the consolidated financial statements.
All consolidated subsidiaries other than 20 consolidated subsidiaries have the same balance sheet date, March 31, corresponding with thatof the Company. As for the 20 consolidated subsidiaries whose fiscal year ends at December 31, their financial statements as of December 31
are used in preparation of the consolidated financial statements. Significant transactions, if any, in the period from January 1 to March 31 havebeen adjusted in the consolidated financial statements.
(b) Valuation of Assets and Liabilities of Subsidiaries
In the elimination of the investments in subsidiaries, the assets and liabilities of the subsidiaries including the portion allocated to non-controllinginterests are recorded based on their fair value at the time the Company acquired control of the respective subsidiaries.
(c) Goodwill included in Intangible assets
Significant excesses of investment cost over net equity of consolidated subsidiaries and affiliated companies accounted for by the equity method
are recognized as goodwill (negative goodwill, if credit balance), and amortized principally over the estimated useful lives or less than twenty
years on a straight-line basis. However, immaterial goodwill is charged to income in the year of acquisition. Negative goodwill is credited toincome upon occurrence.
(d) Foreign Currency Translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at year-end exchange rates. The resulting
exchange gains and losses are reflected in the consolidated statements of income. All revenues and expenses associated with foreign currencies
are translated at rates of exchange prevailing when such transactions are made.
The financial statements of consolidated foreign subsidiaries and affiliated companies under the equity method are translated into Japanese
yen at exchange rates prevailing at the respective year-end dates except for shareholders’ equity accounts, which are translated at historicalrates. The resulting foreign currency translation adjustments are presented in accumulated other comprehensive income in the net assets sectionof the consolidated balance sheets.
(e) Cash and Cash Equivalents in the Consolidated Statements of Cash Flows
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-term highly liquid investments withmaturities not exceeding three months at the date of purchase and with insignificant risks of change in value are considered to be cash and cash
equivalents.
(f) Securities
Securities held by the Group are classified into (a) debt securities intended to be held to maturity, (b) equity securities issued by subsidiaries andaffiliated companies, and (c) all other securities that are not classified in any of the categories above (hereafter “available-for-sale securities”).
Debt securities intended to be held to maturity are stated at amortized cost. Equity securities issued by subsidiaries and affiliated companies
that are not consolidated or accounted for by the equity method are stated at moving-average cost. Available-for-sale securities with available
fair market value is stated at fair market value. Unrealized holding gains and losses on securities, net of taxes are reported as a separate
component of accumulated other comprehensive income in the net assets section. Realized gains and losses on sales of such securities arecomputed using moving-average cost. Other securities with no available fair market value are stated at moving-average cost.

TA I SE I A N N UA L R E P O R T 2 0 2 1 88

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

(g) Revenue Recognition of Construction
Revenue associated with construction contracts of which the outcome can be reliably estimated is accounted for by the percentage-ofcompletion method; otherwise contract revenue is accounted for by the completed-contract method. The percentage of completion at the endof the reporting period is determined by the percentage of the cost incurred to the estimated total costs.
(h) Inventories
The Company and its certain subsidiaries develop real estate projects on their own account. Cost on development projects in progress aremainly stated at the lower of cost based on the specific-identification cost method or net realizable value. For this purpose, the cost includes thepurchase cost of land, incidental costs, direct development costs and (in relation to certain developments by one of the subsidiaries) interest
expenses.
Cost on uncompleted contracts is mainly stated at cost based on the specific-identification cost method.
(i) Tangible Fixed Assets
Tangible fixed assets except for buildings and structures are recorded at cost and depreciated principally by the declining-balance method overthe standard useful lives prescribed in the Corporation Tax Law. Buildings and structures are principally depreciated by the straight-line method.
(j) Accounting for Lease Transactions
Finance leases, except for certain immaterial or short-term finance leases in which ownership is not transferred to lessee, are capitalized.
Capitalized leased assets whose ownership is transferred to lessee are depreciated by the same method of depreciation applied to property,
plant and equipment. Capitalized leased assets whose ownership is not transferred to lessee are depreciated to a residual value of zero by thestraight-line method over a useful life period corresponding to the lease contract period.
(k) Derivatives and Hedge Accounting
Derivative financial instruments are stated at fair value and changes in fair value are recognized as gains or losses unless derivative financial
instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Company and its consolidated domestic
subsidiaries defer recognition of gains or losses resulting from changes in fair value of the derivative financial instruments until related losses orgains on hedged items are recognized.
If interest rate swap contracts are used as hedge and meet certain hedging criteria, net amounts to be paid or received under the interest
rate swap contracts are added to or deducted from the interest on liabilities for which the swap contract were executed.
(l) Income Taxes
The Company and its wholly owned domestic subsidiaries apply the Consolidated Taxation System.
(m) Allowance for Doubtful Accounts
Allowance for doubtful accounts is provided to reserve for probable losses from bad debt. It consists of the estimated uncollectible amount ofcertain identified doubtful receivables and the amount estimated on the basis of the past default ratio for normal receivables.
(n) Allowance for Warranty on Completed Contracts
Allowance for warranty on completed contracts is provided as the amount estimated using an actual ratio of related losses during the pastcertain periods.
(o) Allowance for Losses on Construction Contracts
Allowance for losses on construction contracts is provided with respect to construction projects for which eventual losses are reasonably
estimated.
(p) Retirement Benefits for Directors and Audit & Supervisory Board Members
Retirement benefits for directors and audit & supervisory board members of certain consolidated subsidiaries have been set up in accordancewith each company’s regulations.
(q) Provision for share-based remuneration for directors
Provision for share-based remuneration for directors is provided based on estimated amount of share-based remuneration obligation at the endof the fiscal year in accordance with “Officers’ Share Benefit Regulation”.
(r) Allowance for Environmental Spending
Allowance for environmental spending is provided based on estimated costs for disposal of Polychlorinated Biphenyl (“PCB”) waste, which is
obligated to dispose by the Act on Special Measures Concerning Promotion of Proper Treatment of PCB Waste.
(s) Accounting Method for Retirement Benefit
Net defined benefit liability is provided for severance and retirement benefits for employees and executive officers of the Company’s certain
consolidated subsidiaries based on estimated amounts of projected benefit obligations and plan assets at the year-end.
In calculating projected benefit obligations, the method of attributing estimated amounts of retirement benefits to the period until this fiscal
year is based on the benefit formula basis.
Past service costs are amortized using the straight-line method (some consolidated subsidiaries use the declining-balance method) over
1-10 years, which is not longer than an average remaining service period of the employees when the costs are incurred.
Actuarial gains and losses are amortized from the subsequent fiscal year (some consolidated subsidiaries amortize actuarial gains and losses
from the current fiscal year) using the straight line method (some consolidated subsidiaries use the declining balance method) over 1-10 years,
which is not longer than an estimated average remaining service period of the employees when the gains or losses are incurred.
(t) Net Income and Cash Dividends per Share
Net income per share is calculated by dividing net income available to common shares by the weighted average number of common shares
outstanding during the year. Cash dividends per share shown for each year represent dividends declared as applicable to the respective years.

89 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section(u) Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications have no impact onpreviously reported results of operations or retained earnings.
(v) Application of tax effect accounting for the transition from the Consolidated Taxation System to the Group Tax Sharing System
Regarding the transition from the Consolidated Taxation System to the Group Tax Sharing System, established by “Act on Partial Amendment of
the Income Tax Act and Others” (Act No.8 of 2020), and regarding items of the Non-Consolidated Taxation System that were revised inaccordance with the transition to the Group Tax Sharing System, the Company and part of its domestic subsidiaries, in accordance with thetreatment in paragraph 3 of “Practical Solution on the Treatment of Tax Effect Accounting for the Transition from the Consolidated Taxation
System to the Group Tax Sharing System” (PITF No.39, March 31, 2020) , did not apply the provisions in paragraph 44 of “Guidance on
Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No.28, issued on February 16, 2018)
and calculated the amount of deferred income tax assets and liabilities based on the provisions of tax laws before the amendment.
(w) Accounting policies and procedures adopted in the absence of requirements in relevant accounting standards, etc. that specifically apply
The Company and certain consolidated subsidiaries do not recognize the Construction Joint Venture ( the “JV”) as an independent accounting
unit, but incorporate it into their accounting in the way of recording the amount of revenue and cost of sales associated with construction
contracts according to the interests held in the JV.
(x) Significant Accounting Estimates- Revenue recognition to construction contracts (the “Revenue”) in applying the percentage-of-completion method(1) Carrying amounts in the current year’s consolidated financial statements
The amount of the Revenue in applying the percentage-of-completion method in the consolidated financial statements was ¥ 1,334,601 millionand ¥ 1,083,388 million ($ 9,785,819 thousand), for the fiscal year ended March 31, 2020 and 2021, respectively.
(2) Information on the nature of significant accounting estimates for identified items
The amount of the Revenue in applying the percentage-of-completion method is based on the reasonably estimated amount of total revenue,
the reasonably estimated amount of total construction costs and the reasonably estimated percentage of completion at the end of the current
fiscal year. Since the estimates involve a high degree of uncertainty, in the case that estimates need to be revised, the Revenue may change andaffect the results of following accounting periods.
(y) Accounting standard issued but not yet effective
The following standard and guidance were issued but are not yet effective- “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29 (revised March 31, 2020), March 30, 2018)- “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No.30 (revised March 26, 2021), March 30,
2018)(1) Overview
The IASB and the FASB jointly developed and issued a converged Standard on the recognition of ‘Revenue from Contracts with Customers’(IFRS 15 for IASB and Topic 606 for FASB.) in May, 2014. IFRS 15 will be applied from the fiscal year beginning on or after January 1, 2018 andTopic 606 will be applied from the fiscal year beginning after December 15, 2017. Under these circumstances, the ASBJ developed theconverged standard for revenue recognition and issued the “Accounting Standard for Revenue Recognition” along with “Implementation
Guidance on Accounting Standard for Revenue Recognition”.
In developing the ‘Accounting Standard for Revenue Recognition,’ the principal policy of the ASBJ is to incorporate the basic concept of
IFRS 15 from the perspective of comparability between financial statements, as one way to establish consistency with IFRS 15. The ASBJ will
add alternative treatments in the case that there are different accounting treatments prevalent in accounting practices in Japan that requireconsideration, to the extent that they do not impair comparability.
(2) Effective date
Effective from the beginning of the fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Company and its consolidated subsidiaries are currently in the process of determining the effects of these new standards on the
consolidated financial statements.
- “Accounting Standard for Fair Value Measurement” (ASBJ Statement No.30, July 4, 2019)- “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No.31, July 4, 2019)- “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, July 4, 2019)- “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019)- “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, March 31, 2020)(1) Overview
In order to enhance comparability with internationally recognized accounting standards, “Accounting Standard for Fair Value Measurement” and“Implementation Guidance on Accounting Standard for Fair Value Measurement” (together, hereinafter referred to as “Fair Value AccountingStandards”) were developed and guidance on methods measuring fair value was issued. Fair Value Accounting Standards are applicable to thefair value measurement of the following items:
Financial instruments in “Accounting Standard for Financial Instruments”; andInventories held for trading purposes in “Accounting Standard for Measurement of Inventories.”“Implementation Guidance on Disclosures about Fair Value Measurement” has been revised
requiring disclosure of financial instruments classified by level in the fair value hierarchy.
(2) Effective date
Fair Value Accounting Standards and guidance will be effective from the beginning of the consolidated fiscal year ending March 31, 2022.
(3) Effects of the application of the standards
The Company and its consolidated subsidiaries are currently in the process of determining the effects of these new standards on the
consolidated financial statements.

TA I SE I A N N UA L R E P O R T 2 0 2 1 90

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021(z) Changes in presentation method- Adoption of “Accounting Standard for Disclosure of Accounting Estimates”
The Company and its subsidiaries adopted ASBJ Statement No. 31 “Accounting Standard for Disclosure of Accounting Estimates” (March 31,2020) to the consolidated financial statements for the current consolidated fiscal year, and therefore significant accounting estimates aredisclosed in the note to the consolidated financial statements.
The note does not include information for the prior consolidated fiscal year in accordance with the transitional provision set out in paragraph 11of the Accounting Standard.
(aa) Additional information- Performance-based share remuneration plan for directors(1) Overview
The Company introduced the performance-based share remuneration plan “Board Benefit Trust (the “BBT”)” for directors.
The Company’s common stock are acquired through the BBT with money contributed by the Company (the “Stock”). The directors will have theStock and the amounts converted at market value of the Stock which are provided through the BBT when directors retire in accordance with
“Officers’ Share Benefit Regulation”.
(2) Shares held by the BBT
The shares held by the BBT are reported by the book value of the BBT (excluding the incidental expenses) as part of the treasury stock in the net
assets. At the end of the fiscal year, the book value of treasury stock held by the BBT was ¥ 391 million and the number of the shares was 106
thousand shares.
- Accounting policies and procedures adopted in the absence of requirements in relevant accounting standards, etc. that specifically apply
The Company and its subsidiaries adopted “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections”(ASBJ Statement No.24, March 31, 2020) to the consolidated financial statements for the current consolidated fiscal year, and therefore“accounting policies and procedures adopted in the absence of requirements in relevant accounting standards, etc. that specifically apply toevents or transactions that are accounted for” are disclosed.

3. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2020 and 2021 consisted of the following:Thousands of
U.S. Dollars

Millions of Yen
2020

2021

2021

Cash and time deposits ..........................................................................

¥ 482,723¥ 494,308$ 4,464,890

Less: Time deposits with maturities exceeding three months ..................

(68)

(34)

(307)

Cash and cash equivalents .....................................................................

¥ 482,655¥ 494,274$ 4,464,583

4. Financial Instruments(1) Policies for using financial instruments
The Group restricts investments to the low risk assets such as deposits, and raise funds by the indirect finance such as loans from bank as well
as by the direct finance such as issuing corporate bonds or commercial papers.
Derivative financial instruments are employed mainly for hedging fluctuation in interest rate and foreign currency exchange, not for
speculation.
Receivables: trade notes and trade accounts are exposed to the credit risks of customers. In order to reduce such risks, the Group conducts
strict credit examinations when orders are received, and afterward manage the receivables individually and make effort to detect reduction of
credit risks early.
For investment securities which are mainly debt securities intended to be held to maturity and shares held to keep the relationship withbusiness partners, the Group regularly monitors the fair value or financial positions of the invested companies, and revises the portfolio timely(except for debt securities intended to be held to maturity) considering the relationship with them.
Debts, trade payables: trade notes and trade accounts are debts mostly due within one year. Loans, commercial papers and bonds areprimarily for working capital, and have maturity dates of five years or less. Although the loans or bonds issued at variable rates are exposed tointerest rate fluctuation risk, the risk is hedged by derivative transactions (interest rate swap contracts).
The Group primarily utilizes derivative transactions related to interest rates in order to mitigate the fluctuation risk in interest rates or to reduce
financing costs, and derivative transactions related to currency in order to mitigate the foreign exchange risk. These transactions are exposed to
the fluctuation risk in interest rates and the foreign exchange risk. However, the Group is exposed to limited risk, because most of them arehedged by the corresponding transactions. They consider the credit risk to be low, because they conduct derivative transactions solely withreliable international financial institutions.
The Group executes and manages derivative transactions in accordance with internal rules. Their Finance Departments are responsible for
conducting, evaluating transactions and managing related risks.
(2) Fair Value of Financial Instruments
Book value of the financial instruments was included in the consolidated balance sheet, the fair value of said items as of March 31, 2020 and
2021, was as follows. Items for which it is extremely difficult to calculate the fair value were not included in the following table (see “Note 2”
below).

91 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Millions of Yen
2020
Book Value

Fair Value

Difference

ASSETSCash and time deposits .................................................................................

¥ 482,723¥ 482,723

Notes and accounts receivable, trade ............................................................

615,037

615,046¥—
9Investment securities
Debt securities intended to be held to maturity ..........................................

281

288

7

Available-for-sale securities ........................................................................

253,004

253,004—

Notes and accounts payable, trade ...............................................................

491,569

491,569—

Short-term loans and long term loans due within one year .............................

87,93488,033(99)

LIABILITIESLong-term non-recourse loans due within one year .......................................

15

15

(0)

Straight bonds due within one year ................................................................

10,00010,040(40)

Deposits received ..........................................................................................

146,540

146,540—

Straight bonds ...............................................................................................

30,00030,166(166)

Long-term loans ............................................................................................

80,03880,572(534)

Long-term non-recourse loans ......................................................................

158

174

(16)

[Derivative financial instruments (*)] ................................................................

12

12

—

Millions of Yen
2021
Book Value

Fair Value

Difference

ASSETSCash and time deposits .................................................................................

¥ 494,308¥ 494,308

Notes and accounts receivable, trade ............................................................

539,838

539,849¥—
11

Investment securities
Debt securities intended to be held to maturity ..........................................

269

274

5

Available-for-sale securities ........................................................................

299,288299,288—

Notes and accounts payable, trade ...............................................................

376,100

376,100—

Short-term loans and long term loans due within one year .............................

89,23989,309(70)

LIABILITIESLong-term non-recourse loans due within one year .......................................

15

15

(0)

Straight bonds due within one year ................................................................

—

—

—

Deposits received ..........................................................................................

141,861

141,861—

Straight bonds ...............................................................................................

50,00050,159(159)

Long-term loans ............................................................................................

79,62180,219(598)

Long-term non-recourse loans ......................................................................

143

157

(14)

[Derivative financial instruments (*)] ................................................................

66

66

—

Thousands of U.S. dollars
2021
Book Value

Fair Value

Difference

ASSETSCash and time deposits .................................................................................

$ 4,464,890$ 4,464,890

Notes and accounts receivable, trade ............................................................

4,876,145

4,876,244

99

$

—

Investment securities
Debt securities intended to be held to maturity ..........................................

2,430

2,475

45

Available-for-sale securities ........................................................................

2,703,351

2,703,351—

LIABILITIES
Notes and accounts payable, trade ...............................................................

3,397,164

3,397,164—

Short-term loans and long term loans due within one year .............................

806,061

806,693(632)

Long-term non-recourse loans due within one year .......................................

135

135

(0)

Straight bonds due within one year ................................................................

—

—

—

Deposits received ..........................................................................................

1,281,375

1,281,375—

Straight bonds ...............................................................................................

451,630

453,067(1,437)Long-term loans ............................................................................................

719,185

724,587(5,402)Long-term non-recourse loans ......................................................................

1,292

1,418

(126)

[Derivative financial instruments (*)] ................................................................

596

596

—

(*) Note: The assets and liabilities are reported as net amounts.

TA I SE I A N N UA L R E P O R T 2 0 2 1 92

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

Note 1: The calculation method of the fair value of financial instrument and securities, derivative transactions
ASSETS∙ Cash and time deposits and Notes and accounts receivable, trade
The fair value of these financial instruments is almost equivalent to the book value, due to the short term settlements; although, the fair value of
receivables due after one year is based on the present value of discounted cash flows using the interest rate determined by the factors of theestimated collection terms and credit risks with respect to each receivables categorized by collection terms.
∙ Investment securities
The fair value of marketable securities is based on the quoted market value, and bonds are based on the market value, the price indicated by athird party such as broker or the present value of discounted cash flows.
See the notes on “5. Securities” for notes pertaining to securities categorized by the purposes for which they are held.
LIABILITIES∙ Notes and accounts payable, trade, Short-term loans and Long term loans due within one year and Deposits received
The fair value of these financial instruments are almost equivalent to the book value, due to the short term settlements; although, the fair value of
long-term loans due within one year is based on the same method as that for long-term loans.
∙ Long-term non-recourse loans due within one year, Long-term loans and Long-term non-recourse loans
The fair value of these financial instruments is based on the present value of discounted cash flows by the interest rate which may be applicablewhen the same kind of loans is conducted.
∙ Bonds
The fair value of marketable bonds is based on the quoted market value, otherwise the fair value of nonmarketable bonds is based on thepresent value of discounted cash flows using the interest rate determined by the factors of the estimated redemption terms and issuer’s credit
risk.
[Derivative financial instruments]
See the notes on “13. Derivative Transactions”.
Note 2: Financial instruments which are extremely difficult to calculate the fair value
Nonmarketable securities (book value amount to ¥ 64,337 million and ¥ 64,472 million ($ 582,350 thousand) as of March 31, 2020 and 2021,
respectively) are not included in the ASSETS Investment securities–Available-for-sale securities above, as it is extremely difficult to calculate thefair value because they have no quoted market prices and the future cash flows cannot be estimated.
Note 3: Scheduled redemption amounts after the consolidated balance sheet date for monetary claims and securities with period of maturities
as of March 31, 2020 and 2021 were as follows:
Millions of Yen
2020
Due after one year but
within five years

Due within one year
Time deposits ................................................................................................

¥

Notes and accounts receivable, trade ............................................................

482,344¥

Due after five years but
within ten years—¥ —606,082

8,955

—

12

260

9

Investment securities
Debt securities intended to be held to maturity
Government bonds ................................................................................
Available-for-sale securities
Government bonds ................................................................................

0—

Total ..........................................................................................

¥ 1,088,438¥ 9,215—¥

9Millions of Yen
2021
Due after one year but
within five years

Due within one year
Time deposits ................................................................................................
Notes and accounts receivable, trade ............................................................

¥

493,903¥

Due after five years but
within ten years—¥ —531,393

8,445

—

26

243

—

Investment securities
Debt securities intended to be held to maturity
Government bonds ................................................................................
Available-for-sale securities
Government bonds ................................................................................

21

—

—

Total ..........................................................................................

¥ 1,025,343¥ 8,688¥ —93 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Thousands of U.S. Dollars
2021
Due within one year

Due after one year but
within five years

Due after five years but
within ten years

Time deposits ................................................................................................

$ 4,461,232—$ —Notes and accounts receivable, trade ............................................................

4,799,865

76,280

—

235

2,195

—

$

Investment securities
Debt securities intended to be held to maturity
Government bonds ................................................................................
Available-for-sale securities
Government bonds ................................................................................

190

—

—

Total ..........................................................................................

$ 9,261,522$ 78,475$ —Note 4: See the notes on “7. Short-term Loans and Long-term Debt” for notes pertaining to the aggregate annual maturities of long term debt
after the consolidated balance sheet date.

5. Securities(1) Following tables summarized acquisition costs, book value and fair value of securities with fair value available as of March 31, 2020 and 2021:(a) Debt securities intended to be held to maturity:∙ Securities with fair value exceeding book value
Millions of Yen
2020
Type
Government bonds ....................................

Book value

Fair value

Difference

¥ 281

¥ 288

¥7

Millions of Yen

Thousands of U.S. Dollars

2021
Type
Government bonds ....................................

2021

Book value

Fair value

DifferenceBook value

Fair value

Difference

¥ 269

¥ 274

¥5

$ 2,430$ 2,475$ 45

Securities with fair value not exceeding book value were not applicable as of March 31, 2020 and 2021.
(b) Available-for-sale securities:∙ Securities with book value exceeding acquisition costs
Millions of Yen
2020
Type

Book value

Acquisition cost

Difference

Equity securities .........................................

¥ 210,090¥ 94,597¥ 115,493

Government bonds ....................................

—

—

—

Others .......................................................

595

346

249

Total ................................

¥ 210,685¥ 94,943¥ 115,742

Millions of Yen

Thousands of U.S. Dollars

2021

2021

Type

Book value

Acquisition cost

DifferenceBook value

Acquisition cost

Difference

Equity securities .........................................

¥ 280,696¥ 127,834¥ 152,862$ 2,535,417$ 1,154,674$ 1,380,743

Government bonds ....................................

21

20

1

190

181

9

Others .......................................................

935

595

340

8,445

5,374

3,071

Total ................................

¥ 281,652¥ 128,449¥ 153,203$ 2,544,052$ 1,160,229$ 1,383,823

TA I SE I A N N UA L R E P O R T 2 0 2 1 94

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

∙ Securities with book value not exceeding acquisition costs
Millions of Yen
2020
Type

Book value

Acquisition cost

Equity securities .........................................

¥ 41,919¥ 50,231

Difference

Government bonds ....................................

0

0

(0)

Others .......................................................

400

410

(10)

Total ................................

¥ 42,319¥ 50,641¥ (8,322)¥ (8,312)

Millions of Yen

Thousands of U.S. Dollars

2021

2021

Type

Book value

Acquisition cost

Equity securities .........................................

¥ 17,636¥ 22,103

Government bonds ....................................

—

Others .......................................................
Total ................................

DifferenceBook value

Acquisition cost

Difference¥ (4,467)$ 159,299$ 199,648$ (40,349)

—

—

—

—

—

—

—

—

—

—

—

¥ 17,636¥ 22,103¥ (4,467)$ 159,299$ 199,648$ (40,349)(2) Total sales of available-for-sale securities and the related gains and losses for the years ended March 31, 2020 and 2021 were as follows:
Millions of Yen
2020
Type

Equity securities

Others

Total

Total amount of available-for-sale securities
sold .........................................................

¥ 801

¥—

¥ 801

Gains on sales of available-for-salesecurities .................................................

497

—

497

Losses on sales of available-for-salesecurities .................................................

45

—

45

Millions of Yen
2021
Type

Equity securities

Others

Total

Total amount of available-for-sale securities
sold .........................................................

¥ 3,149¥ 160¥ 3,309

Gains on sales of available-for-salesecurities .................................................

1,714

57

1,771

Losses on sales of available-for-salesecurities .................................................

151

—

151

Thousands of U.S. Dollars
2021
Type

Equity securities

Total amount of available-for-sale securities
sold .........................................................

OthersTotal$ 28,444$ 1,445$ 29,889

Gains on sales of available-for-salesecurities .................................................

15,482515

15,997

Losses on sales of available-for-salesecurities .................................................

1,364

—

1,364

(3) Impairment losses on securities
The Group recognized impairment losses on the following securities for the years ended March 31, 2020 and 2021 were as follows:
Thousands of
U.S. Dollars

Millions of Yen
TypeWrite-down of investment securities ...........

95 T A I S E I ANNUA L R EPORT 2021

2020

2021

2021

¥ 1,502¥ 1,159$ 10,469

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

6. Pledged Assets
The following assets were pledged principally as collateral for loans of companies which were subsidiaries and affiliates as of March 31, 2020
and 2021:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Investment securities .....................................................................................

¥ 2,490¥ 2,190$ 19,782

Other assets ..................................................................................................

1,869

1,077

9,728

Total ..........................................................................................

¥ 4,359¥ 3,267$ 29,510

7. Short-term Loans and Long-term Debt
Short-term loans as of March 31, 2020 and 2021 mainly consisted of short-term notes and overdrafts from banks. The weighted averageinterest rates of short-term loans as of March 31, 2020 and 2021 were 0.4% and 0.4%, respectively.
The Group has had no difficulty in renewing such notes and overdraft facility agreements, when they considered such renewal advisable.
Long-term debt as of March 31, 2020 and 2021 consisted of the following:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Bonds and notes:
Issued by the Company:
0.67% yen bonds due in 2020 ...............................................................

¥ 10,000

0.14% yen bonds due in 2022 ...............................................................

10,00010,00090,326

0.527% yen bonds due in 2022 .............................................................

10,00010,00090,326

0.18% yen bonds due in 2025 ...............................................................

—

10,00090,326

0.38% yen bonds due in 2027 ...............................................................

10,00010,00090,326

0.37% yen bonds due in 2030 ...............................................................

—

10,00090,326¥—$—Loans, principally from banks and insurance companies:
Secured loans (*1) ......................................................................................

173

158

1,427

Unsecured loans ........................................................................................

109,571

105,038

948,767

Capital lease ..................................................................................................

651

957

8,645
1,410,469

150,395

156,153

Amount due within one year ..........................................................................

(39,789)(25,819)(233,213)

Total long-term debt (due after one year) ........................................................

¥ 110,606¥ 130,334$ 1,177,256(*) Note 1: These are non-recourse liabilities for the Group.
The annual interest rates applicable to long-term loans due within one year averaged 0.6% and 0.4% as of March 31, 2020 and 2021,
respectively, and the annual interest rates applicable to long-term loans due after one year averaged 0.5% and 0.5% as of March 31, 2020 and
2021, respectively.
The aggregate annual maturities of long-term debt (including current portion) as of March 31, 2021 were summarized as follows:Year ending March 31,

Millions of Yen

Thousands of U.S. Dollars

2022 ........................................................................................................

¥ 25,819

2023 ........................................................................................................

54,348$233,213490,9042024 ........................................................................................................

15,982

144,3592025 ........................................................................................................

17,598

158,9562026 ........................................................................................................

22,317

201,5812027 and thereafter .................................................................................

20,089181,456

Total ..........................................................................................

¥ 156,153$ 1,410,469

TA I SE I A N N UA L R E P O R T 2 0 2 1 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

8. Income Taxes
Taxes on income consist of corporation, enterprise and inhabitants taxes.
The reconciliations for the year ended March 31, 2020 and 2021 are not presented because the difference between the statutory tax rate
and the effective tax rate were less than or equal to 5% of the statutory tax rate.
Significant components of deferred income taxes at March 31, 2020 and 2021 were as follows:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Deferred income tax assets:
Disallowed portion of expenses and losses:
Net defined benefit liability ......................................................................

¥ 37,436¥ 27,802$ 251,125

Inventories ..............................................................................................

9,399

7,860

70,996

Accrued bonuses ...................................................................................

7,357

5,901

53,301

Fixed assets ...........................................................................................

2,469

3,335

30,124

Advances received .................................................................................

983

796

7,190

Others ....................................................................................................

6,440

6,655

60,112

Tax loss carryforward .................................................................................

521

531

4,796

Unrealized profits .......................................................................................

7,429

7,483

67,591

Sub-total ...................................................................................

72,03460,363545,235

Valuation allowance ....................................................................................

(3,921)(4,996)(45,127)

Total ..........................................................................................

68,11355,367500,108

Unrealized holding gains on securities ........................................................

(32,861)(45,496)(410,947)

Gains on securities contribution to employee retirement benefit trust ..........

(17,711)(16,464)(148,713)

Net defined benefit asset ...........................................................................

(3,599)(2,320)(20,956)

Others ........................................................................................................

(1,436)(2,250)(20,323)

Deferred income tax liabilities:

Total ..........................................................................................

(55,607)(66,530)(600,939)

Net total ....................................................................................

¥ 12,506¥ (11,163)$ (100,831)

In addition to the deferred income taxes shown above, deferred tax liabilities concerning revaluation of land amounting to ¥ 3,280 million and¥ 3,275 million ($ 29,582 thousand) as of March 31, 2020 and 2021 were presented separately in the consolidated balance sheets.

97 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

9. Investment and Rental Property(1) The Company and certain consolidated subsidiaries hold some office buildings for rent in Tokyo and other areas. The rental income on officebuildings for rent was ¥ 3,728 million and ¥ 3,949 million ($ 35,670 thousand) at the year ended March 31, 2020 and 2021, respectively.
Rental income is mainly booked in Real estate development and other of Net sales, and rental cost is mainly booked in Cost of sales.
(2) The amounts of investment and rental property which booked in consolidated balance sheets, the amounts of increase or decrease, and fairvalue as of March 31, 2020 and 2021 were as follows:
Millions of Yen
2020
Book value
April 1, 2019
¥ 109,718

Fair value

Increase (decrease)

March 31, 2020

¥ (15,712)¥ 94,006

March 31, 2020
¥ 126,507

Millions of Yen
2021
Book value
April 1, 2020
¥ 94,006

Fair value

Increase (decrease)

March 31, 2021

¥ (1,440)¥ 92,566

March 31, 2021
¥ 123,185

Thousands of U.S. Dollars
2021
Book value
April 1, 2020
$ 849,119

Increase (decrease)

Fair value
March 31, 2021

$ (13,007)$ 836,112

March 31, 2021
$ 1,112,682

Note 1: The carrying amount is stated at cost of acquisition less accumulated depreciation and impairment losses.
Note 2: The main reasons of increase for the year ended March 31, 2020 was acquisition of fixed assets ¥ 9,123 million.
The main reasons of decrease for the year ended March 31, 2020 were sales of fixed assets ¥ 21,516 million and impairment losses on
fixed assets ¥ 1,110 million. There is no significant increase or decrease for the year ended March 31, 2021.
Note 3: The book value as of March 31, 2020 and 2021 included asset retirement obligations of ¥ 192 million and ¥ 185 million ($ 1,671
thousand), respectively.
Note 4: The fair value of investment and rental property as of March 31, 2020 and 2021 were mainly calculated by the Company according to
the Japanese Real Estate Appraisal Standards (it may include adjustments using official indices).

10. Employees’ Severance and Retirement Benefits
1. The Company and its main consolidated subsidiaries have adopted the defined-benefit pension plans and defined-contribution pension plans.
The defined-benefit pension plans adopted consist of defined-benefit corporate pension plans and lump-sum payment plans.
Liabilities and expenses for severance and retirement benefits of the Company and its consolidated domestic subsidiaries are
determined based on amounts obtained by actuarial calculations. The Company may also pay additional retirement benefits which are notsubject to actuarial calculation.
The Company has established a retirement benefit trust.
2. Defined-benefit pension plans(1) Movement in retirement benefit obligations
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Balance at beginning of the year ....................................................................

¥ 139,848¥ 134,293$ 1,213,016

Current service cost ...................................................................................

6,398

6,523

58,920Interest cost ...............................................................................................

767

741

6,693

Actuarial loss (gain) ....................................................................................

(2,983)

2,605

23,530Benefits paid ..............................................................................................

(9,751)(9,134)(82,504)

Past service costs ......................................................................................

(183)

0

0

Other .........................................................................................................

197

198

1,788

Balance at end of the year .............................................................................

¥ 134,293¥ 135,226$ 1,221,443

Some of the consolidated subsidiaries use simplified method for the calculation of retirement benefit obligations.
Retirement benefit expenses in the consolidated subsidiaries applying simplified method are recorded in current service cost.

TA I SE I A N N UA L R E P O R T 2 0 2 1 98

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

(2) Movements in plan assets
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Balance at beginning of the year ....................................................................

¥ 109,213¥ 102,453

Expected return on plan assets ..................................................................

2,034

1,963

17,731

Actuarial loss (gain) ....................................................................................

(3,500)29,725

268,494$

925,427

Contributions paid by the employer ............................................................

1,107

1,134

10,243

Benefits paid ..............................................................................................

(5,400)(4,919)(44,441)

Other .........................................................................................................

(1,001)(1,358)(12,266)

Balance at end of the year .............................................................................

¥ 102,453¥ 128,998$ 1,165,188(3) Reconciliation from retirement benefit obligations and plan assets to net defined benefit liability (asset)
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Funded retirement benefit obligations ............................................................

¥ 130,762¥ 131,212$ 1,185,186

Plan assets ....................................................................................................

(102,453)(128,998)(1,165,188)

28,3092,214

19,998

Unfunded retirement benefit obligations .........................................................

3,531

4,014

36,257

Net total at year-end ......................................................................................

31,8406,228

56,255Net defined benefit liability .............................................................................

45,045

17,899161,675

Net defined benefit asset ...............................................................................

(13,205)(11,671)(105,420)

Net total at year-end ......................................................................................

¥

31,840

¥

6,228

$

56,255(4) Retirement benefit expenses
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Current service cost .......................................................................................

¥ 6,398¥ 6,523

Interest cost ..................................................................................................

767

741

6,693

Expected return on plan assets .....................................................................

(2,034)(1,963)(17,731)

Net actuarial loss amortization .......................................................................

(993)

(65)

(587)
(12,546)$ 58,920

Past service costs amortization ......................................................................

(1,388)(1,389)Other .............................................................................................................

13

13

117

Total retirement benefit expenses for the year ................................................

¥ 2,763¥ 3,860$ 34,866(5) Remeasurements of defined benefit plans
Items recorded in remeasurements of defined benefit plans (before considering tax effect) were as follows:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Past service costs .........................................................................................

¥ (1,205)¥ (1,389)

Actuarial loss (gain) ........................................................................................

(1,510)27,055244,377

Total balance as of March 31, 2020 and 2021 ...............................................

¥ (2,715)¥ 25,666$ 231,831$ (12,546)(6) Accumulated remeasurements of defined benefit plans
Items recorded in accumulated remeasurements of defined benefit plans (before considering tax effect) were as follows:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Unrecognized past service costs ...................................................................

¥ (4,637)¥ (3,248)

Unrecognized actuarial loss (gain) ..................................................................

(941)(27,996)(252,877)

Total balance as of March 31, 2020 and 2021 ...............................................

¥ (5,578)¥ (31,244)$ (282,215)

99 T A I S E I ANNUA L R EPORT 2021

$ (29,338)

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section(7) Plan assets
2020

2021

① Plan assets comprise:
Equity securities ........................................................................................

42%

57%

Bonds .......................................................................................................

24

16
15

General accounts ......................................................................................

19

Special accounts ......................................................................................

3

2

Short-term assets .....................................................................................

1

1

Other ........................................................................................................
Total ...........................................................................................

11

9

100%

100%

The retirement benefit trust established for corporate pension plans accounted for 40% and 40% of total plan assets, for the fiscal year ended
March 31, 2020 and 2021, respectively.
② Long-term expected rate of return
Current and target asset allocations, historical and expected returns on various categories of plan assets have been considered in determining
the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions as of March 31, 2020 and 2021 were as follows:
2020

2021

Discount rate
The Company and its consolidated domestic subsidiaries

0.4∼1.5

Consolidated overseas subsidiaries

7.5∼8.0

4.8∼8.0

1.0∼3.0

1.0∼3.0

Long-term expected rate of return

0.4∼1.5

3. Defined-contribution pension plans
Amount payable for defined-contribution pension plans of the Company and its consolidated subsidiaries were ¥ 2,591 million and ¥ 2,617
million ($ 23,638 thousand), for the fiscal year ended March 31, 2020 and 2021, respectively.

11. Net assets
Net assets comprise three subsections; which are shareholders’ equity, accumulated other comprehensive income and non-controlling interests.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However, acompany may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares as additional
paid-in capital, which is included in capital surplus.
Under the Japanese Corporate Law (“the Law”), when a dividend distribution of surplus is made, the smaller of an amount equal to 10% of
the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set
aside as additional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying
consolidated balance sheets.
Under the Law, appropriations of legal earnings reserve and additional paid-in capital generally require a resolution of the shareholders’meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Law, however, all additional paid-in
capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentiallyavailable for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of theCompany in accordance with the Law.
The number of treasury stock owned by the Company, consolidated subsidiaries and affiliated companies adopting the equity method as ofMarch 31, 2020 and 2021 were 13,231 thousand shares and 18,694 thousand shares, respectively.
The number of treasury shares of common stock at the end of the fiscal year includes 106 thousand shares held by the BBT. Total annual
dividends per share as of March 31, 2021 is ¥ 130.00 (U.S. $ 1.18), which is the sum of the interim dividend per share of ¥ 65.00 (U.S. $ 0.59)
and the year-end dividend per share of ¥ 65.00 (U.S. $ 0.59).

12. Lease Transactions
Operating leases(a) Lessee
Future minimum lease payments as of March 31, 2020 and 2021 were as follows:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Due within one year .......................................................................................

¥ 4,707¥ 3,842$ 34,703

Due after one year .........................................................................................

15,916

12,311

111,201

Total ..........................................................................................

¥ 20,623¥ 16,153$ 145,904

TA I SE I A N N UA L R E P O R T 2 0 2 1 100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021(b) Lesser
Future minimum lease receipts as of March 31, 2020 and 2021 were as follows:
Millions of Yen

Thousands of U.S. Dollars

2020

2021

2021

Due within one year .......................................................................................

¥ 3,336¥ 2,304

Due after one year .........................................................................................

13,665

16,395148,090

Total ..........................................................................................

¥ 17,001¥ 18,699$ 168,901$ 20,811

13. Derivative Transactions(1) Derivative transactions of the Company and its consolidated subsidiaries as of March 31, 2020 and 2021 were as follows:① Derivative transactions which were not accounted for by the hedge accounting∙ Currency-related transactions
Over-the counter transactions
Millions of Yen
2020
Contract amount
Forward foreign exchange contract (short commitment)
to sell U.S. dollars ..........................................................................................

Total

Due after one year

¥ 1,776

Unrealized gain (loss)

Fair value

¥—

¥9

¥9

Millions of Yen
2021
Contract amount
Forward foreign exchange contract (short commitment)
to sell U.S. dollars ..........................................................................................

Total

Due after one year

¥ 1,427

Fair value¥—

Unrealized gain (loss)

¥ 56

¥ 56

Thousands of U.S. Dollars
2021
Contract amount
Forward foreign exchange contract (short commitment)
to sell U.S. dollars ..........................................................................................

Total

Due after one year

$ 12,890

Fair value$—

Unrealized gain (loss)

$ 506

$ 506

Note: Fair value was determined at the quoted price obtained from the counterparty financial institutions.

② Derivative transactions which were accounted for by the hedge accounting as of March 31, 2020 and 2021 were as follows:∙ Currency related transactions
Main items hedged by forward foreign exchange contracts are accounts payable for construction contracts.
Millions of Yen
2020
Contract amount
Forward foreign exchange contract (short commitment)

Total

to sell U.S. dollars ..........................................................................................

Due after one year
¥ 706

Fair value

¥ 233

¥2

Millions of Yen
2021
Contract amount
Forward foreign exchange contract (short commitment)
to sell U.S. dollars ..........................................................................................

101 T A I S E I ANNUA L R EPORT 2021

Total

Due after one year
¥ 233

¥—

Fair value¥ 10About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Thousands of U.S. Dollars
2021
Contract amount
Forward foreign exchange contract (short commitment)

Total

to sell U.S. dollars ..........................................................................................

Due after one year
$ 2,105

Fair value

$—

$ 90

Note: Fair value was determined at the quoted price obtained from the counterparty financial institutions.
∙ Interest Rate-Related Derivatives:
Main items hedged by interest rate swap contracts are long-term loans.
The following interest rate swaps are used as hedges. The net amounts to be paid or received are added to or deducted from interests.
Special treatment of swap
Millions of Yen
2020
Contract amount
Total
Interest rate swaps receive floating rate, pay fixed rate ..................................

Due after one year
¥ 39,030

Fair value¥ 28,700¥—

Millions of Yen
2021
Contract amount
Total
Interest rate swaps receive floating rate, pay fixed rate ..................................

Due after one year
¥ 28,200

Fair value¥ 28,200¥—

Thousands of U.S. Dollars
2021
Contract amount
Total
Interest rate swaps receive floating rate, pay fixed rate ..................................

Due after one year
$ 254,720

Fair value$ 254,720$—

Note: Fair value of interest rate swaps was included in the corresponding hedged long-term loans (long-term loans due within one year wasconsidered as short-term loans) as those interest rate swaps were recorded as an adjustment to the corresponding hedged long-termloans under the special treatment.

14. Related Party Transactions
The Company had no transaction with related individuals, including shareholders and directors, for the year ended March 31, 2020 and 2021.
The Company’s consolidated subsidiaries had the following transaction with related individuals, including shareholders and directors, for theyears ended March 31, 2020, but no transaction was made for the year ended March 31, 2021.
Millions of yen
2020(a) Name(b) Attribution(c) Capital (Million yen)(d) Equity ownership percentage of the Company

Transactions during the year ended March 31, 2020(a) Eri Teramoto(b) Close relative of the executive officer of the Corporation
(c) —
(d) —

Housing construction
by Taisei HousingCo., Ltd.

Description oftransaction

AmountBalance at the end of the year
Account¥ 44

AmountAdvances received
and progress billingson uncompleted
contracts¥ 11

Note 1: Consumption taxes were not included in the transaction amounts and the balance at the end of the year.
Note 2: Transaction conditions and policies to decide transaction conditions
The transaction price of housing construction was determined properly on an arm’s length basis as in the case of other generaltransactions. The amount of transaction above represents the contract price on the construction contract.

TA I SE I A N N UA L R E P O R T 2 0 2 1 102

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

15. Segment Information(1) Segment Information(a) General information on reportable segments
Each reportable segment of the Group is a business unit in the Group, whose discrete financial information is available. Reportable segments arereviewed periodically at the Board of Directors Meeting in order to determine distribution of management resources and evaluate business resultof each reportable segment.
The headquarters in the head office are established by the products of construction and the services. Each headquarter proposes
comprehensive domestic and oversea strategies with respect to products and services, and operates its business activities.
The Group consists of segments identified by products and services based on the headquarters, and identifies the three segments, “Civil
engineering,” “Construction contracts,” and “Real estate development” as reportable segments: “Civil engineering” delivering construction of civilengineering, etc.; “Construction contracts” delivering construction of building and housing, etc.; “Real estate development” delivering purchase,sale and rental of land and buildings, etc.
(b) Basis of measurement of net sales, profit or loss and other material items on reportable segment
The accounting methods for each reportable segment are the same as that set forth in the “Summary of Significant Accounting Policies”. The
profit (loss) of a reportable segment is based on the operating income (loss) before amortization of goodwill in Consolidated Statements ofIncome. In addition, conditions of intersegment transactions and transfers are determined by considering market prices as in the case of othergeneral transactions.
Assets of the Group are not allocated to the segments. However, the corresponding depreciation expenses are allocated to the segments
according to the rational bases such as the usage of assets.
(c) Information of net sales, profit or loss and other material items on reportable segment
Segment information as for the years ended March 31, 2020 and 2021 was as follows:
Millions of Yen
2020
Reportable segments
Civilengineering

Construction
contracts

Real estatedevelopment

Others

Total

Adjustments

Consolidated

Net sales:
Customers ...................................

¥ 459,110¥ 1,168,446¥ 112,423¥ 11,352¥ 1,751,331

Intersegment ................................

31,99556,389

5,909

3,081

97,374¥(97,374)—¥ 1,751,331—

Total .......................

491,105

1,224,835

118,332

14,433

1,848,705(97,374)

1,751,331

Operating income ............................

¥ 71,380¥

82,685¥ 12,560¥ 1,203¥167,828

¥

(73)

¥

167,755

Depreciation and amortization .........

¥

3,854

¥

3,342

¥

2,607

¥

135

¥

9,938

¥

(53)

¥

9,885

Increase (decrease) in allowance forlosses on construction contracts ...

¥

(496)

¥

4

¥

—

¥

—

¥

(492)

¥

—

¥

(492)

Note 1: “Others” presented businesses such as incidental business to the construction business, leisure business, and other service businesses,
which are not included in reportable segments.
Note 2: Adjustments of operating income of ¥ 73 million included intersegment elimination amounting to ¥ 30 million and amortization of goodwill
amounting to ¥ 43 million.
Note 3: Segment operating income was adjusted against operating income of Consolidated Statement of Income.
Millions of Yen
2021
Reportable segments
Civilengineering

Construction
contracts

Real estatedevelopment

Others

Total

Adjustments

Consolidated

Net sales:
Customers ...................................

¥ 420,549¥

922,255¥ 126,758¥ 10,580¥ 1,480,142¥—¥ 1,480,142

Intersegment ................................

30,24338,412

6,129

3,269

78,053(78,053)—

Total .......................

450,792

960,667

132,887

13,8491,558,195(78,053)

1,480,142

Operating income ............................

¥ 56,074¥

63,858¥

9,669¥ 1,147¥

130,748

¥

(232)

¥

130,516

Depreciation and amortization .........

¥

3,739

¥

4,071

¥

2,550

¥

195

¥

10,555¥(96)¥

10,459

Increase (decrease) in allowance forlosses on construction contracts ...

¥

(147)

¥

(18)

¥

—

¥

—

¥

(165)

¥

—

¥

(165)

103 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Thousands of U.S. Dollars
2021
Reportable segments
Civilengineering

Construction
contracts

Real estatedevelopment

Others

Total

Adjustments

Consolidated

Net sales:
Customers ..........................................

$ 3,798,654$ 8,330,368$ 1,144,955$ 95,565$ 13,369,542

Intersegment .......................................

273,173

346,960

55,361

29,528705,022(705,022)—

Total ..............................

4,071,827

8,677,328

1,200,316

125,093

14,074,564(705,022)

13,369,542$ 1,178,900$—$ 13,369,542

Operating income ...................................

$

506,495$

576,804$

87,336$ 10,360$ 1,180,995$(2,095)

Depreciation and amortization ................

$

33,773$36,772$

23,033

$

1,761

$

95,339

$

(867)

$

94,472

Increase (decrease) in allowance forlosses on construction contracts ..........

$(1,328)

$

(162)

$

—

$

—

$

(1,490)$—$(1,490)Note 1: “Others” presented businesses such as incidental business to the construction business, leisure business, and other service businesses,
which are not included in reportable segments.
Note 2: Adjustments of operating income of ¥ 232 million ($ 2,095 thousand) included intersegment elimination amounting to ¥ 189 million($ 1,707 thousand) and amortization of goodwill amounting to ¥ 43 million ($ 388 thousand).
Note 3: Segment operating income was adjusted against operating income of Consolidated Statement of Income.
(2) Related Information(a) Information about products and services
The information about products and services is included in “(c) Information of net sales, profit or loss and other material items on reportablesegment” of “(1) Segment Information” for the years ended March 31, 2020 and 2021.
(b) Information about geographic areas∙ Net sales
The information about net sales was not presented for the years ended March 31, 2020 and 2021 since sales to unaffiliated customers in Japanaccounted for more than 90% of sales of Consolidated Statement of Income.
∙ Tangible fixed assets
The information about tangible fixed assets was not presented for the years ended March 31, 2020 and 2021 since the amounts of tangible fixed
assets that located in Japan accounted for more than 90% of the amounts of tangible fixed assets of Consolidated Balance Sheet.
(c) Information about major customers
The information about major customers was not presented for the years ended March 31, 2020 and 2021 since net sales to any customer wereless than 10% of the amounts of sales of Consolidated Statement of Income.
(d) Information about impairment losses on fixed assets of reportable segment for the years ended March 31, 2020 and 2021 was as follows:
Millions of Yen
2020
Reportable segments

Civil engineering
Impairment losses on fixed assets .............

¥ 218

Construction
contracts

Real estatedevelopment¥—¥ 1,120

Others¥—Elimination
and/orcorporate¥—

Total¥ 1,338

Millions of Yen
2021
Reportable segments

Civil engineering
Impairment losses on fixed assets .............

¥ 25

Construction
contracts

Real estatedevelopment

¥0

¥ 309

Others¥—Elimination
and/orcorporate¥ (10)

Total
¥ 324

Thousands of U.S. Dollars
2021
Reportable segments

Civil engineering
Impairment losses on fixed assets .............

$ 226

Construction
contracts

Real estatedevelopment$0$ 2,791

Others$—Elimination
and/orcorporate$ (91)

Total$ 2,926

TA I SE I A N N UA L R E P O R T 2 0 2 1 104

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021(e) Information about amortization and unamortized balance of goodwill of reportable segment for the years ended March 31, 2020 and 2021
was as follows:
Millions of Yen
2020
Reportable segments

Civil engineering

Construction
contracts

Real estatedevelopment

OthersElimination
and/orcorporate

Total

Amortization of goodwill .............................

¥—

¥ 43

¥—

¥—

¥—

¥ 43

Unamortized balance of goodwill ...............

¥—

¥ 129

¥—

¥—

¥—

¥ 129

Millions of Yen
2021
Reportable segments

Civil engineering

Construction
contracts

Real estatedevelopment

OthersElimination
and/orcorporate

Total

Amortization of goodwill .............................

¥—

¥ 43

¥—

¥—

¥—

¥ 43

Unamortized balance of goodwill ...............

¥—

¥ 86

¥—

¥—

¥—

¥ 86

Thousands of U.S. Dollars
2021
Reportable segments

Civil engineering

Construction
contracts

Real estatedevelopment

OthersElimination
and/orcorporate

Total

Amortization of goodwill .............................

$—

$ 388

$—

$—

$—

$ 388

Unamortized balance of goodwill ...............

$—

$ 777

$—

$—

$—

$ 777

(f) Information about gains on negative goodwill of reportable segment
Information about gains on negative goodwill for the year ended March 31, 2020, a description is omitted because the amount is immaterial, andfor the year ended March 31, 2021 was not applicable.

16. Revaluation Reserve for LandIn the year ended March 31, 2002, certain consolidated domestic subsidiaries executed revaluation of their land for business in accordance with
the Law Concerning Revaluation of Land (the “Law”).
As a result of this revaluation, deferred income taxes concerning the differences between the amounts after revaluation and the book value
before revaluation was stated in the assets and liabilities in the consolidated balance sheets. The differences between these amounts, net oftaxes, were stated as “Revaluation reserve for land” in “Accumulated other comprehensive income”.
The revaluation was executed in accordance with the method prescribed in the Article 2, Items 3, 4 and 5 of the Law on November 30, 2001
and March 31, 2002.
One of the consolidated subsidiaries, which was merged with another consolidated subsidiary on December 1, 2001, executed therevaluation on November 30, 2001.
Excess amount of the book value of the revaluated land over the fair value as of March 31, 2020 and 2021 were ¥ 3,609 million and ¥ 3,185
million ($ 28,769 thousand), respectively (including the excess amount of ¥ △ 40 million and ¥ 2 million ($ 18 thousand) related to investment
and rental property as of March 31, 2020 and 2021, respectively).

17. Research and Development Expenses
Research and development expenses, which were included in selling, general and administrative expenses and cost of sales, amounted to¥ 13,564 million and ¥ 14,205 million ($ 128,308 thousand) for the years ended March 31, 2020 and 2021, respectively.

18. Impairment Losses on Fixed Assets
Impairment losses on fixed assets for the years ended March 31, 2020 and 2021 consisted of the following:
2020
Use

Type of assets

Location

Rental property

Building and Land

Chiba (1 lot)

Assets for business use

Land and others

Osaka and the other (2 lots)

Idle assets

Building and Land

Kanagawa (2 lots)

105 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

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Creation

ESG Section

Data Section

2021
Use

Type of assets

Location

Assets for business use

Building and others

Osaka and the other (4 lots)

Idle assets

Land and Building

Osaka (1 lot)

The Company and its consolidated subsidiaries grouped their fixed assets based on units, for which decisions for investments were made. Book
value of the fixed assets listed above was reduced to recoverable amounts and impairment losses were recognized as follows:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Assets for business use
Buildings and structures .............................................................................

¥

—

¥ 308

$ 2,782—

Land ..........................................................................................................

177—

Machinery and equipment ..........................................................................

—

1

9

Others ........................................................................................................

7

—

—

Subtotal .................................................................................................

184

309

2,791

649

—

—

Land ..........................................................................................................

471

—

—

Subtotal .................................................................................................

1,120

—

—

Rental property
Buildings and structures .............................................................................

Idle assets
Buildings and structures .............................................................................

4

3

27

Land ..........................................................................................................

30

12

108

Subtotal .................................................................................................

34

15

135

Total ..........................................................................................

¥ 1,338¥ 324$ 2,926

The recoverable amount of the fixed assets for the years ended March 31, 2020 was mainly their net realizable value based on amountdetermined by the sales contract price. And the recoverable amount of the fixed assets for the years ended March 31, 2021 was mainly theirvalue in use for which the valuation amount was zero.

19. Per Share Data
Net assets per share and net income per share as of and for the years ended March 31, 2020 and 2021 were as follows:
Yen
2020

U.S. Dollars
2021

2021

Net assets per share ......................................................................................

¥ 3,550.03¥ 4,084.81$ 36.90

Net income per share ....................................................................................

573.14442.66

4.00

Diluted net income per share .........................................................................

—

—

—

Note 1: Diluted net income per share for the years ended March 31, 2020 and 2021 were not presented because the Company had no shareswith dilutive effects.
Note 2: The treasury shares held by the BBT in the net assets are included in the number of treasury stock, which is excluded from the numberof outstanding shares at the end of the fiscal year and the average number of shares during the period for calculating the net assets per
share and the net income per share.
The number of treasury stock held by the BBT at the end of the fiscal year excluded for calculation of net assets per shares was 106
thousand shares, and the number of treasury stock held by the BBT during the period excluded for the calculation of net income pershares was 53 thousand shares.
Calculation bases for basic net income per share for the years ended March 31, 2020 and 2021 were as follows:
Millions of Yen
2020

Thousands of U.S. Dollars
2021

2021

Basic net income per share
Net income attributable to owners of parent ...............................................

¥

122,088¥

92,554$ 836,004

Net income not available to common stock holders ...................................

—

—

—

Net income attributable to owners of parent available to common stock ..........

122,088

92,554

836,004

Average common stock outstanding (in thousands share) ..........................

213,017

209,089

TA I SE I A N N UA L R E P O R T 2 0 2 1 106

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)
TAISEI CORPORATION AND CONSOLIDATED SUBSIDIARIESMARCH 31, 2020 AND 2021

20. Comprehensive Income
Recycling adjustments and tax effects for each component of other comprehensive income were as follows:
Millions of Yen

Millions of Yen

Thousands of U.S. Dollars

2020

2021

2021

Unrealized holding gains on securities
Amount incurred ........................................................................................

¥ (50,739)¥ 42,055

Recycling ...................................................................................................

1,408

(736)

(6,648)Before Tax ..............................................................................................

(49,331)

41,319373,218

Tax effect ................................................................................................

15,088(12,635)(114,127)

Unrealized holding gains on securities, net of taxes ................................

(34,243)

28,684

259,091$ 379,866

Deferred gains or losses on hedging derivatives
Amount incurred ........................................................................................

3

25

226

Recycling ...................................................................................................

(2)

(17)

(154)

Before Tax ..............................................................................................

1

8

72

Tax effect ................................................................................................

(0)

(2)

(18)

Unrealized gains or losses on hedging derivatives, net of taxes ..............

1

6

54

(6,422)Foreign currency translation adjustments
Amount incurred ........................................................................................

175

(711)

Recycling ...................................................................................................

61

—

—

Foreign currency translation adjustments ................................................

236

(711)

(6,422)244,964

Remeasurements of defined benefit plans
Amount incurred ........................................................................................

(334)

27,120Recycling ...................................................................................................

(2,381)(1,454)(13,133)

Before Tax ..............................................................................................

(2,715)25,666

231,831

Tax effect ................................................................................................

834(7,855)(70,951)

Remeasurements of defined benefit plans, net of taxes ..........................

(1,881)

17,811

160,880

Share of other comprehensive income of associates accounted for by the equity method
Amount incurred ........................................................................................

46

(83)

(750)

Total other comprehensive income .......................................

¥ (35,841)¥ 45,707$ 412,853

21. Subsequent Event(1) Acquisition of treasury stock
The Company resolved the item related to the acquisition of treasury stock at the board of directors held on May 14, 2021, in accordance withthe article 156 of the Japanese Corporate Law (the “Law”), which is applicable as replacement of the article 165, paragraph 3 of the law, asdetailed below.

① Reason of acquisition of treasury stock
The Company decided to acquire its treasury stock in order to enhance the shareholders’ value per share and to improve the capital efficiency.
② Details(a) Type of stock to be acquired: Common stock of the Company(b) Number of stocks to be acquired: Up to 3,600,000 stocks (2.37% of the total outstanding stocks excluding treasury stock)(c) Total cost of acquisition: Up to ¥ 10,000 million ($ 90,326 thousand)(d) Period of acquisition: From May 17, 2021 to September 30, 2021

107 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

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Creation

ESG Section

Data Section

Independent Auditor’s Report

Independent auditor’s report
To the Board of Directors of Taisei Corporation:
OpinionWe have audited the accompanying consolidated financial statements of Taisei Corporation and its consolidated
subsidiaries (collectively referred to as “the Group”), which comprise the consolidated balance sheets as at
March 31, 2021 and 2020, the consolidated statements of income and comprehensive income, changes in net
assets and cash flows for the years then ended, and notes, comprising a summary of significant accounting
policies, other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, theconsolidated financial position of the Group as at March 31, 2021 and 2020, and its consolidated financial
performance and cash flows for the years then ended in accordance with accounting principles generally
accepted in Japan.

Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethicalrequirements that are relevant to our audit of the consolidated financial statements in Japan, and we havefulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

TA I SE I A N N UA L R E P O R T 2 0 2 1 108

Independent Auditor’s Report

Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our auditof the consolidated financial statements of the current period. These matters were addressed in the context
of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Reasonableness of the Company’s estimate of the amount of total construction costs and thepercentage of completion in applying the percentage-of-completion method of revenue
recognition to construction contracts
The key audit matter
The amount of the revenue recognition to construction contracts (the “Revenue”), ¥ 1,326,663 million, for thecurrent fiscal year includes the amount of ¥ 1,083,388 million recognized in applying the percentage-ofcompletion method as described in Note 2 “Summary of Significant Accounting Policies, (x) Significant
Accounting Estimates”, representing 81 % of the Revenue in the consolidated financial statements.
As described in Note 2 “Summary of Significant Accounting Policies, (g) Revenue Recognition ofConstruction”, the percentage-of-completion method is applied to construction contracts for which theoutcome can be reliably estimated to the end of the current consolidated fiscal year. The amount of the
Revenue recognized in applying the percentage-of-completion method is calculated for each construction
contract based on the reasonably estimated amount of total revenue, the reasonably estimated amount of
total construction costs, and the reasonably estimated percentage of completion at the end of the current
consolidated fiscal year, using the following formula.
the Revenue = amount of total revenue
× percentage of completionof construction costs incurred( amount
amount of total construction costs )The amount of total construction costs recognition to construction contracts in applying the percentage-ofcompletion method is estimated based on the budget for the execution of construction (the “Budget”).
Since the Budget is prepared by taking into account the construction site, condition of construction andothers for each construction contract, and is composed of a wide variety of cost items, the estimate of the
Budget involves a high degree of uncertainty and complexity. In addition, the Budget needs to be revised ina timely and appropriate manner when there is a difference between the estimated amount and the actual
amount of each cost item, or when cost items needing a new estimate occur, depending on the progressof construction.
Since the cost-proportional method is adopted as the method of estimating the percentage of completionat the end of the current consolidated fiscal year, the percentage of completion is also estimated as the ratioof the amount of construction costs incurred for the construction carried out by the end of the current
consolidated fiscal year to the amount of total construction costs. Therefore, if the amount of total
construction costs is underestimated (or overestimated) or if the amount of construction costs incurred iscompiled excessively (or insufficiently), the percentage of completion may be overestimated (orunderestimated).
We, therefore, determined that our assessment of the reasonableness of the Company’s estimate of theamount of total construction costs and the percentage of completion in applying the percentage-ofcompletion method of revenue recognition to construction contracts was of most significance in our audit of
the consolidated financial statements for the current fiscal year, and accordingly, a key audit matter.

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Data Section

How the matter was addressed in our audit
The primary procedures we performed to assess whether the Company’s estimate of the amount of total
construction costs and the percentage of completion in applying the percentage-of-completion method ofrevenue recognition to construction contracts was reasonable included the following:(1) Internal control testing
We tested the design and operating effectiveness of certain of the Company’s internal controls relevant to
the process of preparing the Budget which is the basis for estimating the amount of total construction
costs, and the process of estimating the percentage of completion. In this assessment, we focused our
testing on the following controls:• controls to appropriately reflect construction prices such as material costs, labor costs, and outsourcing
costs, details of work, and other individual assumptions within the Budget; and• controls to revise the Budget depending on the progress of construction in a timely and appropriatemanner.
(2) Assessment of the reasonableness of the estimated amount of total construction costs
The primary procedures we performed for large-scale constructions mainly that were judged to have asignificant impact on the consolidated financial statements to assess whether the Company’s estimate of
total construction costs was reasonable included the following:• We examined whether all the contents of the work necessary to complete the construction werereflected as cost items in the Budget by comparing the cost items included in the Budget with thecontents of the construction specified in the construction contract and inquiring with the construction
manager about the correspondence between them. The estimated amounts of each cost item includedin the Budget were confirmed with the amounts of related materials such as quotations from professional
contractors.
• We confirmed the construction costs incurred by the end of the current consolidated fiscal year andthe construction costs whose amounts were determined by the conclusion of a contract with aprofessional contractor included in the latest Budget with related materials such as the contents of thecontract or invoices from the professional contractor.
• We evaluated the accuracy of the estimate of the amount of cost items by inquiring with the construction
manager about the cause of the difference between the estimated amount of the cost items in the initial
Budget and the actual amount. Moreover, we examined whether the effects of such differences werereflected in a timely and appropriate manner in estimating the amount of cost items in the latest Budget
for which contracts with professional contractors had not been concluded.
• We identified the constructions for which the construction profit ratio calculated using the following
formula at the end of the current consolidated fiscal year fluctuated to a certain extent in comparison
with that at the end of the previous consolidated fiscal year since the construction profit ratio calculated
fluctuates when the Budget is revised, and inquired of the construction manager about the content andfactors of the revisions to the Budget. In addition, we examined related materials, such as contracts for
specification changes, and assessed whether changes in the construction profit ratio were based onreasonable factors, by taking into account the results of the observations of construction sites which
includes remote observations, for works for which the amount of total construction costs may not havebeen appropriately estimated.
construction profit ratio =construction profit ( amount of total revenue - amount of total construction costs )amount of total revenue

TA I SE I A N N UA L R E P O R T 2 0 2 1 110

Independent Auditor’s Report(3) Assessment of the reasonableness of the estimated percentage of completion
In order to assess the reasonableness of the estimated percentage of completion, we performed theprocedures described in “(2) Assessment of the reasonableness of the estimated total construction costs”.
In addition, the primary procedures we performed for large-scale constructions mainly that were judged tohave a significant impact on the consolidated financial statements included the following:• We found a certain correlation between the percentage of elapsed time by the end of the current
consolidated fiscal year under the construction contract (the “Period Progress Percentage”) and thepercentage of completion at the end of the current consolidated fiscal year by the cost-proportional
method (the “Cost Progress Percentage”), and also found a certain similarity in the correlation in each typeof construction, such as civil engineering works and building works. Therefore, after classifying construction
contracts to which the percentage-of-completion method was applied in the current consolidated fiscal
year for each type of construction, we engaged specialists with expertise in data analysis, and identified
construction contracts with abnormalities in the percentage of completion by using the technique foranalyzing data as described below for each classification.
• We inquired of the construction manager about the progress toward completion of the specified
constructions, and examined whether the answers to the inquiries were consistent with the construction
timeline and the status of the construction costs incurred.
• We examined whether the percentage of completion was consistent with the status of the construction
sites ascertained through the observations of construction sites, which included remote observations,to the specified constructions whose percentage of completion may be overestimated due tounderestimation of the amount of total construction costs or excessive compilation of the amount ofconstruction costs incurred.
Note : Technique for analyzing data consists mainly of the following steps:
1st We estimate a curve representing the average progress of construction (the “Average Progress
Curve”) based on the relationship between the Period Progress Percentage and the Cost Progress
Percentage of constructions completed and delivered over the past several years.
2nd We set a deviation range to determine that the construction is not abnormal even if it deviates fromthe Average Progress Curve based on the past constructions that deviated from the Average
Progress Curve.
3rd We check the deviation from the Average Progress Curve for the constructions at the end of thecurrent consolidated fiscal year to which the percentage-of-completion method is applied, andidentify the constructions that exceed the deviation range set in the second step as theconstructions with an abnormal percentage of completion.
Responsibilities of Management and Corporate auditors and the board of corporate auditors for
the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statementsin accordance with accounting principles generally accepted in Japan, and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements thatare free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability tocontinue as a going concern, disclosing, as applicable, matters related to going concern in accordance withaccounting principles generally accepted in Japan and using the going concern basis of accounting unlessmanagement either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Corporate auditors and the board of corporate auditors are responsible for overseeing the directors’ performanceof their duties including the design, implementation and maintenance of the Group’s financial reporting process.

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ESG Section

Data Section

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards generally accepted in Japan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions ofusers taken on the basis of these consolidated financial statements.
As part of our audit in accordance with auditing standards generally accepted in Japan, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, while the objective of the audit is not to express an opinion on theeffectiveness of the Group’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and basedon the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events orconditions may cause the Group to cease to continue as a going concern.

•

Evaluate whether the presentation and disclosures in the consolidated financial statements are inaccordance with accounting standards generally accepted in Japan, the overall presentation, structure
and content of the consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with corporate auditors and the board of corporate auditors regarding, among othermatters, the planned scope and timing of the audit, significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide corporate auditors and the board of corporate auditors with a statement that we have compliedwith relevant ethical requirements regarding independence, and communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with corporate auditors and the board of corporate auditors, we determine
those matters that were of most significance in the audit of the consolidated financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequencesof doing so would reasonably be expected to outweigh the public interest benefits of such communication.

TA I SE I A N N UA L R E P O R T 2 0 2 1 112

Independent Auditor’s Report

Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2021 are presented solely for convenience. Our audit also included the translation of yen
amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis describedin Note 1 to the consolidated financial statements.

Interest required to be disclosed by the Certified Public Accountants Act of Japan
We do not have any interest in the Group which is required to be disclosed pursuant to the provisions of theCertified Public Accountants Act of Japan Our firm and its designated engagement partners do not have any
interest in the Group which are required to be disclosed pursuant to the provisions of the Certified Public
Accountants Act of Japan.

Katsunori Tsukahara
Designated Engagement Partner
Certified Public Accountant

Daijiro Otsu
Designated Engagement Partner
Certified Public Accountant

KPMG AZSA LLC
Tokyo Office, Japan
June 25, 2021
Notes to the Reader of Independent Auditor’s Report:
This is a copy of the Independent Auditor’s Report and the original copies are kept separately by theCompany and KPMG AZSA LLC.

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ESG Section

Data Section

ESG Data
Data on Environmental Contribution
Environment Data
GRI

Indicators

305-4

At construction stage: Reduction rate of CO2 emissions per construction cost (intensity)*1

305-5

At construction stage: Reduction rate of total CO2 emissions*1

(FY)

Unit

2017

2018

2019

Target
2020

28.4

28.9

32.0

27

48.4

44.7

43.7

52

54.5

48.1

40.2

39.5

40

41.4

%

At building operation stage: Reduction rate of estimated CO2 emissions*1, 2

Results
2020
30.3

—

Total CO2 Emissions (Taisei Group)

340

361

368

318

—

Total CO2 Emissions

245

261

267

216

151

179

172

10³ｔCO₂

305-1

Scope 1

305-2

Scope 2

67

57

69

305-3

Scope 3

27

25

26

109MJ

3.90

4.14

4.39

%

20.5

21.0

23.3

10³m³

1,691

1,436

1,414

1,151

1,345

1,302

175

205

200

302-1
302-3
305-7
306-2
301-2
304-3
307-1
102-11

Energy consumption
In office divisions: Reduction rate of energy consumption per floor area (basic unit) *3
Water (amount of water used)NOx emissions
SOx emissions

t

—

142
57
17
3.60

25

22.4
1,412

—

1,039
158

Final disposal rate of construction wastes

%

3.2

3.4

3.9

3.4

2.7

Amount of construction waste

10³t

2,644

2,020

2,411

—

1,787

Item/PJ

9.5

9.7

10

10

11.7

52

35

46

30

38

—

—

6

10

6

Cases

0

0

1

0

0

%

100

100

100

—

100

Number of green procurement items adapted at construction design stage
Number of proposals and deployment of biodiversity-related technologies
Number of biodiversity-friendly works implemented
Number of environmental accidents
Acquisition rate of ISO 14001 certification

Projects*1 Compared to fiscal 1990 (a base year for emissions targets)*2 Estimated CO2 emissions from design and construction projects (including dissemination and promotion of ZEB)
*3 Compared to fiscal 2010 (a base year for emissions targets)

Data on Social Contribution and Governance
Human Resources Data
GRI

Indicators

102-7

Number of employees (Consolidated)

102-8
405-1
102-7
102-8
405-1

(FY)

Unit

Male (Consolidated)

2017

Target2020

2019

14,032

14,433

14,562

14,62011,906

11,971

11,959Female (Consolidated)

2,314

2,527

2,591

2,661

Japanese employees (Consolidated)

13,322

13,567

13,658

13,692

Non-Japanese employees (Consolidated)
Number of employees

Persons

710

866

904

928

8,501

8,490

8,507

8,572

Male

6,977

6,949

6,937

Female

1,524

1,541

1,570

Japanese employees

8,413

8,391

8,394

Non-Japanese employees
Thirties
Forties%

Fifties or more

—

—
405-1
—
102-7
102-8
—
405-1

Indicators

Unit

6,970
1,602
8,457

88

99

113

115

15.9

16.5

17.1

18.0

18.3

19.0

19.2

19.7

34.3

30.1

26.3

22.8

31.4

34.4

37.4

39.4

Data on Recruitment, Annual Salary, Length of Service, and Average Age
GRI

Results
2020

11,718

Twenties
102-7

2018

(FY)
Target2020

Results
2020

2017

2018

2019

283

251

264

329

Male

228

207

215

270

Female

55

44

49

59

19

30

27

11

Male

17

29

22

Female

2

1

5

9,872

10,512

10,103

9,850

43.0

43.0

43.0

43.0

43.2

43.3

43.3

43.3

41.7

41.8

41.8

41.6

Number of hires (new graduates)

Number of mid-career hires

Average annual salary

Persons

Thousand yen

Average age
Male
FemaleYears old—

110

TA I SE I A N N UA L R E P O R T 2 0 2 1 114

Data Section ESG Data

Data on Social Contribution and Governance
Data on Recruitment, Annual Salary, Length of Service, and Average Age (continued)
GRI
—
405-1
401-1

Indicators

Unit

Average service years
Male

Years

Female(FY)
Target
2020

2017

2018

2019

18.3

18.3

18.3

18.6

18.6

18.7

16.7

16.6

16.5

Turnover rate

%

1.0

1.1

1.2

Turnover rate of employees within three years of hiring

%

4.3

5.4

7.4

18.3
—

Indicators

Unit

2017

2018

2019

Target2020

102-35

11 (3)

12 (4)

12 (4)

12 (4)

10 (2)

11 (3)

11 (3)

11 (3)

Female

1 (1)

1 (1)

1 (1)

60

58

59

Male

60

58

59

58

Female0000

Number of Managing Executive Officers

Persons—

Indicators
Members of the Board
External Members of the Board

405-1

Indicators

Unit
Million yen

Unit

2017

2018

2019

696

755

741

41

46

58

—

2017

2018

2019

Target2020

Results
2020
236

83

167

197

230

%

1.7

3.2

3.8

—

4.5

Number of female engineers

Persons

621

663

698

740

738

Female engineers ratio
Rate of employment of persons with disabilities

Number of non-regular employees

404-2

Number of employees promoted from non-regular employees to regular employees

%

8.6

9.1

9.5

7.5

2.07

2.33

2.35

2.20

663

739

800

1,226

1,367

1,465

Persons

862—

Indicators

1

2

2

3

1,134

1,173

1,288

42

45

28

20
(FY)

Unit

Male

2019

289

281

282

243

244

241

46

37

41

%

94.8

94.9

100

%

93.8

94.2

100

100

100

100

100

98.1

100

98.1

95.7

Persons

FemaleRate of return to work after childcare leave
Male%

FemaleNumber of employees taking nursing care leave

299
—

403-9
—

100

100

100

100

97.8

95.1

3

0

1

2

Persons—

Target2020

Results
2020

193.9

—

194.1

39.0

35

2019

Total hours worked per month

Hours

192.9

192.8

Average overtime hours per month

Hours

37.5

37.8

42.9

47.5

46.2

41.4

48.5

49.7

115 T A I S E I ANNUA L R EPORT 2021

100

(FY)
2018

Rate of paid leave utilization (Taisei Group)

100

100

2017

Rate of paid leave utilization

46

97.5

Unit

Indicators

253
100

Data on Working Hours and Holidays
GRI

Results
2020

2018

FemaleRate of taking childcare leave

Target2020

2017

Number of employees taking leave for childcare
Male

1,562

1,118

Childcare and Nursing Care Data—

62

Persons

Number of former employees who took advantage of the Job-Return system

401-3

814

Female managers ratio

102-8

—

Results
2020

Number of female managers

Number of employees reemployed after leave retirement (Taisei Group)

401-3

58

(FY)

Number of employees reemployed after leave retirement

GRI

1 (1)

(FY)
Target2020

Diversity and Inclusion Data
GRI

Results
2020

Male

Data on Officer Remuneration (Total Amount)
GRI

7.6
(FY)

Number of Members of the Board (incl. number of External Members of the Board)

102-22

18.8
16.2
1.2

4

Number of Members of the Board
GRI

Results
2020

%

—

39.8
46.5
57.7

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Data on Training and Career in Capacity Development
GRI
404-1
404-3

(FY)

Unit

Indicators
Total training hours for capacity development

Hours

Training hours per person%

Implementation rate of career development review

Target
2020

2017

2018

2019

—

—

261,059

32.8

36.6

30.5

87.8

87.7

86.5

Results
2020
233,143

—

27.0
88.0

Data on Health and Safety Relations
GRI

(FY)

Unit

Indicators
Accident frequency rate (Taisei Group)—

Accident frequency rate
Accident severity rate
403-9

2017

2018

0.44

0.58

0.65

0.41

0.42

0.62

0.22

0.14

0.26

—

0.35

—

0.34

55

50

74

Number of fatal accidents

Cases

1

2

4

0

0

0

0

0

0

0

0

1

2

4

5

—

1,025

1,049

1,063

87.2

89.8

90.2

%

—

—

90.6

90.8

100

100

100

100

%

80.6

—

80.8

—

Persons

Number of fatalities at partner companies (specialized contractors)

102-41

0.36

Cases

Number of work-related contractor fatalities of employees

403-6

2019

Results
2020

Number of occupational accident leaves (excluding fatal accidents)
Number of fatalities of employees

403-5

Target2020

Number of employees receiving safety and health training
Implementation rate of stress checks
Percentage of all employees covered by collective bargaining agreements
Labor union participation rate
Employee satisfaction rate

35
0

5

—

91.6

Data on Technology Development and Intellectual Property
GRI
—

Unit

Indicators
Research and development expenditure (Consolidation)*(FY)

Billion yen

Number of patents registered

Cases

Number of patent applications filed

Target2020

Results
2020

2017

2018

2019

11.6

12.4

13.5

—

14.2

191

250

169

180

202

235

219

188

230

266

* In fiscal 2020, environment-related technology development costs (including those for building materials with low CO2 emissions during manufacturing) wereapproximately ¥3.7 billion.

Quality and Productivity Data
GRI
416-1
416-2
—

(FY)

Unit

Indicators
Customer satisfaction (Building Construction)%

Customer satisfaction (Civil Engineering)

2017

2018

2019

Target2020

Results
2020

90

92

88

100

90.0

95

96

98

100

98.6

Acquisition rate of ISO 9001 certification

%

100

100

100

—

100

Worksite registration rate of Construction Career Up System (CCUS)

%

—

—

75

80 or more

100

Productivity* (Net sales/number of employees)

—

107

111

117

110

94

Target2020

Results
2020* The actual result for FY2016 is set at 100.

Data on Social Contribution Expenditures and Donations
GRI

Indicators

203-1

Expenditure on social contribution activities

415-1

Political contributions

(FY)

Unit
Million yen

2017

2018

2019

655

700

838

—

—

18

—

Data on Ethics, Procurement Practices, and Human Rights
GRI
102-16
205-1

492
18
(FY)

Target2020

Results
2020

Indicators

Unit

Participation rate of e-learning for the Group’s Structure of Values and Policies

%

96

97

94

—

94

Response rate of Corporate Ethics Helpline and Group Helpline

%

100

100

100

100

100

Operational results of the whistleblowing and consultation system

Cases

—

—

24

％

100

100

100

—

100

2017

2018

2019

28

205-2

Compliance training participation rate

205-3

Number of dismissals due to corruption and bribery

Cases

—

—

0

Number of major information security accidents

Cases

0

0

0

0

Number of information security education sessions

Times

15

19

5

—

4

%

—

74.2

—

75

74.6

97.2

97.9

96.5

97.3

97.9

97.4

418-1
412-1
412-2

Average implementation rate of CSR activities by suppliers
CSR procurement e-learning participation rate
Human rights training precipitation rate

%

0

—

1

95.4
99.5

● See Taisei Corporation’s website for definition of ESG data: https://www.taisei.co.jp/english/csr/management/

TA I SE I A N N UA L R E P O R T 2 0 2 1 116

Data Section Glossary

Data Section

Glossary

Carbon pricing (CP)A mechanism to promote the reduction of CO2 emissions by pricing carbon emissions. In Japan, the Ministry of Economy,
Trade and Industry and the Ministry of the Environment are currently considering the introduction of carbon pricing (acarbon tax, an emission trading system, etc.).

Internal carbon pricing (ICP)

A system in which companies voluntarily set their own carbon prices to reflect the economic costs of CO2 in their businessactivities and use them as incentives to promote energy conservation and as guidelines for investment decision-making, inorder to promote decarbonization-related investments and measures. Companies set their own pricing and usage according to their objectives.

CO2 Zero Action

Environmental impact reduction activities conducted by all workplaces. There are seven actions such as eco-driving, inspection
and maintenance of heavy machinery and vehicles, and temperature setting control of air conditioners.

TCFD

Abbreviation for Task Force on Climate-related Financial Disclosures, which was founded by the Financial Stability Board.
Presented recommendations to urge companies to disclose consistent, comparable, and reliable climate-related financial
information for investors’ appropriate decisions on investment.

SBT initiative

An organization founded in 2015 that calls on companies to commit to set Science Based Targets (SBT) to contribute to the Paris
Agreement, which limits the rise in global average temperatures to below 2 degrees Celsius above pre-industrial levels.

Green infrastructure

Efforts to promote the creation of sustainable and attractive national land, cities, and regions by utilizing the diverse functions of
the natural environment in terms of both hardware and software, such as social infrastructure development and land use. As
countermeasures against climate change, there are measures to improve ground surface coverage by optimizing national land
management, conserving green areas and promoting greening, measures to absorb CO2 by utilizing green areas and seagrassbeds, measures to store and infiltrate rainwater by utilizing soil and permeable pavement, and heat mitigation measures thatutilize the transpiration effects of planting.

ZEB ReadyA building that meets 50% or more reduction in primary energy consumption from the standard primary energy
consumption, excluding renewable energy.

Plastic Smart

A campaign by the Ministry of the Environment to promote “a smart way of dealing with plastic” nationwide, including thoroughelimination of littering and illegal dumping, and thorough reduction of single-use plastic and sorting and collection.

BAP

Abbreviation of biodiversity action plan, which refers to the biodiversity action plan of the Convention on Biological Diversity.

Ecological planning

A planning method that is made suitable for the natural environment of a region by analyzing and evaluating the characteristics ofthe region through multidimensional understanding of the relationship between people and the environment.

Concierge Series

Ikimono Concierge: Our unique tool for predicting and identifying animals that can be attracted by a planning site
Mori Concierge:
Our unique tool enabling the selection of plants that can adapt to the environment of a planning site
Mizube Concierge: Our tool for developing a unique plan to conserve and compensate waterside rare flora and fauna
whose ecosystems may be affected by construction

TAISEI QUALITY®

A slogan that expresses in a few words the quality promotion activities of the Taisei Group as a whole. The Group aims to earn
the trust of customers and society by ensuring quality with pride.

T-CIM®

Our proprietary system that integrates a construction system utilizing information and communications technology Construction
Information Modeling (CIM) with attribute information associated with a 3D model of each construction project.

BIM

Building Information Modeling (BIM) is a construction information database that links a 3D building model created with acomputer and attribute information including the specification, layout, and cost of building components and equipment.

Open innovation

Methodology for innovation, including the integration of knowledge and technology across a wide range of organizations.

CSR Procurement Guidelines

A set of guidelines on what the Company and its suppliers should do together. They can be summarized as (1) compliance withlaws, regulations, and social norms, (2) fair and impartial business dealings, (3) respect for human rights, (4) promotion of safety
and hygiene, (5) commitment to environmental conservation, (6) ensuring and improving safety and quality, (7) information
disclosure, (8) commitment to information security, (9) activities contributing to society, (10) business continuity in times of disaster,and (11) promotion of CSR procurement.

Soyukai

Originated from the Harusamekai established in 1917, Taisei Corporation’s organization for its core subcontractors was reestablished in February 2014 to strengthen cooperation between the Company and Soyukai members. As of April 2021, approximately
700 companies have joined the organization. The main purpose of the organization is to promote the improvement of construction capabilities and stable management of member companies through cooperation with the Company’s business.

EcoVadisFrance-based sustainability assessment organization that provides buyer companies with CSR evaluation data on suppliers
through an information sharing platform registered by more than 75,000 companies in 190 industries in about 150 countries.

TAISEI OHSMS

Taisei Corporation’s proprietary occupational health and safety management system developed with reference to guidelines fromthe International Labour Organization (ILO) and the Ministry of Health, Labour and Welfare.

Construction Career Up System(CCUS)

A system to register and visualize the skills, experience and qualifications, status of enrollment in social insurance programs,
etc., of each of the skilled construction workers under uniform rules of the industry, to strengthen cooperation with partnerorganizations.

Health management overtime

Overtime working hours used to judge whether or not measures to prevent health impairment (such as face-to-face guidance byphysicians) should be taken. They are the total of statutory overtime working hours and holiday working hours.

The Valuable 500

Launched at the World Economic Forum Annual Meeting (Davos) in January 2019, this initiative aims to encourage business leaders to undertake reforms that enable people with disabilities to realize their potential value for business, society, and the economy.

117 T A I S E I ANNUA L R EPORT 2021

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Third-Party Opinion

Kanji TANIMOTO
Professor,
Ph. D. in Business Administration
School of Commerce,
Faculty of Commerce,
Waseda University

TAISEI VISION 2030 and New Medium-TermBusiness Plan
The Taisei Group, in its Annual Report 2021, disclosed financial andnon-financial information based on the TAISEI VISION 2030, which
represents the Group’s medium to long-term vision towards the year
2030, and the new Medium-Term Business Plan that has begun thisfiscal year, while addressing IX, SX, and DX (p. 13), all of which
promote major transformations.
The new Medium-Term Business Plan organizes the issues byclassifying them into business-related ones and sustainability-related
ones that should be addressed over the next three years. Goingforward, the Group is expected to present the initiatives it will takealong with the specific targets and strategies for addressing sustainability issues in each core business. As I have pointed out since theprevious fiscal year, there is a gap between the overall picture ofsustainability management (pp. 25-26) and the explanation of initiatives in each business section (pp. 19-21), and it is desirable topresent a specific story on how the Group intends on creating value
in each business. I hope that accurate understanding of CSR, in
connection with the Taisei Spirit and the Taisei Group Philosophy, will
be disseminated throughout the organization once again.

Responding Specifically to Get on with
the Times

Future Sustainability Management Structure
How will Taisei Corporation create value by resolving social issues
that it gives high priorities to its business? The Company is
expected to clearly present the methods for materiality identificationand target setting. Having been pointed out since the previous fiscal
year, it is necessary to engage stakeholders in the formulation andverification of specific materiality issues. I hope that through theengagement the Group will implement initiatives to obtain ideas forresolving social issues and hints for achieving innovation.
While it is important to carry out engagement by having stakeholder representatives related to specific themes of the times
gather, establishing a sustainability committee that constantly
communicates with external parties is another option.
At Taisei Corporation, with the conventional CSR Committee beingreformed, since the previous fiscal year, internal directors (President,
Vice Chairman, and two Executive Vice Presidents) and four outside
Members of the Board have been participating in the committee,
resulting in a structure that promotes lively exchange of opinions. It
is suggested that the Company should consider reflecting theopinions of external stakeholders in the Committee’s discussions. In
this case, the issue is how to relate this structure to the aforementioned sustainability committee.
Meanwhile, the CSR Promotion Section of the Corporate
Communication Department in the President’s Office has thus far
played a central role in formulating management issues related to
CSR and sustainability, disseminating information within the

In the era of the sustainability revolution, a variety of international

company, and making reports. Given the expanding scope of

initiatives, standards, and norms have emerged regarding the code

relevant activities in recent years and the increasing importance ofof conduct for CSR management, disclosure of non-financial

ESG investment, one idea is to enhance the existing structure andinformation and ESG evaluation, and Japanese companies are

establish a Sustainability Promotion Department as part of thepressed to respond as well. Companies are required to not only signcompany-wide reorganization.

and participate in international initiatives, but also take specific

While the sustainability revolution has been spreading over theaction and disclose information. In terms of TCFD, in which Taisei

past 10 years or so, investment and financing using ESG as an

participated last year, the Group is expected to quantitatively

evaluation standard have expanded faster than expected, causing

measure and disclose the financial impact of climate change risks inchanges in the financial market. There is a growing global trend of

the future based on the concept presented in this report (pp.

capital not being allocated to or flowing out of companies that are

37-39). Having accumulated a wealth of environmental information

incapable of adequately implementing initiatives towards realizing a

to date, Taisei Corporation is expected to respond promptly.

decarbonized society and addressing sustainability issues, andcompanies are required to take more strategic steps than everbefore. This is closely related not only to SX, but also to IX and DX,
and it can be said that the realization of the target vision of theTaisei Group presented this time is indeed what is being called for.

TA I SE I A N N UA L R E P O R T 2 0 2 1 118

Data Section Outline of the Company

Outline of the Company
Corporate Data (As of March 31, 2021)
Name
Established
Paid-in capital
Number of
employees
Representative
Head office

TAISEI CORPORATION
December 28, 1917
¥122.7 billion

Domestic Network

8,572 people (non-consolidated)
Yoshiro AIKAWA,
President and Chief Executive Officer
25-1, Nishi-Shinjuku 1-chome,
Shinjuku-ku, Tokyo, Japan
TEL. 81-3-3348-1111 (main number)

SapporoTohoku (Sendai)
Hokushinetsu (Niigata)
Kanto (Saitama)

Head Office
TokyoInternational Operations
Headquarters (Shinjuku, Tokyo)

Nagoya
Kyoto
Kobe

Chiba

Tokyo, Osaka, Nagoya, Fukuoka,
Sapporo, Sendai, Hiroshima,
Yokohama, Niigata, Takamatsu, Chiba,
Saitama, Kobe, Kyoto

Branches

Yokohama
Taisei Advanced Centerof Technology (Yokohama)Kansai (Osaka)

Taisei Advanced Center of Technology (Yokohama City)

Shikoku (Takamatsu)
Chugoku (Hiroshima)

Overseas Network (As of September 1, 2021)

Kyushu (Fukuoka)

Head Office
Branch Office
Taisei Advanced Centerof Technology

CSCEC-TAISEI CONSTRUCTION, LTD.
(Head Office)Beijing

INDIA

PAKISTANNORTH AFRICATAIPEITAISEI MYANMAR CO., LTD
MYANMAR

MIDDLE EASTSRI LANKATAISEI PHILIPPINE CONSTRUCTION INCORPORATEDPHILIPPINEVINATA INTERNATIONAL CO., LTD. VIETNAM (Head Office)
VIETNAM (Hanoi)

KUALA LUMPUR
PT.TAISEI PULAUINTANCONSTRUCTION INTERNATIONAL
JAKARTA

VINATA INTERNATIONAL CO., LTD. VIETNAM(Hochiminh City Branch Office)
VIETNAM (Hochiminh City)

PT. INDOTAISEIINDAH DEVELOPMENT

TAISEI (THAILAND) CO., LTD
THAILANDSINGAPORE

Share Information (As of March 31, 2021)
Major Shareholders (Top 10):

Status of Shares
Number of Shares Authorized
Number of Shares Issued*
Number of Shareholders

440,000,000
224,541,172
67,646

Ownership Distribution
Individuals and Others
65,458 thousand shares(29.16%)

Financial Institutions

71,244 thousand shares(31.73%)

Shareholder
Composition

Other Japanese Corporations
16,106 thousand shares(7.17%)

Foreign Corporations etc.
63,979 thousand shares(28.49%)Stock Listings
Code
Transfer Agent

Securities Companies
7,751 thousand shares(3.45%)

Tokyo, Nagoya
1801
Mizuho Trust & Banking Co., Ltd.
1-2-1, Yaesu, Chuo-ku,
Tokyo 103-8670, Japan* The number of shares issued includes the Company’s own shares of
18,588,329.

119 T A I S E I ANNUA L R EPORT 2021

Name of Shareholder

The Master Trust Bank of Japan, Ltd.
(Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
Retirement Benefit Trust in Mizuho Trust(Mizuho Bank, Ltd. Account)
Taisei Associates’ Shareholding Plan
Custody Bank of Japan, Ltd.
(Trust Account No.7)
Taisei Employees’ Shareholding Plan
Custody Bank of Japan, Ltd.
(Trust Account No.4)
State Street Bank West Client-Treaty 505234
Custody Bank of Japan, Ltd.
(Trust Account No.5)
Meiji Yasuda Life Insurance Company

Number of Shares
Held(Unit: Thousand
Shares)Ratio of
Shares Held(%)

19,5639.50

11,977

5.82

5,857

2.84

5,586

2.71

4,870

2.36

3,653

1.77

3,303

1.60

3,139

1.52

2,992

1.45

2,847

1.38

Note: The Company’s own shares (18,588,329) are excluded in calculating
the Ratio of Shares Held. The Company’s own shares of 18,588,329

exclude 106,000 shares of the Company held by the Board Benefit Trust (BBT).

About the Taisei Group

Strategy for Sustainable Growth

Towards Sustainable Value
Creation

ESG Section

Data Section

Taisei Corporation Organization Chart (As of September 1, 2021)★

Secretarial Dept.
Auditing Dept.

Engineering Planning & Administration Dept.
Project Management Dept.
Strategic Engineering Dept.

New Business Planning Dept.
Corporate Planning Dept.
Corporate Planning Office

Engineering Div.

Corporate Communication Dept.

Fine Chemical Facilities Project Dept.

Human Resources Dept.

Industrial Facilities Project Dept.

General Affairs Dept.
Legal Dept.

Project Management Dept.

Accounting Dept.

Technology Strategy Dept.

Finance Dept.

International Projects Management Dept.

Safety Administration Dept.
Safety Administration Div.

Productivity Innovation Dept.

Subcontractor Relations Dept.
Environmental Administration Dept.

Power Plant Construction Planning Dept.

Planning & Administration Dept.

Digital Product Center

Carbon Neutral Promotion Dept.

Environment Div.

Construction Sitework Promotion Center

Natural Symbiosis Engineering Dept.
Geo-Environmental Technology Dept.

Building Construction Dept.
Building Construction Div.

Technology Planning Dept.

Infrastructure Technology Research Dept.
Advanced Technology Development Dept.
Production Engineering Technology Dept.
Planning Dept.
Energy Projects Promotion Dept.
Energy Div.

ZEB & Smart Community Dept.

Architecture & Engineering Div.(Integrated)Intellectual Property Dept.
Urban Engineering Research Dept.

Building Renovation Div.
Mechanical & Electrical Div.

Architectural Design Depts.
Structural Engineering Depts.
Structural Planning Dept.
Design Div.

President

Specialized & Advanced Design Dept.
Design Quality Management Dept.

Civil Engineering Dept.

Construction Administration Dept.

Environmental Engineering Dept.

International Projects Dept.
Nuclear Facilities Dept.

Marketing & Sales Promotion Dept.
Planning & Business Promotion Dept.

Planning Dept.

Real Estate Information Dept.

Civil Engineering Dept.
Administration Dept.

Customer Satisfaction Dept.

Construction Engineering Dept.

Project Solutions Dept.

Marketing & Sales Div. (Integrated)

Proposal & Solutions Div.

Design Dept.
Estimate Dept.

AI & IoT Business Promotion Dept.

Project Analysis & Information Dept.

Marketing & Sales (Building Construction) Div.Ⅱ

Marketing & Sales Depts.

Marketing & Sales (Building Construction) Div. Ⅲ

Marketing & Sales Depts.

Marketing & Sales (West Japan) Div.
International Marketing & Business Development Div.

Marketing & Sales Depts.

Offshore Wind Power Project Dept.
International Projects Management Dept.
Coordination & Analysis Dept.
Procurement Dept.Ⅰ
Procurement Div.

Planning & Administration Dept.

Marketing & Sales Depts.

Administration Dept.

Planning & Administration Dept.

Safety Administration & Environmental Dept.

Marketing & Sales Depts.
Marketing & Business Development Depts.

BranchDesign Dept.
Civil Engineering Dept.
International Business Strategy Dept.

Administration Dept.
Project Development Dept.Ⅱ
PPP Projects Dept.
Urban Redevelopment Dept.Ⅰ

Marketing & Sales Depts.
Building Construction Dept.

Community Design & IR Development Dept.

Project Development Dept.Ⅰ

Procurement Dept.Ⅱ
Procurement Dept.Ⅲ

Marketing & Planning Dept.

Sales Mindset/Skills Training Dept.

Urban Development Div.

Machinery Dept.

Facility Management Promotion Dept.

Marketing & Sales Depts.

Marketing & Sales (Civil Engineering) Div.

Civil Engineering Div.

Projects Information Analysis & Strategy Dept.

Marketing & Sales (Building Construction) Div.Ⅰ

Medical & Pharmaceutical Business Div.

M&E Engineering Depts.
M&E Planning Dept.

Advanced Analysis Technology Dept.

Business Design & Master Plan Consulting Dept.

Mechanical & Electrical Dept.

Administration Dept.

Structural Engineering Dept.

Marketing & Sales Promotion Div.

Building Renovation Dept.

Strategic Design Dept.

Renewable Energy Dept.

Nuclear Facilities Div.

Building Renovation Promotion Dept.

Operations Planning Dept.

Next Generation Energy Dept.

Planning Dept.

Technology Control Dept.
Estimate Dept.

Innovation Strategy Dept.
Taisei Advance Center of Technology

Engineering Solution Dept.
Life-science Project Dept.

Information Planning Dept.

Business Administration Div.

Building Construction Solution Dept.

Administration Dept.
International Operations Headquarters

Safety Administration & Environmental Dept.
Building Construction & Engineering Dept.
Civil Engineering Dept.

Urban Redevelopment Dept.Ⅱ
Development Business Dept.
Development Business Dept.(International)★
Audit & Supervisory Board Member

Property Management Business Dept.
New Business Development Dept.
Audit & Supervisory Board Members’ Dept.

TA I SE I A N N UA L R E P O R T 2 0 2 1 120

Overseas Network (As of September 1, 2021)
China

TaiwanCSCEC-TAISEI CONSTRUCTION, LTD. (Head Office)TAIPEI OFFICE

4th Floor, Building No. 8, Foreign Culture Creativity Park,
19 Chegongzhuang Xi Road, Haidian District, BEIJING, P.R.C. 100048
TEL 86-10-6845-1267 FAX 86-10-6845-1266

Zone B, 6F, No. 16, Sec. 4, Nan-Jing E. Road, Taipei,
Taiwan R.O.C.
TEL 886-2-2578-5656 FAX 886-2-2578-3300

Philippines
PHILIPPINE OFFICE
9th Floor, BDO Equitable Tower, Paseo de Roxas, Salcedo Village,
Makati City, Philippines
TEL 63-2-8403-9105 FAX 63-2-8478-9542

TAISEI PHILIPPINE CONSTRUCTION INCORPORATED
23rd Floor, BDO Equitable Tower, Paseo de Roxas,
Salcedo Village, Makati City, Philippines
TEL 63-2-8886-0670 FAX 63-2-8886-0663

Vietnam
VIETNAM OFFICE (Hanoi)
2nd Floor, Block A, Song Da Building Pham Hung Road,My Dinh1, Nam Tu Liem District Hanoi,
S.R. Vietnam
TEL 84-24-3553-5033 FAX 84-24-3553-5002

VIETNAM OFFICE (Hochiminh City)
VIETNAM CHAMBER OF COMMERCE AND INDUSTRY,
Hochiminh City Branch Building 7th FL,171 Vo Thi Sau St., Ward 7,
District-3, Hochiminh City, S.R. Vietnam
TEL 84-28-3932-1759 FAX 84-28-3932-1758

VINATA INTERNATIONAL CO., LTD. (Head Office)(Hochiminh City Branch Office)3rd Floor, Block A, Song Da Building
Pham Hung Road, My Dinh1, Nam Tu Liem District Hanoi,
S.R. Vietnam
TEL 84-24-3553-3839, -3840 FAX 84-24-3553-3788

7th FL, VIETNAM CHAMBER OF COMMERCE AND
INDUSTRY TOWER,171 Vo Thi Sau St., District 3,
Hochiminh City, S.R. Vietnam
TEL 84-28-3932-1765 FAX 84-28-3932-1764

Indonesia
JAKARTA OFFICE
L’Avenue Office Tower, 28th Floor, Jl. Raya Pasar Minggu Kav. 16,
Pancoran Jakarta Selatan, 12780, Indonesia
TEL 62-21-8066-7320 FAX 62-21-8066-7312

PT. TAISEI PULAUINTAN CONSTRUCTION INTERNATIONAL
L’Avenue Office Tower, 28th Floor, Jl. Raya Pasar Minggu Kav. 16,
Pancoran Jakarta Selatan, 12780, Indonesia
TEL 62-21-8066-7321 FAX 62-21-8066-7312

PT. INDOTAISEI INDAH DEVELOPMENT
Kawasan Industri Indotaisei, Kota Bukit Indah Sector IA, Block B
Karihurip, Cikampek, 41373, Karawan, Jawa Barat, Indonesia
TEL 62-264-351-003 FAX 62-264-351-026

Singapore

Malaysia

SINGAPORE OFFICE
60 Paya Lebar Road #04-57, Paya Lebar Square,
Singapore 409051
TEL 65-6280-0833 FAX 65-6280-0869

KUALA LUMPUR OFFICE
9-3, 9th Floor, Faber Imperial Court, Jalan Sultan Ismail,50250 Kuala Lumpur, Malaysia
TEL 60-3-2070-6155 FAX 60-3-2070-6010

Thailand
THAILAND OFFICE
19th Floor, Thanapoom Tower, 1550 New Petchburi Road,
Kwaeng Makkasan, Khet Rachtavee, Bangkok 10400, Thailand
TEL 66-2-207-0331

TAISEI (THAILAND) CO., LTD.
9th Floor, Thanapoom Tower, 1550 New Petchburi Road,
Kwaeng Makkasan, Khet Rachtavee, Bangkok 10400, Thailand
TEL 66-2-207-0330 FAX 66-2-207-0332

Myanmar
MYANMAR OFFICE
2nd Floor, Tokyo Enterprise Building, No.32, Pyay Road,61/2 miles,
Hlaing Township,Yangon, Myanmar
TEL 95-1-654-838 FAX 95-1-654-838

TAISEI MYANMAR CO., LTD.
2nd Floor, Tokyo Enterprise Building, No.32, Pyay Road, 61/2 miles,
Hlaing Township,Yangon, Myanmar
TEL 95-1-654-838 FAX 95-1-654-838

Sri Lanka

India

SRI LANKA OFFICEINDIA OFFICE

No.177, 3rd Floor, Galle Road, Colombo 03.
Sri Lanka
TEL 94-11-2446194 FAX 94-11-2446198#602, 6th Floor, Tower B, Global Business Park, M.G. Road,
Gurgaon, Haryana-122002, India
TEL 91-124-466-9800 FAX 91-124-466-9888

Pakistan

Qatar

PAKISTAN OFFICE
Office-A, 5th Floor, Block-A, Saudi Pak Tower, 61-A,
Jinnah Ave., Islamabad, Pakistan
TEL 92-51-8316620 FAX 92-51-8316629

MIDDLE EAST OFFICE (Doha)Corner Abdullah Bin Jassim St. United Bank Bldg. 4th Floor,
Facing QNB Bldg, Doha - Qatar, PO BOX 47366
TEL 974-4443-4174 FAX 974-4443-7176

Arab Republic of Egypt
NORTH AFRICA OFFICE
25th, Rd. No.10, Station Sqr, Maadi, Cairo, Arab Republic of Egypt
TEL 20-2-2378-3609 FAX 20-2-2380-1362

121 T A I S E I ANNUA L R EPORT 2021

［ On t he Co v er ］

The radiating lines and geometric patterns
express “our role” in diversification.
The shining sprouts represent“new birth” and “development.”

TAISEI CORPORATIONCSR Promotion Section,
Corporate Communication Department,
Corporate Planning Office
URL : https://www.taisei.co.jp/english/

21.11.1000.T.2