A NEW SOURCE OF STRENGTHFOR THE ECONOMY OF JAPAN AND BEYOND
In Partnership with Management

2021

NSSK
ESG Report
Nippon Sangyo Suishin Kiko Ltd.
Atago Green Hills MORI Tower, 17F 2-5-1, Atago, Minato-ku, Tokyo 105-6217 Japan

www.nsskjapan.com

Nippon Sangyo Suishin Kiko Ltd.

2020 PEI Private Equity Firmof the Year

INDEX
03 NSSK’s Commitment to ESG
05 CEO Message
07 NSSK’s Approach to ESG
11 NSSK’s Integration of ESG Policies and Practices

13 NSSK’s ESG Initiatives in Action
15
17
19
20
21
22

NSSK’s Fund Platform
Regional Impact Funds
CASE STUDY 1 Vati
CASE STUDY 2 Niwakyu
CASE STUDY 3 EdulinX
CASE STUDY 4 Hotel Castle Inn Group

Nippon Sangyo Suishin Kiko (NSSK) was chosen by Private Equity
International (PEI) as the Private Equity Firm of the Year in Japan in 2020.
The annual PEI awards “showcase the firms that have, in the eyes of theirpeers, set the benchmark during the year.” It is a tremendous honor for us
to receive such recognition, which NSSK also received in 2017 and 2018,
in addition to the Operational Excellence Award in 2019/2020. NSSK willcontinue to strive to deliver superior financial and ESG outcomes.

Thank You!
With much appreciation to all of our Partners,
Friends, Families and Supporters.

23 The Link Between ESG and Value Creation at NSSK
25
27
29
31

Investment in Local Communities“Happy” Employees
NSSK’s ESG Advancement Organization
Diversity and Inclusion

34 NSSK Group Overview

In loving memory of Sam who shared our vision

01 2021 NSSK ESG Report

2021 NSSK ESG Report

02

NSSK’s Commitment to ESG

03 2021 NSSK ESG Report05

CEO Message

07

NSSK’s Approach to ESG

11

NSSK’s Integration of ESG Policies and Practices

2021 NSSK ESG Report04CEO Message

NSSK’s Commitment to ESG

Dear Partners andFriends,
When we formed NSSK, we establisheda Mission to “build a best-in-classinvestment firm that will generate
superior outcomes while contributing
to the Environment, Society andGovernance of Japan and beyond.”
In addition to our global top quartile
performance to date, we have madegreat strides in our efforts to promote
ESG principles within and outside of NSSK.
This Annual Review will highlight
our various activities and showcase
some of the amazing outcomes that
the NSSK team (led by our management
and employee partners) has achieved.

Our Outcomes as of February 2020 ofFund II Portfolio Companies

Jun Tsusaka

Chief Executive Officer,
CIO and Chairman of the ESG Committee• We have increased the number of jobs by

12%

40% of our CEOs/COOs are Women or Minority• 78% of our total employee base of over 5,000•

are Women•

49% of the managerial positions are held by

Women

Please see pages 31 - 33 for the details behind the data

NSSK Commitment to Diversity
and Inclusion

Our Regional Impact Fund
Initiative

We chose to have a differentiated focus on Diversity
and Inclusion at NSSK. As you may know, Japan
does not fare well in most gender gap indexes. For
example, according to World Economic Forum Data
which looks at economic, educational, health andpolitical disparities between the sexes, Japan isranked at number 121. We have work to do withrespect to narrowing this gender gap in Japan andthat is why NSSK has decided to dedicate itself toimproving diversity and inclusion. What we aremost excited about is that our data, limited as it
may be, suggests a correlation between strong fundperformance and greater diversity and inclusion! *We were one of the first firms in our industry to
successfully launch an Impact Fund through our
Regional Impact Fund Platform (see page 15). In
2017, we successfully closed the Chubu-Hokuriku
Vitalization Fund, dedicated to creating social
impact in central Japan focusing on 8 prefecturesand executing an investment strategy designed tocreate positive social outcomes (increase inemployment, gender diversity, local community
commitment among others). In 2021, we areproud to have launched four new vehicles whichenable us to bring our ESG initiatives to all ofJapan. This is possible thanks to the support of
the government, local governments and regional
financial institutions and stakeholders.

* Please see the following article for more backgroundwww.nsskjapan.com

Our ESG Committee,
Chief Philosophy Officer and
ESG Audit Officer
So NSSK has made it its Mission to make adifference and start in our corner of the world. Our
ESG Committee is comprised of members from allparts of the Firm and represents almost a quarter ofour organization. Each member has specificresponsibilities and performance accountability. We
have learned from gender equality pioneers like
Kathy Matsui that actions must start at the top.*
The CEO of NSSK will always bear the title of
Chairman of the ESG Committee and proudly so. In
addition, we have created the ever important
position of Chief Philosophy Officer (read about thisexciting role and the CPO’s contributions on Page28) and have tasked one of our Operating Leaders(a former CFO of Pfizer Japan) to be a full time ESG
and Compliance Audit Officer. Our commitment to
ESG does not end here.

In Closing
This is just the beginning. It is almost unthinkable
how quickly ESG and SDGs have practically
become household terms. When my nephew
received his Masters in Sustainability from theUnited Nations University in 2015, many people
asked what that even was. Today, the recognitionof the importance of ESG and SDG initiatives isunquestionable. Now we need to figure out better
processes to achieve these goals in our own ways.
Good things come when there is a big common
goal. And this is a daunting task where outcomesare created only through the daily, steadfast
commitment to these objectives.
Please take the time to flip through our Annual
Review and celebrate the exciting work andcontributions that the NSSK team has made overthis last year. And join us in this global mission.
Warmest regards and wishing all of you the best ofhealth, safety and happiness,* Kathy Matsui (Publication)"Goldman Sachs-style human resource development for
female workers" (in Japanese)

05 2021 NSSK ESG Report

2021 NSSK ESG Report

06

NSSK’s Approach to ESG

NSSK’s Commitment to ESG

ESG POLICYNSSK believes that implementing an Environmental, Social and Governance (“ESG”) policy is socially
responsible and is designed to improve the returns in our investment portfolio. Since the establishment of
NSSK, we have embedded the following principles in our investment process:1. Consider ESG issues associated with target companies when evaluating whether to invest in a particular company orentity, as well as during the period of ownership.
2. Seek to engage with relevant stakeholders either directly or through representatives of portfolio companies, as
appropriate.
3. Seek to grow and improve the companies in which we invest for long‐term sustainability; work with portfolio
companies through representation on their boards or other governance structures, with the goal of improving
performance and minimizing adverse impacts in ESG areas.
4. Seek to provide appropriate levels of oversight in the areas of audit, risk management and potential conflicts of interestand to implement policies that align the interests of owners and management.
5. Comply with applicable labor laws in all respects, including those on wages, workplace safety, equal employment
opportunities and rights of employees to join unions and collective bargaining, in the countries where we invest.
6. Maintain strict policies that prohibit bribery and other improper payments in order to gain commercial advantage.
7. Respect the human rights of those affected by our investment activities and seek to confirm that our investments do
not flow to companies that utilize child or forced labor or maintain discriminatory policies.
8. Provide timely information to our limited partners on our commitment to ESG matters.
9. Seek ESG disclosure from our portfolio companies, and encourage our portfolio companies, service providers andindustry peers to advance ESG principles.

NSSK is a PRI signatory
NSSK MISSION

Our MISSION is to build a BEST-IN-CLASS
investment firm that will generate
SUPERIOR OUTCOMES andcontribute to the Environment, Society andGovernance of Japan and beyond.

07 2021 NSSK ESG Report

NSSK is a signatory to the United Nations-supported Principles for
Responsible Investment (“PRI”), to express our commitment towards
incorporating Environmental, Social and Governance (“ESG”) principles inour business activities.

Signatory of:(Appendix: https://www.unpri.org/pri)

NSSK is a signatory to the“Operating Principles for Impact Management”
NSSK is a signatory to the “Operating Principles for Impact Management”, aglobal market standard for impact investing developed by the International
Finance Corporation (“IFC”*).
* IFC: An institution of the World Bank Group, established in 1956. Founded in 1956, it is one of theworld’s largest international financial institutions specializing in private sector development indeveloping countries. It works with the private sector in about 100 countries to help eradicate
extreme poverty and promote shared prosperity.

2021 NSSK ESG Report

08NSSK’s Approach to ESG

NSSK’s Commitment to ESG

Components of NSSK’s Approach to ESG
Regarding ESG, NSSK executes responsible investment based on awareness of the importance of offering
fair opportunities, diversity, employment creation, best governance practice and health/welfare while
protecting the environment.

Equal
Opportunity

Diversity

Different individuals
having different
backgrounds arewelcomed, and equallytreatedEmpowering people byrespecting andappreciating whatmakes them different

ESG

Job Creation
Actively managed
human resource
process and career
path programs for
employees“We believe that injecting ‘heartware’in addition to software and hardware
into our businesses, is core to successful outcomes.
It is about investing in our people.”

Components

Best Practice
GovernanceHaving a high-level of
ethics and integrity toalign the interests ofowners andmanagement

Health andWell-Being

Environment

physical and mental
welfareEnergy efficiency andmakingenvironmentallyfriendly products

Jun TsusakaCEO• Putting ESG front and center of what we do• Driving ESG relevant portfolio construction• Integrating our mission to promote responsible investing• Conducting training and coaching led by our Chief Corporate Philosophy Officer(NSSK Philosophy Program)09 2021 NSSK ESG Report

2021 NSSK ESG Report10

NSSK’s Integration of ESG Policies and Practices

Japan’s Economic Environment
and NSSK’s Purpose

NSSK’s Commitment to ESGNSSK Value-Up Program

NVP

Managers of small and medium-sized companies face numerous challenges, including
business succession, human resource shortages, and the need to repond to changes in
the market environment. While business is becoming increasingly concentrated in the
Kanto region, the overall Japanese economy is in greater need of revitalization. With theglobalization of businesses and the digitization trends, industry must also revise its
conventional structures. In an effort to contribute to resolving these important issues,
NSSK leverages knowledge and expertise acquired by its members while working forleading global companies. We undertake investment and management support in
attractive Japan-based companies with high growth potential, boosting corporate andshare value, and contributing to economic development both in Japan and globally, with
an emphasis on ESG. ESG is at the center of NSSK’s business activities, forming thebasis of our investment processes and driving enhanced returns.

INTRODUCTION of
MANAGEMENT SYSTEMPRODUCTIVITY
ENHANCEMENTS

KPI identification & monitoring,
Financial Management Tools,
ESG Integration, Target
Setting, Compliance andGovernance

Gross Margin Improvement,
SG&A Cost Reduction,
Outsourcing of Back Office
Functions, R&D, Supply
Chain Management

NVP

SALES &
MARKETING INITIATIVES
Marketing Strategy Review,
Measurement of Marketing
Effectiveness, Call Center
Optimization, International
Business Expansion,
Strategic Alliance

Components

Business Activities

Fund raising

Pre-investment

Post-investment

Overview

ESG Initiatives• Composition of funds
procured from government
agencies, global corporate
pension plans, major
financial institutions, regionalbanks, etc.

• Briefings on key initiatives
and action guidelines around
ESG• Active promotion of ESG
principles throughconference participation• Undertaking investment
and concrete management
support in attractive
Japan-based companies
with high growth potential,
to contribute to regional
economic development inJapan• Execution of ESG due
diligence including Third
Party DD

• Operational improvement
support based on our uniqueexpertise (NSSK Value-Up
Program = NVP)

• Introduction of an ESG
framework• Investment return throughdividends, share offerings,
share transfer to strategic
investors, etc.

• Continuous monitoring

HUMAN RESOURCEDEVELOPMENT

Working Capital
Optimization, ROI Analysis,
Flexible Covenants

Self Evaluation System,
Compensation Structure,
Best Practice Sharing,
Recruiting, Training, Career
Path Setting

OTHER
MANAGEMENT TOOLSBig Data Usage, AI Usage,
SNS/Internet, Loyalty
Programs, Recession
Management, M&A, Post
Merger Integration• Assessment of ESG issues• Investment committee
deliberation• Identification of risks andimprovement measures• Setting of KPIs for each
investment target• Measurement and evaluationof results• Quarterly reporting• Compliance and ESG
auditing

11 2021 NSSK ESG Report

BALANCE SHEETOPTIMIZATIONNSSK’s Approach to Management Support
NSSK offers its unique NSSK Value-Up Program (NVP) to businesses for management support. NVP is
deployed by excellent companies worldwide, providing expertise for management improvement, humanresource development, and financial optimization, organized according to the circumstances of businesses inJapan. It is implemented by NVP support teams comprised of our highly specialized personnel. Furthermore,
we offer opportunities to leverage the management instruction of experts with global management experienceand extensive networks in North America, Europe and Asia. We thus aim to support or help create moreglobally competitive Japan-based companies, while striving to strengthen the management foundations of ourportfolio companies.

2021 NSSK ESG Report

12

NSSK’s ESG Initiatives in Action
15

NSSK’s Fund Platform

17

Regional Impact Funds

19

CASE STUDY 1 Vati

20

CASE STUDY 2 Niwakyu

21

CASE STUDY 3 EdulinX

22

CASE STUDY 4 Hotel Castle Inn Group13 2021 NSSK ESG Report

2021 NSSK ESG Report

14

NSSK’s Fund Platform

NSSK’s ESG Initiatives in Action

The funds contribute to the development of the local
economy in Japan by investing in companies withhigh growth potential and providing them withmanagement support.

SapporoNSSK Group
Portfolio Companies
as of May 2021

SOWA PROJECT(Weddings)

Marked points indicate headquarterand plant locations
Areas where portfolio companies
are located

Nippon Sangyo Suishin Kiko I
Nippon Sangyo Suishin Kiko I Investment Limited Partnership was formed in 2015.
The partnership is intended to be a long-term shareholder in the companies that it invests in. This allows NSSK and the
management teams of the portfolio companies to focus on sustainable long-term value creation. NSSK, through the
NSSK Value-Up Program (NVP) provides critical business process improvement measures, balance sheet and cost
structure optimization and the addition of management talent. As a result, the businesses are experiencing solid sales
growth and earnings improvement, in addition to increases in the numbers of their employees.

NSSK Fund II and its successor funds

Iwate

Welfare Suzuran

RAY Field

Niwakyu(Nursing home management)(Beauty salons)(Toiletries)

SORA GROUP

Tokai Tenrei(Dining establishments)(Funeral services)

NSSK Fund II was formed in 2016.
The fund invested mainly in Japan-based attractive small to medium-sized companies with high-growth potential that cancontribute to the development and the revitalization of the local economy in Japan.
With a focus on investing in “good” companies and transforming them into “great” companies, NSSK seeks to generate
superior outcomes through its differentiated investment sourcing, highly disciplined pricing approach and implementationof its NSSK Value-Up Program (NVP).

Tochigi
Saitama
Gifu

Osaka

Regional Impact Funds

Mie

As part of its ESG activities, NSSK's Regional Impact Fund Platform has been active since 2016, with the
Chubu/Hokuriku Vitalization Investment L.P. as the first impact fund, in order to bring NSSK's investing and value up
platform in a way that contributes to domestic regional communities. With a focus on business succession and attractive
small and medium-sized companies with high growth potential in the local area, the Regional Impact Funds aim tocontribute to the development of the local economy and society by providing growth capital for operational improvement,
reinforcing and development of human capital and supporting business and sales development both in Japan andoverseas. This will result in the creation of employment opportunities as well as the improvement of corporate andshareholder value together in partnership with local financial institutions. In addition to the Chubu/Hokuriku Vitalization
Investment L.P., NSSK Group has expanded its Regional Impact Fund initiatives to include the Kanto/East Japan,
Kinki/West Japan and nationwide areas. As a result, the NSSK Group operates 5 impact funds focusing on regional
vitalization in Japan.

Sokan(Healthy snack food)Tokyo

Kantoku Global Corporation

Aichi(Used truck exports)

Hotel Castle Inn GroupDNS

EdulinX(Hotel chain)(Sports nutrition business)(EdTech)Ise Meotoiwa Paradise

next innovation

Vati(Aquarium)(Hair care products)(Nursing home management)

Hakkoden(Funeral services)

ELSONIC(390 yen shops)

U.S. Mart(Children’s leisure centers)“NSSK enjoys a unique nationwide footprint
and presence.”
Aki Ishida
Partner

15 2021 NSSK ESG Report

For details of portfolio companies, please refer to our
websitehttps://www.nsskjapan.com/en/portfolio/

2021 NSSK ESG Report16

Regional Impact Funds

NSSK’s ESG Initiatives in Action

The Impact Funds are designed to execute
NSSK’s SDG commitments with the aimof producing benefits for society.

Selected SDGs and Impact Investment
SDG
Targets

Social Benefits

NSSK’s Initiatives

Support for Smalland Medium-sizedCompanies• Regional Impact Funds targeting small and medium-sized companies with investments of up to one
billion yen• Globally-competent management improvement tools deployed by leading companies worldwide(NSSK Value-Up Program = NVP), targeting small and medium-sized companies and leveraging
NSSK’s expertise, resources, and network

Regional Impact Fund Overview
In addition to our core funds, NSSK manages impact funds that invest and provide concrete
management support in attractive Japan-based companies with high growth potential, tocontribute to regional economic development in Japan. NSSK’s Regional Impact Funds
execute initiatives based on the 17 Sustainable Development Goals (SDGs), aiming to produce
benefits for society through our portfolio companies.

Employment
Creation

Human Resource
Education• We consider employee numbers as one KPI, striving to create employment while increasing revenue• Promoting creation of work-friendly environments and reducing staff turnover through revision of
personnel systems, including introduction of performance-linked remuneration and incentive plans• Supporting creation of work environments that are rewarding for employees and provision ofnecessary professional training- NSSK Philosophy Program (NPP) (see pages 27-28)- Building and strengthening education and training systems• Understanding and applying industry-leading technology and expertiseSocial Benefit through Impact Investment and Funds
ImpactInvestment

Social Benefit&

Financial Return
Environment

Impact investment refers to investment activities that deliver positive andmeasurable social and environmental results while providing solid financial
returns. NSSK executes such investment through its Regional Impact Funds,
aiming to produce both social and economic value.

Social Benefit

In operating the Regional Impact Funds, key targets have been set for thefollowing eight Sustainable Development Goals (SDGs), in an effort to produce
social benefit.
Support for Smalland Medium-sizedCompanies

Employment
Creation

Human Resource
Education

Digitalization

Environment

Advancementof Women

ComplianceReinforcement

Healthcare
Sector“We are dedicated to job creation and creating
attractive career paths for all.”- Strengthening digital marketing- Advancement of data-based management decision-making(use of cloud and other systems)• Our ESG, Diversity and Inclusion Committee leads pre-investment analysis of ESG issues, andsupport for post-investment strengthening of ESG- Including creation of products developed with awareness of issues such as food waste
reduction, power and water conservation, paperless operation, and environmental protection• We also actively promote advancement of female employees

Advancementof Women

ComplianceReinforcement

Healthcare
Sector- Providing education on creation of work-friendly environments(including anti-harassment training)- Active promotion of women into management at investment targets• Support for strengthening of compliance systems, which are lacking in many small andmedium-sized companies- Introduction of personnel for internal management positions- Implementation of accounting audits, strengthening internal controls,
thorough labor management systems, creation of systems to exclude antisocial forces* All 100% executed• We consider employee numbers as one KPI, striving to create employment while increasing revenue• Promoting creation of work-friendly environments and reducing staff turnover through revision of
personnel systems, including introduction of performance-linked remuneration and incentive plans“We believe that greater diversity and inclusion iscorrelated with superior investment returns.”
Joe Matsunaga

President, Regional Impact Funds

17 2021 NSSK ESG Report

Digitalization

Kaz Tokuyama
Partner

2021 NSSK ESG Report

18

CASE STUDY 1

CASE STUDY 2

NSSK’s ESG Initiatives in Action

ESG Initiatives

Niwakyu Co., Ltd.
Business Description

With a 130-year history, Niwakyu
manufactures environmentallyand people-friendly cleaning andfood products
Niwakyu is a household cleaning products manufacturer,
founded in 1880 and based in Ena, Gifu Prefecture. Its
main product lines are natural household cleaners basedon four natural ingredients. It also manufactures and sells
Kesco, a natural deodorizer and cooking seasoning,
including natural rock salt.

Vati Co., Ltd.
Business Description

Vati contributes to communities
through its extensive network of
nursing home services

Providing high quality
nursing care services
at affordable prices
from the standpointof facility users

Vati, established in 2002, operates an elderly carebusiness which manages nursing homes, elderly housing,and daycare services throughout Japan’s Kanto andChubu regions. As of September 2020, it is the 9th largest
player in the industry in terms of number of facilities.

• The company is certified under
EcoAction 21, an environmental
management system devised by
Japan’s Ministry of theEnvironment. Its facilities are also
certified for HACCP, meeting thefood hygiene management
standards stipulated by the Gifu
prefectural authorities. It also
eliminated the inclusion of plastic
accessories, such as spoons• The company strives to create awork-friendly environment, withmeasures such as two full days
off a week and progression frompart-time to full-time employment
Ratio ofEnvironmentally
Friendly Product

About

60%

The “Smart Cleaner” series (toprow), natural cleaning agentsthat do not contain surfactants
or other chemicals, and the“Disinfectant Soaking Solution
for Masks” and “Disinfectant
Soaking Solution for Water
Bottles/Bottles” (bottom row)

ESG Initiatives• Vati’s facilities play an essential role as regional infrastructure for the elderly,
while also contributing to communities through job creation

Ratio of womenin management• The company provides serviced housing for the elderly at the lowest price in theindustry, taking individual pension income into account in order to reduce theeconomic pressure on residents

48%

65%

• Vati actively employs women, appointing them to key roles. Presently, over 70%
of employees are women, and women account for over 60% of management• The company has established a Compliance Promotion Division, which
conducts regular internal audits and compliance education for all employees

19 2021 NSSK ESG Report

2021 NSSK ESG Report

20CASE STUDY 3

CASE STUDY 4

Hotel Castle Inn Group
Business Description

A hotel chain in Mie Prefecturethat caters to business andleisure travelers
Hotel Castle Inn Group operates a chain of hotels in Ise,
Suzuka and Yokkaichi cities, Mie Prefecture, where there
is strong demand for hotels that cater to business andleisure travelers. The company executes its social
responsibilities in line with stakeholder expectations,creating good relationships with hotel guests, trading
partners, employees, and the local community.

EdulinX Corporation
Business Description

EdulinX products and services have been
introduced at over 1,200 corporations andeducational facilities in Japan andworldwide.

ESG Initiatives

ESG Initiatives• Through installation of LED lighting
and amenity bars to cut plastic
wastage, the company strives toreduce its environmental burden• The company has successfully
reduced staff turnover throughexpansion of locally focused
employment, the introduction ofa staff award system, andimprovements toemployee-management
communication• It has revised internal regulations
and established policies for handlingpersonal data in an effort tostrengthen governance• The company has also increased
customer satisfaction throughmeasures including investment inrenovations, enhancement of
product plans, and boosting guest
reviews on travel reservation
websites

Providing innovative education solutions
for human resource development andthose in need through edtech
EdulinX makes extensive use of advanced educational technology(edtech) to provide comprehensive education solutions for humanresource development at all levels. The company is committed toreshaping learning by applying personalization, video on demand,
gamification and immersion technology, as well as intuitive andinteractive learning experiences, to transform the way people learn.

NSSK’s ESG Initiatives in Action

An amenity bar (photograph on left) that was installedat the front desk to cut plastic wastage and LED
lighting (photograph on right) that was introduced toreduce energy costs

Staff turnover
Employees(including
part-timers)

43% decrease
12% increase

A cypress bath looking over the streetscape of Ise(Hotel Castle Inn Ise)

• EdulinX employs people of diverse nationalities, and internal communications are written in both
English and Japanese to cater to this
• The company has established a work environment where all employees can fully exercise theirtalents, through the introduction of systems such as remote working and flexi-time for those raisingchildren• EdulinX has acquired ISO 27001 certification and strives to boost implementation of internal
governance in areas of privacy and data security• CEO is a foreign national• Incorporate AI to dramatically improve productivity

21 2021 NSSK ESG Report

2021 NSSK ESG Report

22

The Link Between ESG
and Value Creation at NSSK

23 2021 NSSK ESG Report25

Investment in Local Communities

27“Happy” Employees

29

NSSK’s ESG Advancement Organization

31

Diversity and Inclusion

2021 NSSK ESG Report24Investment in Local Communities

The Link Between ESG and Value Creation at NSSKNSSK strives to actively support local
communities by implementing various measures
for regional vitalization.

Protecting the Environment – Beach Clean Up
Clean up activities in one’s local community is an important

Nippon Sangyo Suishin Kiko Ltd.

aspect of protecting the environment and being good membersof society. Whether it be the weekend Shibuya cleanup or
regularly participating in the cleanup of our coastlines, every bit

NSSK undertakes a variety of activities that lead to regional vitalization, in order to fulfill its responsibility as amember of the local community. A range of those activities are introduced below.

helps. The entire NSSK team will be participating in a beachclean up as part of our annual off site in order to support our
local community and for everyone at NSSK to learn about theenvironmental effects of trash on our beaches.

Supporting Earthquake Recovery in Tohoku
Sokan Co., Ltd.

Sokan, with plants in Tochigi and Iwate Prefectures, manufacturesand distributes healthy ingredient-based snacks such as wakame
seaweed, pickled and processed plums, dried fruits and dried

U.S. Mart, operator of indoor playground facilities (Kid’s US.

sweet potatoes. In May 2016, the Company opened a new factory

US.Mart Corporation

LAND) in shopping centers, is building new partnerships with toy

in Otsuchi-Cho, Iwate Prefecture, an area severely damaged by

and game companies and event organizers to further boost

the 2011 Great East Japan Earthquake. In August 2012, it began

satisfaction for its local customers. The company is also working

sales of a special wakame product, donating 10% of proceeds

to establish new businesses, expanding its target beyond justfrom sales to a wakame agriculture recovery project, thus

children, to include housewives and the elderly.

contributing to the revival of local industry and to job creation.

Contributing to the Regional Economy
through Management Support
Ise Sea Paradise operates an integrated leisure facility that

Establishing New Businesses to Boost Local Client Satisfaction

Support for Local Professional Sports TeamsIse Meotoiwa Sea Paradise Co., Ltd.

includes souvenir stores, restaurants and an aquarium,

Sokan supports professional sports teams in Tochigi Prefecture

Sokan Co., Ltd.

with the aim of regional vitalization. Currently, Sokan is an official

in a highway service area near to Meotoiwa, a key tourist attraction

sponsor for locally active teams Utsunomiya Brex (basketball),in Mie Prefecture. Recently, the company renovated the aquarium

H.C. Tochigi Nikko Icebucks (ice hockey) and Utsunomiya

and other facilities, and bolstered operations by renewing

Blitzen (road cycling).

relationships with travel agencies and offering tour packages. It
also introduced an overall facility concept and content tailored totourist tastes, to contribute to the local economy.

Enhancing Regional Infrastructure to Meet
the High Demand for Elderly Nursing and Healthcare
Welfare Suzuran operates seven residential style nursing homes,

Contributing to local communities
through cleaning activities and blood donation
Welfare Suzuran Co., Ltd.

ELSONIC has deployed THANK YOU MART outlets throughout

three group homes for persons with disabilities and one groupJapan and offers all of its products, including character

home for persons with cognitive disorders in and aroundproducts, miscellaneous items and clothing, at 390 yen. To

Nagoya, offering high quality service at an affordable price. The

contribute to local communities, workers engage in wastecompany is working to strengthen its business foundation,cleaning as volunteer work in nearby areas. ELSONIC also

through introduction of business management techniques, andconducted blood donation activities at the head office insupport to boost revenue and enhance internal control systems,

collaboration with the Japanese Red Cross Society. Going

whereby it can fulfill its role as regional infrastructure to meet theforward, ELSONIC will continue to proactively engage inhigh demand for nursing and healthcare for elderly people.

activities to contribute to local communities.

25 2021 NSSK ESG Report

ELSONIC Co., Ltd.

2021 NSSK ESG Report

26

“Happy” Employees

The Link Between ESG and Value Creation at NSSKNSSK supports the education of employees
and human resource development based on
its NSSK Philosophy Program (NPP).
NSSK Philosophy Program Ideals
NSSK has established its NSSK Philosophy Program (NPP) as an approach to support the education of
employees and human resource development. One ideal of NPP is to do what is right in life. All employees
connected to NSSK are encouraged to follow this life philosophy, which we believe leads to the happiness of
all employees and prosperity for the company.

NSSK Philosophy Program Aims
NSSK’s Approach
Project Team Formation
NPP Project Teams are formed through the invitation of next-generation
leaders from among management-level employees, transcending divisionand job category.

An NPP lecture given by CPO Yoshihito
Ohta (US.Mart Corporation)

Program Introduction
Based on his experience at NSSK group portfolio companies, Kyocera
and JAL, CPO Yoshihito Ohta expounds the importance of corporate
philosophy to each and every employee at portfolio companies.

Establishing or Restructuring Independent Corporate Philosophy

NSSK Philosophy Program Details
The NPP was developed based on six elements by, among others, Yoshihito Ohta, Chief Corporate
Philosophy Officer (CPO) of NSSK, who supported Kyocera Corp. founder Kazuo Inamori for over 30 years.
It describes the importance of corporate philosophy and how to form and promulgate it and supports
the establishment of independent corporate philosophies at portfolio companies.

Based on NPP, all project team members play a central role inestablishing or restructuring corporate philosophy that all employees canagree with.

Promulgation of Corporate Philosophy to All Employees
We conduct education on the corporate philosophy until it becomes
second nature to all employees.

An NPP lecture given by CPO Yoshihito
Ohta (Hotel Castle Inn Group)

Philosophy
Chief Corporate Philosophy Officer Comment

Attitude x Effort x
AbilityLife

Leadership

Be ambitious,
Do the right things,
Be reflective

Team work isimportant, Aim high,
Align mental vectors,
Be bold and cautious,
Have goodwill

NPP
Components

Challenges

Work

Your thoughts shapereality, Pursue
unlimited potential,
Willpower determines

Love your work,
Be humble,
Strive to become better

Management
Set specific goals,
Pricing is management

27 2021 NSSK ESG Report

Aiming for Managementwith All-Member Participation
It goes without saying that a business is ultimately just a gathering of people:
people are its most valuable asset. There is no doubt that work is extremely
important for employees to earn a living and for their self-realization.
Consequently, it is beneficial for employees, and for management, to createa workplace environment that provides job satisfaction to the majority of
employees. But many companies are unable to create such an environment,
and consequently, fail to increase productivity or improve their results:
essentially, employees are unable to exercise their full capabilities. Because abusiness is a social entity, in such cases, it is a social loss.
NPP is a program based upon specific cases such as the restructuring ofJAL. It teaches the approach and methods for management to communicate
with employees in order to facilitate enthusiastic engagement in work. I believethat if management sincerely implements NPP, it can significantly contribute to
management reform.

Yoshihito Ohta
Executive Advisor
Chief Corporate Philosophy
Officer• Former Chairman of Kyocera
Communication Systems Co., Ltd.
• Engaged in corporate
restructuring as Aide to the
Chairman and Senior Managing
Executive Officer at Japan
Airlines Co., Ltd. (JAL)• Supported Mr. Kazuo Inamori formany years as General Manager
of Secretary’ s Office and served
as Director and Managing
Executive Officer of Kyocera
Corporation.

2021 NSSK ESG Report28

NSSK’s ESG Advancement Organization

The Link Between ESG and Value Creation at NSSK

Establishment of ESG, Diversity and Inclusion Committee
NSSK has established the ESG, Diversity andInclusion Committee as an organization to promote
ESG. The committee establishes key ESG-related
policies and conducts ongoing reviews of issues. In
addition, it shares ESG information in-house,monitors handling of issues, continuously updates
the ESG checklist used at portolio companies, andregularly updates stakeholders about ESG
initiatives.

NSSK ESG Committee Members

Jun Tsusaka

Takaharu ItohYoshihito Ohta

CEO
Chairman of ESG Committee

Compliance and
ESG Audit Officer

Executive Advisor
Chief Corporate Philosophy
Officer (CPO)

Shohei Akiyama

Kiyomi Matsuda

Kurama Sato

Director
Chief Administrative Officer

Finance Director
ESG Leader

Associate & Manager
ESG Leader

Masatoshi Takara

Tsuneo Endo

Makoto Iwami

Senior Analyst
ESG Leader

Senior Executive Officer
Regional Impact Funds
Member (IR/Impact Funds)

Director
Member (Investment Team)

ESG, Diversity and Inclusion Committee Structure
The ESG, Diversity and Inclusion Committee is comprised of nine members, including CEO Jun Tsusaka, theChairman, together with members from various divisions (Investment, IR and Business Support Teams),
together with the Chief Corporate Philosophy Officer and the Compliance and ESG Audit Officer. This
Committee deliberates ESG issues at NSSK, portfolio companies and prospective investment targets.
Takaharu Itoh, who has extensive experience as CFO in global businesses, is the Compliance and ESG Audit
Officer, overseeing ESG-related activities at NSSK.
Chairman of ESG Committee
Compliance and ESG Audit Officer

ESG Leader

Member (IR)CPO

ESG Leader

CAO

ESG Leader

Member (Investment Team)

Compliance and ESG Audit Officer Comments
Details of Specific Activities• Once a month, the ESG Committee deliberates ESG strategy for NSSK and its portfolio companies, as wellas initiatives for ESG promotion• Auditing of investment target businesses by the ESG Officer• ESG training for management and employees at portfolio companies• Arrangement of disclosure documentation for signatories

29 2021 NSSK ESG Report

Nippon Sangyo Suishin Kiko (NSSK) was conscious of theimportance of ESG and conducted ongoing in-house ESG study
sessions even before demand for ESG reached the current levels.
ESG is an essential standard and requirement in the operation offunds entrusted by investors. Such awareness is shared withmanagement at portfolio companies, such that they establish
respective SDGs and strive towards their realization. In spite of
the current COVID-19 pandemic, the company will commence
auditing in May and June. We also expect to conduct the second
audit for the year around October.

Takaharu Itoh

Compliance and
ESG Audit Officer

2021 NSSK ESG Report30

The Link Between ESG and Value Creation at NSSKMany female managers are actively involvedin our businesses which drives performance.
In order to promote diversity and inclusion and to eliminate gender gaps, NSSK is making efforts topromote opportunities for workers at portfolio companies and establish work environments that
promote long-term career development. We are pleased to introduce a number of our outstanding
performers and contributors to our ESG mission.

Ms. Makiko Nagata, Deputy Directorof ISE Sea Paradise Aquarium

Joined as a contractor and currently a manager
responsible for facility operation.

Diversity and Inclusion

NSSK has made progress in diversity and inclusion
initiatives, already achieving excellent results.
In its investment activities, NSSK focuses
especially upon diversity and inclusion, among allof the aspects of ESG. The gender gap is currently
a major issue in Japan. There are many tasks totackle to address this. NSSK considers diversity
and inclusion improvement among its missions.
Its actively promotes advancement of female
employees at investment targets, with numerous
achievements to date.

12%
40%

Employee increase ratio

Ratio of women/minorities of CEO/COO
at investment target businesses

78%

Ratio of women among employees(5,300)After joining the company as a contractor, I was promoted to a full-time employee and then to a
manager. I used to be satisfied by accomplishing the things I wanted to do and improving my skills
through my duties at work. Now that I am in a management position, I am thrilled when my efforts
contribute to the company, and when young staff members persevere and take on challenges attheir own volition. At this workplace, I have never been discriminated against for being a woman.
I have been able to actively engage in challenges leading to the happiness of our animals and thecustomers who visit our aquarium, and I believe that my results have received fair evaluation. In
terms of my personal life, I am truly grateful that I can prioritize my family and that the staff on site
will cover for me if I have to go home unexpectedly.
I believe that in order for women to advance their careers in our industry, it’s critical to have awork environment where we can work long-term. In terms of gender-related reasons why women
can’t continue work long-term, marriage and childbirth both play a role. In my case, I was able tokeep working thanks to the support of my family and my husband’s parents. In addition, thecompany’s flexibility in creating an accommodating working environment is also a major factor. If I
could ask the company for one thing, it would be to make the work environment attractive not justfor women, but for men as well. Right now, my husband and I split household and child rearing
responsibilities in half. I feel that my husband’s company doesn’t yet seem to understand that men
also have duties as fathers. In our company, there are many male employees who are raisingchildren. If there is company support not only for women but also for men to be able to contributeto housework and child rearing, I think it would lead to an environment that makes it easier for
women to advance in society and continue working long-term.

49%

Ratio of women in management*As of February 2020 of Fund II portfolio companies
31 2021 NSSK ESG Report

2021 NSSK ESG Report32Diversity and Inclusion

Ms. Marie Sugimoto, Manager of the Division of Product Planning Design, ELSONIC Co., Ltd.,

Leading the company’s product design teamwith a strong sense of job satisfaction.
I work as manager of a design team for original products planned and developed at our company.
Products move quickly from planning to commercialization at our company and I enjoy always being able
to take the lead in making new proposals. Our team has many young members, and the lively in-housecommunication is a daily stimulus for me. This, as well as the rich responses received from customers,
gives me job satisfaction. While many efforts are being made to make workplaces easier to work in,
I hope to contribute to promoting diversity at our company by focusing on gender disparities, childcare
leave-taking and return to work rates, and encouraging improvements in these.

NSSK Group Overview

The Link Between ESG and Value Creation at NSSKNSSK Group Overview

Name

Nippon Sangyo Suishin Kiko Group

Established

September 3, 2014

Representative

Jun Tsusaka

Address

Atago Green Hills MORI Tower, 17F 2-5-1, Atago, Minato-ku, Tokyo 105-6217 Japan

Websitewww.nsskjapan.com

Ms. Naomi Kondo, Director of the Operations & Finance Division, EdulinX Corporation

Contributing to corporate performance improvement
by fulfilling one’s responsibilities as well as
promoting development and growth of subordinates.
Regardless of one’s gender, it is imperative that we fulfill our responsibilities. I will continue to engage in the
improvement of our business and also provide opportunities for education and growth of my subordinates
so they can make outstanding contributions to the company with a sense of responsibility. At EdulinX, wevalue work-life balance in which it is easy to take time off, and an environment that encourages everyone toexpress their own opinions. Conversely, the recent pandemic conditions have meant that there have been
reduced opportunities for collaboration amongst our employees, and occasionally creating somemisunderstandings. I think that establishing a workplace environment that fosters collaboration even in suchconditions enables all workers, including women, to be able to perform their job function duties with peaceof mind.

Ms. Miho Obo, Chief of the Division of Administration, Castle Inn Hotel & Resort

Taking on general affairs and accounting for the entire Group,
and working hard on projects that promote the company Credo.
I am involved in accounting and general affairs at the head office of the Hotel Group. I feel a strong
sense of responsibility as I am in a position that oversees the entire group, but it is very rewarding to playa role in coordinating with each hotel. I was appointed as a member of the project to launch thecompany Credo (mindset and action guidelines that all employees should keep in mind) and I’m also
working hard to promote the Credo within the Group. It is a work environment where I can express my
opinions freely and without hesitation, and there is flexibility in accommodating my daughter’s school
events, for which I am very grateful. Looking forward, I hope for a system where each employee will beable to further demonstrate their abilities and be rewarded for their efforts.

33 2021 NSSK ESG Report

2021 NSSK ESG Report34