HOKUETSU GROUP

Integrated
Report2023

Structure of the Hokuetsu Group Philosophy

Contents

Growth Strategy

Hokuetsu Group Corporate Philosophy

As a people focused business group, we work to improve society globally,by providing socially and environmentally responsible products throughinnovative manufacturing on a global scale.

Message from the President and CEO

4

Medium-term Management Plan 2026

7

Value Creation Process

9

Business Strategy

11
13
15

Investment Business
Paper and White Paperboard Business“People-focused business group” is the expression of our vision for the future, what we want
to become, our goal.

Performance Materials Business
Sustainability• A business group that values its connection to its stakeholders and the relationship of trustwith them.

Sustainability Management17• A business group that pursues the happiness of its employees.

Group Sustainability Activity Implementation Targets

19• A business group that respects diversity and empowers its people.

Initiatives to Achieve Materiality (important issues)

21“Socially and environmentally responsible” means to create a sustainable society inharmonious coexistence with nature, guided by the concept of “minimum impact” to keep all
impact on the natural environment to the minimum at each stage from the procurement of raw
materials to the manufacture of end products.

Governance“Products through innovative manufacturing on a global scale” means to pursue
innovation, to aim at delivering the greatest satisfaction to our customers by enhancing ourtechnological capabilities.

Corporate Governance

31

Executive Officers

35

Discussion with Outside Directors

38

Financial and Non-financial Highlights

41

Corporate Information

43“Socially and environmentally responsible,” “products through innovative manufacturing on a global scale”: these are
the values, the philosophy, that we uphold. It is the mission of our corporate group, the foundation of our existence, to“work to improve society globally” through these values.
Editorial Policy
This report is published for the purpose of communicating the Hokuetsu Group’s value creation strategy and its progress, in addition to themes that we recognize
as particularly important issues in non-financial activity reports. In editing this report, we refer to the IFRS Foundation's International Integrated Reporting
Framework, the Ministry of Economy, Trade and Industry's Guidance for Collaborative Value Creation 2.0, and the GRI Standards. Please also refer to our website forGroup Code of Conduct

more detailed information.

Disclosure system

Scope of reporting

The Group hereby sets forth its “Group Code of Conduct” to signify the basic rules to be observed by all of its
officers and employees in all activities they engage in toward realizing the Group’s Corporate Philosophy.

2. We Shall Strive for Environmental Conservation and Seek Harmonious Coexistence with Society and Local
Communities
3. We Shall Respect Human Rights and Strive to Secure a Safe, Hygienic and Pleasant Workplace Environment
4. We Shall Conduct Business with Integrity and Fairness

Financial information

1. We Shall Comply with Laws and Regulations, and Act in a Responsible Manner in Line with the Social Norms

Integrated Report
IR information

Sustainability• Consolidated Financial Highlights• Hokuetsu Group Sustainability• Management Plans• Social Contribution Activities• Consolidated Financial Statements• Environmental Activities• Summary of
Financial Results• Health and Safety

Companies covered by this report:
Hokuetsu Group(Hokuetsu Corporation and main affiliated subsidiaries, etc.)
Period covered by the report:
April 1, 2022-March 31, 2023
(Some activities after this period are also reported.)Contact:
General Affairs Department Hokuetsu Corporation
Telephone +81-3-3245-4500
Published
October 2023

WEB

5. We Shall Appropriately Manage Corporate Assets and Information
Comprehensiveness1

Non-financial information

NewsworthinessCorporate website
https://www.hokuetsucorp.com/en/index.html

2

HOKUETSU GROUP Integrated Report 2023

Growth Strategy

Message from the President and CEO

Since our founding in 1907, Hokuetsu Corporation has been contributing to the development of society andculture through papermaking, while aiming to be a company that is trusted by all stakeholders, including
customers, shareholders, business partners, and local communities.
We will continue to pursue our business activities under the banner of “Socially and environmentally
responsible,” “Products through innovative manufacturing on a global scale,” and “people-focusedbusiness group.” As a truly global company, we will continue to take on new challenges with the aim ofcreating new value.

Long-term Management Vision

Vision 2030
Basic Policy

In a business environment that is subject to major changes, the Group and all its stakeholders will
aim for continuous growth by promoting management with effective governance and compliance,and developing and providing services and products that are both high quality and cost-competitive
through environmentally friendly business activities.

We will contribute to realizing asustainable society by shifting ourbusiness portfolio and decarbonizing.
Sekio Kishimoto
President and CEO

Achieved record profits within the timeframe of Medium-term Management Plan 2023
As a result of several price revisions and efforts to strengthen
our earnings base by leveraging our competitive advantages,
operating income, ordinary income, and net income attributableto owners of the parent company reached record highs in thefiscal year ended March 31, 2022. In addition, consolidated net
sales for the fiscal year ended March 31, 2023 exceeded 300 billion
yen for the first time since the company was founded, and wewere able to achieve all consolidated management indicators
during the three years of Medium-term Management Plan 2023.

The Hokuetsu Group initiated its Long-term Management Vision“Vision 2030” and Medium-term Management Plan 2023 in April 2020.
Immediately after the start of the Plan, the global economy
experienced major upheaval due to the spread of the novel
coronavirus and the impact of the situation in Russia andUkraine. There were also drastic changes in the external
environment, including significant fluctuations in exchange rates
and sharp increases in the price of raw materials and fuel, anddistribution costs.

Consolidated management indicators• A business group that contributes to sustainable social development based on environmental
management

Results of Medium-term Management Plan 2023

• A business group made up of people working proactively with dreams, hopes, and pride

Hokuetsu Group ZERO CO2 2050

Fiscal Year Ended
March 31, 2021

Fiscal Year Ended
March 31, 2022

Fiscal Year Ended
March 31, 2023

Net sales¥280 billion¥225.5 billion¥261.6 billion¥301.2 billion

Operating income¥15 billion¥1.7 billion¥20.5 billion¥17.3 billion

Ordinary income¥20 billion¥9.8 billion¥29.5 billion¥11.5 billion

Net income attributable toowners of parent company¥15 billion¥14.2 billion¥21.2 billion¥8.3 billion

7.0%

7.6%

10.3%

3.8%

¥35 billion¥24.8 billion¥43.3 billion¥24.3 billion

ROE

The Hokuetsu Group actively uses “CO2 zero energy” such as biomass to produce paper, asustainable material.
We have made progress in our climate change countermeasures and raised our “CO2 zeroenergy” ratio to the highest level in the industry.
We aim to realize a society where people and the environment coexist, and are taking on thechallenge of net-zero CO2 emissions by 2050.

Results

Medium-term Management
Plan 2023 Consolidated
Management Indicators• A business group that makes use of diverse human resources and the latest technology to challenge
ourselves in new business fields in step with the times

EBITDA: Target achieved

Results (annual average)

Premise under the plan

Exchange rate*

¥108

¥106

¥113

¥136

Dubai crude oil$50/bbl$45/bbl$78/bbl$93/bbl*USD/JPY

3

4

Growth Strategy

HOKUETSU GROUP Integrated Report 2023

Main initiatives of Medium-term Management Plan 2023
Basic Policy

Shift business portfolio

Expand businessworldwide

Strengthen businessin Japan

Strengthen governancemanagement

Promote SDGs-related
activities

FY2020Assigned Chief Risk Management Officer (CRO)No. 6 paper machine at the Niigata Mill

Established a new Audit & Supervisory Board Member OfficeStarted containerboard base paper business(Niigata mill No. 6 paper machine)
Started “hSA25” (hokuetsu Safety Action 2025), safety and health activities
Received Logistics Environmental Conservation Activity Award at the
21st Logistics Environment Awards
Established a new Safety, Environment & Quality Management Division

Established a new Group Business
Investment Division
Established “Hokuetsu Group Zero CO2 2050”
Certified as a Health & Productivity Management Outstanding
Organization (large enterprise category) in 2020, 2022 & 2023

FY2021
Declared support for TCFD recommendations (Task Force on Climaterelated Financial Disclosures)

Kanto Mill (Katsuta) wood biomass boiler

Kanto Mill (Katsuta) awarded the “Judges’ Special Award” in the Zero
Carbon Challenge Cup 2021
Launched the Southern Ace, fuel-efficient chip carrier
Achieved ISO45001 (occupational safety and health) certification

Installed heat recovery system for recovery boiler (Al-Pac)

Established the Hokuetsu Group Basic Policy on Diversity and a policy toensure diversity in human resource development and internal environment.

Formulated the Group Basic Sustainability Policy
Revised product prices (continued into FY2022)

FY2022“Panse,” environmentally friendly
packaging material

Updated core business system (Al-Pac)
Participated in biomass power generation business(Aizu Komorebi Power Plant)
Achieved Eco Rail Mark product certification
Transferred to the TSE Prime Market

Developed electromagnetic noise
suppression sheet

Joined “30by30 Alliance for Biodiversity”

Opened relaxation area at headquarters

Disclosed information based on TCFD recommendations

Halted Niigata Mill No. 2 paper machine

Participated in paper satellite project

Established Paper Cup Business Development OfficeObtained “A-” rating in CDP Climate Change Program

Appointed a female outside director
Increased ratio of outside directors (33.3%

40%)

Won the Cellulose Society Technology Award

Signed the United Nations Global Compact
Provided inflation special allowance

Medium-term Management Plan 2026: The start of the second step to realizing Vision 2030

5paper machine at the Niigata Mill in June 2022, and as a result of
optimizing the supply-demand balance in Japan and building
an optimal production system between the Niigata and Kishu
mills, we achieved results that exceed those of FY2021.
In the Performance Materials Business, we established a newPaper Cup Business Development Office in October 2022 topromote the development of environmentally friendly products,
including plastic-free products, and to make a full-scale entry
into the paper cup and paper container base paper markets. We

businesses through M&As, and the focus on high value-added
products, such as by developing environmentally friendly
products and new products that meet customer needs as well
as expanding the applications of existing products.
Regarding the issue of climate change, we have been
producing paper with zero CO2 energy consumption, which is
the highest level in the industry, as a result of our efforts since
1995, which includes the installation of additional biomass
boilers. During the three years of the new medium-term
management plan, we will move forward withenvironment-related investments with the aim of further
reducing group-wide CO2 emissions through the promotion ofgreen transformation and preserving biodiversity by cultivating
and managing company-owned forests.
In addition, we jointly applied for the “Survey on
Implementation of Japanese Advanced CCS Projects in FY2023”
by the Japan Organization for Metals and Energy Security, andwere commissioned to conduct the survey. We will continue ourchallenge to achieve virtually zero CO2 emissions by 2050 byworking together with the joint applicants toward the start of
the advanced CCS project in 2030.
We look forward to your continued support as the Groupaims to evolve and grow for the next generation based on thetrust of all of our stakeholders.

In April 2023, we initiated the Medium-term Management Plan
2026 as the second step toward realizing Vision 2030. With thisPlan, we set numerical targets, including consolidated net salesof ¥330 billion, and promote business activities toward further
enhancing our corporate value in accordance with three basic
policies: “shift business portfolio,” “strengthen competitiveness,”and “promote sustainability (ESG) activities.”
Since our 100th anniversary in 2007, the Group hasaggressively shifted its portfolio, with Alberta-Pacific Forest
Industries Inc. entering the commercial pulp business in Canada
and Jiangmen Xinghui Paper Mill Co., Ltd. entering the white
paperboard business in China. We also started a containerboard
base paper business in Japan.
In addition, we hold 24.8% of the shares in Daio Paper
Corporation, a major household paper manufacturer. We continue
to hold this asset based on its significance in the Group’s mediumto long-term business strategy, such as accelerating our portfolio
shift and strengthening our business footing by strengthening
alliances and developing new businesses.
During the three years of the Medium-term Management
Plan 2026, we will aim for further growth by pursuing a businessportfolio shift and strengthening our competitiveness throughthe development of new businesses that will become corebusinesses in the future, including by entering into new

Long-term Management Vision

Measures implemented in FY2022 to improve profitability
In FY2022, as in the previous year, we implemented
unprecedented biannual price revisions particularly for paper,and also revised prices for other types of paper to respond tochanges in the external environment, such as the sharp rise in
the price of raw materials and fuel, and logistics costs.
By product type, as regards coated paper, the mainstay of
the Paper & White Paperboard Business, demand for pamphlets
and other items recovered as domestic travel and events
resumed. For wood-free paper, etc., we shut down the No. 2

superiority of our environmental competitiveness by developing
a production system with the aim of starting commercial
production by the end of FY2024.
In addition, among overseas businesses, Canada’s
Alberta-Pacific Forest Industries Inc. (Al-Pac) saw sales priceincreases that exceeded expectations amid global logistics
issues, and as prices continued to rise, the company’s pulp
business expanded. Furthermore, in the electricity sales business,in addition to increased earnings due to weather and supply anddemand factors, a recovery boiler waste heat recovery facility,
installed to increase electricity sales, was able to operate at full
capacity, which also contributed to higher earnings.

also worked to strengthen our collaboration of Hokuetsu
Package processing paper cup base paper produced at our
Niigata and Kishu mills. Sales in the packaging businessincreased due to special demand for vapor-deposited products.
In May 2023, Hokuetsu Package concluded a technology
introduction agreement with Packable, a Dutch paper container
molding company, and acquired the exclusive right tomanufacture and sell Halopack, a high-performance paper
container, in Japan. Packable’s products are highly regarded as
revolutionary environmentally friendly paper-based containers
with various barrier properties equivalent to those ofhigh-performance plastic containers, and can also be
hermetically sealed. Moving forward, we will further enhance the

Vision 2030

2020

2021

2022

Medium-termManagement Plan 2023

2023

2024

2025

2026

2027

2028

2029

2030

Medium-termManagement Plan 2026

Core timeframe for realizing the business group image of Vision 2030
6

Growth Strategy

HOKUETSU GROUP Integrated Report 2023

Medium-term Management Plan 2026
—The second phase of our Long-term Management Vision - Vision 2030—
The Hokuetsu Group formulated Medium-term Management Plan 2026 as a core timeframe for realizing our business group
image of Vision 2030. We aim to achieve our consolidated management indicators and strive to improve our corporate value
by further shifting our business portfolio, strengthening our competitiveness, including environmental competitiveness, andpromoting sustainability activities.

Medium-term Management Plan 2026

Changing Business Environment

Risk• Economic impact
of carbon taxes

Macro Trend

Carbonpricing

Opportunity• Higher regard forlow environmental
impact management

Basic Policy

Consolidated Management Indicators (FY2025)1

Shift Business
Portfolio

Net sales330• We will pioneer new core businesses to further
accelerate our business portfolio shift, with the aimof the continuous growth of the Group.

¥• We will strive to expand our growth operations by
exploring new businesses in Japan and overseas,promoting M&As, and developing new products thatmeet our customers’ needs.

Ordinary income

24¥billionbillionROE• Temporary
increase inenergy costs

Decreased
dependency
on fossil fuels• Higher regard forsuperior environmental
friendliness• Higher regard for
products that promotedecarbonization

2

Strengthen
Competitiveness8.0• We will further strengthen our competitiveness of“costs,” “the environment,” and “safety.” We will pursue asafe and stable production system that ensures
profitability even within the contraction occurring in thedomestic printing and communication paper market.
• By further improving our industry-leading environmental
competitiveness, we will solidify our position as thepapermaking company group chosen by customers.

%¥• Supply chain risks

Emphasis on
human rights• Stronger risk
management• Promotion ofsustainability activities

3

PromoteSustainability(ESG) Activities• As a people-oriented company, we will promote
diversity and work-style reforms, and build a resilientorganization by promoting human capital management
and business activities that respect human rights.
• We will strive to enhance our corporate governance,
including by strengthening our risk management system.

30

billion

Maintenance &renewal investment

40¥

billionStrategic investment¥

40

billion(M&As, new investment)

7

20

¥

billion

Net income attributableto owners of parent company

20¥billion

EBITDA39¥

billionInvestment Plan
Growth &improvement investment• We will promote responses to climate change, and thedevelopment of environmentally friendly products.

Operating income

Growth & improvement
and maintenance &renewal investment includes• Environment-related
investment¥9 billion• Human capital
investment¥6 billion• IT & system
investment¥4 billion8Growth Strategy

HOKUETSU GROUP Integrated Report 2023

Value Creation Process
We aim for sustainable growth through the realization of our corporate philosophy and contribute to solving social issues byengaging in business activities that realize our long-term management vision.

INPUTGroup Corporate Philosophy
Group Code of Conduct

P.1

Long-term Management Vision “Vision 2030”

P.3

Hokuetsu Group Basic Sustainability Policy

P.17

OUTCOME

Source of value creation
Business activities

Financial information
Total net assets

A–(R&I)*1¥225.9 billion*2

Interest-bearing
debt¥103.7 billion*2

GradeIntellectual capital
R&D expenditures

Strengths• Solid financial foundation(Net D/E ratio 0.38x)381¥700 million*2• Growing regard for environmental technology(Vulcanized fiber/rigid fiberboard PASCO®,
battery separators, etc.)

Medium-Term Management Plan 2026
P.7-8

Business segment
Investment Business

Strengths*3

Patents

Value createdPrimarily manages and assesses
overseas Group companies such as
Alberta-Pacific Forest Industries Inc.
(Al-Pac) in Canada and Jiangmen
Xinghui Paper Mill Co., Ltd. in
China, and makes strategic
investments through M&As andother means. It aims to transform the Group’s business portfolio
into one that can achieve sustainable growth.

Sustainability activities
P.17-30

We actively pursue sustainability efforts that enhance theintegration of financial and non-financial aspects based on the
Hokuetsu Group Basic Sustainability Policy and Hokuetsu Group
Sustainability Basic Regulations.

Materiality (important issues)
Strengths

Manufacturing capital
Capital investment
Offices in Japan
Overseas offices¥12.53 billion*2
24*4
8*4

Human capital
Consolidated employees

859*4

Paper & White Paperboard Business• Pulp production capacity of approximately
1.5 million tons/year in Japan and overseas

The Paper & White Paperboard
Business mainly produces printing
and communication paper, white
paperboard, and specialty paper, of
which coated paper and printing
paper boast a high market share in
Japan. In recent years, it has beendeveloping new products at the Nagaoka Mill as the use of white
paperboard for food packaging and as an alternative to plastic
has increased.

Employee education andtraining expenses¥14 million*3• Promotion of human resource employment
and training

Local community• Contribute to the safety of the living environment,
disaster preparedness and mitigation• Harmonious coexistence with the local community
Global environment• Reduction of burden by responding to climate change• Contribution through products with functions that
reduce environmental impact
Medium-Term Management Plan 2023
Consolidated Management Indicators
FY2025

1. Response to climate change• Core mills in locations advantageous forexport to Asia (Niigata)• Acceleration of human capital management

Employees at overseas
subsidiaries

Employees• Employee professional development• Maintenance of health management

P.11-12• Integrated supply system from base paper
production to packaging

Strengths

4,163*4

Client companies and shareholders• A brand that is highly evaluated for sustainability• Improved profitability and efficiency through stableprocurement• Co-creation of high value-added products

E

Environment

330 billion

2. Responsible procurement of raw materials

Net sales ¥3. Forest management and protectionof biodiversity(FY2022 result: ¥301.2 billion)

Important issues of the Diversity Committee
Ensure diversity in core human resources

4. Ensuring safety and hygiene of the workplaceS

FY20305. Human capital management
Society

Percentage of women, non-Japanese,
mid-career hires, etc.

6. Delivering responsible product quality andnew product development

20% or more

7. Dialogue with stakeholders(FY2022 result: Approx. 10%)

P.13-14

Social & relational capital
Main sales
countries

Over 40*5

Natural capital

Performance Materials Business• New customers and partners due to changes
in paper demand structure

The Performance Materials Businesshas a product development officewithin the Performance Materials
Sales Division that plays the role ofpromoting strategic businesses
that pave the way for the future,
and works closely with our researchlaboratory. Our aim is to rapidly realize new businesses by having
the sales and engineering departments work together to find anddevelop new businesses.

Strengths

Environmental
conservation investment¥1.15 billion

Environmental
conservation expenditures¥9.04 billion*3
644,000 tons*3

CO2 emissions

Strengths*3• Abundant forest resources of approximately
6.41 million hectares in Japan and overseas• Obtained “A-” rating in CDP Climate
Change Program

P.15-16G

Governance“hSA25” safety and health activities
Group targets

8. Improving corporate governance
9. Respecting for human rights

FY2025

FY2025

Serious accidents

Occupational accidents

0

accidents(FY2022 results: 1)

Hokuetsu Group Environmental Target 2030

25

or less(FY2022 results: 39)

Zero CO2 2050
FY2050Net zero CO2 emissions“hSA25” safety and health activities
P.27(FY2022 result: 644,000 tons)*1 Issuer rating by Rating and Investment Information, Inc. (R&I) (March 31, 2023) *2 Results for FY2022 (consolidated).
*3 Results for FY2022 (non-consolidated). *4 As of March 31, 2023 *5 Main countries with sales results in FY2022

910

Growth Strategy

HOKUETSU GROUP Integrated Report 2023

Business Strategy

Investment Business
Consolidated subsidiaries (Performance Materials Business)

Bernard Dumas S.A.S.
(Dumas)Jiangmen Xinghui
Paper Mill Co., Ltd.

Looking back on FY2022 andstrategy moving forward

Alberta-Pacific Forest
Industries Inc.

Main activities in FY2022

Dumas is a French manufacturer of performancematerials and specialty papers. It became a wholly
owned subsidiary in 2012. Main products are AGM
battery separators, air purification filter paper, etc. byusing glass fiber as raw material.

Both sales and operating income(EBIT) exceeded the previous year
thanks to recovery from the impactof the spread of COVID-19 and anincrease in selling prices.

Although the European AGM
battery separator market hasentered a stable period, newentrants are continuing toenter the market, so we will
work to maintain market shareand promote sales expansion
activities to expand the market
outside of Europe.

This year marked a turning point in
the market, with demand forsmartphones, which had been themarket driver, plummeting due tothe strong impact of the “zero
COVID” policy, including theimplementation of a lockdown inShanghai.

In China, the production ofelectric vehicles (EVs) is rapidly
expanding, and vehicle
electronic components are
expected to grow further inthe future. We will work tostrengthen our earnings base byshifting to growth fields while
collaborating with customers.

Location: Dordogne, France
Business: Manufacture and sale of glass fiber sheets
Products: AGM battery separators, filter paper

Accelerating the business portfolio shift by leveraging our coretechnology and expertiseIn FY2022, to achieve a “business portfolio shift” which is set by “Medium-term Management Plan 2023” a series of initiatives wereconducted such as looking for the entering opportunities for new businesses, expanding existing business areas including M&As.
In order to achieve the Group’s sustainable growth, we will continue to develop new businesses for the future and promotebusiness portfolio shift. Moreover, to grow our business, we will strengthen the cooperation with existing invested businesses, look for
new business globally, chase M&A opportunities, and support the development of new products that meet market needs.

Shanghai Toh Tech Co., Ltd.

Company
Alberta-Pacific Forest
Industries Inc. (Al-Pac)

Jiangmen Xinghui Paper
Mill Co., Ltd.

Business strategy
moving forward

Business Overview

Main activities in FY2022

Al-Pac is one of North America’s largest commercial
pulp mills producing market pulp and exporting
power to the grid in Alberta which is generated
by biomass.

In the first half of FY2022, production
and shipments were slow due to ashortage of freight rail cars, which also
resulted in a sluggish power sales
business. When the logistics situation
improved in the second half,
production and shipments recovered
to almost normal levels, and electricity
sales accordingly. This brought almost
record-high earnings with the help ofrecord-high pulp prices.

To maximize the power sales
business and reduce CO2
emissions, we implement
plans and initiatives. Also, wewill make efforts to increase
log-to-pulp yields andoptimize energy consumption
processes for the aim of
improving our pulp production
cost competitiveness.

In China, the economic situation was
sluggish due to the “zero COVID”
policy, and the paper industry as awhole continued to face difficult
business operations. Despite these
difficult circumstances, they
implemented vacuum pumps tosave energy and introduced sales ofwhite back coated duplex board
suitable for blister packs.

While securing stable sourcesof recycled paper, the main
raw material, and alternative
raw materials, and promoting
sales expansion by cultivating
new customers and developing
new products, we will also work
to comply with environmental
regulations that are becoming
stricter every year.

Location: Alberta, Canada
Business: Pulp manufacturing, power export, etc.
Products: Hardwood pulp, softwood pulp
Production capacity: 640,000 tons/year

Jiangmen Xinghui Paper Mill manufactures and sells
white paperboard that meet customer needs, suchas coated duplex board used for packaging
materials, special grade paper for blister packs, anduncoated products. The sales are centered in
Guangdong Province, and they also export toSoutheast Asia.
Location: Guangdong, China
Business: Manufacture and sales of white paperboard
Products: Coated duplex board, coating liners,
white liners
Production capacity: 300,000 tons/year

Other overseas businesses
Company

Business Overview

Main activities in FY2022

Freewheel Trade and Invest
7 Pty Ltd. (FW)FW is a joint venture between Hokuetsu
Corporation (90%) and South African company NCT
Forestry Agricultural Co-operative Limited (10%). It
operates a tree-planting business in the Republic ofSouth Africa, and operates through a cycle of tree
planting, nurturing growth, felling, and tree
planting. It stably sells logs primarily for paper
production and lumber.

In order to reduce transportation
costs, it has increased the use of
freight rail cars instead of trucks. In
addition, it closely monitored themarket conditions for eucalyptus
lumber, which is expected to sell at ahigher price, and planned logging
areas and strengthened sales to shipand sell products in a timely manner,
where demand is expected to increase.

Location: KwaZulu-Natal, Republic of South Africa
Business: Timber farming

Al-Pac’s 30th anniversary
Al-Pac began commercial production in 1993 and celebrated its 30th anniversary in 2023.
Since the planning of the business, the construction and operation of the mill has been carriedout with the cooperation of Japanese and Canadians and has overcome various hardships andtransitions up to the present day. Since 2015, the company has become a member of the
Hokuetsu Corporation Group and has developed a cooperative structure. It continues to write
new history for the Group. Currently, the company is not only involved in the pulp business,but also serves as a base for the overseas business development of the Hokuetsu Group,
including expanding the electricity sales business and developing new businesses.

11

Business strategy
moving forward
The company will expand thearea of forest land it owns andmanages by confirming theintentions of other local forest
owners and, in some cases,
purchasing forest land.
It aims to further expand
business and capture new
business opportunities in the
future by increasing its
capacity to absorb CO2.

Affiliated companies accounted for under the equity method
Company
Daio Paper Corporation

TOPICS

Shanghai Toh Tech processes the base paper
produced at the Nagaoka Mill and other locations to
produce chip carrier tapes for transporting electronic
components such as capacitors and resistors.
Location: Shanghai, China
Business: Production of chip carrier tape

Consolidated subsidiaries

Business strategy
moving forward

Business Overview

Company

Business Overview
Hokuetsu Corporation acquired the shares of Daio Paper, a general paper manufacturer, in 2012, and as of the end of March 2023,
owns 41,589,000 shares, or 24.8% of the outstanding shares excluding treasury stock, and considers the company to be an equity
method affiliate.
By capturing revenues from the home and personal care business, which is the company’s forte, we have shifted our businessportfolio as stated in Medium-term Management Plan 2026. Also, we continue and strengthen the cooperative relationship withthe company as part of our medium- to long-term management strategy by holding the shares of Daio Paper.
Headquarters: Shikokuchuo City, Ehime Prefecture
Business: Manufacture, processing and sale of paper, paperboard, pulp and their by-products
Products: Newsprint paper, printing paper, packaging paper, paperboard, containerboard, pulp, sanitary paper, disposable
diapers, etc.
Production capacity: 210,000 tons/year

12Growth Strategy

HOKUETSU GROUP Integrated Report 2023

Business Strategy

Paper and White
Paperboard BusinessBusiness strategy
moving forward

Main product lineup• Since April 2023, the first year of the Medium-term Management Plan 2026, we changed our organizational structure offour departments as new: the Paper Sales Department, the White Paperboard Sales Department, the Export Department,
and the Product Logistics Department. Through discussion with various customers, we are trying to engage in sales
adapting to changes in the demand environment after the price improvement.

• Paper
Printing paper, colored wood-free paper, communication paper, packaging paper, specialty paper• White paperboard
Cast-coated paper, art-post, premium white paperboard, specialty white paperboard, coatedduplex board

Looking back on
FY2022

Build a best production scheme forprinting and communication paper
according to domestic and international
demand movement

Paper & White Paperboard Sales Division

No. 9 paper machine at the Niigata Mill

Aiming to achieve business strategic goals by leveraging the strengthsof the Hokuetsu Group• The Paper Sales Department will work with mills to achieve best production and logistics in accordance with the strategiesof the Profit Management Office. In addition, it will strive to secure profits by establishing a system that can quickly respondto domestic and overseas market trends and rapidly changing exchange rates.
• The White Paperboard Sales Department will strive to expand users base with the target of recovering the market share forcoated duplex board, and aim to rebuild the white paperboard business while closely cooperating with the Paper Cup
Business Development Office.

Status of efforts in FY2022

Business strategy

Aiming to improve profitability to respond in a changing external environment
under a new organizational structure

Because of raw materials and fuel and logistic cost increasing by rapid depreciation of Japaneseyen, we were forced to implement price revisions of our products. Also we had shut down No.2
paper machine at Niigata mill as of June 2022. At the same time, we are now in the process ofreviewing our product lineup, including consideration of basis weight and consolidation of
product lineup in order to increase efficiency of production. Moving forward, the Profit
Management Office will pursue a product mix that responds to changes, aiming for bestproduction and maximum profits.

Strengthen export and sales expansion
based on a direct trading system

We have a top share of major printing paper (like printing paper category A and LWC) among
Japanese manufacturers for export quantity. In FY2022, our export quantity reached approximately
300,000 tons on a weight basis. Although we had to make stable arrangements for shippingdelivery under global supply chain turmoil, we were able to achieve 111% year-on-year growth inKishu cup base paper and 103% year-on-year growth in medium paper.

Development of new products to utilize
printing and communication paper
manufacturing technology

We are focusing on proposing paper file folders as an alternative to plastic folders, and sales
volume is increasing. Regarding water-absorbent paper, we are also proposing that it can beapplicable not only to absorb water, but also to impregnate and retain chemicals when in need.

Aiming for customer satisfaction by looking
for latent demand to our products

The Wholesale Merchant Department, Direct Sales Department, and Publishing & Media
Department have developed speedy sales activities based on the main products of eachdepartment to leverage their strength in handling all products. Also, the Material Logistics
Department has improved delivery systems to be more efficient by sharing production
information from each mill. (Transitioned to a new organizational structure from April 2023.)

Taking in new products needs for packaging
business by whole of Hokuetsu GroupTo respond to the various requirements from our customers, we are working together with groupcompanies Hokuetsu Package and Hokuetsu Paper Sales to engage in various research anddevelopment activities. We will continue to promote research and development in the packaging
market with a sense of urgency as a unified group.

• The Product Logistics Department are aiming to improve transportation efficiency by further promoting a modal change inorder to eliminate the “2024 problem” and promote reductions in Scope 3 CO2 emissions.

Building an optimal production system
Improving production efficiency with a sales system that captures customer needs
Based on the strategy by Profit Management Office, sales departments and mills will work together to implement an optimal
production, and are aiming to secure profits by maintaining price improvement and expanding sales by higher competitive products.
In addition, we are aiming to build the trust of our customers and stronger relationships by striving to provide stable supplies fromboth production and logistics aspects.
We will actively convey our environmental initiatives to users who are highly environmentally conscious and also by promotion of
the superiority of our products’ environmental performance, we are trying to get new business extension and sales.

Strengthen profitability of existing businesses

Paper & White Paperboard Sales Division: Production
Paper

White paperboard

Production ratio by product and mill (FY2022)

Specialty paper

Kanto Mill Katsuta

Aiming to secure further profits based on product price improvement
The Paper Sales Department will closely monitor demand trends for coated paper, deepen mutual understanding with users, andstrengthen alliances through products with a stable supply and high environmental performance, which are our strong points.
For uncoated paper, on the other hand, we will focus on understanding the trends of major users and respond flexibly throughmutual production between the Niigata and Kishu mills. For colored wood-free paper, we will focus on securing our existing market
share by strengthening relationships with our main distributors.
For the White Paperboard Sales Department, sales forecast would continue to be sluggish primarily due to low demand for
packaging, which is a main application, has not returned to pre-COVID levels.
However, we expect the demand recovery trend to continue in the long term due to a recovery in the flow of people as COVID-19
has been reclassified as a Class 5 infectious disease. As such, until demand fully recovers, we will promote the reduction of CO2 emissions
at our Kanto Mill and make our environmental efforts a key point in our efforts to recover sales volume and further expand sales.
The Export Department is responsible for responding immediately to rapidly changing exchange rate and export market trends,
promoting optimal logistics and price changing to products in accordance with the Profit Management Office's strategies, andcontributing to the improvement of profitability by increasing marginal profit.

Nagaoka Mill

(t)

White
paperboard

2,000,000

White
paperboard
Specialty
paper

1,500,000

Kanto Mill
Ichikawa

Kishu Mill

1,000,000

Specialty
paper

Niigata Mill

Paper
Paper

500,000

Tackling the logistics problem in 2024
Accelerating a modal shift to cover a shortage of truck drivers
From April 1, 2024, overtime hours for truck drivers will be capped at 960 hours per year, leading to concerns that truck transportation
capacity will decline.
We had estimated that the transportation capacity from the Niigata Mill and Kanto Mill (Ichikawa/Katsuta) to Kansai area andwestward might decrease, so we have begun switching to JR rail containers for some of the logistics from the Kanto Mill. Moving
forward, we will continue to accelerate the modal shift by increasing container transportation to appropriately respond to the “2024problem” and further reduce CO2 emissions.

White
paperboard
0

13

2020

2021

2022

(FY)

14

Growth Strategy

HOKUETSU GROUP Integrated Report 2023

Business Strategy

Performance Materials BusinessBusiness strategy
moving forward

Main product lineup• Performance materials
Functional paper (chip carrier tape base paper, glass fiber filter media, metal interleaving paper,
abrasive-coated base paper, oil resistant paper, PASCO®), communication paper (OCR paper, form
printing paper, crimped postcard paper, etc.), specialty processed products (Poem-S, films for printing)• The Performance Materials Sales Department strives to expand the market share of products that require outstanding
functionality, such as environmentally friendly products that contribute to the reduction of CO2 and the volume of plastic
waste, as well as products related to hygiene management and advanced technology.

• Containerboard base paper
General corrugating mediums (HDM), reinforced corrugating mediums (HDM-S)

Looking back on
FY2022

Nagaoka Mill

Promoting strategies for each business and focusing on high value-added
product development and stable production
We are considering expanding production capacity to meet demand to permanently maintain andexpand the market share of AGM battery separators made by Dumas, a French group company. In
addition, the Nagaoka Mill produces AGM battery separators for the Japanese market.

Capture demand for alternatives to plastics

Our rigid fiberboard PASCO® is used as an alternative for plastics in the hooks and hangers of major
apparel companies, and efforts are being made to recycle these items collected at stores into
PASCO®. We have also started efforts to replace plastic parts in store fixtures with PASCO®.

Develop businesses that leverage thestrength of the Group’s integrated
production from base paper to processed
products

Demand for HOCTO®, a base paper for chip carrier tape used to transport electronic components, is
expected to increase in the mobility field. Using the pulp produced at the Niigata Mill as the main
raw material, we produce base paper at the Nagaoka Mill and Kanto Mill (Katsuta), and process it
into chip carrier tapes that meet customer needs. Part of this process is also done by our Group
company in China, Shanghai Toh Tech, creating an integrated supply system within the Group.

Deepen relationships with customers andexpand the basics of production and sales
in the containerboard base paper businessWe quickly and accurately capture needs and reflect them in product development, production,and sales through direct dealings with customers. In FY2022, we achieved production and sales ofover 100,000 tons in Japan and for export.

Promote the improvement of production
efficiency and improve profitability at an
early stage

We are working to improve production efficiency by improving the per unit of raw fuels andexpanding daily production. In addition, to accelerate improved profits, we are focusing on thedevelopment, production, and sales of high value-added products, centered on thinner basepaper, which is our specialty.

Paper Cup Business
Development Office

Restructure our business portfolio andstudy new fields and businesses

In October 2022, we created a new organization, the Cup Business Development Office, within the
Performance Materials Business Division. We are delving deeper into cup paper development
projects and working with Group company Hokuetsu Package to offer concrete proposals using
processed paper. In addition to being used for paper cups, we are also focusing on proposals for
replacing plastic containers with paper ones in response to needs for plastic-free products andproducts that use less plastic.

Product
Development
OfficeStrengthen business by deepening
cooperation among Group companies

In collaboration with Hokuetsu Package and Hokuetsu Paper Sales, we are continually proposing
paper packaging materials as an alternative to plastic. As a result of repeated consultations withpotential customers, we were able to realize commercialization in several instances. Additionally, theelectromagnetic noise suppression sheet currently under development is being evaluated by end users.

Containerboard Sales
Department

Performance Materials Sales Department

Efforts related to measures to build asystem to produce and sell growth
products from a global perspective

Performance Materials Sales Division: Production
Communication paper

Production ratio by product type and mill (FY2022)

Containerboard base paper(t)200,000

Nagaoka Mill

Functional paper(industrial paper)
Communication paper

150,000

Niigata Mill

Kanto Mill
Katsuta

50,00015

Functional paper(industrial paper)
Communication
Kishu Mill paper
Functional paper(industrial paper)
Communication
Osaka Mill
paper

100,000

0

2020

2021

• The Containerboard Sales Department aims to build a strong profit structure by strengthening stable production and sales
systems. We also work to further reduce the weight of thinner base paper and address the need to reduce CO2 emissions at
the production and logistics stages.
• The Paper Cup Business Development Office, which was newly established in October 2022, and the Product Development
Office, whose name was changed from the Performance Materials Development Office in April 2023, are working on
proposals to replace plastic packaging materials used for food products with paper.

Status of efforts in FY2022

Business strategy

Functional paper

Actively offering environmentally friendly products such as alternative uses forplastic packaging materials

2022

(FY)

Containerboard
base paper

Functional paper(industrial paper)

Performance Materials Sales Department
Expanding market share and stable supply of products related to environment, hygiene, and advanced
information technology
To meet the growing need for environmentally friendly products, we proactively propose paper thatcan be used as a substitute for flexible packaging for food as an alternative to plastics. We also
promote the development of new applications for our rigid fiberboard PASCO®. We have also built astable supply system for HOCTO®, a base paper for carrier tape that transports electronic components,
which is an advanced information technology-related product that is essential for the development ofsocial infrastructure, battery separators, filter media for hygiene-related products, microfine®, and RO
membrane backings. In the area of functional communication paper, we actively engage in sales
activities for crimped postcard paper.

Containerboard Sales Department
Working to lower the weight of base paper and addressing the need to reduce CO2 emissions during production
and transportation
In order to further expand and develop our business in the future, we aim to build a strong profit structure by stabilizing our
production system and strengthening our sales capabilities. Regarding sales in Japan, in response to the recent rise in the price of raw
materials and fuel, we have revised our prices twice over the past two years with the understanding of our customers, which has
contributed to improved profitability. In addition, we will further expand sales of thinner base paper, which is our forte, by addressing
the need to reduce CO2 emissions during production and transportation by reducing weight. Exports are lackluster due to sluggish
demand in China, our main export market, but we aim to differentiate ourselves from other companies by implementing quality
designs that incorporate local needs and continue to strengthen our sales capabilities.

Paper Cup Business Development Office
Promoting market research, developing cup base paper, and proposing base paper for paper containers
We will increase our ability to propose products to customers such as domestic cup molding manufacturers who are highly
environmentally conscious and expand our projects by leveraging our strength in the ability to produce base paper with low CO2
emissions. Additionally, we will focus on market research from our users’ perspectives, connect society’s needs for plastic-free products
and products with lower plastic content to our proposals for paper food containers, and aim to expand our business throughcollaboration with Hokuetsu Package. At the same time, we will proceed with specific proposals and commercialization tailored to thequality and characteristics of each cup base paper, such as paper-based and white paperboard-based paper, which will help us
establish quality at an early stage.

Product Development OfficeCommercializing paper food packaging materials and proposing electromagnetic wave shielding materials
Due to a reorganization in April 2023, we changed the name from “Performance Materials Development Office” to “ProductDevelopment Office.” In response to the trend of replacing plastic food packaging materials
with paper to reduce plastic waste, we have commercialized paper materials such as“Panse” that is suitable for packaging machines and are offering them to customers. Inelectromagnetic wave shielding materials, we will further develop electromagnetic
noise suppression sheets that are effective for large-capacity communication cables
and next-generation communications such as 5G.

16

HOKUETSU GROUP Integrated Report 2023

Sustainability
Value chain and sustainability issues

Hokuetsu Group Basic Sustainability Policy
In order to be “socially and environmentally responsible” as stated in the Group Corporate Philosophy, theGroup will contribute to the realization of a sustainable society by minimizing any impact on the environment
from raw materials to end products. We will:

When identifying materiality, the Group also considers sustainability issues in each process of the value chain to more appropriately
identify materiality.

Value chain

Sustainability initiatives in a company’s business activities have become increasingly important. In December
2021, we established the “Hokuetsu Group Basic Sustainability Policy” and “Hokuetsu Group Sustainability
Basic Regulations,” and actively and proactively pursue sustainability efforts that enhance the integration offinancial and non-financial aspects.

• Strive for zero CO2 emissions by 2050.
• Work to solve social issues through our business based on our Long-term Management Vision.
• Continue to be a sincere company that thoroughly complies with laws and regulations together with ourbusiness partners and customers.
WEB

Raw material procurement

Transportation

Sales and use

Recycling and disposal

Response to climate change issue*
Promoting energy conservation

Responding to plastic alternatives
and reducing plastics

E

Hokuetsu Group Sustainability https://www.hokuetsucorp.com/en/sustainability/activity.html

Responsible procurementof raw materials*
Ensuring the legality andsustainability of logging
Forestry management
and protection of
biodiversity*
Maintaining the ecosystem

Sustainability Management

Promoting the use ofrenewable energy
Switching to fuel withlower CO2 emissions
Thorough water quality
management
Preventing soil pollution
Preventing air pollution
Promoting appropriate
environmental management

Transitioning to modal
shift

Promoting the use ofenvironmentally friendly
products

Controlling andeffectively using
industrial waste
Promoting wastepaper
collection and recycling
Reusing housing
construction wastematerials

Constructing a stable production and supply system

the formulation of the Medium-term Management Plan 2026,
and identified nine new materialities in response to changes inthe external environment. We believe that identifying
materiality and contributing to resolving social issues enhances
the sustainability of the Group.

Sustainability issue

Reducing the impact of natural disasters on product supply

Identifying materiality (important issues)
The Group identifies materiality that should be prioritized in themedium- to long-term by selecting issues based on the two axesof “requests and expectations from society” and “importance in
the Group’s businesses” based on the keywords of the Group
Corporate Philosophy while referring to international standards.
In April 2023, we conducted a review in conjunction with

Development and production

Mitigating the impact ofinternational situations on
raw material procurement

Responding to the 2024
problem in logistics

Ensuring safety and hygiene of the workplace*S

Human capital management*

Delivering responsible
product quality and new
product development*
Dialogue with stakeholders*Requests and expectations from society

Harmonious coexistencewith the local suppliersand communities

Materiality classifications (9 items)

Materiality map (as of 2023)

Creating employment andcontributing to the local
economy and society

1. Response to climate change issue
Importance Medium

Importance High
(9 items)

E

Environment

Improving corporate governance*

2. Responsible procurement of raw materials
3. Forestry management and protectionof biodiversity

Thorough compliancePreventing dishonest and unfair transactions

Defined as materiality

4. Ensuring safety and hygiene of the workplace

Importance Low

Importance Medium

S

5. Human capital management
Society

6. Delivering responsible product quality andnew product development
7. Dialogue with stakeholders

G

Preventing falsification of
product quality and safety

Appropriate disclosure of
information on products

Appropriate transportmanagement ofindustrial waste

Risk management (BCP, etc.)
Respecting human rights*
Thorough protection of personal information and management to protect against information leaks

Importance in the Group’s businesses

G

Governance

8. Improving corporate governance
9. Respecting human rights* Materiality* Materiality is set in line with the Medium-term Management Plan and reviewed as necessary.

17

18

Sustainability

HOKUETSU GROUP Integrated Report 2023

Group Sustainability Activity Implementation Targets
The Group has set targets for promoting Group sustainability activities in order to achieve materiality. We reviewed thesetargets with materiality in conjunction with formulating the Medium-term Management Plan 2026 in April 2023. Additionally,
we have newly created group-wide KPIs that will serve as more specific activity targets.

FY2022No.

1

Materiality

Sustainability Activity Implementation Targets

Promotion of global warming
countermeasures

Achieve “Zero CO2 2050” to reduce CO2 emissions tovirtually zero by 2050 through the use of biomass energy
and the latest technology

Materiality (Important Issues)E2

Consideration for the global environment by
reducing the environmental load

3

Promotion of the procurement ofenvironmentally friendly raw materials

4

Ensuring product safety and responsible
services to customers

5E

Promote the procurement of environmentally friendly
raw materials

Continue to ensure product safety and responsible services
to customers

Sustainability Activity Implementation Targets (Strategy)Group-wide KPIs (Indicators and Targets)

SDGs Targets

6.3 11.6 13.3
7.2 12.4
9.4 12.5

1

Response to climatechange• Achieve “Zero CO2 2050” to reduce CO2 emissions to virtuallyzero by 2050 through the use of biomass energy and thelatest technology• Reduce CO2 emissions in 2030 by 43% compared to FY2005

2

Responsible procurementof raw materials• Promote CSR-aligned raw materials procurement thatconsiders the environment and society based on the Hokuetsu
Group Fundamental Policy for Raw Materials Procurement• Procure wood pulp for paper produced in socially,
economically and environmentally sound ways NEW

12.7

3

Forestry management
and protection of
biodiversity NEW• Leveraging the multiple functions of forests, maintainproper and sustainable management of Hokuetsu-owned
and managed forests NEW• Preserve the biodiversity of owned and managed forests,
and strive for community interaction through owned andmanaged forests NEW• Maintain or increase absorption of CO2 by owned andmanaged forests NEW• Strengthen community exchange activities related tobiodiversity NEW

15.2
15.4

4

Ensuring safety andhygiene of the workplace• Strive for an accident-free workplace by following thehSA25 roadmap• Zero serious accidents every fiscal year
• 25 or fewer industrial accidents (including minor accidents)
every fiscal year NEW

3.6

5

Human capitalmanagement• By promoting human capital management, accelerate talenthiring and training, striving to increase the competitivenessof the Group as a whole• Double the percentage of women, non-Japanese, andmid-career hires in management and executive ranks by2030 from the current level (FY2021) of approximately 10%• Improve retention (newly grads/mid-career) NEW• Increase education and training investment per
employee NEW• Total the number of training participants NEW• Increase the number of qualifications and licenses
held NEW• Higher percentage of women in management NEW• Improve the rate of men taking childcare leave NEW

5.1
5.5
5.C
8.5

6

Delivering responsible
product quality and new
product development• Ensure product quality and safety• Develop new, environmentally friendly products NEW• Zero product liability accidents (non-consolidated) NEW• Enhanced range of environmentally friendly
products NEW• Development of products harnessing
nanotechnology NEW

12.4
12.5
12.7
14.2

7

Dialogue withstakeholders• Continue good relationships with stakeholders(shareholders/investors, sellers/suppliers, consumers,
employers, communities)• Improved stakeholder engagement (IR/SR meetings,
factory visits/internships, employee surveys, etc.) NEW• Survey responses NEW• Continued CSR activities NEW

8

Improving corporate
governance• Continuously improve corporate governance• Strive to enhance risk management activities• Enhance content of disclosure NEW• Continue risk reduction activities NEW

3.3
16.5

9

Respecting humanrights NEW• Promote approaches that respect human rights NEW• Sign up to the United Nations Global Compact NEW• Establish a human rights policy NEW• Establish approaches for respecting human rights NEW

8.7
10.2
10.3

Group-wide KPIReduce CO2 emissions in 2030 by 43% compared to
FY2005

FY2023-2025

No.

Creation of products that contribute tosustainable social development

Ensure safety and hygiene of the workplace

6

Ensuring safety and hygiene of the workplace

Group-wide KPIZero serious accidents (every fiscal year)

Promote respect for diversity and development of humanresources

Group-wide KPIS

7

Respect for diversity and human resource
development

Double the percentage of women, non-Japanese, andmid-career hires in management and executive ranks
from the current level (FY2021) of approximately 10%
by 2030.

S

Promote better health along with work-life balanceGroup-wide KPI

8

9Promotion of work-life balance and healthEnhancement of dialogue with stakeholders

Annual health checkup rate:
100%
Smoking rate:
30% or less
Employees who exercise regularly:
30% or more
Employees taking stress checks:
over 95%(FY2023 target figures)

Continue to enhance dialogue with stakeholders

Promote continuous improvement of corporate governance10

Continuous improvement of corporate
governance

G
11

19

Penetration of Group Corporate Philosophy
and thorough legal compliance

Strengthening risk management of issues such as the novel
coronavirus

Aim for the Group Corporate Philosophy to take hold andensure thorough legal complianceG

20

Sustainability

HOKUETSU GROUP Integrated Report 2023

Initiatives to Achieve Materiality (Important Issues)

Environment

E

Materiality 1

Response to climate change issue
Reason to emphasize
The Hokuetsu Group has taken the lead in reducing CO2 emissions to reduce climate change risks. We reflect risks and opportunities in ourmanagement strategy based on the TCFD recommendations and are engaging in environmental management with the aim of achieving net zero CO2emissions by 2050.
Main group-wide KPIProgress (FY2022)• Reduce CO2 emissions in 2030 by 43% compared to FY2050• CO2 emissions: 644,000 (tons non-consolidated), 37.2% reduction
compared to FY2005

Aiming for net zero CO2 emissions
The Hokuetsu Group has been working to reduce CO2
emissions since 1995 as a measure against climate change,and our capital investment over the past 25 years has
amounted to approximately ¥50 billion.
Currently, we are aiming to achieve the goal of “Zero CO22050,” which aims to reduce CO2 emissions to net zero by
2050, and to “reduce CO2 emissions in 2030 by 43%
compared to 2005.” Specifically, we will take on the challengeof switching to city gas and/or natural gas, which emit less
CO2 when burned than heavy oil, and increase our zero CO2energy ratio. In addition, we will take on a challenge ofreducing CO2 emissions by creating an environment where
we can make the most of the renewable energy we generate
in-house using biomass, solar, and other sources.
Furthermore, in addition to using our own forest resources,
we will continue to work towards achieving our KPIs by taking

measures such as improving energy efficiency, including
saving power consumption and saving steam consumption.

Change in CO2 emissions (non-consolidated)
1,000 tons/year
1,200

1,025,000
tons

1,000

2030 target
450,000 tons

776,000
tons

800
600

642,000
tons

644,000
tons

668,000
tons(TJ)

22,578
71%
7,205

7,500

5,000

76%
2,816

2,500
89%

1,305

Kishu

KatsutaIchikawa

Niigata

Kishu

Katsuta

Biomass, etc.

71

76

89

0

0

0

Gas

15

0

0

98

67

51

779
50

0

Niigata

Nagaoka

Osaka(%)

Ichikawa Nagaoka

Osaka

Purchased electricity

1

8

2

1

33

49

Heavy fuel oil C

12

13

2

0

0

0

Coal

0

2

7

0

0

0

CLOSE UP

Initiatives to commercialize first CCS in Japan

0
2005

2013

2016

2019

2022

2030

2050 (FY)

Reduce unit energy consumption by 1% per year
Introduce new carbon-neutral fuelConvert fuel from heavy oil to natural gas for pulp
manufacturing equipment (boilers, kilns)

Consider advanced use of biomass power generation

Renewable energy
Study the use of renewable energy

Introduce renewable energy
power generation equipment

Increase CO2 fixation through effective useof afforestation sites

Conduct CCUS feasibility study

To achieve net zero CO2 emissions

Zero CO2 Challenge to 2050

Phase out coal21

25,000200

Switch to fuel with lower CO2 emissions

CO2 fixation and capture

Renewable wood biomass absorbs CO2 during its growth
process, so it is believed even if it is burned it will notincrease CO2 in the atmosphere.
The Kanto Mill (Katsuta), Niigata Mill, and Kishu Mill
conduct production activities using mainly biomass energy.
All mills have achieved a zero CO2 energy ratio of over 70%
using biomass energy, waste energy, etc.
In particular, the Kanto Mill (Katsuta) has increased its
zero CO2 energy ratio to 89% by using a large wood biomass
boiler that uses construction waste and other materials as
fuel. We will continue to take on the challenge of increasing
our biomass energy ratio and aim for CO2 emission-free mills
ahead of 2030.
We will continue to expand the possibilities of using
biomass energy, take further measures to reduce CO2
emissions, and continue our challenge of achieving net zero
emissions by 2050.

To achieve zeroCO2 emissions
by 2050

400

Execute to 2030

Fuel Conversion

Energy consumption by fuel at each Hokuetsu Corporation mill

(FY2022 results)

Initiatives to reduce CO2 emissions

Promotion of energy
conservation

Use biomass energy

Together with four participating companies*, Hokuetsu is entrusted a study named FY2023 “Business Feasibility Study on
Japanese Advanced CCS Project,” which was publicly solicited by the independent administrative agency Japan
Organization for Metals and Energy Security (JOGMEC). Hokuetsu is the only pulp and paper manufacturer among thecompanies selected by JOGMEC.
The study aims to start a CCS business in East-Niigata area by 2030 and examine the separation and capture of CO2
emitted from existing mills and power plants, CO2 injection and storage points, and the construction of transportation
pipelines that connect these venues. As part of the study, we will study equipment that separates and captures CO2
derived from biomass fuel at the Niigata Mill. Plans to move forward with the survey, including estimating the necessary
costs, will be ready by around March 2024.
* Japan Petroleum Exploration Co., Ltd., Mitsubishi Gas Chemical Company, Inc., Tohoku Electric Power Co., Inc., Nomura Research Institute, Ltd.

Hokuetsu Corporation is taking on the challenge of negative emissions.
Resins, etc. black liquor fuelCOabsorption

reduction
CO2 injection facility

Capture CO

ForestWhat is CCS?

CO2 separation andcapture equipment

Recovery boilerCO
storage

Wood fiber pulp paper

CCS stands for “Carbon dioxide Captureand Storage.” This technology separates
and captures carbon dioxide (CO2)emitted from factories, etc., and stores it
deep underground.

CCS

22

Sustainability

HOKUETSU GROUP Integrated Report 2023

Initiatives to Achieve Materiality (Important Issues)

Environment

E

Disclosure of information based on TCFD recommendations
In February 2021, the Hokuetsu Group declared its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Group will reflect the risks and opportunities analyzed based on the recommendations of the TCFD in its management strategy, aiming for net zeroCO2 emissions by 2050.

Main risks and opportunities
Risk details

Level of impact

Tighter CO2 emission regulations• Introduce and enhance carbon pricing such as carbon taxes and emissions trading systems• Financial impact of climate-related risks: Carbon tax burden of approximately(Set based on IEA’s NZE scenario as a reference)¥13.8 billion yen

High

Tighter regulations for the spreadof renewable energy• Increase in unit price of levy to promote power generation with renewable energy

MediumSoaring fossil energy prices• Soar prices of energy derived from fossil fuels due to the decrease in investment in oil
development toward the realization of a decarbonized society

Low

Growing criticism of lack ofenvironmental consideration• Increase consumer criticism and product boycotts due to lack of environmental
consideration in climate change countermeasures and forest conservation

Lower valuation from investors• Lower valuation and withdraw (divest) investment in ESG investments due to delay inaddressing climate change

AcuteImpact on business due to increased
extreme weather• Damage to the company’s mills and facilities due to extreme weather such as torrential
rains, floods, and large typhoons• Suspend services due to damage to infrastructure such as electricity and water caused byextreme weather• Disrupt supply chains due to damage to roads, railways, and port facilities caused byextreme weather

Medium• Assess and implement measures for natural disaster risks at mills• Review BCP (Business Continuity Plan) based on “Regulations of Emergency Response”• Promote profitable and stable procurement by diversifying suppliers, etc.

Chronic

Impact of changes in weather patterns
on procurement of raw materials• Deteriorate growth of trees and impact negatively on raw material procurement forpulp and paper due to rising temperatures, frequent forest fires, and outbreaks of diseases
and insects

Medium• Promote forest management aimed at improving the multiple functions of forests• Promote profitable and stable procurement by diversifying suppliers, etc.

Opportunity

Opportunity details

Level of impact

Growing need for environmentallyfriendly products and services• Increase in need for environmentally friendly products and services due to heightened
consumer awareness• Financial impact of climate-related opportunities: Sales increase of approximately¥13.9 billion to ¥22.8 billion

High

Sympathy for advanced
environmental considerations• Increase sympathy and active purchase of products from consumers and business
partners for environmental considerations such as climate change measures and forest
conservation

High

Improved valuation from investors• Improve valuation and attract investment in ESG investments through advanced climatechange initiatives

MediumMarketSpread of CO2 emissions trading
systems• Increase momentum to introduce carbon-negative CO2 derived from biomass into
chemical products such as e-methane

Medium• Study introducing advanced CCS that generates negative emissions by separating and capturing wood-derived CO2

Energysources

Growing need for renewable energy• Increase needs for renewable energy to achieve carbon neutrality

Medium• Develop electrical power generation business with renewable energies such as solar power and biomass

Growing interest in forest resources• Increase interest in forest sinks that sequester and fix CO2 and contribute to climatechange issues

Medium• Promote sustainable forest management through afforestation projects and acquisition of forest certification• Implement thinning based on the forest management plan
• Use thinned wood in construction, plywood, chips for fuel, etc. effectively

Growing interest in water resources• Increase interest in water resources, where there are concerns about declining water
volumes and deteriorating water quality due to climate change, etc.

Low

Classification

Transition risks

Policy/legal
regulation

Physical risks

Risk

Classification

Products
andservices

Low

Low

Resource
efficiency

23

Strategies and measures to reduce risk

• Realize “Hokuetsu Group Zero CO2 2050” and “Hokuetsu Group Environmental Targets 2030”• Promote further energy conservation• Use biomass energy such as black liquor generated in the pulp manufacturing process actively• Use carbon-neutral fuels• Promote modal shift to railways, etc. with low CO2 emissions• Introduce high-efficiency chip carriers• Study introducing advanced CCS that generates negative emissions by separating and capturing wood-derived CO2

MarketReputation

Opportunity* Impact: The size of a risk or opportunity is determined by the “size of impact on business” x “probability of occurrence,” and is expressed as high, medium, or low.

• Promote the above climate change measures• Implement “Group Fundamental Policy for Raw Materials Procurement” and “Fundamental Policy on Procurement of Wood Material”• Procure wood materials with proven legality and sustainability through elimination of non-certified timber, use of traceability systems, audits by
third-party organizations, and on-site checks by our employees• Disseminate information on the Group’s environmental conservation activities through active acceptance of mill tours, publication of anenvironmental activity information magazine, and visiting lectures on themes such as the environment

Strategies and measures to take advantage of opportunities• Provide FSC® certified products (Hokuetsu Corporation FSC license code: FSC-C005497)• Develop composite materials of cellulose nanofiber and carbon fiber, which are cutting-edge biomass materials• Develop and expand sales of plastic alternatives such as paper materials to eliminate plastic• Develop and expand sales of battery separators• Develop the above environmentally friendly products and services proactively, and promote climate change measures, forest conservation, etc.
• Disseminate information on the Group’s environmental conservation activities through active acceptance of mill tours, publication of anenvironmental activity information magazine, and visiting lectures on themes such as the environment.

• Provide separation membrane backings, which are sheets used to increase strength in water treatment• Study water treatment business using wastewater treatment technology cultivated in paper manufacturing business

24

Sustainability

HOKUETSU GROUP Integrated Report 2023

Initiatives to Achieve Materiality (Important Issues)

Environment

E

Materiality 2

Responsible procurement of raw materials
Reason to emphasize

The Hokuetsu Group operates globally, and we engage in procurement that takes into consideration society, human rights, and the environment
based on our raw materials procurement policy to resolve social issues throughout the supply chain.

E

Materiality 3

Forestry management and protection of biodiversity
Reason to emphasize

The Group manages a total of approximately 6.41 million hectares of company-owned and managed forests in Japan, South Africa, and Canada.
Protecting our irreplaceable nature is the responsibility of our Group, which is able to do business receiving the bounty of nature.

Main group-wide KPIProgress (FY2022)

Main group-wide KPIProgress (FY2022)• Procure raw materials produced with consideration forsociety, economy, and environment.

• Procure only raw material produced legally in the forest where resources
are protected, forests are cultivated, and properly managed.

• Maintain and increase CO2 absorption capacity ofcompany-owned and managed forests• Strengthen biodiversity in our forests and regional
exchanges though communication with local communities• CO2 absorption: Approximately 7,022,000 tons/year• Carry out forest operations that take biodiversity into consideration,and regional exchanges

Sustainable raw material procurement
The Hokuetsu Group has its “Fundamental Policy on
Procurement of Wood Material” where all wood chips andpulp we purchase are produced by logs that come fromlegally and properly managed sustainable forests.
Furthermore, we use our own traceability system tocontinually check the legality and sustainability of logging,and conduct annual third-party audits. Furthermore, anotheraudit by the Japan Paper Association’s Illegal Logging
Measures Committee verifies that there is no illegal logging.

In FY2022, we conducted a traceability report audit inJapan with SGS Japan and applied for re-registration as awood-related business entity based on the Clean Wood Act.
Additionally, from the perspective of Japan’s economic
security, the flag of the wood chip carrier Hokuetsu Ibis wastransferred from Panama to Japan, and changed its homeport to Niigata Port. Hokuetsu Ibis is one of the largest woodchip carriers in Japan, built in 2008, and is our third
Japanese-flagged vessel.

Forest management and cultivation that considers biodiversity
Of the forests we own in Japan, natural forests have a highcontribution to biodiversity, so as a rule we do not harvest
native forests and protect them as they are. In addition, in
forests where we produce softwood logs but growth is not
as good as expected and they are naturally invaded byhardwood, we manage them to become mixed species
forests of softwood and hardwood to improve biodiversity.

Meanwhile, in our planation in South Africa, we maintaina good habitat for native flora and fauna by protecting
riverside areas, and managing protected areas and production
areas separately. We also incorporate conservation methods
from the South African National Biodiversity Institute topractice forest management that respects biodiversity and is
tailored to local conditions as well as we do in Japan.

Forest management and summer student program in Canada
Procurement of wood chips from abroad (FY2022)
Country

Name ofwood forwoodchips

Chile

Eucalyptus

Forest classification
Plantation

Re-growthMeans of verifying legality
Traceability report

Declaration of legality of timber
for material of wood chips

Forest certification
approved by third party

Annual volume ofwood chips procured(1,000 BDT)

AcaciaSouth Africa

1,623

Eucalyptus

Australia

Eucalyptus

Vietnam

AcaciaAl-Pac has been entrusted by the Government of Alberta to
manage approximately 6.4 million hectares of vast forestland,an area larger than Japan’s Kanto-Koshin’etsu region. In
addition, as part of its support for student employment, thecompany has established a program that takes advantage ofthe summer vacation period and is working to develop
human resources in general forest management, such as
forest cultivation, harvesting, and management methods.
Managed forest area of the Hokuetsu Group

CanadaJapan
Total area of company-owned
forests and profitsharing forests
Vietnamese locations and species
Vung Ang, Hà Tĩnh Province
Dung Quat, Qung Ngãi ProvinceVũng Tàu, Bà Ra-Vũng Tàu Province

Australian locations
and species

KwaZulu-NatalRichards Bay / Durban

Western Australia
Albany Victoria
PortlandAcacia

Eucalyptus

Eucalyptus

12,170 ha

CO2 absorption
Approx. 11,000 tons/year

AcaciaSouth African locations
and species

Approx.

Chilean locations
and species
Concepcion, VIII Region
Puerto Montt, X Region

Eucalyptus

Tottori Prefecture
1,740 haRed pine, cedar, cypress

Total managed contracted
forest area

Akita Prefecture
140 haCedar

Niigata Prefecture
480 haRed pine, cedar,hardwood

Iwate Prefecture
Obtained FSC®-FM
certification(FSC-C023503)
3,050 haApprox.

6,400,000 ha

CO2 absorption
Approx. 7,000,000 tons/year
Alberta
6,400,000 ha

Red pine, larch, hardwood

Eucalyptus, acacia

Fukushima Prefecture
70 ha

Ishikawa Prefecture
1,050 haHardwood

Red pine, cedar,cypress, asunaro

South Africa

Nagano Prefecture
1,000 haTokushima Prefecture
1,140 haTotal area ofcompany-owned forests

Larch, cedar

Cedar, cypress

Nara Prefecture
2,600 haGifu Prefecture
120 haCedar, cypress

Cedar, cypress

Kochi Prefecture
70 ha
Cypress
Wakayama Prefecture
580 haCedar, cypress

25

A student surveys the state of forest development

Mie Prefecture
130 haCedar, cypress

Republic ofSouth Africa
2,800 haAcacia, eucalyptus

Approx.

2,800 haCO2 absorption
Approx. 11,000 tons/year* The calculation method for the amount of CO2 absorption in Japan and South Africa is as follows.
Amount of CO2 absorption = Amount of CO2 fixation in FY2021 - Amount of CO2 fixation in FY2020
Amount of CO2 fixation = Accumulated amount x biomass expansion factor x (1 + underground ratio) x volumetric density x
carbon content rate x CO2 conversion factor (44/12)* CO2 absorption in Canada (Al-Pac) is based on the approximate values calculated by Al-Pac.

26

Sustainability

HOKUETSU GROUP Integrated Report 2023

Initiatives to Achieve Materiality (Important Issues)SocietyS

Materiality 4

Ensuring safety and hygiene of the workplace
Reason to emphasize

The Hokuetsu Group established the Hokuetsu Group Fundamental Policy for Health and Safety based on the belief that safety and health are at thecore of management. We conduct safety and health activities that consider not only all Group employees but also those involved in our business activities.

Human capital management
Reason to emphasize

In order to rapidly shift our business portfolio and innovate in response to rapid changes in the business environment, we are developing andpromoting human resources who can be the driving force behind change, ensuring diversity, and striving to sustainably improve corporate value.

Main group-wide KPIProgress (FY2022)

Main group-wide KPIProgress (FY2022)• Zero serious accidents in FY2025• 25 or fewer occupational accidents (including minor accidents)
in the Group in FY2025 (FY2022 target: 40 or less)• Serious accidents: 1• Occupational accidents: 39(0 fatal accidents, 15 lost-time accidents, 24 non-lost-time accidents)• Double the percentage of women, non-Japanese, and mid-careerhires in management and executive ranks from the current level(FY2021) of approximately 10% by 2030, etc.

• Percentage of women, non-Japanese, and mid-career hires inmanagement and executive ranks (non-consolidated): Approx. 10%

Creating a safe workplace through “hSA25” safety and health activities

Promoting diversity and fostering a corporate culture

Safety and health activity hSA25 (hokuetsu Safety Action 2025)
is an initiative to achieve the KPIs of “zero serious accidents”
and “25 or fewer occupational accidents” by FY2025.
Specifically, we are working on creating a safe workplacethrough three approaches: “systems,” “people,” and “objects,”
including proactive capital investment, activities to improvesafety management, and developing sensitivity to risk throughthe introduction of safety VR equipment.

In FY2022, we achieved our target for thenumber of occupational accidents for that
fiscal year. In addition, our hSA25 activities
have steadily improved the Group’s safety
performance, with the rate of lost-time accidents
decreasing by 9.3 points from the previous year.

hSA25 Roadmap

STEP

The Group launched the Diversity Committee in FY2021 andestablished the Hokuetsu Group Basic Policy on Diversity. We
are also continuing to develop systems to ensure diversity ofpeople, such as revising the “Policy to Ensure Diversity in
Human Resource Development and Internal Environment”
and establishing the “Hokuetsu Group Human Resource
Development Policy.” Our basic policy is for each employee
to independently shape their own career, regardless ofgender or nationality. At the same time, we aim to boost
individual motivation and revitalize our organization,
promote human resource development that respects
independence and the spirit of challenge, and foster a
corporate culture that is easy to work in and in which
individuality can be fully demonstrated.

JUMP

HOP
Phase 1
2020–2021

Phase 22022–2023

Phase 32024–2025

Mechanism

Use ISO 45001 to promote hSA25
and achieve its targets

Objects

Construct a mechanism to reduce risk from the perspective of equipment safety

PeopleProvide safety education depending on career level and develop
safety-oriented human resources

ActivityMonth conducted

Achieve targets
by the end of
FY2025

Details

VR safety system introduced

From April

Introduced a goggle-type VR system and actively used itwithin the Group

Regular ISO 14001 audit(external audit)

AprilExamination conducted by Japan Quality Assurance
Organization (JQA)

Safety and health slogan contest

June

Total of 5,131 entries from around the Group

Held Hokuetsu Group Safety and
Health Conference

NovemberHeld online (a total of 171 people from all Hokuetsu Corporation
locations + 17 domestic Group companies participated)

Hokuetsu Group Mill Safety and
Health Conference

June to November

Held scaled down version to prevent the spread of COVID-19

Top labor-management safety
inspections

November

The central general safety and health manager and the labor
union central executive committee chairman conducted safety
inspections at all mills for the first time in three years.

Safety exchange training session
between workplaces

March

Held online (safety representatives from 13 Group
companies participated)

Safety audit

Implemented according
to annual plan

Conducted annually at mills and approximately every three
years at Group companies

In FY2022, we revised our work system to support flexible
working styles, expanded our support system to help peoplebalance work and family circumstances such as childcare andnursing care, introduced an hourly annual paid leave systemon a trial basis, and implemented various companywide initiatives such as promoting health management.
Furthermore, in April 2023, women accounted for more thanhalf of our new graduate hires, with a ratio of 71%.
Under the Medium-term Management Plan 2026, whichstarted in April 2023, we plan to invest a total of ¥6 billion inhuman resources and will further strengthen our efforts inthe future to realize human capital management.
WEB

Hokuetsu Group Basic Policy on Diversity

https://www.hokuetsucorp.com/en/sustainability/report.html

Initiatives to maintain and promote employee health

FY2022 activity results

27

S

Materiality 5

The Group formulated the Hokuetsu Group Health
Declaration in FY2021 and established a health management
system headed by the executive officer in charge of the
Personnel Department. We are promoting the creation of aworkplace that prioritizes the security and safety of each
employee and consider and strategically implement
employee health management from a management
perspective through measures to achieve work-life balance
and improve mental health. In recognition of these efforts,
Hokuetsu Corporation was certified for the second year in a
row as “Health & Productivity Management Outstanding
Organization (Large enterprise category).”

Progress of individual initiatives
Initiative

FY2023 target

FY2022 result

Annual health checkup rate

100%

100%

Smoking rate

30% or less

32.2%

Employees who exercise regularly

30% or more

29.6%

Employees taking stress checks

95% or more

94.8%

VR safety training in session

Top labor-management safety inspections

28

Sustainability

HOKUETSU GROUP Integrated Report 2023

Initiatives to Achieve Materiality (Important Issues)SocietyS

Materiality 6

Delivering responsible product quality and new product development
Reason to emphasize

We are developing new businesses that will become our future core businesses and promoting a shift in our business portfolio by developing
environmentally friendly products that meet customer needs and products using advanced nano-materials, and by focusing on expanding applications
and adding higher value to existing products.
Main group-wide KPIProgress (FY2022)• Zero product liability accidents (non-consolidated)• Expand environmentally friendly products• Develop products harnessing nanotechnology• Product liability accidents: 0• Expand plastic-free/reduced plastic products such as Panse• Develop electromagnetic noise suppression sheet and fluorine-free air filter paper

Quality control system
CustomerGroup Governance
Administration Dept.

Agents
Quality request
form

Confirmation ofrequirements

Audit of the entire management systemfrom ordering and manufacturing topackaging and shipping

Reason to emphasize

We believe that communicating with stakeholders is important to increase our corporate value. In addition to increasing opportunities for dialogue
with investors and shareholders, we strive for harmonious coexistence with local communities.
Main group-wide KPIProgress (FY2022)• Improve stakeholder engagement• Respond to various questionnaire surveys• Continue social contribution activities• Started new SR meetings• Responded to Nikkei SDGs Management Survey, Nikkei Smart Work Management Survey,
Toyo Keizai CSR Survey, etc.
• Continued mill tours and supported various organizations and events

Mills

Confirmation of
manufacturing method

Qualityconfirmation

Product Technology
Dept.

Qualityrequirements form

The Group strives to disclose corporate information in atimely and appropriate manner and to respond courteously
to inquiries from shareholders and investors.
In recent years, there have been an increasing number ofinquiries from institutional investors in particular, so we holdHarmonious coexistence with the local community

Products

Harmonious coexistence with local communities is essential
for smooth business activities. We aim to be a company that istrusted by the local community. We are working to solve
various social issues that exist in the community throughcommunication with local residents, from participating in

events and environmental activities, to fostering the next
generation and supporting medical care and welfare.
WEB

Hokuetsu Group ESG Data 2023 > Hokuetsu Group’s ESG Activities

https://www.hokuetsucorp.com/pdf/esg2023_en.pdf

Main initiatives (FY2022)

paper containers and paper cutlery with the aim of
expanding their base paper production as a measure against
plastic waste. Furthermore, in May 2023, Hokuetsu Packaging
signed an exclusive manufacturing and sales agreement for
Halopack™, a high-performance paper container
manufactured and sold by Packable in the Netherlands.

Genre

Education

Welfare

CLOSE UP

Received the Chairman’s Encouragement Award fromthe Japan Air Cleaning Association for the presentationof fluorine-free air filter media.
At the 40th Annual Technical Meeting on Air Cleaning and Contamination
Control held in April 2023, we received the Chairman’s Encouragement Awardfor our presentation on “Development of PFAS*-free air filter media.”* Perfluoroalkyl substances: Chemical substances that are increasingly regulated worldwide due to their
persistence in the environment and high bioaccumulative potential.

Local
Community

Initiative

Host of main initiative

Accepted tours of mills

A total of 781 people participated in mill tours (non-consolidated)

Niigata Mill, Kishu Mill, Kanto Mill
(Ichikawa/Katsuta), Nagaoka Mill,
Osaka Mill

Accepted internships and work experience

Accepted 5 university students, 2 junior high school students, and11 elementary school students (non-consolidated)

Niigata Mill, Kanto Mill (Ichikawa),
Central Research Laboratory

Scholarships for indigenous
communities, etc.

Provided $246,163 in scholarships and corporate sponsorships

Al-Pac (Canada)

Support for the Road to Hope
Community Foundation

Cooperating in the activities of a non-profit organization that
supports cancer patients to receive treatment outside their local area.

Al-Pac (Canada)

Cooperation in funding activities
by WWF Japan

We support activities aimed at creating a sustainable society andhave continued to support them since 1993.

Head Office

Cooperation with the charity program“24 Hour Television”

We provide “N Matte” coated paper to set up a “message street”
where citizens can send messages.

Niigata Mill

Cleanup and beautification activities
around mills

A total of 413 employees nationwide participated in local
cleanup activities.

Niigata Mill, Kishu Mill, Kanto Mill
(Ichikawa), Nagaoka Mill, Osaka Mill,
Central Research Laboratory

Sketch competition

129 elementary school students near the Niigata Mill applied, and the
grand prize-winning sketch was featured on the cover of a memo pad.

Niigata Mill

Exhibited at Hitachinaka City Industrial
Exchange Fair

Introduced the group’s environmental initiatives and productsamples to local residents

Kanto Mill (Katsuta), Hokuetsu Package

Sponsored an event held by Nagaoka City and provided coatedpaper “μ Matte” for flyers to publicize the event

Nagaoka Mill

Participated in a symposium on regional co-creation and promoting
women’s empowerment hosted by Nagaoka University of Technology

Central Research Laboratory

Our chartered chip ship transported relief supplies such as canned
bread and athletic shoes to elementary schools in the Kingdomof Eswatini and Vietnam.

Head Office

Cooperation with Nagaoka regional
revitalization events

Logistics cooperation for
Kyu-Can-Cho Project

29

IR/SR meetings approximately 60 times a year to increase
opportunities for dialogue with shareholders and investors.
We will continue to work to improve corporate value
through a variety of dialogues.

Quality Management
OfficeSales Dept.
Qualityrequirements form

Developing products that contribute to the realization of a sustainable society
The Group has expanded the production and sales volume ofbase paper for paper cups and paper cutlery as an alternative
to plastics. These products comply with the Food Sanitation
Act. We are also developing biodegradable biomass productsthat are stronger and more durable than ordinary paper.
In FY2022, we focused on the development of various

Dialogue with stakeholders

Active in IR/SR activities

Quality control system to ensure product safety
The Quality Management Office of the Group conducts
regular internal quality audits to ensure compliance withvarious regulations, including checking the safety of raw
materials and compliance with voluntary standards. In
addition, the Group Governance Administration Department
conducts audits of the management system for the entire
Group, from the receipt of orders to shipment.
In FY2022, we compiled information and madepreparations for revisions to rules regarding voluntarystandards for food-use paper under the Positive List system.
In addition, Dumas in France renewed their ISO 9001 and ISO
14001 in July 2022, and in April 2023, obtained
IATF16949:2016 certification, a management system for the
automotive industry.

S

Materiality 7

30

HOKUETSU GROUP Integrated Report 2023

GovernanceIn order to achieve long-term stable improvement of our corporate value, which is the most importantmanagement issue, Hokuetsu Corporation is building an appropriate corporate governance system inaccordance with the following basic concepts.
• We respect the rights of our shareholders and will strive
to establish an environment in which shareholders can
exercise their rights appropriately and to secure equality
between shareholders.
• We recognize the importance of corporate social
responsibility and will strive to collaborate appropriately
with shareholders and other stakeholders in order todevelop a corporate culture in which business isconducted with self-discipline in a sound manner.
• We will ensure transparency and fairness in ourdecision-making by establishing an executory system fortimely disclosure and by conducting the timely andappropriate disclosure of non-financial information
beyond requirements mandated by laws and regulations.

• We will strive to secure the effectiveness of the Board of
Directors based on our fiduciary responsibilities andaccountability to our shareholders. We will also enhance
the strategic, decision-making, and oversight functions of
the Board of Directors through its analysis and assessment.
• We will actively and constructively engage in dialogue
with our shareholders based on our Basic Policy for
Active and Constructive Dialogue with Shareholders to
support the enhancement of our stable, long-term
corporate value.
The Board of Directors shall establish and disclose theGroup Code of Conduct to be shared by all employees
and executive officers of our corporate group.

Board of Directors
The Board of Directors strives to increase corporate value andthe common interests of shareholders, and aims to enhancelong-term stable corporate value by realizing appropriate
corporate governance. It is responsible for overseeing overallmanagement, including the execution of the duties of thecorporate management, and decides important matters asprescribed by laws and regulations, our articles of incorporation,and our Rules for the Board of Directors. It delegates thedecision-making for business matters other than those listed
above to the corporate management in order to enhance themobility of the business and management vitality, while also
exercising oversight of the status of the execution of overallmanagement by the corporate management.
Outside directors give advice from a neutral position
independent from management to enhance our stable,

long-term corporate value, and play a significant role in thedecision-making for the important management issues of ourcompany. They oversee conflicts of interest between ourcompany and management.
The Board of Directors establishes the institutional
systems for internal discipline and cooperates with therelevant departments to supervise and ensure that they areoperating effectively.
The number of members of the Board of Directors shall be
15 or less, as stipulated in the Articles of Incorporation, andconsists of Directors and Audit & Supervisory Board Members
who represent diversity and have expertise in the Board of
Directors. The Board is chaired by the President and CEO.
In order to strengthen our corporate governance system,
outside directors make up one third of the board members.

Director skill matrix
Specialty/Character
Name

Corporate InternationallyIndustry
Finance and Technology/
ESG/
mindedmanagement
knowledge Sustainability accounting
IT

Sekio Kishimoto

President and CEO

Corporate Governance

Shigeru Wakamoto

Senior Managing Director

Shigeharu Tachibana

Senior Managing Director

Corporate governance system

Makoto Yanagisawa

Director CFO

Yutaka Ishizuka

Director

Tomoyuki Iida

Director

Mitsuyasu Iwata

Outside Director

Kazuo Nakase

Outside Director

Hiromitsu Kuramoto

Outside Director

Hiroko Nihei

Outside Director

Organizational Structure Chart of Corporate Governance

Shareholders’ Meeting
Appointment Dismissal

Appointment Dismissal
Partnership

Accounting Auditor

Appointment Dismissal

Audit & Supervisory Board
Audit & Supervisory
Board Members
Outside Audit & Supervisory
Board Members
Audit

Partnership

Audit

Board of Directors
Directors
Outside Directors

Nomination
andCompensation
Committee

ReportAudit & Supervisory
Board Member OfficeSubmission ofimportant matters(Management/Monitoring)(Execution of Business)

PartnershipGroup Governance Administration Dept.
Control andsupportReportHuman
resources
and labor

Purchasing
andprocurement

Board ofDirectors

Numberof meetings

13

Attendance rateof Directors

100%(for outside directors: 100%)

Attendance rate of
Audit & Supervisory
Board Members

100%

Audit &
Supervisory
Board

Number ofmeetings

13

Attendance rate of
Audit & Supervisory
Board Members

97.4%

President and CEO
Management Execution Meeting

Accounting
Audit

Sales andmarketing

FY2022 achievements

ReportSelection Oversight

Audit

31

Position

Business Divisions and Affiliated Companies

Assessing the effectiveness of the Board of Directors
In order to improve the function of the Board of Directors, we
conduct a questionnaire survey on the effectiveness of theBoard of Directors (strategic, decision-making and supervisory
functions, etc.), and the Board of Directors discusses the results
based on the analysis at their meetings.

As a result, our Board of Directors believes that theeffectiveness of the Board is sufficiently ensured by the
directors’ active opinions and discussions based on theirrespective experiences and knowledge, which seeks to
improve corporate value with respect to the proposals that are
submitted to the Board of Directors.

32

Governance

Audit & Supervisory Board Members and the Audit &Supervisory Board
Our Audit & Supervisory Board Members and our Audit &Supervisory Board conduct operational audits and accounting
audits from an independent and objective perspective on thebasis of their fiduciary duties towards our shareholders. Our Audit& Supervisory Board Members also audit the execution of theduties of each director, and express their appropriate opinions at
Board of Directors meetings on the basis of their aforementioned
fiduciary duties.
Our Audit & Supervisory Board Members and our Audit &Supervisory Board enhance their effectiveness by organicallycombining the robust independence of the outside Audit &Supervisory Board Members and the high information gathering
ability of the standing Audit & Supervisory Board Members.
The Audit & Supervisory Board evaluates the outsideaccounting auditor on the basis of their duties to shareholders
and investors by confirming the independence and theinstitutional business operations for audit quality control, both ofwhich are required of an outside accounting auditor.
The number of the Audit & Supervisory Board Members is 5
or less, as stipulated in the Articles of Incorporation, with morethan half of the members composed of outside Audit &Supervisory Board Members in order to ensure the independenceof the Audit & Supervisory Board. The Board is chaired by a

HOKUETSU GROUP Integrated Report 2023

standing Audit & Supervisory Board Member. Outside Audit &Supervisory Board Members are determined by the independence
judgment criteria set by the Financial Instruments Exchange.
Nomination and Compensation Committee
In 2018, we established a Nomination and Compensation Committeewith a majority of outside directors as a voluntary advisory bodyto the Board of Directors to strengthen corporate governance.
Based on the mandate from the Board of Directors, theCommittee conducts independent, objective, and fairdeliberations on analysis and assessment for the effectiveness of
the Board of Directors, selection of the director candidates, thedirector compensation system and the process of selecting
successors, and reports the results of its deliberations to the Boardof Directors. The selection of candidates for the Board of Directors
is led by the outside directors.
Composition of the Nomination and Compensation Committee
and status of meetings in FY2022

Chair

Member

Title

Name

Status of activities

Outside Director

Mitsuyasu Iwata

7 out of 7 meetings

Outside Director

Kazuo Nakase

7 out of 7 meetings

President and CEO Sekio Kishimoto

Decision Process
The basic remuneration for directors is a fixed monthly
compensation, and is determined by comprehensively considering
the position, responsibilities, and years of service, while taking
into account the performance of the company and employee
salary level. Performance-linked remuneration consists ofperformance-linked bonuses as cash compensation andstock-based compensation as non-cash compensation linked to

33

Risk management system
The management risks to the Group’s global business arediversifying every year and require more advanced measures.
The Hokuetsu Group has established a Chief Risk
Management Officer who reports directly to the president topromote risk management activities. Through regular Risk
Management Officer Meetings and Consolidated Management
Internal Control Meetings, the Chief Risk Management Officer
determines policies to avoid or minimize the Group’s
management risks and inspects the internal management system.
Risk management activities
In FY2022, we set human resource shortages andcyberattacks/information security as priority issues common to
the Group, and promoted initiatives to minimize risks. In
addition, based on improvement proposals from Audit &Supervisory Board Members, each division, office and milllocation, and Group company identified management risks thatshould be addressed with the highest priority, and implemented
measures to avoid or reduce them.

Furthermore, we conducted a group-wide risk survey toidentify management risks that could impede the developmentof the Group. We quantified risks and created a risk map toidentify management risks.
Cyberattack/information security measures
The Group’s business systems are mainly built on private cloudcomputing, and in the event of an information security
incident caused by a cyberattack on these systems, it ispossible that it could disrupt business operations. In such acase, there is a risk that the Group’s business performance may
be affected. To address this risk, the Group established the“Hokuetsu Group Basic Policy on Information Security” and isstrengthening our information security management. We aretaking measures to prevent system failures due to viruses andcyberattacks, and information leaks outside the company,
through education and training for officers and employees, andsecurity vulnerability assessments.

7 out of 7 meetings* As of July 2023

ComplianceDirector’s remuneration
Basic Policy
The remuneration system for directors is designed as anincentive to enhance long-term and stable corporate value, andcomprehensively reflects the company’s and individual
performance. Remuneration consists of basic compensation as
fixed remuneration, an annual incentive (performancelinked bonus) as performance-linked compensation, andmedium- to long-term incentives (stock options compensation).
The remuneration of outside directors consists of only basic
compensation as a fixed remuneration.
The decision-making policy regarding the content of
remuneration for individual directors comes from theNomination and Compensation Committee, which consists of
two outside directors and the president and CEO, and the Board of
Directors determines remuneration based on this policy.

Risk management

corporate performance and the degree of contribution to it.
Performance-linked compensation is an index that measures acompany’s performance and profitability in terms of quantitative
aspects, such as consolidated sales, consolidated operating income
and consolidated ordinary income. It also looks at qualitative
aspects as an index that aims to increase corporate value overthe medium- to long-term. The system comprehensively reflects
the degree of contribution to ESGs (environment, society, andgovernance) and is paid at a certain time every year.
The remuneration of directors is based on a ratio of 7:2:1(basic remuneration: performance-linked bonus: stock-based
compensation), which is deliberated by the Nomination andCompensation Committee and decided by the Board of
Directors. Regarding the remuneration of individual directors,
the president and CEO, who has been delegated based on a
resolution of the Board of Directors, appropriately determines
the amount of basic individual remuneration and the evaluationand distribution of performance-linked bonuses within the limit
approved at the shareholders’ meeting in accordance with thedecision policy on the individual remuneration for directors. For
stock-based compensation, the Board of Directors determines
the number of stock options to be allocated to each individual
director based on the opinion of the Nomination andCompensation Committee.

We have been working to strengthen the compliance system of
the entire group by implementing the compliance items set
forth in the “Hokuetsu Group Code of Conduct” with the aim ofenhancing our corporate value through the realization of the“Hokuetsu Group Corporate Philosophy.”
In recent years, scandals involving quality by Japan’s leading
manufacturers have been attracting attention. In light of thissituation, in FY2022, we conducted training on the theme of“data falsification concerning quality and the environment” toraise awareness about preventing data falsification. 3,448
employees from the Group attended the training and deepened
their understanding of the risks to the company if quality or
environmental data is falsified.
We also hold waste compliance training every year for
Hokuetsu employees and employees of Group companies inJapan involved in waste management operations. We will raise
the compliance awareness of all Group employees throughthese programs.

Initiatives related to “respect for human rights”
The Hokuetsu Group has promoted business activities that respect human rights in accordance with the Hokuetsu Group
Corporate Philosophy and the Hokuetsu Group Code of Conduct, and has worked to enhance corporate value by building
good relationships of trust with our stakeholders. To further our efforts regarding respect for human rights, we signed theUnited Nations Global Compact and established the “Hokuetsu Group Human Rights Policy” on April 1, 2023. In order toachieve sustainable growth, we will continue to identify human rights risk issues, conduct human rights training, improve
our internal environment, and develop methods for dealing with our supply chain.

34

Governance

HOKUETSU GROUP Integrated Report 2023

Executive Officers

ProfileJuly 1969
July 1995
March 1999
June 1999

Sekio Kishimoto
President and CEO

June 2001
June 2004
July 2006
June 2007
April 2008

Joined Mitsubishi Corporation
General Manager, Paper Raw Materials Division
Advisor; General Manager, Purchasing
Department, Materials Division, the Company
Director, Deputy Division Manager,
Materials Division; General Manager,
Purchasing Department
Managing Director; COO, Material Division
Senior Managing Director; COO, Material Division
Executive Vice President; Representative Director
Executive Vice President; Representative Director;
CO-CEO
President and CEO (current position)

ProfileApril 1981
April 2018
June 2019

Shigeru Wakamoto

April 2020

Senior Managing Director
October 2020

April 2023

June 2023

Joined the Company
Corporate Officer; Kishu Mill Manager,
Paper Business Division
Director; COO, Technology Development Division;
In charge of Safety Supervision Department,
Environment Supervision Department
President and CEO, MC Hokuetsu Energy Service
Company (current position)
Director; COO, Technology Development Division,
In charge of Safety Supervision Department;
Environment Supervision Department;
Quality Management OfficeDirector, COO, Production Technology Division;
Deputy Division Manager, Safety, Environment &Quality Management Division
Director; COO, Production Technology Division;
Deputy Division Manager, Safety, Environment &Quality Management Division;
Profit Management OfficeSenior Managing Director; COO, Production
Technology Division; Deputy Division Manager,
Safety, Environment & Quality Management
Division; Profit Management Office(current position)

ProfileApril 1982
April 2019
June 2019
August 2020
April 2021

Yutaka Ishizuka
Director

June 2023

Joined the Company
Corporate Officer; Kishu Mill Deputy Manager,
Paper Business DivisionCorporate Officer; Kishu Mill Manager,
Paper Business DivisionCorporate Officer; Niigata Mill Deputy Manager,
Paper Business Division; COO, Papermaking Division
President and CEO, Hokuetsu Paper Tec Niigata
Co., Ltd.
President and CEO, Techno-Hokuetsu, Ltd.
Director; Niigata Mill Manager (current position)

ProfileApril 1984
January 2020
April 2020
July 2020

Tomoyuki Iida
Director

ProfileJuly 1969

ProfileApril 1981
April 2014

June 2015

Shigeharu Tachibana
Senior Managing Director

July 2016

June 2017
April 2018
April 2019
April 2020
April 2021
June 2021
April 2022

April 2023

June 2023

35

Joined the Company
Corporate Officer; General Manager, Coated Paper
Sales Department, Paper Business Division;
General Manger, Niigata Sales Office;Staff General Manager, CEO Office
Corporate Officer; COO, White Paperboard
Division; General Manager, Jiangmen Promotion
Group; Staff General Manager, CEO Office
Corporate Officer; COO, White Paperboard
Division; General Manager, CEO Office;U.S. Business Promotion OfficeDirector; COO, White Paperboard Division;
Chairman, Jiangmen Xinghui Paper Mill Co., Ltd.
Director; Chairman, Jiangmen Xinghui Paper Mill
Co., Ltd.
Director; COO, Paper Business Division; In chargeof Sales Branch Offices
Director; COO, Paper Business Division
Director; COO, Paper & White Paperboard Division
Managing Director; COO, Paper & White
Paperboard Division
Managing Director; COO, Paper & White
Paperboard Division; General Manager, Material
Logistics Department
Managing Director; COO, Paper &White Paperboard Sales Division;
Profit Management OfficeSenior Managing Director; COO, Paper & White
Paperboard Sales Division; Profit Management
Office (current position)

ProfileApril 1980

Makoto Yanagisawa
Director CFO

Joined The Industrial Bank of Japan, Limited(currently Mizuho Bank, Ltd.)
June 2010
General Manager, Internal Control Auditing Office,
the Company
April 2016
Corporate Officer; In charge of Group Governance
Administration Office; General Manager, Public
Relations Office
April 2019
Corporate Officer; Chief Compliance Officer; In
charge of Group Governance Administration
Office; General Manager, Public Relations Office
April 2020
Corporate Officer; Chief Risk Management Officer;
Chief Compliance Officer; In charge of Group
Governance Administration Office; Legal Affairs &Compliance Office, Public Relations Office, Deputy
in charge of Safety Management Department,
Environment Management Department, Quality
Management Office
April 2022
Corporate Officer; Deputy in charge of Corporate
Planning Department, Business Management
Department; Chief Risk Management Officer;
In charge of General Affairs Department,
Legal Affairs & Risk Management Office,Public Relations OfficeNovember 2022 Corporate Officer; CO-CFO; CRO; In charge ofGeneral Affairs Department, Legal Affairs & Risk
Management Office, Public Relations Office
April 2023
Corporate Officer, CO-CFO; CRO; In charge ofGeneral Affairs Department, Legal Affairs & Risk
Management Office, Public Relations Office; Profit
Management Office
June 2023
Director, CFO; CRO; In charge of General Affairs
Department, Legal Affairs & Risk Management
Office, Public Relations Office; General Manager,
Profit Management Office
Chairman, Xing Hui Investment Holdings Co., Ltd.
(current position)
September 2023 Director; CFO; CRO; In charge of General Affairs
Department, Legal Affairs & Compliance Office,Public Relations Office; General Manager, Profit
Management Office (current position)

Mitsuyasu Iwata
Director
OutsideIndependent

Joined Ministry of International Trade and Industry(currently Ministry of Economy, Trade andIndustry)
September 1999 Commissioner, Small and Medium Enterprise Agency
June 2000
Retired from Ministry of International Tradeand Industry
July 2000
Board Member, Japan Bank for International
Cooperation
October 2003 Advisor, The Kansai Electric Power Co., Inc.
June 2005
Managing Director
June 2007
Executive Vice President; Director
June 2009
President; Representative Director, Osaka Smalland Medium Business Investment & Consultation
Co., Ltd.
June 2015
Outside Director, the Company (current position)
Board Chairman, Business Policy Forum, Japan
July 2015
Board Chairman, Research Institute of Economy,
Trade and Industry

ProfileApril 1972
June 2001
June 2003
April 2006
April 2008

Hiromitsu Kuramoto
Director
OutsideIndependent

April 2010
June 2010

April 2011
June 2016
April 2017
June 2018
June 2021

Joined Nippon Yusen Kabushiki Kaisha
Director
Director; Managing Corporate Officer
Representative Director; Senior Managing
Corporate Officer
Representative Director; Executive Vice-President
Corporate Officer
Director
Director; Executive Vice-President Corporate
Officer, Yusen Air & Sea Service Co., Ltd. (currently
Yusen Logistics Co., Ltd.)
President and Representative Director
Chairman and Representative Director; Chairman,
Executive Officer
Chairman; Representative Director
Executive Board Counselor
Outside Director, the Company (current position)

April 2023

June 2023

ProfileApril 1973
June 2006
June 2008
June 2009

June 2011

Kazuo Nakase
Director
OutsideJune 2015
June 2016
June 2017

Joined Marubeni Corporation
Deputy Division Manager, Resources & Pulp
Division, the Company
Corporate Officer; COO, Resources & Pulp Division;
General Manager, Woodchip & Pulp Department
Corporate Officer; COO, Resources & Raw
Materials Division; General Manager, Woodchip &Pulp Department
Corporate Officer; COO, Resources & Raw
Materials Division; General Manager, Woodchip &Pulp Department; Profit Management OfficeDirector; COO, Resources & Raw Materials Division;
General Manager, Woodchip & Pulp Department;
Profit Management Office (current position)

Joined Mitsubishi Paper Mills, Ltd.
Director, Managing Executive Officer
Director, Senior Managing Executive Officer
Representative Director, Senior Managing
Executive Officer; General Manager, Paper
Division; In charge of the Paper Division andGerman Operations
President; CEO, Mitsubishi Paper Sales Co., Ltd.
(currently Mitsubishi Oji Paper Sales Co., Ltd.)
AdvisorOutside Audit & Supervisory Board Member,the Company
Outside Director (current position)

Independent

ProfileApril 1999

Hiroko Nihei
Director
OutsideIndependent

Joined The Fuji Bank, Limited (currently Mizuho
Bank, Ltd.)March 2008
Retired from Mizuho Bank, Ltd.
September 2009 Completed the legal apprentice training program,
admitted to the bar (Dai-ichi Tokyo Bar Association)
October 2009 Joined O’Melveny & Myers LLP, Associate Attorney
September 2014 Magister Juris, University of Oxford
January 2016 Counsel Attorney, O’Melveny & Myers LLP(current position)
March 2019
Master of Advanced Law, LL.M. in Intellectual
Property Law, Graduate School of Law,
Waseda University
June 2019
Outside Corporate Auditor, SEED Co., Ltd.
(current position)
January 2020 Supervisory Director, Invesco Office J-REIT, Inc.
June 2022
Outside Director, the Company (current position)
March 2023
Outside Audit & Supervisory Board Member, JUKI
Corporation (current position)36

Governance

HOKUETSU GROUP Integrated Report 2023

Discussion with Outside Directors
Audit & Supervisory Board Members

Manabu Ueno

Under the new management structure, how has the governance of Hokuetsu evolved?
We asked the outside directors to speak about the role that the board of directors should play in enhancing
corporate values.

ProfileApril 1992
Joined Hokuetsu Corporation
February 2015 Group Manager, Jiangmen Group; Group Manager, Al-Pac
Promotion Group
October 2015 Leave of absence and seconded, Director, Deputy General
Manager, Jiangmen Xinghui Paper Mill Co., Ltd.
April 2017
Leave of absence and seconded, Director, Deputy General
Manager (General Manager), Jiangmen Xinghui Paper Mill
Co., Ltd.
June 2021
Standing Audit & Supervisory Board Member, Hokuetsu
Corporation (current position)

Standing Audit &Supervisory Board Member
ProfileApril 1964
June 1995
June 1999
June 2000
July 2004

Jun Itoigawa

Joined The Industrial Bank of Japan, Limited (currently
Mizuho Bank, Ltd.)Managing Director (in charge of Asia, Latin America,and M&As)
Senior Managing Director, Executive Officer, Kogin Lease
Kabushiki Kaisha (currently Mizuho Leasing Co., Ltd.)
Director, Executive Vice President
Advisor, Dai-ichi Mutual Life Insurance Company(currently Dai-ichi Life Insurance Co., Ltd.)

June 2007
June 2012

President, Rikkyo Educational Corporation
Outside Audit & Supervisory Board Member(current position)
January 2014 Chairman of the Board of Trustees, Keep, Inc.
April 2016
President, St. Luke’s International University
September 2018 President, St. Margaret’s School

Joined Price Waterhouse Accounting Firm (currently PwC
PricewaterhouseCoopers Aarata LLC)
Representative Partner, Aoyama Audit Corporation(currently PwC PricewaterhouseCoopers Aarata LLC)
Partner, Price Waterhouse (currently PwC
PricewaterhouseCoopers Aarata LLC)
Joined Deloitte Touche Tohmatsu (currently Deloitte Touche
Tohmatsu LLC)
Representative Partner
Outside Director, Ichiyoshi Securities Co., Ltd.
Deloitte Touche Tohmatsu Global Middle Market Leader

June 2008
June 2010
March 2011
June 2017

Audit & Supervisory
Board Member
OutsideIndependent

ProfileOctober 1975
July 1987

August 1995

Keiji Watanabe
Audit & Supervisory
Board Member
OutsideApril 1996
June 2000
July 2003

June 2018

Outside Director, Asahi Kogyosha, Co., Ltd.
Outside Director, SBI Holdings, Inc.
Outside Director, Aoyama Zaisan Networks Co., Ltd.
Outside Audit & Supervisory Board Member, Hokuetsu
Corporation (current position)
Outside Director, SBI Insurance Group Co., Ltd.
(current position)
Outside Director, Ukai Co., Ltd.

Hiroko Nihei

Outside Director

Outside Director

Kazuo Nakase

Mitsuyasu Iwata
Outside Director

Outside Director

Chair of the Nomination andCompensation Committee

Member of the Nomination andCompensation Committee

Independent

Corporate Officers
Koji Goto

Kunihiro Ando

Katsuhide Nishikata

COO, Performance Materials Sales Division;
General Manager,
Containerboard Sales Department;
Profit Management Office

Kanto Mill Manager;
General Manager,
Ichikawa Product Department

Nagaoka Mill Manager;
General Manager,
Administration Department

Maou Sugimoto

Takashi Kasahara

COO, Safety, Environment &Quality Management Division;
In charge of Group Governance Administration
Department (General Manager);
Information System Department

In charge of Personnel Department(General Manager);
Executives’ Secretariat (General Manager);
General Manager, CEO Office;Profit Management Office

Shu Mizuguchi

Kazuhiro Takasumi

Deputy Division Manager,
Performance Materials Sales Business Division;
General Manager,
Performance Materials Sales Department;
General Manager, Sales Division

Kishu Mill Manager

Kunihiko Kashima
COO, Group Business Investment Division

Satoshi Miyake
President, CEO & CAO
Alberta-Pacific Forest Industries Inc.

Hisashi Abe
General Manager, White Paperboard Sales Department,
Paper & White Paperboard Sales Business Division;
General Manager in charge of administration ofWhite Paperboard Business;
Staff General Manager, ZERO CO2 Promotion Office,Production Technology Division

Satoshi Okamoto
Chairman, Jiangmen Xinghui Paper Mill Co., Ltd.

37

Hiromitsu Kuramoto

Active involvement of outside directors to oversee corporate
management and achieve sustainable growth—A new executive structure has been put in placewith approval by shareholders at the 185th Ordinary
General Meeting of Shareholders on June 29, 2023. Firstof all, Outside Director Iwata, as the chair of theNomination and Compensation Committee, will you
speak about how the Board of Directors and theNomination and Compensation Committee operates?
Iwata Since 2015, I have been attending meetings of theBoard of Directors as an outside director and have been
involved in the company’s management issues. As a memberof the Nominating and Compensation Committee, I haveworked with Outside Director Nakase and President

Kishimoto to formulate and submit committee proposals
regarding plans for director succession and compensation
structures to the Board of Directors.
With respect to the operation of board meetings, thechair (president) frequently takes the initiative insupplementing the agenda explanation by clarifying thepoint of issues. In response, each director actively expresses
his or her opinions based on their experience and knowledge
to improve our corporate value, which I believe deepens
discussions. I would like to maintain this operating structureof welcoming frank discussions.
Touching on the Nomination and Compensation
Committee, at the time of selecting directors, myself and38

Governance

HOKUETSU GROUP Integrated Report 2023

Medium-term Management Plan 2026, we plan to invest
approximately 9 billion yen in environment-related
investments to decarbonization efforts, and we will monitor
implementation and provide feedback through the Board of
Directors if necessary.

Outside Director Nakase interview candidates based on an
essay written by them and prepare a draft report to besubmitted to the Board of Directors.
I believe that the active involvement of outside directors
will contribute to strengthen governance and to invigorate
the board meetings.

I make a conscious effort to express
my opinions with a view to promoting
the advancement of women in
our company.
Hiroko Nihei

Active involvement of outside directors
will contribute to strengthen governanceand invigorate the board meetings.
Mitsuyasu Iwata—Outside Director Nihei has been instrumental inoverseeing the Company’s management since June
2022. Could you tell us about the process leading up to
your appointment as an outside director?
Nihei As Outside Director Iwata explained earlier about how
directors are selected, I also had an interview with Outside
Director Iwata and Outside Director Nakase before assuming
office. At that time, President Kishimoto, who is a member of
the Nomination and Compensation Committee, was notpresent. Through frank discussions with both of them, I
strongly felt that my knowledge and experience as an
attorney could be put to good use at Hokuetsu Corporation.
It has been about a year since I assumed my post. We
have been sincerely addressing the various demands of theera, checking the progress of each measure toward therealization of the Medium-term Management Plan 2026 andtaking steps to strengthen our governance.
I try to engage in constructive discussions from diverse
perspectives at Board of Directors meetings, including myown experience and areas of expertise. As the only woman
on our Board of Directors, I make a conscious effort toexpress my opinions with a view to promoting theadvancement of women in our company.

39

I believe that environmental initiatives,
such as “response to climate change,”
are of paramount importance.
—Outside Director Nihei just touched on the topic
of the Medium-term Management Plan. In April of thisyear, Hokuetsu newly formulated its Medium-termManagement Plan and Sustainability Activity
Implementation Targets. Outside Director Nakase, could
you tell us about the challenges of the management
strategy to enhance the Company’s corporate value overthe medium- to long-term?
Nakase We understand the requirement of outside
directors is to contribute to the expectations of shareholders
and other stakeholders, and to enhance corporate value froma medium- to long-term perspective, while keeping a little
distance from the executive position.
In April of this year, we renewed the two pillars of ourbusiness activities, namely the “Medium-term Management
Plan 2026” and the “Sustainability Activity Implementation
Targets.” As a company, we naturally aim to achieve theMedium-term Management Plan 2026, which is ourmanagement strategy, but we also believe that we should
focus our efforts on sustainability activities, as set forth in the
Corporate Governance Code.
From the perspective of integrating financial andnon-financial activities, our group’s sustainability activities
have been revised into nine materiality items. Among themateriality, I believe that environmental initiatives, such as“response to climate change,” are of paramount importance.
Our group has traditionally promoted the introduction of gas
turbines and biomass boilers to produce environmentallyfriendly paper through the use of clean energy with low CO2
emissions, which has been an advantage for us. In the

respond to the appropriateness of each agenda, and as otheroutside directors have said, we believe that the Board of
Directors is operating well.
As for medium- to long-term challenges, earlier Outside
Director Nakase spoke about strengthening ourenvironmental competitiveness, and I believe the foundationfor our future growth is in the realization of a shift in ourbusiness portfolio, which is both a financial goal and verymuch related to our sustainability activity goals.
Our core business is the manufacture and sale of paper
and pulp. During the three years of the Medium-termManagement Plan 2026, we will need to push forward withmeasures that will contribute to enhancing our corporate
value from a medium- to long-term perspective, rather thanbeing limited to a short-term perspective, such as expanding
our business portfolio by developing new products
including environmentally friendly products and entering
new businesses, and holding Daio Paper shares and how to
use them.

Kazuo Nakase—As explained by Outside Director Nakase, ourgroup is working to survive in the industry bydifferentiating ourselves from other pulp and paper
companies based on our environmental strategy.
Outside Director Kuramoto, are there any issues
required of our group, other than the “E” (environment)of ESG? Also, based on your knowledge and experience,
could you tell us how you plan to oversee themanagement of the company using your expertise?
Kuramoto As an outside director of Hokuetsu, I haveattended Board of Directors meetings for about two years
since June 2021 to offer various opinions hoping that myprevious experience would encourage the company togrow further.
Whenever an important agenda is brought up for
discussion at a meeting of the Board of Directors, a briefing
session is held in advance for outside directors and outside
audit & supervisory board members to ensure that sufficient
information is provided and that a forum is created for frank
discussion. The board meeting also serves to provide
opportunities for frank exchange of opinions.
Outside directors are responsible for improving
corporate value and the common interests of shareholders
from an independent standpoint. From that perspective, we
believe that an environment is in place to properly judge andI believe the foundation for our future
growth is in the realization of a shift
in our business portfolio.
Hiromitsu Kuramoto—Thank you for sharing with us today yourthoughts on management strategy and some of theactivities undertaken by the Nominating andCompensation Committee.
In order to respond to changes in the businessenvironment surrounding our group, and to grow andmeet the expectations of our stakeholders, we ask you
for your continued appropriate oversight and advice.
Thank you for your time today.

40

HOKUETSU GROUP Integrated Report 2023

Financial and Non-financial Highlights
Financial Highlights

G-1st

C-next

V-DRIVE

Medium-term Management Plan 2023
Unit: millions of yen

Financial data
Net sales

Thousands of U.S. dollars (Note 1)

Year ended
March 31, 2014

Year ended
March 31, 2015

Year ended
March 31, 2016

Year ended
March 31, 2017

Year ended
March 31, 2018Year ended
March 31, 2019Year ended
March 31, 2020

Year ended
March 31, 2021

Year ended
March 31, 2022

Year ended
March 31, 2023

Year ended
March 31, 2023

¥223,865¥228,400¥246,849¥262,398¥269,100¥275,807¥264,618¥222,454¥261,617¥301,205$2,255,541

Operating income

3,308

6,140

9,236

12,90011,414

10,130

11,2091,702

20,456

17,288129,462

Ordinary income

8,481

11,463

10,58814,056

13,90813,015

15,652

9,757

29,515

11,47285,904

Net income attributable to owners of parent company

6,105

8,359

7,477

10,381

10,327

9,156

8,073

14,173

21,207

8,326

62,345

EBITDA (Note 2)

26,97430,582

31,12533,93833,87132,31334,88324,802

43,25524,263

181,695

Capital expenditures

23,91911,128

9,425

12,751

14,71016,08916,231

14,136

13,462

12,532

93,844

Total assets

350,808

351,033

363,658

362,205

366,448

368,082

344,731363,075

376,956

388,4452,908,825

Net assets

158,824

168,573

169,529

181,035

191,977

192,861

180,862

195,419

216,974

225,950

1,692,002

Interest-bearing debt

136,387

123,724

129,586

116,754

108,240

109,726

106,832

113,991

99,088103,726

776,738

Cash flows from operating activities

18,67627,85820,94428,91819,742

21,62743,97523,761

20,186

1,747

13,081

Cash flows from investing activities-22,805-16,261-3,628-13,649-14,158-19,275-20,199-19,575-1,648-12,753-95,500

Earnings per share (EPS)

30.54

44.39

39.69

55.09

54.68

48.44

43.45

84.40

126.22

49.54

0.37

Book value per share (BPS)

834.44888.16894.74956.63

1,011.58

1,016.16

1,073.08

1,159.49

1,286.82

1,339.89

10.03

Dividends per share

12.00

12.00

12.00

12.00

12.00

12.00

12.00

14.00

24.00

18.00

0.13

EBITDA/Net sales (%)

12.0

13.4

12.6

12.9

12.6

11.7

13.2

11.1

16.5

8.1

Operating income ratio (%)

1.5

2.7

3.7

4.9

4.2

3.7

4.2

0.8

7.8

5.7

Net income ratio (%)

2.7

3.7

3.0

4.0

3.8

3.3

3.1

6.4

8.1

2.8

Equity ratio (%)

44.8

47.7

46.4

49.8

52.2

52.2

52.3

53.6

57.4

58.0

ROA (%) (Note 3)

2.4

3.3

3.0

3.9

3.8

3.5

4.4

2.8

8.0

3.0

ROE (%)

3.9

5.2

4.5

6.0

5.6

4.8

4.3

7.6

10.3

3.8

Debt equity ratio (times)

0.87

0.74

0.77

0.65

0.57

0.57

0.59

0.59

0.46

0.46

Cash flows

Per share data (Yen/U.S. dollars)

Key ratios

Notes
1. Amounts in US dollars were converted at ¥133.54 to one dollar, the currency exchange rate
prevailing in the Tokyo Foreign Exchange Market as of March 31, 2023.

Non-financial highlights

Industrial waste generated andeffective utilization
Scope1(1,000 tons-CO2)

714
57

Industrial waste generated
Effective utilization amounts

Scope2790

744(1,000 tons)

400(1,000 m3)(Persons)

100,000

4,800

62

600

Number of employees (consolidated)

Water intake
95,707

94,90088,82964
302 300

300

224

657

680

728

Domestic Japanese employees
Overseas employees(%)
Overseas employee ratio
30
873

871

219

19

19

19

3,841

3,817

3,685

15

20

859
21

11

20

2.00

100

41

2021

2022

2023
(End of the fiscal year in March)

0

11

10

10

10

4

4

2022

2023

9

1.80

3,398

3,304

10

1.00
0.63

25,000

5

0.79

0.38
0

Outside Directors(Persons)

3.00

50,0001,600
200

Number of directors in the last five years

2.46

75,0003,200200Frequency rate of occupational
accidents (consolidated)

860
872

257 252400* The Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28 issued on February 16, 2018) has been
applied from the beginning of FY2019. The primary business indicators, etc. pertaining to FY2018 are those after the retroactive application of
the relevant accounting standards.

ESG Data 2023 https://www.hokuetsucorp.com/pdf/esg2023_en.pdf

GHG emissions
800

2. EBITDA = Ordinary income + interest expenses + depreciation and amortization costs +depreciation of goodwill - depreciation of negative goodwill
3. ROA = Ordinary income ÷ average total assets at the beginning and end of the fiscal year × 100

2021

2022

2023
(Fiscal year ended in March)

0

2021

2022

2023
(Fiscal year ended in March)

0

2019

2020

2021

2022

2023

(Fiscal year ended in March)

0

0

2019

2020

2021

2022

2023

(Fiscal year ended in March)

0

2

2

2019

2020

3

2021

(including
1 woman)(Fiscal year ended in June)

42

HOKUETSU GROUP Integrated Report 2023

Corporate Information
Japanese Group companies Main locations

Head office / branch office / office / production / research locations

Japanese Group company

Organization

Group companies (consolidated subsidiaries)

Affiliated companies accounted for under the equity method

Affiliated companies not accounted for under the equity method

Products

Sales

Products

Niigata MillTokyo Head OfficeHokuetsu Paper Tec Niigata Co., Ltd.
Techno-Hokuetsu, Ltd.

Hokuetsu Paper Sales Co., Ltd.

MC Hokuetsu Energy Service Company

Hokuetsu Package Co., Ltd.

Hokuetsu Logistics Co., Ltd.

Hokuetsu Pallet Co., Ltd.

Raw materials

Products and raw materials

Kanto Mill Katsuta

Products

Jiangmen Xinghui Paper Mill Co., Ltd.
Bernard Dumas S.A.S.

Kanto Mill Ichikawa

Nagoya Office

Manufacturing and Sales
Alberta-Pacific Forest Industries Inc.

Paper andpulp segment

Hokuetsu Paper Tec Katsuta Co., Ltd.

Hokuetsu Material Co., Ltd.

HOKUETSU CORPORATION USA

Hokuetsu Toyo Fibre Co., Ltd.

Hokuetsu Package Co., Ltd. Kanto Mill
Nagaoka Mill
Central Research Laboratory

Hokuetsu Paper Sales Co., Ltd.

Products

Hokuetsu Suiun Co., Ltd.
Hokuetsu Engineering Co., Ltd.

Products

Daio Paper Corporation

Hokuetsu Toyo Fibre Co., Ltd.

Osaka Branch
Product cutting
Sorting and packaging
Provision of services, etc.

Kishu Mill

Osaka Mill

Hokuetsu Paper Tec Kishu Co., Ltd.

Sorting, packaging, etc.
Hokuetsu Paper Tec Niigata Co., Ltd.
Hokuetsu Paper Tec Kishu Co., Ltd.

Provision of services, etc.

Hokuetsu Paper Tec Katsuta Co., Ltd.
Techno-Hokuetsu, Ltd.

Overseas Group company

Overseas location

Bernard Dumas S.A.S.

Alberta-Pacific Forest Industries Inc.

Shanghai Toh Tech Co., Ltd.

HOKUETSU CORPORATION USA

Jiangmen Xinghui
Paper Mill Co., Ltd.

Provision of base paper
Packaging andpaper processing
segment

Products

Transportation, etc.

43

Transportation, etc.

Hokuetsu Suiun Co., Ltd.

Production/research locations

Niigata Mill/Kishu Mill/Kanto Mill Ichikawa/Kanto Mill Katsuta/Nagaoka Mill/Osaka Mill/Central Research Laboratory

Consolidated
subsidiaries

Paper and pulp segment

Hokuetsu Paper Sales Co., Ltd./Hokuetsu Toyo Fibre Co., Ltd./Hokuetsu Paper Tec Niigata Co., Ltd.
Hokuetsu Paper Tec Kishu Co., Ltd./Hokuetsu Paper Tec Katsuta Co., Ltd.
Techno-Hokuetsu, Ltd./MC Hokuetsu Energy Service Company

Packaging and paper processing segment

Hokuetsu Package Co., Ltd.

Timber business

Hokuetsu Material Co., Ltd.

Engineering business

Hokuetsu Engineering Co., Ltd.

Transportation/ warehousing business

Hokuetsu Logistics Co., Ltd./Hokuetsu Suiun Co., Ltd.

Other

Hokuetsu Pallet Co., Ltd.

Paper and pulp segment

Alberta-Pacific Forest Industries Inc./Xing Hui Investment Holdings Co., Ltd.
Jiangmen Xinghui Paper Mill Co., Ltd./Bernard Dumas S.A.S.

Packaging and paper processing segment

Transportation/warehousing business
Hokuetsu Logistics Co., Ltd.

Wood chips etc. forraw material and fuelOverseas

Products

Nikkan Co., Ltd.

Freewheel Trade and Invest 7 Pty Ltd.

Japan

Hokuetsu Package Co., Ltd.
Shanghai Toh Tech Co., Ltd.

Xing Hui Investment
Holdings Co., Ltd.
Ho Chi Minh Representative Office

Packaging and paper processing segment

CustomerOverseas Group companies Main locations

Hokuetsu Corporation

MC Hokuetsu Energy Service Company

Shanghai Toh Tech Co., Ltd.

Timber business

Timber, etc.

Hokuetsu Material Co., Ltd.
Freewheel Trade and Invest 7 Pty Ltd.

Other
Provision of services, etc.

Construction industry, machine
manufacturing/sales/maintenance

Provision of services, etc.

Hokuetsu Engineering Co., Ltd.
Hokuetsu Kiko KK

OtherProvision of raw materials,
services, etc.

Hokuetsu Pallet Co., Ltd.
Niigata GCC Co., Ltd.

Affiliated companies accounted for under the equity method

Daio Paper Corporation/Nikkan Co., Ltd./Niigata GCC Co., Ltd./Niigata PCC Co., Ltd.

Niigata PCC Co., Ltd.

Affiliated companies not accounted for under the equity method

HOKUETSU CORPORATION USA/Freewheel Trade and Invest 7 Pty Ltd.
Hokuetsu Kiko KK/Daio Shoko Co., Ltd.

Daio Shoko Co., Ltd.

Provision of products,
services, etc.

44

HOKUETSU GROUP Integrated Report 2023

Corporate Information

Equity Data

Corporate Data (as of March 31, 2023)

Stock Information (as of March 31, 2023)

Corporate Name:

Hokuetsu Corporation

Established:

April 27, 1907

Head office:3-5-1, Nishizao, Nagaoka, Niigata Prefecture

Capital:42,020,940,239 yen

Fiscal year ending:March 31

Number of consolidated subsidiaries:

18 (13 in Japan, 5 overseas)

3865

Securities code

Number of shares authorized 500,000,000
188,053,114

Number of shares issued(including own shares)

Listed Stock ExchangeTokyo

Share unit number

100 shares

Shareholder registry administrator Mizuho Trust & Banking Co., Ltd.
KPMG AZSA LLC

Independent audit firm
9,509

Number of shareholders

Number of affiliated companies accounted for under the equity method: 44,163 (consolidated); 1,503 (non-consolidated)

Number of employees:

Distribution of shares by shareholders (as of March 31, 2023)
Securities companies
0.50%
Non-Japanese
corporations
1.84%
Japanese corporations
3.55%

Financial
institutions
0.45%
Treasury stock
0.01%

Number ofshareholders
Total 9,509
shareholders

Individual
93.65%

Securities companies
0.86%
Treasury stock
10.31%
Individual
10.04%

Number ofsharesNon-Japanese
corporations
23.51%

Major Shareholders (as of March 31, 2023)

Total
188,053,114

Financial
institutions
29.50%

Japanese
corporations
25.78%

Number of shares held(Thousands of shares)

Shareholding
ratio (%)

Misuga Kaiun Co., Ltd.

18,806

11.15

The Master Trust Bank of Japan, Ltd.
(Trust Account)

13,281

7.87

MLI FOR CLIENT GENERAL OMNI NONCOLLATERAL NON TREATY-PB

11,963

7.09

Daishi Hokuetsu Bank, Ltd.

8,332

4.94

Hokuetsu Corporation’s Agent
Stockholding

6,884

4.08

NOMURA CUSTODY NOMINEES LIMITEDOMNIBUS-FULLY PAID (CASHPB)

6,476

3.84

Sumitomo Realty & Development
Co., Ltd.

6,066

3.60

CGML PB CLIENT
ACCOUNT/COLLATERAL

5,997

3.56

OASIS JAPAN STRATEGIC FUND LTD.

5,615

3.33

Custody Bank of Japan, Ltd.
(Trust Account)

4,903

2.91

Name

* In addition to the above, Hokuetsu holds 19,393,000 shares of treasury stock.
The shareholding ratio is calculated excluding treasury stock.

Stock related data
March 2020

March 2021

March 2022

March 2023

188,053,114

188,053,114

188,053,114

188,053,114

75,973

97,411

130,696

166,803

Price earnings ratio (PER) (times)

9.30

6.14

5.51

17.90

Price book-value ratio (PBR) (times)

0.38

0.45

0.54

0.66

Number of shares issued
Market capitalization at end of period (millions of yen)

45

Initiatives & External Evaluation
Endorsed Initiatives

External Evaluation
We have signed the United Nations Global
Compact as of January 24, 2023. The Groupis committed to implementing andcontinuously improving the 10 principlesof the UN Global Compact.

We have been recognized by the Ministryof Economy, Trade and Industry as a 2023
Certified Health & Productivity Management
Outstanding Organization (Large Enterprise
Category). The Health & Productivity
Management Outstanding Organization
certification program recognizes
companies that practice particularly
outstanding health management.

We have joined the GX League, an initiativeof the Ministry of Economy, Trade andIndustry. The Group will promote ourefforts to achieve carbon neutrality andcontribute to the transformation of theentire economic and social system incooperation with participating companies
and organizations.

In the “Climate Change Program” by CDP,
an international non-profit organizationthat addresses environmental information
disclosure, we received an “A-” rating, thehighest level of leadership.

We are participating in the “30by30
Alliance for Biodiversity,” a coalition ofvolunteers aiming to achieve the “30by30
Target” promoted by the Ministry of theEnvironment. Through our participation inthis alliance, the Group will visualize theimportance of biodiversity and conservation
activities, and contribute to achieving the
30by30 goal.

We have been certified as an Eco-Rail Markproducts by the 42nd Eco-Rail MarkManagement and Operating Committee,
which is authorized by the Ministry ofLand, Infrastructure, Transport andTourism and operated by the Railway
Freight Association. The Group will further
promote rail freight transportation, an
environmentally friendly means oftransportation, to reduce CO emissions.

We endorsed and announced the“Declaration of Partnership Building”
established by the “Council on Promoting
Partnership Building for the Future,” whose
members include the Chairman of Japan
Business Federation, the President of The
Japan Chamber of Commerce and Industry,
the President of Japanese Trade Union
Confederation, and relevant ministers.

46

3-2-2, Nihonbashihongoku-cho, Chuo-ku,
Tokyo 103-0021 Japan
www.hokuetsucorp.com/en

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