30％ Club Japan
Investor Group
Progress Report
vol.4
July 2024

Contents
1. The second Thought Leadership Group seminar

2. Engagement with female directors from JICPA
3. Best practices of engagements on gender diversity
4. Selection of FY2023 Nadeshiko Brands by METI & JPX
Disclaimer: The English version is a translation of the original in Japaneseand is for information purposes only. In case of a discrepancy, theJapanese original will prevail.

The second Thought Leadership Groupseminar (8 th December, 2023)• Following on from last year, the Thought Leadership Group hosted theevent "Corporate Governance and the Importance of a Diversified Board”.
Fidelity International took the lead, providing an opportunity for senior
female leaders of the TOPIX President’s Committee to learn about what
investors hold as most important in managing public companies, and a
networking opportunity. This year, a small group case study session wasadded to the program to stimulate an intimate and lively discussion.
• Ms. Asako Suzuki, Director and Audit Committee Member of Honda Motorgave a keynote speech, sharing her dream of contributing to thedevelopment of emerging economies as the starting point of her career.
She also spoke on the initiatives she believes are necessary to improvediversity meaningfully.
• In a panel discussion by the Thought Leadership Group, ideas on “TheImportance of Human Capital including Diversity, and Future Expectations;an Investor’s Perspective” were shared with the audience.
• Mr. Yukio Yokoyama, Director and Chief Sustainability Officer of Nissin
Foods Holdings, gave a presentation on “The Analysis of the Relationshipbetween ESG Issues and Corporate Value". He explained the relationshipbetween CSV (Creating Shared Value)-style management, which tackles
social issues based on the two axes of "global health" and "human health“,and corporate value.
• In the final session, participants studied GPIF's gender pay gap report.
Despite only having 30 minutes, a myriad of views and proposals ranging
from AI tools to diversification of managerial posts were shared, in a true
testament to diversity, before wrapping up with time for networking.
The Thought Leadership Group aims to contribute to the improvement ofgender diversity in Japanese companies by communicating on the activities
of female leaders and through sharing with the next generation of female
leaders on investor expectations of a diversified board.

Thought Leadership Group panel (L to R):
Mr. Saito (3D Shareholder Services); Mr.
Okamura (Neuberger Berman); Ms. Kobu
(Invesco Asset Mgmt.); Mr. Ikawa (Fidelity
International)

Details on each session including
feedback from participants canbe found here (in Japaneseonly): https://bit.ly/49jsvPS

Engagement with female directors from JICPAOn April 3, 2024, the 8th meeting of the Support Committee for Non-CPA
Officers with Female Outside Directors was held. This time, members of
the Japan Federation of Bar Associations(JFBA) joined the meeting,bringing the total number of participants to just over 50. In addition, Ms.
Kana Shirakawa (Daiwa Securities Group Inc.) and Ms. Hiromi Yamagishi(Asahi Group Holdings, Ltd.) from 30% Club TOPIX Presidents'
Association joined us to discuss the current situation of companies.

Outline• Date: April 3, 2024 15:00-17:00(Reception to be held from 17:00)• Place: Japan Foundation for Accounting
Education ＆ Learning(JFAEL) (Otemachi)• Number of participants: 56(26 institutional
investors, 28 executives, 2 companies)• Contents: Group discussion (2 themes / 45
minutes x 2 sessions)

Discussion topics① Diversity Promotion• Current status (gaps among companies, regions, etc.)• Importance of establishing targets and KPI, andinformation disclosure② Improvement of the effectiveness of the Board.
• Roles of directors and auditors• Number of concurrent holding of positions by theboard and effectiveness of them
• Problems in evaluating effectiveness of the Board,measures for improvement, etc.

Features• Diversification of participants: 30% Club TOPIX Presidents'
Association members participated for the first time. In addition,
five members of the JFBA participated in the meeting.
• Changes in Discussion topics: Discussions have shifted from the"necessity" of diversity to “specific measures" such as
roadmaps and KPI formulation. The participants expressed
different perspectives from each point of view, and exchangedof opinions, which brought awareness to both sides.

Engagement with female directors from JICPA
Participant comments(Expert)
Executives• Investors are expected to encourage companies to promote importanceof diversity from a long-term perspective.
• Investors' questions to companies regarding "KPI setting" and"information disclosure" will have a great effect in motivating
management.
• KPI is becoming a general term, and the investors' opinion that it isimportant to set KPI linked to the company's strengths made us awareof the importance of KPI setting.
• It would be effective to confirm the effectiveness of the board by asking
for detailed information on the content of board discussions.
Investors• The "formulation of a roadmap or plan for diversity promotion" iseffective in promoting diversity initiatives.
• The board should not just engage in lively discussions, but deep
discussions that match the actual situation of the company.
• The status of the effectiveness evaluation of the board of directors is
not well visualized to the external stakeholders, and it is difficult tojudge the effectiveness of the board. We would like companies to makedisclosures that show the rotation of the PDCA.
Next TimeThe next meeting will be held in October 2024.The event is usually held
twice a year, in April and October. We had many participants who attended
this event for the first time, and the number of participants this time has
doubled compared to last year. We will continue to make further efforts tomake this event more conducive to best practices in engagement.

Best practices of engagements
Company A in manufacturing sector••

Issue identified : Company A is a major
manufacturing company listed in the TOPIX
Large 70, and as of the Annual General
Meeting of Shareholders (AGM) in 2022, only
one female director had been appointed as an
outside director, so there was a possibility thatthe company would violate the gender
diversity standards of the Asset Manager’s
Voting Guidelines for their AGM in 2023.
Therefore, they decided to confirm thecompany's views on gender diversity throughengagement.
The engagement with the company: The
company explained that its culture to welcome
diversity of any kind–including gender,
professional status, or nationality was deeply
rooted into the company, and that the lack ofgender diversity in the current board
composition was expected to be resolved in
the near future.

•

At the same time, it was shared that thecompany was making progress in providing
training and other programs to develop thenext generation of management, and thatwomen were included in the pipeline. The
Asset Manager communicated that it desirable
to appoint women as an inside director in the
future, taking into account the fact that there
were several women in positions at executive
level.

•

Outcomes & Future steps: The company
appointed a female inside director at June
2023 AGM. The company still has several
women at the executive officer level, and theAsset Manager expects to see further
improvement in gender diversity over the
medium to long term, and will continue tomonitor the impact of a corporate culture inwhich a diverse workforce plays an active roleon the company's long-term corporate value.

6Best practices of engagements
Company B in chemical sector – A chemical products manufacture in
JPX Nikkei Mid Small•

Issue identified: The small number of female science students in the materials sector
is estimated to be a factor hindering female advancement in R&D departments at R&Doriented companies in the materials sector. The company recognizes that whether or
not this situation is appropriately addressed, whether progress is being made inpromoting female advancement in R&D departments, and whether there is a clear pathfor improvement will have a significant impact on its mid- to long-term competitivenessas an R&D-oriented company.

•

The dialogue with the company : Company B is a medium-sized company, and dueto the nature of its business, in which the role of R&D personnel is to support overseas
customers, it was hypothesized that it would not be easy to secure human resources
and promote women's activities in the R&D department, and a dialogue was held
regarding the current situation and countermeasures.

•

However, contrary to our preliminary hypothesis, we confirmed that the ratio of
women in the R&D department reached nearly 40%. It was found that the key factor is
not the existence of outstanding institutional support, but rather the motivation of R&D
people.

•Based on the recognition that it is important to clarify the image of human resources
needed, develop R&D people who possess these elements regardless of gender, andcreate a climate in which they can play active roles, the company is increasing
motivation by providing them with experience in academic presentations, customer
support, etc., from early stage. The retention rate of highly motivated female R&D
people is high, and the return-to-work rate after maternity leave has been 100% for
the past several years.
7Best practices of engagements
Company B in chemical sector – A chemical products manufacture in
JPX Nikkei Mid Small （continued)•

Outcomes & Future steps: [Appointment of a woman as the representative of theoverseas local subsidiary] In 2022, the first female executive officer was internallypromoted from the R&D department, and she became the representative of the Taiwan
subsidiary, which is an important base for electronic pharmaceutical products. In addition,a female manager was appointed as the person in charge of launching a new business in
Malaysia, and after its establishment, she became the deputy representative of the local
subsidiary. 75% of Company B's overseas sales have been generated in overseas, andmanagement at overseas bases is an important career path for people who have gained
experience in R&D.

•

[Further improvement on disclosure is needed] In the future, we would like to confirm
the continuity of the promotion of women's activities in the R&D division and follow up on
the trend of the promotion of women's activities in global management and thedevelopment of women's activities in overall corporate management.

•

In addition, despite the fact that the promotion of women's activities in the R&D division
is a source of competitiveness, information disclosure of women encouragement efforts
seems to be modest. We would like to encourage further disclosure in this area.

8Best practices of engagements
Company C in pharmaceutical sector - A global pharmaceuticalmanufacture in the JPX Nikkei Mid Small••

Issue identified : While Company C
maintained a high degree of independence as
a company with a nominating committee (6out of 9 directors were independent outside
directors), the diversity of the board waslimited to 1 woman and zero non-Japanese
directors.
The dialogue with the company: In July
2021, we told Company C's directors that aslong as Company C would like to contributeto global health and healthcare as acomprehensive pharmaceutical manufacturer,
they should pursue diversity of the board,
including non-Japanese directors. On thatoccasion, Company C recognized theimportance of appointment of global talents,
especially as the company's overseas sales
are expected to increase.

•

Outcomes & Future steps: In a follow-up
meeting in September 2022, we confirmedthat Company C had set a 2030 goal forboard diversity.

•

While many Japanese companies arehesitant to set numerical targets for board
diversity, we commended the company's
attempt to instill a healthy sense of urgency
in management by setting and publicizing
targets.
•

The goal was simple and ambitious: 30%
female directors/executive officers and 20%
foreign directors/executive officers to beappointed by 2030. Company C's early
awareness of corporate governance and top
management's deep understanding of thesignificance of diversity on the board of
directors were likely factors in its success.

•Company C's goals are ambitious, andachieving them, especially for the executive
officer position, is likely to be challenging.
Therefore, in the future, we will encourageclarification of actions to achieve the goals.
For example, we expect concrete actions
such as appointing at least one woman orforeigner to each position in the executive
reserve.

Engagement best practices
Company D in chemical sector – A large chemical company in the
TOPIX Large 70•

Issue identified : We have been engaging in
regular dialogue with the company, discussing issues
related to corporate governance and initiatives on
ESG. Regarding social (S) aspects, we believe there
is a challenge in the discrepancy between the actualand targeted ratio of female managers in Japandespite being a global company with over 60%
overseas sales. The initiatives for promoting
women's participation in the workforce are lagging
behind.

•The dialogue with the company :We requested
an explanation about the current challenges forincreasing the number of female managers atdomestic locations. The company explained thatthey recognize the formation and maintenance of apool of female talent as the main challenge increating a group of female managers.

•

We also highlighted the importance of initiatives
related to the overall human capital of the company.
The company indicated that creating an environment
where diverse talents can demonstrate their ability
and sustain that state leads to strengthening humancapital. They also said that they are focusing on
individualized development strategies such as
considering the timing of promotions and toughassignments for women who are particularly affectedby life events, and mentioned that they arepromoting initiatives on the system side to make iteasier for employees to continue working.

•Outcomes & Future steps: At the 2022 AGM, awoman who has been with the company since she
was a new graduate was appointed to the board of
directors, as a result, the number of female directors
increased from two to three ((in 2021, a female
executive was appointed to the statutory auditor).
The fact that a woman was appointed to the boardof directors from executives not only serves as a rolemodel for next generations of female employees, butalso has the announcement effect internally andexternally as a proof of a workplace where a diverse
range of human capital can play active roles.

•

In the following dialogue, we confirmed that thecompany has established a committee to promote
DE&I and is making further progress in diversity
initiatives throughout the group. We intend tocontinue our positive dialogue in the future. We willclosely monitor the progress of the company's
efforts to develop and strengthen a workplaceenvironment in which a diverse workforce can play
an active role, as befits a global company, andconfirm concrete results.

10Best practices of engagements
Company E in machinery sector - A global machinery company in the
TOPIX Mid 400•

Issue identified : Company E, a machinery manufacturer included in the TOPIX Mid400, had
never nominated a female board member until the June 2023 AGM, lacked clear top
management commitment to gender diversity and quantitative KPIs such as the ratio of female
managers, and had very limited disclosure of relevant data.

•

As a global manufacturer with a top-class global market share for its main products and an
overseas sales ratio is over 80%, the company appeared to have chosen a human capital
strategy that was economically and socially irrational, so we conducted an engagement dialogue
with the company.

•

The dialogue with the company comments: In the 2022 dialogue, along with the possibility of
nominating a female board member in the near future, the company also took up gender
diversity promotion and complementary personnel evaluation system reforms (not only various
benefit improvements and WLB improvements, but also introduction of a job-based employment
system and evaluation).

•

The company stated that it was in the process of nomination of female candidates for directors
from outside of the company and that it had no intention of making major changes to its
employment and personnel evaluation systems for the purpose of promoting gender diversity.
However, the company expressed recognition that it is in the process of "spreading the concept(of gender diversity)," and that Japan, where it is headquartered, is "lagging behind" comparedto overseas group companies where there are no gender differences in promotion standards andmany female managers.

•

In a dialogue held in May 2023 (just prior to the June AGM), we pointed out the issues ofpromoting the development of senior management as a “candidate of next generation " forfemale executive directors and setting quantitative targets for the number (ratio) of female
managers, and received positive responses on the latter issue.

11Best practices of engagements
Company E in machinery sector - A global machinery company in the
TOPIX Mid 400 (continued)•

Outcomes & Future steps : At the June 2023 AGM, the Company's first outside female director(member of the Audit Committee) was nominated. July 2023, the company announced in its
integrated report that it had set a female management ratio (number) target for its Parent entity;
which is 3% (10 or more) by the fiscal year ending March 31, 2030. The level of disclosure oflabor-related historical data (number of female employees, number of female managers, wage
difference between men and women, etc.), which is a necessary data for engagement, on thecompany website and in the integrated report, has also improved. The company is not categorized
the most behind group of gender diversity effort anymore, and we believe that the following points(1) to (5) will be the key points for future engagement in order to maintain and accelerate theimprovement trend.
(1) strengthen the commitment of top management,(2) appoint female executive directors within the company, including those promoted from executive
officers of overseas group companies,(3) achieve (exceed) the target for the ratio of female managers,(4) train senior female managers as a pipeline of future candidates for board members, and(5) strengthen complementary measures to promote gender diversity (reform the personnel evaluation
system, narrow the wage gap between men and women, etc.).

12

Selection of FY2023 Nadeshiko Brands
by METI & JPX
The Ministry of Economy, Trade and Industry (METI), in cooperation with theTokyo Stock Exchange (TSE), has selected Nadeshiko Brand companies,
which are considered to be leading companies in the encouraging gender
diversity. Nadeshiko Brands has been continued since 2012.Ms. Tomoko
Soma, Director, Economic and Social Policy Office, Economic and Industrial
Policy Bureau, METI, commented below.

【Ms. Tomoko Soma: Ministry of Economy, Trade and Industry, Economic and Social
Policy Office, Economic and Industrial Policy Bureau】
Many companies have implemented gender diversity efforts, in which diversified humancapital can maximize their abilities to enhance corporate value. This movement is expected to
grow stronger in the future as more attention is paid to the human capital and sustainabilityconscious management initiatives and their information disclosure. In light of this, in FY2022,
we renewed the process of Nadeshiko Brands selection; to emphasize the correlation between
business strategies and human resource strategies, including the women encouragement, andthe promotion of the disclosure of non-financial information. In fiscal 2023, based on thephilosophy above, we established new category, called “Next Nadeshiko: Companies
Supporting Dual-career and Co-parenting”, which are companies with particularly good worklife balance initiatives which support all employees to enable dual-career and co-parenting.
Burden of women's careers due to childbirth or childcare is one of the factors preventing
women from taking active roles in the workforce. Background for such situation is a longhours working customs, an unbalanced burden of house-keeping and childcare duties for
women, and a stereotype gender-biased mindset, etc.

Selection of FY2023 Nadeshiko Brands
by METI & JPX【Ms. Tomoko Soma: Ministry of Economy, Trade and Industry, Economic and Social
Policy Office, Economic and Industrial Policy Bureau】 (continued)
In FY2023, 27 companies were selected as “Nadeshiko Brands” for their efforts to promote diversity, which is
key to their corporate value enhancement by promoting both “consistent career development effort” and“support for all employees’ dual-income career and dual parenting”. The 16 companies that are particularly
outstanding in their efforts to support dual income and dual parenting are newly selected as “NextNadeshiko: Companies Supporting Dual-career and Co-parenting”. In terms of the link between womenencouragement and corporate value enhancement, the average stock price performance of 27 Nadeshiko
Brands companies selected outperformed TOPIX over the past several years.

When companies apply to Nadeshiko Brands, they will have the opportunity to review the current status of
their diversity management and women’s empowerment, which will lead to the acceleration of such efforts
and the enhancement of corporate values. Investors are encouraged to make use of those companies’ dataand case studies of Nadeshiko Brands companies, on their investment decisions process and theengagements with investee companies. We expect that investors’ attentions to those diversity information
should encourage listed companies to enhance such diversity related information disclosure. We would
appreciate your further intention to the Nadeshiko Brands, and we would be grateful if you could provide us
with any suggestions. The report and the data collection containing the details of the selection results areavailable on the website of METI.
https://www.meti.go.jp/policy/economy/jinzai/diversity/nadeshiko.html