https://www.kddi.com/english/

Peoples’ values vary.

Society offers more choices.
Beyond these huge changes,

we want to create a new world,

where people accept one another,and where each of us can make our dreams a reality.
For that to happen, we must overcome some hurdles such as:– Outdated conventional thinking.
– Preconceptions.

If there are boundaries that keep us apart,
let us eliminate them and connect.

With communication increasingly integrated into our lives,
our capabilities should dramatically increase.
We have the technology.
We have the mindset.

We have the partners.
Together, we can surely make it happen,

while enhancing the power to connect in line with the times.
Let’s enjoy the thrill of creating things.
Let’s go forward together,

towards a more interesting future.

KDDI brand site
https://brand.kddi.com/

2

KDDI Integrated Sustainability and Financial Report 2023

3

At KDDI, our mission is to connect.
KDDI’s work of connecting is more than just connecting distantConnecting and Protecting Lives
This means ensuring communications during
disasters with our resilient infrastructure.
It means implementing ICT technology to
reduce environmental impact, helping our
precious planet.

locations with communication lines.
We connect much larger things—people’s lives, day-to-day lives,and hearts and minds.

Connecting Day-to-Day Lives
This means helping resolve issues incommunities, cities, and developing nations
by bringing together new technologies andpartners.
It involves developing human resources
today, so that we can help create better
lives tomorrow.

Connecting Hearts and Minds
This means implementing initiatives aimed atcreating a digital society characterized byaffluence and peace of mind. A society
where diversity displaces isolation and all
can enjoy healthy, fulfilling lives. In this ageof living beyond 100, this is more important
than ever.

Thus, KDDI will evolve our “Power to Connect” into an era in which new values will be
generated as a result of the “blending” of telecommunications into all kinds of scenes.

Our power to make connections will help create a brighter future for all.

4

KDDI Integrated Sustainability and Financial Report 2023

5

Introduction

VisionKDDI VISION 2030

KDDI’s “Power to Connect”

Framework for Mid-Term Management Strategy

Material Issues

TCFD/TNFD

Governance

Data

Contents/Editorial Policy/Website Information
The KDDI Group Philosophy

The Path of Value Creation

KDDI Integrated Sustainability and Financial Report 2023

Contents
Introduction
2-3KDDI VISION 2030

4-5KDDI’s “Power to Connect”

6-7

Contents/Editorial Policy/Website Information

8-9	
Framework for Mid-Term Management
Strategy
10-11

The KDDI Group Philosophy

12-13

The Path of Value Creation

VisionDisclosure of Financial and Non-Financial Information
71-84

85-96

Materiality 3

information, financial data, management strategies, and sustainability information. Additional sustainability and research &development (R&D) information that is not contained in this report can be found on KDDI’s website.

Materiality 434-37	
Human Capital Supporting “Connecting”

future, and other statements other than those of historical fact, are forward-looking statements based on management’s

Materiality 5materially from these statements. Potential risks and uncertainties include, but are not limited to overseas economic

market—a market characterized by rapid technological advances, the steady introduction of new services, intense pricecompetition, and others.

Issuing Sustainability Bonds

The cover design features a

Third-Party Evaluation

genders, connecting their hands
as if playing a cat’s cradle. This
design builds upon the previous

42-43	Six Material Issues/Process for Identifying
Material Issues

112-115 Disclosure based on TCFD Recommendations

further emphasizes KDDI’s

Materiality 1

116-121	Disclosure based on TNFD Recommendations

represented diversity, but it“power to connect” and thecreation of new value through “partnering” by connecting

Governance122-123 Board Members

hand to hand with strands of light. Simultaneously, it

IR Website

Shareholder
Newsletters

Owned Media,“KDDI Tobira”

symbolically represents KDDI’s commitment toIntegrated
Sustainability
and Financial
Report(this report)

Sustainability Website

Non-Financial Information

Sustainability Management.

124-126	Messages from Outside Directors

48-51	Values We Embrace (1)Molding Future Society

127-138	Corporate Governance

52-60	Values We Embrace (2)Realization of Sustainable Industrial/Infrastructure Environment142-144	
Risk Management and Internal Controls

139-141 Intellectual Property Management

Website Information

145-149	ComplianceKDDI

https://www.kddi.com/english/▲

Materiality 2

61-66	Values We Embrace (3)Regional Co-Creation

150-163

KDDI Brand Book

https://brand.kddi.com/

Financial and Non-Financial Data

KDDI Tobira (Japanese only)

https://tobira.kddi.com/

▲

Data

▲

Realization of Safe, Secure,and Prosperous Society

67-70	Values We Embrace (4)Eliminating Regional and Economic Disparities
Globally

Financial Information

including various ages and

TCFD/TNFD

Sustainability Promotion Framework

Positioning of This Report

depiction of diverse individuals,

fiscal year’s cover design that

	Promotion of Innovation Centered on
Telecommunications

150-151 Consolidated Financial Highlights
152-163 Financial and Non-Financial Highlights

164-233 Consolidated Financial Statements234	Disclosure and IR

6continue developing and marketing services that enable them to secure new customers in the telecommunications

38-41	Message from the General Manager of the
Sustainability Management Division

46-47

61-70

currencies in which KDDI or KDDI Group companies do business; and the ability of KDDI and KDDI Group companies to

About the cover design

Materiality

44-45	Mid-Term Sustainability Targets(FY23.3-FY25.3)

48-60

conditions; fluctuations in currency exchange rates, particularly those affecting the U.S. dollar, euro, and other overseas

Advancing Stakeholder Engagement110-111	Visualization of Non-Financial Activities to
Improve Activities
111

assumptions in light of information currently available and involve risks and uncertainties. Actual results may differ

Experts and Institutional Investors

38-47

Materiality 6

Statements contained in this report concerning KDDI’s plans, strategies, beliefs, expectations, or projections about theGeneral Consumers(including individual investors)

Material Issues

110

which was launched through the merger of IIRC and SASB).

91-96	Values We Embrace (7)Respect for Human Rights

97-105	Values We Embrace (8)Advancement of Professional Human Resources
and Engagement Improvement30-33	CFO Message

based on multiple guidelines and frameworks, including the principles outlined by the Value Reporting Foundation (VRF,

Disclaimer Regarding Forward-Looking Statements

20-23	Value Creation Story

106-109

KDDI has applied International Financial Reporting Standards (IFRS) since FY16.3. For this report, unless otherwise
stated, figures up to FY14.3 are based on Japanese GAAP and figures for FY15.3 onward are based on IFRS. This report is85-90	Values We Embrace (6)Strengthening the Management Infrastructure of
the Entire KDDI Group

Human Resources First

5G Communications and Focus Areas

Financial Report” from FY23.3 to offer investors and other stakeholders a better understanding of KDDI’s basic

71-84	Values We Embrace (5)Carbon Neutral

14-19	CEO Message
22-23	Satellite Growth Strategy:

This report integrates the “Integrated Report” and the “Sustainability Report” into the “Integrated Sustainability andCarbon Neutral	Strengthening the Group Management BaseThrough Progressing Governance97-10524-29	The Future We Aim for by Enhancing
the “Power to Connect”

Editorial Policy

235

Corporate Overview/Stock Information

236

External Assurance

Financial Information

Investor Relations
https://www.kddi.com/english/corporate/ir/

Non-Financial Information

Sustainability
https://www.kddi.com/english/corporate/sustainability/

Research & Development (R&D)
https://www.kddi.com/english/corporate/r-and-d/KDDI Integrated Sustainability and Financial Report 2023

7

Introduction
KDDI VISION 2030

VisionMaterial Issues

KDDI’s “Power to Connect”

Framework for Mid-Term Management Strategy

Governance

TCFD/TNFD

Data

Contents/Editorial Policy/Website Information
The KDDI Group Philosophy

The Path of Value Creation

Framework for Mid-Term Management Strategy
The “Mid-Term Management Strategy (FY23.3-FY25.3)” iscentered on “Sustainability Management,” which aims for

The KDDI Group Mission Statement

The KDDI Group values and cares about the material and emotional
well-being of all its employees, and delivers a thrilling customer experienceby always going further than expected with the ultimate goal of achieving
a truly connected society.

the sustainable growth in society and the corporate value

Brand Message

improvement achieved together with our partners. As partof this strategy, we will also promote our “Satellite
Growth Strategy,” which aims to advance the 5G-driven
evolution of our telecommunications business andthe expansion of focus areas with

Explore the extraordinary

telecommunications at the core, whilestrengthening our management base toCompany Vision

support this strategy.

1. The company the customer can feel closest to

The Mid-Term Management Strategy ispositioned within the framework of the

2. A company that continues to produce excitement

KDDI Group Mission Statement, Brand

3. Contributing to the sustainable growth of society

Message, and Company Vision as
well as the “KDDI VISION 2030,”
and is based on the “The KDDI
Group Philosophy,” which forms
the foundation of KDDI’soperations.

The creation of a society in which anyone can make their dreams a reality, by enhancing
the power to connect.

→ P10

5G-driven evolution of
the telecommunications business andexpansion of focus areas with
telecommunications at the core

Satellite Growth Strategy→ P85

Strengthening of management basethat contributes to the sustainablegrowth in society andthe corporate value improvement→ P16, 22

Carbon neutral

Strengthening thegroup managementbase throughprogressing
governance

Human resources
first

8

KDDI Integrated Sustainability and Financial Report 2023

9

Introduction
KDDI VISION 2030

VisionKDDI’s “Power to Connect”

Framework for Mid-Term Management Strategy

Material Issues

TCFD/TNFD

Governance

Data

Contents/Editorial Policy/Website Information
The KDDI Group Philosophy

The Path of Value Creation

The KDDI Group Philosophy

KDDI Group Philosophy Initiatives
KDDI believes that it is important for every employee to practice the KDDI Group Philosophy in order to permeate theKDDI Group Mission Statement, the KDDI VISION 2030, and KDDI’s Sustainability Management. Accordingly, KDDI

The KDDI Group Philosophy consists of the corporate credo, the KDDI

organizes study sessions for all employees to learn about the Philosophy from the very foundation, and is promoting

Group Mission Statement, and five chapters with 38 items, which

initiatives to make employees in each organization aware of the connection between their activities and the Philosophy.

express the attitudes, values, and behavior that all employees need to

By bringing all employees together under a common set of values, we aim to build on the strengths of KDDI’s sustainableexhibit in order to achieve sustainable growth for the Company andgrowth in the future.

society. The KDDI identity and KDDI vision that we must embrace as atelecommunications operator are incorporated throughout.

Every employee practices the KDDI Group Philosophy

The Philosophy is the foundation of our Sustainability Management

to permeate the KDDI Group Mission Statement,

and is the basic stance KDDI employees must adopt. By putting theKDDI Group Philosophy into practice, we aim to be a company admiredKDDI Group Philosophy Pocketbook

the KDDI VISION 2030, and KDDI’s Sustainability Management.

and trusted by all stakeholders.

Learn about the KDDI Group Philosophy
from the very foundation

History of the KDDI Group Philosophy
In 2000, when three companies merged to form KDDI, the KDDI Group Philosophy was established with the aim of
fostering a corporate culture in which employees from various backgrounds share common values. After being revised in2013, it evolved into the current KDDI Group Philosophy.

• Attitude toward work and KDDI’s common values• The Company’s significance of existence, social
responsibility, providing value to society

Be aware of the connection to
the KDDI Group Philosophy• Think about the connection between the Philosophy
and experiences, current work, and daily activities

Background of Revision
On March 11, 2011, the Great East Japan Earthquake struck, and KDDI’s communications network suffered tremendous
damage. The earthquake made KDDI strongly reaffirm its significance of existence and mission as a telecommunications

Company-wide study sessions
on the Philosophy

company that plays a key role in social infrastructure. To fulfill the mission, it is necessary to unite the hearts and minds ofall KDDI Group employees. To this end, we felt it necessary to revise the KDDI Group Philosophy into a new set of guiding

Activities in each organization

principles. In revising the Philosophy, we have indicated what kind of company KDDI aims to be and what kind of
attitudes and values we should act with, and have reflected the lessons learned from the Great East Japan Earthquake aswell as content that can be applied to our own operations in all divisions. The KDDI Group Philosophy is filled with ouraspirations for what we want to be as employees of KDDI.

In the Publication of the Revised KDDI Group Philosophy
KDDI has indicated that it will thoroughly pursue the following two objectives as part of its management based on theKDDI Group Philosophy as the Foundation of Sustainability Management

KDDI Group Philosophy.

• We will achieve the sustainable growth of the Group by ensuring all employees share and practice the Group’s visionand management guidelines, and improving employee and organizational capabilities.

• Each employee learns the correct code of conduct and standards of judgment as a good person and earnestly engages
in their work, thereby improving their personality and leading a meaningful life.
KDDI Group Philosophy and KDDI Code of Business Conduct

Growth of society

Employee awarenessContributing to solving environmental
and social issues

Sustainable profit growth
22 consecutive years of profit growth

10

Material andAchieving aKDDI Group emotionaltruly
well-being
Missionconnected Statementof allsociety
employees

Employee satisfaction

Employee actions
Creating innovations

KDDI Integrated Sustainability and Financial Report 2023

11

Introduction
KDDI VISION 2030

VisionMaterial Issues

KDDI’s “Power to Connect”

Framework for Mid-Term Management Strategy

5G

Data

Contents/Editorial Policy/Website Information
The KDDI Group Philosophy

The Path of Value Creation

The Path of Value Creation

3G

Governance

TCFD/TNFD

4G

The integration of
telecommunications and life design

Widespread use of mobile phones2020“au Insurance & Loans” is launched
Service for 3G mobile phones is terminated

2017

2011

au Energy Holdings Corporation is established as anenergy holding company“au PAY Market” is launched

2021

2012
“au Smart Value”

Smartphone

2018

Internetis launched

Launch of “KDDI Hikari Plus” opticalau Smart Value2013

fiber service (FTTH)

No.1 net increase in market share for
5 consecutive terms from FY04.3 to FY08.3

AEON Holdings Corporation

A business alliance with SpaceX’s

becomes a consolidated subsidiarysatellite broadband “Starlink”

2019

JCOM Co., Ltd. is consolidated

FY04.3-FY08.3

2023 αU is launched

A new brand “povo” is launched

au PAY Market

2003

is established

UQ mobile is integrated

sales of iPhone

3G mobile phone service begins

KDDI SmartDrone Inc.

“au Denki” (electricity service) is launched

KDDI launches its first

2002

2022

5G launch

2016

The rising popularity of smartphones

Creating new value by integrating
telecommunications into every domain

2014
Achieved an actual population coverage ratioof 99% for 800MHz “4G LTE”

KDDI “IoT World Architecture”
applications open

FY23.3Operating income“au PAY (QR code payment)” islaunched¥1,075.7

au Financial Holdings Corporation
is established“au Pay Card” is launchedbillion

FY24.3Operating incometarget¥1,080.0

billion

Makoto Takahashi
appointed President(Apr. 2018)2015
UQ Communications Inc. starts

2000 KDDI established“UQ mobile” service

Japanese GAAPIFRS

Oct. 2000

DDI CORPORATION (now KDDI)establishedTakashi Tanaka
appointed President(Dec. 2010)

Yuusai Okuyama appointed President■ Operating income*1

Market capitalization*2

Tadashi Onodera
appointed President(Jun. 2001)

Three-Year Medium-Term Targets(FY14.3-FY16.3)

 ouble-digit growth in operating income each•D
fiscal year

• Dividend payout ratio: over 30%

FY01.312

FY05.3

FY10.3*1 Figures up to FY14.3 are based on Japanese GAAP and figures for FY15.3 onward are based on IFRS
*2 On a closing price basis for the end of October 2000 to the end of March 2023 (monthly) *3 CAGR: Compound Average Growth Rate

FY15.3Three-Year Medium-Term Targets(FY17.3-FY19.3)• Operating income: CAGR* 7%• Dividend payout ratio: over 35%
3

Three-Year Medium-Term Targets(FY20.3-FY22.3)• EPS: FY19.3 ➡ FY25.3 1.5 times• Dividend payout ratio: Over 40%

May 2022 Mid-Term Management Strategy
is announced (FY23.3-FY25.3)• EPS: FY19.3 ➡ FY25.3 1.5 times• Dividend payout ratio: Over 40%→ P21

FY20.3

FY22.3

KDDI Integrated Sustainability and Financial Report 2023

13

Introduction
CEO Message

VisionValue Creation Story

Material Issues

Governance

TCFD/TNFDThe Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

CEO Message
KDDI makes achieving a truly connected society
part of the KDDI Group Mission Statement.
Telecommunications are an integral part ofmodern society and form the basis for life, industry, and social activities. Therefore, the stability
and reliability of telecommunications have become
even more critical. As a telecommunications
carrier, we play an important role in society,maintaining telecommunications 24 hours a day,365 days a year. We also recognize that promoting
efforts toward creating a resilient future societythat achieves both economic progress and theresolution of social issues is a vital issue andshould be undertaken actively.
To achieve such a future society, we formulated
the “KDDI VISION 2030” in May 2022.

In our Business Strategy, we will pursue a“Satellite Growth Strategy” that expands growthareas by deepening the existing businesses andmaximizing synergies. With 5G communications
as the center of the satellite, we will position
growth areas around this core and take on challenges in various transformations to promotebusiness.
Regarding Strengthening of Management Base,we aim to achieve carbon neutrality—an environmental issue on the global scale—by fiscal 2030
for KDDI (non-consolidated) and by fiscal 2050
for the KDDI Group. We will also actively pursue
transformation into a company that puts humanresources first as well as promoting unified groupmanagement.

“The creation of a society in whichanyone can make their dreams a reality,
by enhancing the power to connect.”

We expect changes to accelerate in the future—both changes in the business environment
brought about by new technologies as well aschanges in the social environment due to theglobal situation. The KDDI Group will unite as
one to respond to these changes and promotesustainable growth.
We look forward to your continued support andguidance as we work on these initiatives to meetthe expectations of our customers and society.

Our mission is to connect and protect lives,connect day-to-day lives, and connect hearts andminds. We will enhance our power to connect,
and we hope to create a resilient future society inwhich anyone can make their dreams a reality.
Under the Mid-Term Management Strategy(FY23.3 to FY25.3), we will promote “Business
Strategy” and the “Strengthening of Management
Base” with Sustainability Management—which isbased on a virtuous cycle of corporate value
improvement and the sustainable growth insociety—at the core.

KDDI CORPORATION
President,
Representative Director,
CEOand fuel price hikes, we were able to increase our

Looking Back on FY23.3

operating income through steady growth in the focus
areas of digital transformation (DX) and financial
business, pursuing cost efficiency, and other efforts.

On Conclusion of the First Year of the Mid-Term Management Strategy
Under the current Mid-Term Management Strategy, we aim to achieve both sustainable profit growth and enhanced

achieving our goals for business growth: ARPU

shareholder returns.

revenue increase due to 5G promotion, profit growth

Our consolidated operating revenue for FY23.3 increased 4.1% year on year to 5,671.8 billion yen, while consolidated
operating income was up 1.4% year on year to 1,075.7 billion yen. Against factors such as the impact of price reduction

14

We are steadily advancing efforts towardof 100 billion yen or more in focus areas, and cost
efficiency at the level of 100 billion yen.

FY23.3YOY

Operating revenue

5,671.8 billion yen+4.1%

Operating income

1,075.7 billion yen+1.4%

Business Services segment

190.8 billion yen+2.0%

Financial Business36.0 billion yen+85.6%

KDDI Integrated Sustainability and Financial Report 2023

15

Introduction
CEO Message

VisionValue Creation Story

Material Issues

TCFD/TNFD

Governance

The Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

KDDI VISION 2030

Mid-Term
Management
Strategy

To achieve our ideal future society, we set out a new vision, “KDDI VISION 2030: The creation of a society in whichanyone can make their dreams a reality, by enhancing the power to connect” in May 2022.
To contribute to building a resilient social infrastructure that withstands environmental changes, we will connect andDefining new materiality andprotect lives, connect day-to-day lives, and connect hearts and minds to create a society in which anyone can make theirpromoting the Mid-Termdreams a reality through businesses with our partners while utilizing technology.

Management Strategy

Aiming for “a platformer supporting society” that can add value to every industry and life scene, we will promote“business transformation centered on 5G” with a view of the year 2030.

The creation of a society in whichanyone can make their dreams a reality,
by enhancing the power to connect.

Sustainability
Management

Sustainability Management and Medium-Term Targets
We have established the “materiality (material issues)” centered on the interests of diverse stakeholders such as long-term
investors as well as our vision and enterprise impact. With this in mind, we position Sustainability Management at thecore and promote reinforcement of the business strategy and the underlying management base.
By doing so, we will aim for the sustainable growth in society and the corporate value improvement with our partners.
Our goal is to create a virtuous cycle in which society’s growth is fed back on the subsequent business strategies, and thebusiness growth is reflected in society.

Satellite
GrowthStrategy

Business Strategy/Satellite Growth Strategy
In our Business Strategy, we are pursuing our business growth strategy in the focus areas centered on 5G, which is
expected to prosper with the Stand-Alone (SA), under the name “Satellite Growth Strategy.” With telecommunications—which is the power to connect—at the center, we will make new expansions into business areas that are positioned likesatellites. For the core service of 5G communications, we will undertake all kinds of efforts to enhance the power toconnect. We will also focus on 5G network building, provision of various services and penetration of 5G-compatible
handsets so that multi-brand communications ARPU revenues, will increase in FY25.3 compared to FY22.3.
At the center of new business expansion are DX and life transformation (LX). For corporate customers, we will work
on offering DX solutions that support the use of digital technologies to transform their businesses into becoming capableof sustainable growth. As for consumers, in an era of diversifying values, we will deliver an exciting world—both in thephysical space and in cyberspace—through LX, which is represented by the metaverse.
In addition, we will expand our financial business. Telecommunications and finance will become closely linked in our

Summary ofEfforts in Focus
Areas

future day-to-day lives. In an era where telecommunications and finance blend into our lives, we will develop financial
services to become more closely tied to the lives of our customers by maximizing synergy between telecommunicationsand various financial services.

16

KDDI Integrated Sustainability and Financial Report 2023

17

Introduction
CEO Message

VisionValue Creation Story

Material Issues

TCFD/TNFD

Governance

The Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Highlight 1

Highlight 2“KDDI Digital Twin for All”

“Competition and Collaboration”

Modern society is characterized by the

To achieve advanced technological innovation required in the era of Beyond 5G as well as promote Sustainability

prominent changes in the environment

Management while increasing social and environmental values, it will be important to define the areas for competition

arising from various internal and external

and those for collaboration with competitors, and implement a balanced investment strategy. As an area for collaboration,

factors. To overcome such dramatic changes

in March 2023, we signed a basic agreement for global standardization of optical network technologies with Nippon

and achieve “the creation of a society in

Telegraph and Telephone Corporation toward deploying and standardizing innovative communication technologies

which anyone can make their dreams acentered on all-photonic networks. Through this agreement, the two companies will seek to achieve a sustainable high-reality” that is stated in KDDI VISION 2030,

capacity optical network using the telecommunications technologies and experiences they have developed so far.
In addition, 5G JAPAN Corporation—which started business in 2020—is contributing to the sustainable growth in

we have developed a concept called “KDDI
Digital Twin for All.” DX for corporate

society by promoting infrastructure sharing based on the mutual use of base station assets held by KDDI and SoftBankcustomers and LX for individual customers

Corp. and accelerating the rollout of 5G in rural Japan. Furthermore,form the two pillars of this concept.

through providing roaming services to Rakuten Mobile, Inc. via our 4G
network, we will promote the expansion of area coverage nationwide

Under “KDDI Digital Twin for All,” we willin Japan by driving the effective use of our 4G infrastructure andtransform people’s lives to make them betterby transferring data generated in the physicalspace where people live to the virtual

A Society in which anyone can make their dreams a reality.
KDDI Digital Twin for All

focusing on the rollout of our 5G network.
Going forward, we will continue to collaborate with bothcyberspace, conducting sophisticatedtelecommunications operators as well as various other partners aroundsimulations digitally in real time, and feeding

the world to achieve a truly connected society.

back the results to the physical space.

Initiatives for Strengthening of Management Base
To strengthen the our management base that supports our Sustainability Management, we will also promote initiatives todeal with major social issues such as carbon neutrality, transforming ourselves into a company that puts human resources
first, respect for human rights, and enhancement of our group governance.
We are also actively addressing carbon neutrality, which is a major issue on a global scale, and KDDI (nonconsolidated) is aiming to achieve net-zero CO2 emissions by fiscal 2030. Ahead of this, we aim to achieve the same goalat our data centers worldwide under the TELEHOUSE brand by fiscal 2026, while the KDDI Group as a whole aims toachieve net-zero CO2 emissions by fiscal 2050. In addition to the commercialization of renewable energy generation, we
will proactively promote energy efficiency and shift to renewable energy for mobile phone base stations andtelecommunications equipment to achieve these goals.
In addition, to ensure ongoing sustainable growth amid a business environment that is undergoing constant andprofound change, it is essential to transform into a company that puts human resources first, which promotes innovationand encourages a high degree of autonomy and growth for employees and organizations. In promoting innovation, we will
strengthen R&D and capital investment for 5G and beyond 5G. And we will accelerate efforts for business creation, R&D,
AI and advanced security technology efforts based on our Satellite Growth Strategy and will deepen partnerships such as
collaboration with startups.

Progress of Mid-Term Management Strategy
In our Mid-Term Management Strategy, we aim to achieve both business growth and shareholder returns. Besides
sustainable profit growth, we will undertake capital expenditures and strategic business investments in 5G and focus
areas. Based on a financial policy that aims for a dividend payout ratio of over 40% as shareholder returns, we will also
consider flexible repurchasing of our shares.
As we move forward together, I would like to express my sincere appreciation for your continued support and guidance
for the KDDI Group.

18

KDDI Integrated Sustainability and Financial Report 2023

19

Introduction
CEO Message

VisionValue Creation Story

Material Issues

Governance

TCFD/TNFDThe Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Value Creation Story

The KDDI Group Mission Statement

Six Material Issues and Mid-Term
Sustainability Targets FY25.3 targets

The KDDI Group values and cares about the material and emotional well-being of
all its employees, and delivers a thrilling customer experience by always going further
than expected with the ultimate goal of achieving a truly connected society.

1. Promotion of Innovation Centered on
Telecommunications
Number of business strategy and R&D projects basedon Satellite Growth Strategy (cumulative total):
IoT connections (cumulative total):* Figures since the start of the service

The creation of a society in which anyone can make their dreams a reality,
by enhancing the power to connect.

OUTCOME• Building a resilient infrastructure forcommunication and disaster response

Transaction Volume of Settlement/Loan

Connecting Day-to-Day Lives

Connecting Hearts and Minds• Sustainable development for cities and• Creating a digital society for affluence andcommunities• Building the infrastructure for developing
countries• Developing human resources for the next
generation• Conserving the environment

44 million connections

2. Realization of Safe, Secure, andProsperous Society(cumulative total):

Connecting and Protecting Lives

60 casespeace of mind

• Promotion of diversity and inclusion• Fostering health and a purpose in life

16.3 trillion yen

3. Carbon NeutralKDDI’s carbon neutrality (Scope 1+2)
(KDDI non-consolidated): fiscal

2030

4. Strengthening the Group Management
Base Through Progressing Governance
Number of advanced security technology initiatives(cumulative total):

15 cases* Number of news releases and topics by KDDI (non-consolidated)
and KDDI Research, Inc.

Sustainability Management

5. Human Resources First

Working with partners to achieve sustainable growth in society and corporate value improvement.
Satellite Growth Strategy

Strengthening of Management Base

→ P16, 22

Maintain and improve employee engagement score(KDDI non-consolidated): maintain→ P85

72 or over

Ratio of female directors (KDDI non-consolidated):

20％ or over

BUSINESS/OUTPUT

Percentage of females in managerial positions

Strengthening
the group
managementbase throughprogressing
governance

Carbon neutral(KDDI non-consolidated):

15％ or over

* Calculated excluding incoming secondees and current secondees.
Personnel in managerial positions: Leaders who have personnel
evaluation authority and experts in specialized area.

6. Advancing Stakeholder Engagement

Human resources
firstFinancial Objectives FY23.3-FY25.3
ARPU revenue increase due to 5G
promotion (FY22.3 vs. FY25.3)
Business
growthINPUT

Human resources who

5G communication

possess both expertise

infrastructure andand well-roundedinnovative technology,

character

intellectual property→ P35, 97

20

Stable financial base

→ P139KDDI Group Philosophy→ P150Rich customer contacts
and partnerships→ P106

Profit growth infocus areas

100 billion yen
or moreCost efficiency

100 billion yen
targetFinancial
policy•P rioritize capital expenditures andstrategic business investments in 5G andfocus areas• Dividend payout ratio over 40%• Flexible share repurchases

EPS
growthContinue to aim for 1.5x growth versus
FY19.3

KDDI Integrated Sustainability and Financial Report 2023

21

VisionIntroduction
CEO Message

Value Creation Story

Material Issues

Governance

TCFD/TNFDThe Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Satellite Growth Strategy: 5G Communications
and Focus Areas

Operating income also grew steadily with a CAGR of +13.0% for the results of FY23.3 compared to FY19.3.
Our strength is that we can expand our business domain and ID by drawing on our existing telecommunications
business customer base. There is a customer case that the monthly usage fee increased by a factor of approximately 4.5
from 2010 to 2022 as a result of outsourcing operations using managed services in addition to using multiple
telecommunications services through various value propositions. We will continue to deepen our understanding of ourcustomers and provide telecommunications and additional value.

We have formulated and are promoting the “Satellite Growth Strategy” as a business strategy under the Mid-Term
Management Strategy (FY23.3-FY25.3). The strategy aims to advance the 5G-driven evolution of our telecommunications
business and the expansion of our business in focus areas with telecommunications at the core of our activities. We will
maximize the KDDI Group’s corporate value by promoting initiatives that enhance social value mainly in our focus areas.
Here, we will explain the main progress we have made up to FY23.3.

Finance
KDDI will promote the collaboration and cross-use of au Financial Holdings’ diverse
functions and services to increase customer engagement. In FY23.3, finance-related
value-added ARPU revenues grew steadily by 17.7% YOY.

5G Communications

In addition to the growth in operating income, au Financial Holdings’ customer
base is steadily expanding with settlement/loan transaction volumes reaching

The key to the success of the Satellite Growth Strategy is 5G communications. Together with

14.3 trillion yen, 8.6 million au PAY Card members, and 2.3 trillion yen held indiverse partners, KDDI aims for an age of new value emerging from the integration of

au Jibun Bank loan products balance. We aim to maximize the corporate

communications into every domain.
As of the end of FY23.3, the mobile telecommunications business has achieved

value of the KDDI Group by creating synergies resulting from leveraging

steady growth with multi-brand communications ARPU of 3,940 yen and 31.23 million

au’s customer base through the growth of our financial business.

IDs. As for communications ARPU, the composition ratio of UQ mobile rose as did au
unlimited usage plan subscriptions. ID exceeded the initial forecast due to strong

Synergy with au

momentum, especially for UQ mobile. The decline in YOY communications ARPU

Finance-related
value-added
ARPU revenues

revenues has been steadily decreasing and we aim to rebound in the first half of
FY24.3. We will continue to promote the attractiveness of 5G and unlimited

Growth of financial businessau Financial Holdings
Operating income

Transaction volumeof settlement/loan(Unit: Billions of yen)

14.3 trillion yen

FY23.3(YOY +22.9%)

usage plans, and further promote data usage through proposals tailored to meetcustomer needs to achieve further ARPU growth.
5G Penetration

YOY +17.7%

36.0

Multi-Brand communications ARPU revenues

19.4
11.7
FY22.3

FY23.3

FY21.3

FY22.3

FY23.3

Number of au PAY
Card members
8.6 million(YOY +1 million)

au Jibun Bank Loan
Products’ Balance
2.3 trillion yen(YOY +0.7 trillion yen)80%

5G 33.0%
FY22.3

LX (Life Transformation)
FY23.3

FY24.3

FY25.3

Goal: 80% by FY25.3

FY22.3

FY23.3

FY24.3

FY25.3

Plan to increase by FY25.3 versus FY22.3
Moreover, aiming faster rebound* Personal Services segment basis

αU

New technologies in the Web3 era

Web3 services in all dimensions focusing
on metaverse

Combining the strengths asa telecommunications carrier totransform the customer experience

DX

Cloud

High-definition immersive live
experience with cloud rendering

Network

Robust 5G network to support
the vast traffic of 3D

We will support our customers’ businesses by leveraging the diverse capabilities of the KDDI
Group, with 5G at our core, in “Corporate DX” to support workstyle reform and improvement ofbusiness productivity, “Business DX”

Operating revenue

to solve management and social
issues through the power of digitaltechnology, and “Business
Infrastructure Services” (data centers,

1,042.1
NEXT Core
335.0

1,109.7
394.0

contact centers, etc.) to facilitate
these services. In terms of theperformance of the Business Services
segment in FY23.3, NEXT Core led
operating revenue growth with anincrease of 17.6% YOY, each category
achieved double-digit YOY growth.

22

Operating income(Unit: Billions of yen)
Each category YOY
double-digit growth• Corporate DX
100 billion yen scale(Unit: Billions of yen)

CAGR +13.0%
187.1
167.5

• Business DX

150 billion yen scale• Business Infrastructure

Telecom
Services

FY22.3

199.4

IDConvenient and secure economic
zone achieved through the use of
distributed IDs and NFTs

“αU” (Alpha U) launched in March 2023. It provides comprehensive services for the Web3 era, including shopping,

149.0

markets, wallets, and live streaming centered on the metaverse. Additionally, αU is highly acclaimed, winning the most122.2

prestigious award in the MM Research Institute Awards 2023, Metaverse Field of Smart Solution Division. Going forward,

Services 150 billion
yen scale

FY23.3

MM Research Institute Awards 2023
Smart Solution Division, Metaverse Field(most prestigious award)

KDDI will continue to combine its strengths in cloud, network, and ID with the new technologies of the Web3 era to
FY19.3

FY20.3

FY21.3

FY22.3

FY23.3* In FY23.3, operating revenue excludes the impact of communications failure, while

operating income excludes impacts of fuel price hikes and communications failure.

transform the customer experience and create a prosperous future society.
In addition, we are developing services using drones and creating new experiences using Starlink through our satellite
telecommunications partnership with SpaceX.
KDDI Integrated Sustainability and Financial Report 2023

23

Introduction
CEO Message

VisionValue Creation Story

Material Issues

TCFD/TNFD

Governance

The Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

The Future
We Aim for by Enhancing
the “Power to Connect”
The “power to connect” is the key to solving a wide range of social
issues such as depopulation, digital divide, natural disasters, and labor
shortages due to declining birthrates and aging populations. As an
infrastructure company that supports the information infrastructure ofsociety, KDDI will strengthen the communication infrastructure that
supports “connections” and solve the social issues that surround us bycombining communication technology with cutting-edge technology.
We will work toward the sustainable development of society byenvisioning a future society in which everyone can realize their
aspirations.

FutureAll-Photonics Network,a next-generation communication
infrastructure supporting “connections”→P26

Flying car

Immersive entertainment

Remote medicine

Utilization of space

Enhancing the Power to Connect CASE 2

Future Society Where Robots andPeople Coexist → P29
Enhancing the Power to Connect CASE 1

Network “Connecting andProtecting Lives” → P28

Robotics

Satellite communication

Mobility

AI

Drone

24

Present

MetaverseKDDI Integrated Sustainability and Financial Report 2023

25

Introduction
CEO Message

VisionValue Creation Story

Material Issues

Governance

TCFD/TNFDThe Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Next-Generation Communication
Infrastructure Supporting“Connections”: All-Photonics Network
General Manager of Technology Strategy Division,
Technology Sector

KDDI’s Vision for the Network

Tomohiro Ohtani
Cyberspace

Virtual Services/Platforms

All-Photonics Network Achieving Both Digital Twin andCarbon Neutrality

Virtualization platform
technology enables the processingof huge amounts of dataand high added value

In the Beyond 5G era, where everything is connected by telecommunications, we believe that the “Digital Twin” will
Platform

become an important mechanism for society, linking physical space (real world) and cyberspace (virtual space)

Platform

capabilities to analyze the current situation and predict the future. It will bring about major changes in urban design,

Platform

personal lifestyles, and many other aspects.

All-Photonics Network

In a society where everything is connected by telecommunications, enormous amounts of data processing are
required. Recently, the volume of global data distribution (IP traffic) has increased dramatically, hence, the power

The All-Photonics Network enables
ultra-high-speed communication, lowcost, and low power
consumption

consumption of IT-related equipment for processing data has been on the rise accordingly. It is necessary, therefore, toimprove transmission capacity, enhance data processing ability, and reduce power consumption in order to achieve both
Digital Twin and carbon neutrality. An All-Photonics Network is an important key technology for solving this issue.

IT-Related Power Consumption Forecast
IP trafﬁc(ZB)
Approx.

Power consumption(Japan)(TWh)Approx.

Power consumption(overseas)

Devices(TWh)Approx.

4,300 times

4,300 times

4,300 times

20,200176,200

5,030,000

Communication seamlessly
integrates into various devices,leading to a dramatic increase indata traffic and power consumption

Physical space

Approx.

Approx.

36 times

4.7
2016

170

2030

41
2016
2050

accelerating the emergence of high-value and practical services and platforms that the world will demand in the future.

36 times

1,480

2030

The realization of an All-Photonics Network will serve as a catalyst for various Digital Twin society innovations,

Approx.

36 times

1,170
2016
2050

On the next page, our initiatives are introduced as specific examples of services and platforms that are created by

42,3002030

enhancing the “power to connect.”

If power consumption increases in proportion to IP traffic growth, it will be approx. 36 times higher in 2030, and approx. 4,300 times higher in 2050,
compared to 2016.
Source: 2022 White Paper Information and Communications in Japan (The Ministry of Internal Affairs and Communications)

In current network communication, signals are converted from optical to electrical and from electrical back to optical.

We want to shape the future together with people,
while empathizing with their aspirations

However, an all-photonic network achieves ultra-high speed, low cost, and low power consumption by transmitting signals in

KDDI has aimed to provide seamless communication to its customers as a mission of a telecommunications company.

their optical form without undergoing these conversions. Throughout our 60 years of research and development in undersea

Nevertheless, to offer even more pleasure, surprise, and inspiration, we must further evolve our communication services.

optical cables, we have cultivated three strengths in the field of optical communication. These strengths are long-distanceIn doing so, we believe that it’s important not only to focus on technological innovation but also to empathize with ourtransmission capable of spanning the Pacific Ocean, high-capacity transmission capable of handling the growing data traffic

customers. This involves understanding the desires and aspirations of various people, then combining new technologies

associated with Internet development, and a high reliability to withstand operation in the harsh environment of the seabedto smoothly present them with options. This is the company vision we strive for.

for many years. By leveraging these three strengths, we aim to establish a strong All-Photonics Network.

26

Message

2050

The definition of happiness has changed from in the past when everyone was seeking material wealth. Now, weFurthermore, in addition to advancing our in-house research and development efforts, we are promoting open

believe that realizing our aspirations according to our own values is what makes us happy. Communications can surely beinnovation in collaboration with worldwide partners, aiming for the standardization of transmission methods for All-of help for people in realizing their individual aspirations. We will continue to evolve the power to connect customers by

Photonics Networks and their application to mobile networks.

empathizing with them in all aspects of our business, communication platforms, and new services.

KDDI Integrated Sustainability and Financial Report 2023

27

Introduction
CEO Message

VisionValue Creation Story

Material Issues

TCFD/TNFD

Governance

The Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

E n h a n c i n g t h e Po w e r t o C o n n e c t C A S E 1

E n h a n c i n g t h e Po w e r t o C o n n e c t C A S E 2

Network for “Connecting and Protecting Lives”

Future Society Where Robots and People Coexist

Our business has progressed according to the desire to deliver communications anywhere, anytime on earth, and to

Japan’s working-age population (ages 15-64) peaked ineliminate disconnected locations. We believe that our mission is not just about connecting lines but also about

1995 and has continued to decline, with a projectedconnecting and protecting people’s lives with the “power to connect.”about 29% decline by 2050 compared to 2021.

Realization of “connecting more and always” with Starlink from space

remarkable population decline and aging, various issues

KDDI has been a key player in Japan’s satellite telecommunication services for over 60 years. In 2021, we partnered withare causing concern, such as labor shortages and the lackStarlink, SpaceX’s satellite telecommunication service, which is driving the next generation of space business. The

of leaders in the local economy and industry.

DeliveryPatrolling

Cleaning

Communication device

Communication device

Communication device

In rural areas especially, which have experienced

partnership has expanded the possibilities of communication more than ever, bringing us much closer to the realization ofa world in which communication is integrated into every aspect of our lives.
In the event of a large-scale disaster, communications are essential for emergency rescue calls, safety confirmation,

Robots are expected to be one of the solutions to
Robot platform

labor shortages. To enable robots to move freely and(map data, robot monitoring, controlling, coordination, resource
management, dialogue function, digital payment, image analysis, etc.)

perform services such as sales/delivery, patrolling, anddamage assessment, and support activities. Even if terrestrial lines are unavailable during a disaster, communication lines

cleaning, KDDI plans to link its robot platform with various

can be secured by using Starlink via satellite.

data gathered from security gates, elevators, andIn the Nakatsugawa area of Chichibu City, an au mobile communication

Control various robots via the platform

Link robots and building equipment via the platform

surveillance camera footage. By doing so, we aim toenvironment has been secured using Starlink, with supplies delivered by remoterealize services that could not be realized independently

autonomous drone flight. This initiative aims to provide livelihood support during theand to build an environment that can respond flexibly to

winter period to local residents in the Nakatsugawa area of Chichibu City, whereuser demand. We will also conduct a survey on thelogistics were disrupted by a landslide in September 2022. We have delivered up to

acceptability of robots to consumers through actual

4 kg of food, daily necessities, medicines, and other supplies multiple times bydemonstration experiments carried out in the city, anddrone to support the lives of local people.

deliver our services to society in a more desirable form.

Security gateMessage

Not only in disasters, but also in everyday life, there are life-threatening social issues to be avoided, such as accidents
drivers of bicycles, motorized vehicles, and automobiles when they approach the same intersection. This is a Digital Twin
initiative that uses information gathered from the physical space to make predictions in cyberspace, then feeds it backinto the physical space again.
With communication platforms, we can deliver a sense of security to people and protect their lives. We will continue
to strive to provide a communication environment that connects anytime, anywhere.


28

Automatic lock

 greement with Five Major ElevatorA
Manufacturers to Conduct Robot Platform
Connection Tests (Japanese only)

Efforts for “Connecting and protecting lives” in everyday life
involving cars and bicycles. KDDI has developed a function that uses smartphone location data to notify the respective

Elevator

In the Beyond 5G era, when you run out of milk in your refrigerator, you will not haveto run to the supermarket to buy some. Instead, a delivery robot will deliver it to yourdoor. Indeed, you may never run out of something in the first place.
By automatically connecting all things in society, various tasks can beaccomplished without human intervention. Robots will be good partners to provide
free time for people.

Preventing Accidents on Public Roads Using Smartphone Location Data (Japanese only)KDDI Integrated Sustainability and Financial Report 2023

29

Introduction
CEO Message

VisionValue Creation Story

Material Issues

TCFD/TNFD

Governance

The Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

CFO Message

Toward the Achievement of Carbon Neutrality → P71
We aim to make our business activities carbon neutral by fiscal 2030. In addition, we will endeavor to achieve net-zero CO2emissions for all TELEHOUSE brand data centers around the world by fiscal 2026, and for the entire KDDI Group by fiscal 2050.
We will also respond to the growth of 5G traffic by developing technologies for conserving energy. In addition to our

We aim to achieve together with our partners
a virtuous cycle of corporate value

improvement and sustainable growthin society through promoting our Satellite

3G suspension at the end of March 2022, we will also work on sharing infrastructure with competitors, adopting various
energy-saving technologies to reduce power consumption, and switching to renewable energy.
In addition, we started jointly operating sustainable base stations—which ensure independent power sources using
solar power generation and can supply all the electricity necessary for the operation of a single base station during the
day on sunny days—with au Energy & Life Inc. in May 2023. Furthermore, we will further accelerate our renewable energy
generation business through au Renewable Energy, Inc.—which started business in April 2023—to contribute toward
society’s carbon neutrality through business.

Growth Strategy and strengthening

the management base that supports it

Carbon Neutral Goal
Energy Conservation Efforts

Managing Executive Officer, CFO
Executive Director, Corporate Sector
Executive Officer of Sustainability

Energy Conservation Efforts

Switching to Renewable Energy

Obtained SBT certification by KDDI
Group (February 2022)

Nanae Saishoji

3G Suspension➡ 5G Transition

Base Station Sleep

Efficient 5G area
construction

Power consumption control
using analysis of traffic change

Equipment Sharing

Submerged Liquid Coolingfor Data Centers

Promotion of
infrastructure sharing

Reduced power consumption
by technology

Acceleration

Data centerscarbon neutral*KDDI(non-consolidated)carbon neutral

KDDI Group
carbon neutral

Fiscal 2026

Fiscal 2030

Fiscal 2050

* The term “data center” refers to data centers owned by the KDDI Group, excluding
facilities or parts of facilities rented from other companies to provide services.

Enhancement of Group Governance Necessary for Promoting
the Satellite Growth Strategy → P85
As we welcome more group companies and diversify our businesses through the promotion of the Satellite Growth
Strategy, we are also strengthening the KDDI Group’s risk management and information security systems. Specifically, toManagement Strategy with Sustainability Management at the Core → P44

achieve synergy and growth for the entire group, by expanding the common infrastructure through shared services andestablishing a system for training and supporting CFO human resources, we will strengthen our risk management
system. Additionally, we will further enhance information security to support business growth by upgrading a privacy

There is a growing interest in ESG initiatives in the stock market. With Sustainability Management at the core, KDDI aims
to achieve together with our partners a virtuous cycle of corporate value improvement and sustainable growth in society.

governance system for inter-group data connections.
The KDDI Group established the “KDDI Group Human Rights Policy,” recognizing that all business activities are based

In the past, we have honed our non-financial initiatives, including the provision of a resilient telecommunications

on respect for human rights. To further accelerate our efforts to fulfill our responsibility to respect for human rights, we

environment through our disaster countermeasures and the human resource development through activities for therevised the KDDI Group Human Rights Policy in October 2022.

penetration of KDDI Group Philosophy within the company. When formulating our Mid-Term Management Strategy, we
selected six material issues based on topics of interest for multi-stakeholders including long-term investors, our vision, andthe impact on our business. They incorporate aspects such as the promotion of innovation required for our business

Increase in the number of group companies and diversification of businesses
in line with the promotion of the Satellite Growth Strategy

transformation, enhancement of human resources and governance in step with the diversification of our businesses, andresponse to the international society’s growing concerns about climate change and other issues.
At the same time, we have defined for each materiality the “Eight values we embrace,” the different types of values weStrengthen risk management for the entire KDDI groupneed to provide to society. We have also set a total of 25 mid-term sustainability targets (KPIs) to work toward for therespective values to be provided.
As interest in ESG rises, so do expectations for the visualization of capital expenditures and non-financial capital.
Therefore, we will step up our efforts to disclose information closely related to our long-term strategy. Please also keep an
eye on the initiatives for strengthening of management base needed to promote the Satellite Growth Strategy as well as

Expand common
infrastructure
throughshared services

Strengthening
the training andsupport systems
for CFO humanresources

Strengthen
information
security system

our mid-term sustainability targets.

30

KDDI Integrated Sustainability and Financial Report 2023

31

Introduction
CEO Message

VisionValue Creation Story

Material Issues

Governance

TCFD/TNFDThe Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Accelerating Growth in Focus Areas alongside Human Resources First→ P97

Transformation into a Company
that Puts Human Resources FirstThe KDDI Group emphasizes human resources, and it is statedin the KDDI Group Mission Statement that the Group “values
and cares about the material and emotional well-being of all its
employees.” In the future, the specialty of each person will
become important, and the development of human resources

A company that regards human resources as important
capital and places their development and strengthening at
the core of management

who can play active roles both within and outside the company

Promote unified three-part reform

is also an important initiative for our sustainable growth.

First Company” that places the development andwe will undertake investment in growth keeping in mind the improvement of capital efficiency for the KDDI Group as awhole.
Regarding the EPS growth target stated in the Mid-Term Management Strategy, there are issues such as the reductionof telecommunications fees and the impact of high fuel prices. However, we will continue with the pursuit of EPS growth
as it is an important vector for both business growth and enhancement of shareholder returns. In May 2023, to show ourmanagement’s direction, we also enhanced shareholder returns through increasing dividends by five yen as well as
establishing an upper limit of 300 billion yen for further repurchase of our own shares.
Furthermore, in October 2022, we issued KDDI Tsunagu Chikara Bonds (unsecured straight bonds), KDDI’s firstwe will continue to promote projects that address social issues and protect the environment, and effectively raise funds in

Penetration of
new personnel
systemWith the aim of transforming KDDI into a “Human Resources

investment of 700 billion yen, we will focus on projects that will lead to business growth in the future. At the same time,sustainability bonds to deploy funds for projects that address social issues and protect the environment. Going forward,

1

We consider human resources to be our greatest resource.

strategic business investments, for a total investment of around 2 trillion yen. In particular, for the strategic businessline with Sustainability Management.

Cash Allocation Policy

enhancement of human resources at the core of its
2
Developmentof professional
human resources
through KDDI
Version Job Style
Personnel
Systemmanagement, KDDI is promoting the unified three-part reform
initiatives of “Penetration of new personnel system”,“Development of professional human resources through KDDI
Version Job Style Personnel System”, and “Enhancement of
employees’ engagement”. Moreover, we have defined our

sophisticated professionals and cultivate a culture that1

Enhancement of
employees’
engagement

Operating CF (excluding Financial Business) 5 trillion yen scale in mid-term
Business
growthCapex 5G and Focus areas

Strategic Business Investment

1.3 trillion yen scale in mid-term

and internal side jobs

700 billion yen scale in mid-term

Shareholder returns, etc.
• Dividend payout ratio over 40%

innovation and contribute to the sustainable growth in society.
2

human resources ratio in all specialized fields to at least 30%

Business
growth• Building a HR portfolio linked to business strategy• Promoting career autonomy using open recruitments• Penetration of DE＆I

embraces challenges so that we can further produce
As a specific target, we will work to raise the professional

Continue to strengthen investment in growth and shareholder returns for sustainable growth(Equivalent to approximately 70% of total consolidated Capex)

transformation into a company that puts human resources firstas a materiality. We will leverage a diverse pool of3• Implementation of DX basic skills training for all

employees• Expansion of training programs at KDDI DX University

• Conduct share repurchases in a flexible manner

1.5 trillion yen scale in mid-term

by FY25.3. Also, by enhancement of all employees’ DX skills
and training of DX professionals through the use of KDDI DX
University, and expansion of DX basic skills acquisition to KDDI

3

• Division-led work style redesign• Promotion of data-driven engagement improvement

Group, we will shift DX professionals to the focus areas.

The optimization of expenditure related to telecommunications facilities from the 3G suspension in March 2022 achieved

Human Resource Developmenta cost structure reform of approximately 50 billion yen. We will continue to undertake technological cost structure

Maximizing organizational strengths to drive business strategy centered on DX

全専門領域で

プロ人財比率30％
In all specialized fields
Professional human resources ratio 30%(FY25.3 targets)reforms through the promotion of infrastructure sharing, use of advanced technologies, and such, as well as revenue
structure reforms for selling costs. Through these efforts, we will promote cost structure reforms in the scale of 100 billion*※

プロフェッショナル人財Professional Human Resources
KDDI版ジョブ型人事制度の浸透
Penetration of KDDI Version Job Style Personnel System

Cost Structure Reform

yen in the mid-term (FY23.3 to FY25.3). Going forward, based on the KDDI Group Philosophy, we will continue to practice

DX人財DX Human Resources
DX基礎スキル習得
DX basic skill acquisition“Maximizing revenues, minimizing expenses” as well as adhere to lean and mean management.

全社員 11,000人超

All employees over 11,000

KDDIグループへ拡大

注力領域への要員シフト

Expand to KDDI Group(FY25.3 targets)

Shifting personnel into focus areas* In-house human resources development organization launched in 2020

Cash Allocation and Shareholder Returns
We will continue strengthening our investment in growth and shareholder returns to support our sustainable growth. We

Today’s corporate management is exposed to a variety of risks that are
difficult to predict, such as the unstable situation overseas, high fuelprices, and sudden fluctuations of exchange rates. Even in such anenvironment, KDDI will promote various types of initiatives seeking
financial growth in both aspects of revenue and profit. We will therefore
undertake the strengthening of management base that balances agile
forecasts and resilient preparations. Through the practice ofSustainability Management based on the KDDI Group Philosophy, we
will also improve our non-financial value and contribute toward theenhancement of corporate value and sustainable growth in society.
As we carry out the Mid-Term Management Strategy, we will guideour decisions and actions with the valuable insights we gain from
dialogue with our shareholders and investors.

will also work to attain operating cash flow (excluding financial business) of 5 trillion yen scale over the mid-term. The
operating cash generated will be preferentially allocated to capital expenditures in 5G and focus areas, as well as

32KDDI Integrated Sustainability and Financial Report 2023

33

Introduction
CEO Message

VisionValue Creation Story

Material Issues

Governance

TCFD/TNFDThe Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Human Capital Supporting“Connecting”

Executive Officer
General Manager,
Human Resources DivisionCorporate Sector

In a society where telecommunication is becoming integrated into every scene, for KDDI to

Naoto Hishidacreate new value by combining telecommunications with various industries, it is importantto evolve the organizations and people both within and outside the KDDI Group, as well as
the diversity that emerges from them, by enhancing the “power to connect.” We asked Mr.
Hishida, the General Manager of Human Resources Division, about the concept of becoming a“Human Resources First Company” for the KDDI VISION 2030.

History with Diversity

KDDI Group Philosophy Connecting Hearts and Minds of Employees → P10

At the core of KDDI, which has continuously created services that deliver not just surprise but also inspiration to its

The KDDI Group Mission Statement is “to care about the material and emotionalcustomers, diversity has always been present. In the year 2000, prior to the launch of next-generation mobile phonewell-being of all its employees.” While management resources are said to be people,

services, DDI, KDD, and IDO came together to establish KDDI. Under the banner of “Becoming a comprehensive

goods, and money, “people” and moreover “the hearts and minds of people” arecommunication carrier to rival NTT,” these three companies, each with distinct organizational cultures, brought together aimportant. The KDDI Group Philosophy clearly states what the company exists for,diverse array of talents from various backgrounds, values, and individualities. Through subsequent integrations withwhat its employees aim for, and what the standards are for their actions. I believe

companies possessing various organizational cultures, we come a long way.

that this is what it means to be a Human Resources First Company. Through the

In a diverse environment, our company has consistently transformed diversity into the “Power of the Organization.” The

KDDI Group Philosophy, we have encouraged heart-to-heart communication among

introduction of groundbreaking web services like “Chaku-uta” and “LISMO,” along with the development of design-oriented

diverse human resources and built deep relationships of trust. By thoroughly thinking

mobile phones such as “INFOBAR,” were made possible by the exchange of differing opinions and outstanding skills

what is useful for the world and for people, and by elevating our minds, we haveamong individuals with various specialties.

aligned our direction and enhanced our centripetal force.

Currently, through investments in startup companies and collaborations with partner companies, KDDI is accelerating

I believe that we should continue to keep the KDDI Group Philosophy at the core

open innovation and evolving diversity, while incorporating the individuality and expertise of the human capital involved inof our operations and further pursue becoming a “Human Resources First Company”.

KDDI. These success factors can be attributed to the KDDI Group Philosophy, which has helped align the vectors of theobjectives and actions of diverse human resources and enhance their centripetal force.
■

DDI
KDD

October 2000
Establishedthrough themerger of 3
companies

IDO
Mobile communications
Mobile phone/high-speed data
communication
Fixed-line communications
FTTH/cable TV/fixed-line
telephone34

Merged in
October 2001■

au

Merged in
October 2005

■

Tu-Ka

Merged inJanuary 2006■

Integrated in
January 2007

Fixed-line■

MobileFurther Pursuit of Becoming a Human Resources First Company for the KDDI VISION 2030
Design-oriented
mobile phone
INFOBAR

POWEREDCOM
Optical Fiber Business of Tokyo
Electric Power Company■

Became a consolidated
subsidiary in June 2007■

JAPAN CABLENET

Established inAugust 2007■

UQ Communications

Became a consolidated
subsidiary in April 2008

■Consolidated in April 2013■

CHUBU TELECOMMUNICATIONSJCOMCorporate Credo “Elevate Our Minds” “Asking
ourselves if our motives are righteous or selfish”

As the business environment changes drastically and the Satellite Growth Strategy to expand business areas such as DX,
finance, and energy is promoted, it is necessary to acquire human resources with more diverse expertise than ever before,
and create innovations leading to the advancement of business and organizational functions through the mixing of thesehuman resources.
However, it is also true that as a result of achieving stable growth, KDDI has diminished the spirit of challenge that it
possessed when it was first established and during its period of rapid growth. In a rapidly changing business environment,

Merged
in
April
2014

every employee must continue to take on challenges and grow while considering the promotion of the Satellite GrowthBusiness co-creation platform to support
startups, KDDI ∞ Labo

Strategy as their own job, and accelerate innovation, and pursuing new areas. This is why we are committed to further
pursuing our goal of becoming a Human Resources First Company for the KDDI VISION 2030.

KDDI Integrated Sustainability and Financial Report 2023

35

Introduction
CEO Message

VisionValue Creation Story

Material Issues

TCFD/TNFD

Governance

The Future We Aim for by Enhancing the “Power to Connect”

Data

CFO Message

Human Capital Supporting “Connecting”

Realization of a Sustainable Human Resources Portfolio

Future Prospects for Further Pursuit of Becoming a Human Resources First Company

To realize the further pursuit of becoming a Human Resources First Company, it is important for independent professional

The KDDI Version Job Style Personnel System, which was introduced to develop professional human resources who

human resources with expertise to continue to take on challenges and grow. In the KDDI Group, which covers a wide

continue to take on challenges and grow, has a significant transformation for employees, and we recognize that there arevariety of business domains, they find places where they can demonstrate their individuality and abilities, and take on

issues in penetrating the system. For example, in order to become a professional human resource, employees must

challenges while developing their skills and taking on higher-level challenges. Such higher-level challenges require thevoluntarily find their own area of expertise and hone their skills, yet we believe that career autonomy is not easilycollective knowledge of human resources from several different fields of expertise. As a result of the mutual recognition

promoted simply by changing the system. One of the solutions to the issues is to actively use and experience the system.

and enhancement of professional human resources in each area, we will achieve a sustainable human resources portfolio

To solve the issues, we will work to foster a culture that encourages each employee to take on challenges and growthat will continue to produce professional human resources throughout the Group.

through career training and in-house counseling.
While there is uncertainty about major system changes, here are some examples of employees who have taken steps

Enhancing of the Power to Connect Society

to enhance their expertise and skills and develop their careers through voluntary in-house side jobs, open recruitment,

Realizing the life satisfaction reform for KDDI Group employees through enhancing
the power to connect

and the KDDI DX University (KDU). → P97

KDU encourages challenges in new areas and career development
Sustainable Human Resources Portfolio

Partnercompanies
Building a humanresources pipeline
beyond the KDDI Group

Developing professional
human resources
to support businessstrategies throughout
the Group

The KDDIGroup
Philosophy

Repeating the cycle offurther challenge andgrowth by professional
human resources

Customers
Delivering excitement
beyond surpriseBusiness transformation and value creation via the
combination of special skills, characteristics, andother personalities

Labor market
Attracting diverse human resources andenhancing the power of human resources

Achievingsustainable
A platformer supporting society
organizational
growthFurther pursuit of becoming a Human Resources First Company

Human Capital, the Driving Force behind the Power to Connect Society
Maintaining and improving the physical and mental health of employees is important. In the age of work-as-life where theboundary between work and life is disappearing, “improving wellbeing through life satisfaction reform” together with work
style and job satisfaction are important elements that we will pursue as a Human Resources First Company. Whenconsidering the pursuit of happiness for all employees, it is important to emphasize not only job satisfaction but also life
satisfaction. When discussing with employees “When do you feel happiness?” they shared that they feel happiness when
they receive gratitude from others, when they positively influence people or society, and when they experience a sense of
personal growth. KDDI employees have a very strong desire to do something useful for society. I believe that such a desireis the driving force behind the “power to connect” lives, day-to-day lives, and hearts and minds. By pursuing life
satisfaction for its employees, KDDI will become an even more attractive company that increases engagement with its
customers, partners, and the labor market, continuing to be loved and trusted by them.

36

I had previously focused on developing my skills specializing in IoT, but arecommendation from the head of the division I was in at the time inspired me
to embark on a new career, learning business skills and general DX skills at KDU.
Before attending KDU, I had no experience in learning business skills, soevery single lecture taught me something new, from basic knowledge such as
how to think about things and reporting to applied knowledge such as businessstrategy. I am now engaged in planning and customer proposals to expand salesof IoT service platforms, and actively involved in tasks ranging from market andenvironmental trend research to target selection and promotion of proposals. I
feel that I have grown through learning at KDU.
As Japan faces an aging society with a declining birthrate, our next step is to
grow on a global scale. I hope to work in such a way that I can think about whatkind of businesses exist as global DX, what issues each country faces, and what
KDDI can do to address these issues, using the knowledge I learned at KDU
combined with the knowledge I will learn on my own in the future.

KDDI DX
University

KDDI

Mobility Business
Development Department,
Connected Business Division

Daisuke Sasaki

Turn my desire into my job by finding aptitudes througha side job and open recruitment
I learned about gender as a student, and when I was looking for a job, cameacross KDDI’s advanced LGBTQ+ support efforts and became interested inKDDI’s human resources work before I joined the Company. I gained five years ofwork experience in the Customer Service Division to which I was assigned,
where I was exposed to the work styles and career perspectives of women of allages. This experience further strengthened my desire to promote the free andautonomous career development of women working at KDDI, so I took a side
job in the Human Resources Division then was transferred to the Human
Resources Planning Department through open recruitment.
Before participating in the side job program, I was worried about changing
jobs, but the experience of having a side job gave me confidence in the strengthof my desire and allowed me to boldly take on the challenge of open
recruitment. At the time of application, I believe I was able to clearly explain mydesire to work in the human resources field, for which I have deepened myunderstanding through my side job.
The in-house side job program is a system that allows individual employees totake on challenges without hesitation, and I hope that more employees will takeadvantage of this system. After transferring to the Human Resources Planning
Department, I broadened my perspective on the system and learned that it is amechanism for passing on the skills of personnel with expertise and for improving
organizational operational efficiency. I think we need to promote this system sothat more people will want to utilize it, not only from the perspective of individual
employees, but also from the perspective of the organization itself.

KDDI

In-houseside job

Publicoffering

Human Resources Planning
Department,
Human Resources Division

Nanami Nakajima

KDDI Integrated Sustainability and Financial Report 2023

37

Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Materiality
Creating Business Opportunities Based on Social Issues
Contributing to solving social issues through our businessWe will contribute to solving
environmental and social issues withthe “power to connect” and actively
promote communication
with stakeholders.

by enhancing the “power to connect”
As the global shift towards a decarbonized society, the KDDI Group is also aiming to achieve net-zero CO2 emissions in its
business activities. Furthermore, we are actively promoting initiatives that will lead to carbon neutrality throughout society.
au Energy Holdings, a member of the KDDI Group, established au Renewable Energy and launched a renewable energy
generation business centered on solar power generation. The company will contribute to the shift to a renewable energycentered society that realizes a stable energy supply. KDDI has also launched “Green Mobile” for corporate customers.
This service uses renewable energy sources to generate electricity for the telecommunication services provided tocustomers. → P75
We also believe that KDDI’s strength, the “power to connect,” is the key to shaping a better future as an enabler,
supporting society’s information infrastructure and helping to solve the social issues facing us. Our telecommunications→ P4

General Manager,
Sustainability Management DivisionCorporate Sector

based innovations will contribute to solving all kinds of environmental and social issues.

Kazuyasu Yamashita

survey using a waterborne drone, considering the importance of restoring the seaweed beds, which are the marine

For example, the marine environment is changing drastically due to climate change, etc. In the fishery industry, thecatch continues to decline along with the decrease in fishery resources and seaweed beds. We therefore conducted aforests below the sea surface, from the viewpoint of preserving and restoring the fishing environment. → P55
In addition to the above, we are actively working to solve issues in the fishing and agriculture industries through theuse of IoT technology throughout Japan. To address the issue of the heavy workload on fishery and agricultural workers,
our assets are used to improve work efficiency, reduce costs, stabilize yields, and improve quality. Visualizing the qualityof work that has been covered by the experience and intuition of workers as data, reproducing it in a digital space, andMessage from the General Manager of
the Sustainability Management Divisionpresenting solutions can lead to greater employment opportunities for inexperienced workers and young people.
As a telecommunications carrier, KDDI’s mission is to connect people. This means connecting people’s lives, day-today lives, and hearts and minds. We will strive for a world where new value is created and social issues are solved byenhancing the power to connect and integrating communications into every aspect of our lives.

KDDI Green Partners Fund

Promotion of Sustainability Management

We will contribute to enhance the sustainability of society by aiming
to achieve the following three goals with respect to the global
environment: carbon neutrality for society as a whole, preservation of
biodiversity, and realization of a recycling-oriented society.

Creating business opportunities based on social issues and further promoting

One of the major driving forces for achieving these goals iscommunication with stakeholders

innovation through co-creation that transcends corporate andIn the pursuit of sustainability management, we have set forth two vital roles for the Company.

companies that are actively working to solve environmental issues, we will further expand our impact on society by

The first role entails committing to perpetuating a cycle that identifies business opportunities based on environmentalorganizational frameworks. Through partnering with startup
integrating the technologies of KDDI and its partners and creating synergies.

and social issues, and then seeking to resolve these issues through these opportunities. We will solve environmental andIn 2021, KDDI, together with SBI Investment Co., Ltd. established the KDDI Green Partners Fund to invest in startup

social issues through our business, such as addressing climate change, preserving ecosystems, transitioning to a recycling-

companies that address environmental issues. The fund has provided funding to six companies (as of September 2023),

oriented society, bridging the regional divide, and realizing a sustainable infrastructure environment. Leveraging ouras well as business support and joint demonstrations utilizing various assets of KDDI. To further accelerate ourinherent “power to connect,” we aim to become a leading sustainability management company that contributes tocontribution to solving environmental issues, we will continue to invest in and support startup companies with superior

sustainable growth in society and corporate value improvement together with our partners by utilizing various assets suchtechnologies and services. → P76

as DX and IoT.
The second is to promote communication with stakeholders. Initially, we will ensure comprehensive information
dissemination to facilitate their comprehension of our financial and non-financial initiatives. Additionally, by engaging inthoughtful dialogue with our multistakeholders, we will correctly understand the issues we need to address and the
expectations they have of us, which will lead to stronger sustainability management initiatives.

38

KDDI Integrated Sustainability and Financial Report 2023

39

Introduction
Materiality

Materiality1

Material Issues

VisionMateriality2

Materiality3

TCFD/TNFD

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Issuing sustainability bonds → P110
We also need a mechanism to financially support the promotion ofsustainability activities. KDDI created its Sustainability Finance Framework that

Actively Driving Information Disclosure andCommunication with Stakeholders

limits the use of funds to projects that help solve social issues and preserve
the global environment, and issued KDDI Tsunagu Chikara Bonds, KDDI’s firstsustainability bonds. They correspond to SDGs bonds, in which procured

Promoting communication with stakeholders and information disclosure

funds are allocated to projects that contribute to solving environmental andWe focus on proactive information disclosure to communicate our sustainability efforts to our stakeholders. We wouldsocial issues.

also like to contribute to solving social issues not only by our own company but also together with our stakeholders. In

As a specific use of KDDI Tsunagu Chikara Bonds totaling 100 billion yen, KDDI will contribute to the government’s

addition to the statutory disclosure of sustainability information in our Annual Securities Report, we are actively“Vision for a Digital Garden City Nation” initiative by constructing 5G areas. Moreover, we will continue to implement

communicating our current status and perspectives on all aspects of ESG through the KDDI Integrated Sustainability andvarious projects to promote power saving and the use of renewable energy in mobile phone base stations andFinancial Report, our website (including Sustainability News), and via various media outlets.

telecommunication facilities.

We are also actively engaged in dialogue with our stakeholders, and in particular, continuously focus on discussions
with experts on the themes of the environment and human rights. Through such information disclosure and■ Outline of the bonds

communication, we will strive to improve our activities and create opportunities to address our issues and expectations
from outside the Company, and to be a company trusted and chosen by our stakeholders.

NameKDDI Corporation 30th Unsecured Bond
(with inter-bond pari passu clause special clause)(Sustainability Bond)

KDDI Corporation 31st Unsecured Bond
(with inter-bond pari passu clause special clause)(Sustainability Bond)

Term of issue

3 years

5 years

Total amount of issue

100 billion yen in total

Recognizing the significance of investor communication, we have established an Investor Relations Department within theIssue date

October 27, 2022

information to investors and receive valuable feedback from them.

Structuring agent

Daiwa Securities Co., Ltd.

Lead managing

Daiwa Securities Co., Ltd.; Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.;

solely from financial or non-financial information. This is reflected in the improvement of business activities, information

underwriters

Mizuho Securities Co., Ltd.; Nomura Securities Co., Ltd.

disclosure, etc., and leads to enhanced communication with investors. In FY22.3, we conducted a trial correlation analysis

Enhancing IR activities and taking on the challenge of new initiatives
Sustainability Management Division. We ensure the meticulous conveyance of our integrated financial and non-financial
We have also taken on the challenge of analyzing and visualizing the relationship between our non-financial activities
and corporate value. This has allowed us to deepen our understanding of important activities that could not be readof non-financial data and PBR (Price to Book Ratio), mainly for the purpose of enhancing ESG information disclosure, by
utilizing Digital ESG Analytics provided by ABeam Consulting Ltd. In FY23.3, we conducted a more in-depth quantitative

Providing employees with the opportunity for business development throughthe internal penetration of sustainability

analysis, including cause-and-effect relationships, by utilizing a model of “AI Powered Enterprise Value Cockpit” by
Accenture Japan Ltd. By including the effects of latent variables such as shareholder evaluation and company size, we
visualized the relation between non-financial data and market capitalization, including causal relations. → P110

To implement sustainability management and have a positive impact on society, it is important for each employee todeepen his or her understanding of sustainability and to think autonomously about how to create businesses that
address social issues.
For example, within the assessment criteria for the President’s Award, an internal award system, a sustainability
element is considered mandatory.
Additionally, we conduct workshops focused on sustainability management to provide employees with simulation
study opportunities for business development based on solutions to social and environmental issues. Other efforts tocreate such opportunities include planning sustainability workshops for employees from a wide variety of divisions andlaunching an internal community focused on discussing sustainability. → P46

The CDP, an international environmental non-governmental organization(NGO), has evaluated our efforts to address climate change, and wewere recognized for the first time as a “Climate Change A-List”
company, the highest rating for an environmentally advanced company.
→ P78

We are also a member of RE100, an international initiative thataims to use 100% renewable energy. In addition, KDDI’s efforts tobecome a Human Resources First Company, including the introductionof KDDI Version Job Style Personnel System, received the top award for
HR Transformation (HRX) of The Year 2022.

→ P35

We will continue to work even harder to solve social issues throughour business and ensure thorough information disclosure andcommunication.

40

KDDI Integrated Sustainability and Financial Report 2023

41

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Six Material Issues

Materiality

1

We have mapped and summarized the issues to be addressed in the Mid-Term Management Strategy based on the

Promotion of Innovation Centered on Telecommunications
Values We Embrace (1)	Through Satellite Growth Strategy centered on communications, promote innovation that customers can experiencein their daily lives and create a future society.

(2)	Realize a sustainable industrial/infrastructure environment by providing innovative solutions for communications andother social infrastructure/connected vehicles.

concerns of long-term investors and other multi-stakeholder groups and their impact on our business. We are promoting
innovation necessary for our business transformation, strengthening human resources and governance in line with theMateriality

diversification of our business, and responding to the growing awareness of issues in the international community, such as

2climate change.

Realization of Safe, Secure, and Prosperous Society
Values We Embrace (3)	Realize regional co-creation by connecting people and regions together with DX centered on communication andsolving information gaps and regional issues.

(4)	Eliminate regional and economic disparities by contributing to local economic development through the maintaining
and expanding of communications and peripheral services in emerging overseas countries.

Six Material Issues
Materiality

6 Advancing stakeholder engagement
1

2

3

4

5

Promotion of innovation
centered on
telecommunications

Realization of safe,
secure, andprosperous society

CarbonneutralStrengthening the groupmanagement base throughprogressing governanceHuman
resources
first

3

(1)

Molding
future society(2)
Realization ofsustainableindustrial/
infrastructure
environment(3)

Regional
co-creation(4)
Eliminating
regional andeconomic
disparities
globally(5)“Aggressive” Satellite Growth Strategy

Carbonneutral(6)(7)
Strengthening
Respect forthe management
human
infrastructure ofrightsthe entire
KDDI Group

Values We Embrace (5)	In addition to achieving carbon neutrality in fiscal 2030*, we will provide customers with renewable electricity andcontribute to solving the global climate change problem.

* Scope 1+2

Materiality

4

Eight Values We Embrace(8)
Advancement ofprofessional
human resourcesand engagement
improvement

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (6)	Create social and environmental value by establishing a strong management infrastructure through the strengtheningof governance in the entire KDDI Group.

(7)	Respect human rights in all business activities, eradicate human rights violations in the supply chain, and contribute to
the sustainable growth in society.

Materiality

5“Defensive” Strengthening of Management

Carbon Neutral

Human Resources First
Values We Embrace (8)	Create innovation and contribute to the sustainable growth in society by fostering a corporate culture that encourages
the active participation of diverse and professional talent while also providing a challenge.

Materiality

6

Mid-term sustainability targets (FY23.3-FY25.3)

Process for Identifying Material Issues

Advancing Stakeholder Engagement■ Matrix of Material Issues

Materiality 1 Promotion of Innovation Centered on Telecommunications

1-1 Through Satellite Growth Strategy centered on communications, promote innova-

More important

Management Strategy (FY23.3-FY25.3) in the following process.

2. Priorities are set by scoring the “concerns of long-term investors and other multi-stakeholder groups(vertical axis)” and the “business impact (horizontal axis).”3. Identify six material issues that reflect the opinions of external experts collected through interviews.
4. The Sustainability Committee and the Board of Directors deliberate on the appropriateness of the
proposal and finalize it.

Concerns of long-term investors andother multi-stakeholder groups

1. Identify key issues based on the GRI requirements, international guidelines for sustainability information
disclosure, and the requirements of ESG assessment for the information technology and telecommunications industry.

External
perspectiveKDDI has revised the Material Issues related to sustainability in conjunction with the establishment of its Mid-Term

Important

4-2
4-3

tion that customers can experience in their daily lives and create a future society.
Materiality 2 Realization of Safe, Secure, and Prosperous Society

4-1

4-4

1-1

2-1 Leverage technological innovation to provide resilient infrastructure, realize

6-1

2-2 Eliminate the digital divide by creating new value through DX.

2-1
5-2
4-5

5-1
3-2

3-1

4-6
4-7

2-2

5-3

Materiality 3 Carbon Neutral

3-1 Achieve the sustainable growth in society by promoting decarbonization andleaving a prosperous planet for the future.

3-2 Achieve carbon neutrality in the KDDI group by fiscal 2050.
Materiality 4 Strengthening the Group Management Base Through Progressing Governance

4-1 Ensuring customer privacy by building up strong data security.
4-2 Engage in thorough risk management.
4-3 Develop an effective and transparent governance structure.
4-4 Engage in thorough compliance.
4-5 Respect for human rights.
4-6 Engage in fair and proactive information disclosure.
4-7 Promotion of sustainable procurement
Materiality 5 Human Resources First

Business impact

More importantKDDI’s intention

42

economic development, and a safe and secure society.

5-1 P ursue the well-being of our employees and promotion of diversity and inclusion.
5-2 Promote human resource development and career development.
5-3 Initiatives for health and productivity management.
Materiality 6 Advancing Stakeholder Engagement

6-1 Build strong relationships with all stakeholders, including employees,
customers, distributors, suppliers, and shareholders.
KDDI Integrated Sustainability and Financial Report 2023

43

Introduction
Materiality

Materiality1

Material Issues

VisionMateriality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Mid-Term Sustainability Targets (FY23.3-FY25.3)
Some changes have been made to the Mid-Term Sustainability Targets (FY23.3-FY25.3). The results for the FY23.3 arebased on the indicators before the change.
Materiality

who have personnel evaluation authority and experts in specialized areas. The percentage is as of April 1st, 2023.

Values We Embrace(1) Molding future society
Materiality

1

→ P48

Promotion of Innovation
Centered on
Telecommunications*1 Reference data for outside the Mid-Term Sustainability Targets period.
*2 Revised in line with changes in the business environment, social trends, business expansion, etc.
*3 Number since the start of the service.
*4 Expanded the scope to include more than just telecommunications equipment, and reorganized definitions.
*5 Cases that require reporting or notification to the competent authorities and cause severe reputational damage.
*6 Number of news releases and topics by KDDI (non-consolidated) and KDDI Research, Inc.
*7 Clarified specific initiatives as indicators to ensure respect for human rights.
*8 Top 90% of KDDI Group procurement businesses and suppliers with known human rights risks are covered.
*9 This number does not include employees who have temporarily transferred to KDDI and other companies. Personnel in managerial positions: leaders
Mid-Term Sustainability Targets (FY23.3-FY25.3)

Details of implementation

Index

FY22.3 results*1

FY23.3 results

FY25.3 targets

Promoting business creations and R&D projects based on Satellite
Growth Strategy

Number of projects (Mid-Term cumulative total)

21

20

60

Providing LX Services in collaboration with local governments*2
Promoting innovation to strengthen intellectual capital
Contribution to industry/infrastructure DX(2) Realization of sustainableindustrial/infrastructure
environment→ P52

Promoting customer workstyle reform
Expand 5G coverage

Expansion of LX Service provision areas and number of facilities*2
Number of patents held in 5G/Beyond 5G + Satellite Growth-related areas—

Year on year
grew 28%

Year on year
grew 20%

IoT connections*3

24.5 million
connections

32.4 million
connections

44 million
connections

Percentage of KDDI customers (corporate customers) deploying zero-trust solutions

—

7%

35%

0

2

0

5.7 million

5.67 million

15 million

11.7 trillion yen

14.3 trillion yen

16.3 trillion yen

5G population coverage governmental target 95% by FY24.3
Number of serious incidents (equipment failures)*4

Eradication of major incident* Based on the Ministry of Internal Affairs and Communications’ incident reporting guidelines etc.
Number of people supported (Mid-Term cumulative total)* Services such as smartphone classes, in-store support, usage support, on-demand

Solving disparity in regions
Materiality

2

Development of regional experience support services

Realization of Safe,→ P61

Secure, and Prosperous
Society

Materiality(4) Eliminating regional andeconomic disparities→ P67
globally3

Expand global business in emerging countries*

Education and training of the next generation in Mongolia using
telecommunications

Providing renewable energy to customers(6) Strengthening themanagement infrastructureof the entire KDDI Group

Providing next-generation renewable energy solutions

Strengthen the governance and information security of the Group
as a whole→ P85

Strengthening the Group

Conduct business activities with respect for human rights

Management Base

Number of users of regional experience support services(Mid-Term cumulative total)
Transaction volume of settlement/loan

2KDDI’s carbon neutrality including telecommunication facilities

→ P71

4

Eliminating financial divides(5) Carbon neutral

Carbon Neutral

Materialitytransportation, supporting regional education (lectures and seminars,) Simple TV Phone service,
and disparity elimination for local governments, medium-sized and SMBs.

(3) Regional co-creation

Respect the human rights of the people in emerging countries, and strive to maintain the social infrastructure that is essential to people’s daily lives.*2
Number of subscribers to Stars, a telecommunications service forchildren aged 13 and under (cumulative total)—

0.13 million

0.18 million

KDDI’s carbon neutrality including telecommunication facilities(Scope 1+2)(KDDI non-consolidated)

CO2 emissions:
1.1 million tCO2

CO2 emissions:0.95 million tCO2

Achievement of FY2030
carbon neutrality

Achievement of carbon neutrality by the KDDI Group at its worldwide data centers* Excluding data center facilities and equipment provided by other companies on a partial lease basis

CO2 emissions:
0.3 million tCO2

CO2 emissions:
0.3 million tCO2

Achievement of FY2026
carbon neutrality

Percentage of corporate contracts supplied with renewable energy—

22%Over 60%

Expand provision of carbon neutral support solutions to corporate customers * Green ICT/telecommunications, power SL, DX-SL, consulting, etc.*2
Number of serious incidents*5• Cybersecurity-induced divulgence of personal data and significant service outages• Inappropriate use of personal data
• Serious incidents other than the above

0

0

0

Number of initiatives of advanced security technology*6(Mid-Term cumulative total)

4

7

15

Conduct human rights risk assessments in business activities, including those of Group companies, and make improvements based on the results*7

Through Progressing
Governance(7) Respect for human rights

Human rights due diligence*8

Improvement rate in the activities of high-risk suppliers
that may be violating human rights→ P91

Career development for professional human resources5

Human Resources First(8) Advancement ofprofessional humanresources and engagement
improvement

44

All employees who have completed DX basic skills training(KDDI non-consolidated: Mid-Term cumulative total)* Learning opportunities to be expanded to the Group companies
Conduct the Employee Engagement Survey

Promotion of diversity-oriented human resources (DE&I)→ P97

Select potential risk
suppliers and initiate
individual dialogues
and improvement
proposals

Improvement rate:
100%—

35% * Strategic areas

30% * All areas—

6,222 employees

All employees(response rate: 98%)

Percentage of professional human resources in specialized fields(KDDI non-consolidated)

Materiality

Check the status ofrespect for humanrights with approximately 90% of top
suppliers in terms of
the purchase value

Maintain and improve employee engagement score(KDDI non-consolidated)

72* Average of quarterly73

survey results (4 times/year)* Average of quarterly

survey results (4 times/
year)

Maintain 72 or over

Ratio of female directors(KDDI non-consolidated)

7.1%

16.6%

20% or over

Percentage of females in managerial positions*9(KDDI non-consolidated)

9.4%

10.6%

15% or overKDDI Integrated Sustainability and Financial Report 2023

45

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Sustainability Promotion Framework

Internal Penetration Activities for Sustainability Management Practices

The President, Representative Director of KDDI serves as the chair with the remaining committee members made up of

We have formulated a series of internal penetration steps, outlined in the diagram, to align the awareness, understanding,the Executive Directors and General Managers of All Businesses and Corporate Sectors, the Audit & Supervisory Boardand action of sustainability management. From the management team to all employees, we continuously promotemembers of KDDI, and President of the KDDI Foundation. The committee considers sustainability to be a pillar ofunderstanding, aiming to foster new learning and awareness.

company-wide business strategies. Improvements in sustainability are incorporated into company-wide KPIs and are linked
to executive remuneration and bonuses for all employees.

■ Internal penetration
structure diagram

Departments/units

Deepen the understanding

Board of Directors
Comprehensive strategy

Approval

Entire company

ReportSustainability Committee (convened biannually)
Chair
President, Representative Director

Management
levelManagerial
positionsCore position

Division’s general manager
study (six times a year) session
Philosophy workshops(for leaders)Philosophy workshops

Owned media,
internal
newsletters,
external
guest speaker
webinars, etc.

1% ofbusiness
activities

Taking ownership

Excitement
Tours(Waku-Waku
Tours)

Division’s
study
session,etc.

(for all employees)

Initiatives where you canvolunteer to participate

Permanent Members
Executive Directors and General Managers of All Businesses and Corporate Sectors,
President of the KDDI Foundation, Audit & Supervisory Board members

e-learning

Empathizing

Workshops

Workplacediscussion

Sustainability community

Avenue for dialogue between the management team and employees, Excitement Tours (Waku-Waku Tours)

Details of Sustainability Committee activities• Formulation of sustainability action policies• Sustainability promotion framework maintenance• Confirmation of progress on KPIs

With the aim of encouraging all employees to understand the Company Vision and take actions towards achieving theCompany Vision, we have established opportunities for interactive communication between the management team andemployees. The “Excitement Tours” (Waku-Waku Tours), where the management team interacts with employees fromvarious divisions to foster mutual understanding, has been held annually since FY19.3 when President Takahashi assumed
office. This initiative has also contributed to improving employee

Secretariat

Human Rights Subcommittee (convened biannually)
Set targets, consider measures,and monitor progress related to social values,
including the promotion of respect for human rights
Carbon Neutral Subcommittee (convened biannually)
Set targets, consider measures,and monitor progress toward achievingcarbon neutrality

EnergyConservation
Working Group

Renewable
EnergyWorking Group

Social CN
Working Group

Sustainability
Management Division

engagement.
Service
Customers

In FY23.3, under the themes of “Mid-Term Management Strategy”

Shareholders/Investors
Local
Communities

Business Sector
Corporate Sector

and “KDDI VISION 2030,” our President directly addressed
employees from various divisions regarding our pursuit ofsustainability management and engaged in discussions. We willcontinue to maintain communication between the management

Regional Offices in Japan

Senior General Managers of divisions
and general branch offices in chargeof sustainability activities andgeneral administration and humanresources related matters in each region

Group Companies

Stakeholders

Business
Partners(Suppliers)

NPO/NGOteam and employees to encourage each individual employee totake proactive actions toward practicing sustainability management.

Administrative
Organizations/Industry
GroupsEmployees
and Their
Families

Engaging in “1% of business activities” to experience customer feedback and social issues
Since FY23.3, employees have taken the initiative to get closer to customers and experience social issues firsthand. This is
the starting point of one of our Company Vision, “the company the customers can feel closest to.” Understanding scenes
where we personally experience what kind of value our work can provide to customers and society, as well as whatmight be lacking, we encourage all employees to allocate about 1% of their working time (approximately 2 days per year)

As of September 1, 2023

to activities such as “interacting with customers” and “engaging in work experiences that help understand the customer
perspective.” For example, there are activities to participate as assistants in senior-oriented Smartphone classes requested
by local governments, or to assist local farmers, NGOs, and other organizations in the community. Through this initiative,

ESG initiatives reflected in bonuses for executives and employees

we believe that each employee sincerely engages with customers and society, incorporates insights into their own tasks,

In order to raise the awareness of all employees and encourage them to take action, we have included sustainability

and delivers high-value services to customers. We consider this to contribute to improving corporate value and achieving(ESG) evaluation indicators in the calculation of executive compensation and employee bonuses since FY21.3.

concurrent sustainable growth in society.

Starting from FY23.3, in order to promote and evaluate a wider range of non-financial initiatives as part of our MidTerm Management Strategy and commitment to sustainability management, we have revised the evaluation items andExperience assisting an instructor in asmartphone class“Local ‘Otetsutabi’ (Helping+Journey)”

Support for drone flight demonstrations/demonstration experiments

allocation of points. We believe it is important to give a certain weight to sustainability items so that our employees andgeneral public can understand the importance we place on ESG initiatives, and we have increased the weight of points
allocated to these items.

46

KDDI Integrated Sustainability and Financial Report 2023

47

Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Japanese creators and content. By establishing a creator economy where creators can generatevalue and receive compensation, αU will evolve from a “venue for experience” into a “platform forself-expression,” advancing its development and transformation for participants.
Moreover, we consider the αU universe to be a vehicle through which to manifest a society

Materiality 1that empowers individuals regardless of gender, age, disabilities, and other differentiating factors.

Promotion of Innovation Centered on
Telecommunications

Our aim rests in ushering in an era where diverse values and personal strengths intermingle,
synergizing to cultivate a novel future.
KDDI Launches the Metaverse and Web3 Service αUαU metaverse service screen

Values We Embrace (1)Molding Future Society

Achieving a Comfortable Lifestyle with Drones Connected to the SpaceKDDI actively engages in area development along the life lines ofThrough Satellite Growth Strategy centered on communications,promote innovation that customers can experience in their daily
lives and create a future society.

customers’ daily lives, surpassing a population coverage rate of 99.9%
for 4G LTE. Additionally, in areas where it is difficult to lay optical fiberlines for establishing communication areas that connect customers’
non-daily lives, KDDI is gradually deploying au base stations utilizing
Space Exploration Technologies Corp. (hereafter referred to asSpaceX)’s satellite communication service “Starlink” as backhaul lines.
However, Japan’s territory is comprised of over 16,000 mountains andmore than 14,000 islands, and due to geographical constraints, there“Another World” Continuing to Expand Diverse Values

exist locations where installing base stations is challenging.

KDDI aims to drive forward innovation that resonates tangibly with customers in their daily lives, thereby contributing to theentered into a new business partnership with SpaceX and plans to provide direct communication services between thecreation of an exhilarating future society through our “power to connect.” This aspiration, coined as “Life Transformation”

latest cutting-edge Starlink satellites and au smartphones within FY25.3. This will enable connectivity “wherever the sky is(LX)* within our Mid-Term Management Strategy. In the realm of LX, our focus centers on pioneering novel businesses,

visible” even in areas without coverage, expanding au’s coverage across Japan, including mountainous and island areas,such as the “metaverse,” “outer space” and “drone.”and working towards realizing “eliminating areas without connectivity wherever you are in Japan.”

In March 2023, KDDI launched αU, a metaverse and Web3 service, aiming to realize a world where anyone canbecome a creator and to support the new generation of users who seamlessly move between the real and virtual worlds.
αU encompasses five services: “αU market,” “αU wallet,” “αU place,” and “αU live,” with “αU metaverse” at the center.

Consequently, the 4G LTE coverage rate across the nation’s territory remains at approximately 60%. Therefore, KDDI has

Continuing to stay connected even during disasters, implementing scheduled
drone deliveries utilizing Starlink in Chichibu City

It also provides services for the Web3 era, including the metaverse, Non-Fungible Token (NFT), and virtual shopping. This

Leveraging Starlink, it becomes possible to achieve long-distance and remote drone flights for au’s mobile communication

service eliminates the boundaries between the real and virtual worlds, allowing users to enjoy everyday experiences sucheven in areas with weak signal coverage, such as mountainous and island areas. In collaboration with eight entities

as attending live music events, appreciating art, having conversations with friends, and enjoying shopping regardless of

including KDDI, KDDI SmartDrone Inc., Chichibu City in Saitama Prefecture, ZENRIN CO., LTD. Aeronext Inc., CO-OP MIRAI,

time or place.

Chichibu Tourism Organization, and WELCIA YAKKYOKU CO.,LTD., scheduled drone deliveries of essential supplies were

*LX: Life Transformation (a business model that transforms diversifying consumption, life experience and behaviors with an eye to the future)

conducted in response to the landslide that struck the Chichibu Nakatsugawa area on September 13, 2022. This incident
disrupted transportation and logistics during the winter season. The deliveries aimed to extend aid to the affected“αU metaverse” —The new form of communication is here

communities in need.

The “αU metaverse” constitutes a service wherein your avatar ventures into a virtual realm accessible via your smartphone,

Access to the intended delivery destination, the Nakatsugawa area, entails traversing the Kinzan-Shigasaka Path—a

providing the means to engage in avatar-to-avatar conversations, relish live musical performances, partake in discussions byforest management road restricted to specific vehicles like emergency units. However, this passage becomes exceedingly

notable figures, and explore exhibitions by creators. These virtual spaces faithfully replicate locales like the bustling streets

treacherous in winter due to snowfall and icy conditions. Compounded by the region’s unique topography, characterizedof Shibuya and Osaka. Commencing with the transformation of

by unstable mobile communication, the deployment of Starlink ensured a stable mobile communication environment for

one’s designated abode (My Room), a separate space from theau. Consequently, autonomous drone flights were executed to deliver supplies to the area. In total, 28 drone flights were

town, creative journeys commence through personalized

conducted, ferrying supplies of up to 4kg each, comprising foodembellishments using furniture, thereby expressing one’s

and daily necessities. This effort provided the residents of theindividuality. Our aspiration revolves around the creation of a

Nakatsugawa area with a safe and convenient lifestyle. This

realm where anyone can seamlessly transform into a creator of

initiative marks the first case in the country (as of April 2023) of

their own volition, a vision actualized through endeavors such asscheduled drone deliveries of supplies during emergencies, such

hosting talk shows as an extension of engaging conversations

as disasters.
We will continue to work on expanding and implementing

within My Room and the innovation and sale of avatars and My

the use of drones, with the aim of solving social issues andRoom furnishings.
Furthermore, KDDI will collaborate with domestic andinternational partners to support the global expansion of48

Metaverse and Web3 service “αU suite”

Application of the Japanese-developed mass-produced
logistics-specific drone called “AirTruck”

achieving a comfortable society through the utilization of drone.

KDDI Integrated Sustainability and Financial Report 2023

49

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 1

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Promotion of Innovation Centered on Telecommunications

Values We Embrace (1)Innovation Strategy and Intellectual Property in the Field of LX

Molding Future Society

In recent times, there has been a surge of interest in inhabiting and conducting business within virtual spaces constructedon the internet, commonly referred to as the metaverse. KDDI is actively involved in developing urban-linked metaverses,
such as “Virtual Shibuya,” “Virtual Osaka,” and the “αU metaverse,” through collaborative efforts with established cities.
However, given that the metaverse market is still in its nascent stages, the imperative to establish rights protection
encompassing copyright, portrait rights, ownership, and similar entitlements has intensified. Moreover, there is a need to

StarLinksatelliteorganize various rights, create compliance protocols, and ensure the faithful recreation of connectivity with real-world orest Management Road:F
Kinzan-Shigasaka Path
During winter, traveling is difficult
due to freezing conditions.
Even if you manage to pass through,the one-way journey from the central
area of Chichibu City to Nakatsugawa takes two hours.

Using a drone to transport
supplies

au basestations

Road closure due to acollapse

In partnership with our partners to propel the metaverse and urban-linked metaverse sector, KDDI inaugurated the“Virtualcity Consortium*” in November 2021. The goal is to create a secure and safe space wherein users, stakeholders,and platform providers can confidently engage.
This consortium engages in collaborative discussions with pertinent government bodies and experts geared towards
formalizing the “Virtual City Guidelines,” as a referential framework for municipalities and metaverse-related enterprises.
The initial release of version 1.0 in April 2022 addressed aspects such as interactivity, faithful representation of real

Otaki area
Nakatsugawa area

cities and the accuracy of landscapes.

cities and metaverses, and safeguarding avatar rights. Subsequently, version 1.5, introduced in November 2022,
Deliveries include items from CO-OP
MIRAI, WELCIA Kagemori Store, andFamilyMart Michi-no-Eki Otaki Onsen
Store, each individually boxed andpackaged.

incorporated the utilization of NFTs (Non-Fungible Tokens) to facilitate the realization of a creator economy.
Furthermore, version 2.0 established in July 2023 mainly centered sorting out of legal issues in economic transactions
and updating items regarding precautions to be taken when using AR/MR content in public spaces.
Our commitment will remain steadfast in formulating guidelines, disseminating information, and actively participating
in discussions regarding rule formulation.
Additionally, as a distinctive initiative of KDDI, we systematically formulate policies for acquiring and utilizingThe scheduled drone deliveries conducted within the Nakatsugawa area of Chichibu City have been successfully completed. (Japanese only)

intellectual property for respective business and technological domains. We are also committed to maximizing business
opportunities while minimizing business risks associated with intellectual property. In FY23.3, we submitted patentapplications related to Web3 technologies (NFTs, digital currency), avatar-related advancements, user management
features, AR integration, and correlation analysis between real and virtual spaces. The number of patent applications
related to the metaverse expanded significantly, reaching 25 applications in FY23.3—fivefold greater than the preceding

A landslide occurred in Chichibu City, prompting the city to consider drone-based supply deliveries.
However, the area presented challenges due to inconsistent mobile communication and unfavorable
flying conditions for drones.
Furthermore, beyond the communication hurdles, the collapse site’s location was nestled between
mountains on both sides, rendering it impervious to GPS signals. This geographical complexity posed
difficulties in maintaining stable drone flights. After several site visits and experimentation with various
flight routes, a stable path was eventually devised, making drone flights feasible.
Drones are expected to contribute to creating a prosperous future society across diverse applications,
including disaster response, daily supply deliveries, high-altitude inspections, surveillance, and surveys,
besides their utilization in times of disaster.
A continual process of trial and refinement characterizes our business journey. Despite the inherent
challenges, we remain dedicated to advancing our contributions towards the society of tomorrow.

year. Moving forward, we will continue to implement valuable intellectual property as crucial managerial resources. This
will contribute to creating a metaverse environment where customers can utilize services securely and safely, while also
supporting the sustainable development of our business.

* 

Establishment of the “Virtualcity Consortium” to formulate guidelines for urban-linked metaverses. (Japanese only)

Key Topics of the “Virtual City Guidelines”

KDDI SmartDrone Inc. Toshihiro Morishima

Urban-Linked
Metaverse
In Japan, communication infrastructure such as fiber optics and mobile phone networks has been
established not only in urban areas but also in rural regions, encompassing nearly all residential areas.
However, upon closer examination, there are still numerous areas, such as mountainous and remoteisland regions, where the communication infrastructure remains inadequate. Our role is to provide
support to those who operate in such challenging conditions through Starlink.
Upon receiving the proposal for area development in Chichibu City, the local site was on the brink of
the snow season. There was an urgent need to proceed with verification of Starlink connectivity andthe design of the communication infrastructure. The shared commitment “to assist residents in need”
united members from the Engineering, Construction, and Operation Divisions. As KDDI, we came
together with unwavering dedication to implement requisite.
Starlink provides an exceptional service, offering high-speed communication wherever the sky is visible.
In regions with limited communication coverage, such as mountainous and remote island areas, and by
managing traffic congestion during outdoor music events, we persistently confront communication
challenges on behalf of our customers, embodying the essence of “Here, there, everywhere.”
LX Platform Development Department,
Business Exploration & Development Division

Fidelity and modification of real city landscapes
Concept of “publicness”
Collaboration with real cities and streamlining of commercial flow

Items requiring
arrangement
in urban-linked
metaverse

Activation of the creator economy
Copyright of user-generated content (UGC*)

Metaverse

Avatar protection
Avatar’s portrait rights and publicity rights

Items requiring
arrangement
in both metaverseand urban-linked
metaverse

Virtual property* User-generated content that users bring to the platform or distribute on the platform

Motonori Imamura

50

Development of operational and utilization guidelines for the metaverse (Japanese only)KDDI Integrated Sustainability and Financial Report 2023

51

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

IoT Platform Spreading Globally■ IoT Connections (Unit: million connections)KDDI aims to contribute to industrial and infrastructure digitaltransformation (DX). In FY23.3, its cumulative total of IoT connections

Materiality 1

32.0

surpassed 32 million. By combining IoT with 5G and AI, the potential for

24.5

various data collection and analysis expands, and we consider the IoT to

Promotion of Innovation Centered on
Telecommunications

be a new foundation for co-creating value. We will leverage staff wellversed in local conditions at over 100 sites worldwide, both in thedomestic infrastructure and the global arena, to promote DX in society

8.0

and across various industries, and contribute to the sustainable growth insociety.

FY19.3

FY20.3

FY21.3

FY22.3

FY23.3

Values We Embrace (2)Realization of Sustainable Industrial/Infrastructure Environment

Concept of Digital Twin
To achieve a prosperous future society around 2030, it is

Virtual world

essential to address various social issues. We believe that

Realize a sustainable industrial/infrastructure environment
by providing innovative solutions for communications andother social infrastructure/connected vehicles.

the concept of “Digital Twin,” which uses digital technology
to link the real world and cyberspace to analyze current
conditions and predict the future, will become an importantsocial mechanism that will institute major changes in urban

Feedback

Data collection(value creation/issue solving)

design and individual lifestyles. KDDI envisions utilizing
Digital Twin to solve various social issues. → P24

Real world

Expanding the 5G Area
Our mission is to provide a stable communication and call network 24 hours a day, 365 days a year, with the aim of“connecting lives, day-to-day lives, and hearts and minds” of people. In addition to au’s 4G LTE communication network

Contribution to Urban Development through a Human Flow Analysis and Forecasting Platform(encompassing the 800MHz platinum band and other frequencies), we have begun construction of a nationwide 5G

In collaboration with Mitsui & Co., Ltd., KDDI established GEOTRA Co., Ltd in April 2022 to support urban Digitalcommunication network to provide an even more comfortable communication environment.

Transformation (DX) by harnessing the power of data. We believe that there are social issues that can be solved by “theOur 5G expansion strategy prioritizes areas where our customers life line. (As of April 30, 2023, this initiative is being
executed across 47 railway zones and 323 commercial districts).*1

ability to accurately monitor people’s activities” and we have initiated platform and analysis services that utilize AI,
location data from au, and other big data to understand and predict the means, time, and purpose of people’s

The national coverage ratio has exceeded 90% concerning the population, and we have scheduled the increase of 5G

movements.
The company’s products not only include an analytical platform but also have the capability to digitally recreatebase stations to reach up to 90,000 by the conclusion of FY24.3.
We will continue to provide safe and secure telecommunication services by promoting the construction of next-

real-world human movement in geographic space. This capability facilitates the simulation of diverse scenarios within thegeneration networks through continuous quality control and improvement in order to ensure that our customers candigital realm. As a result, these products can be utilized for a wide range of purposes, including Smart City planning,safely use telecommunication services-an indispensable infrastructure for their daily lives.

disaster preparedness planning for urban areas, and the development and maintenance planning for buildings and social*1 Source: Internal research

infrastructure.
In utilizing au location data, KDDI places paramount importance on employing solely the information for which users

5G Area Construction
Strengthening along customer’s life line, expanding nationwide coverage

お客さまの生活動線に沿ったエリア
Areasalong the customer’s life line

全国エリアカバー
Nationwide
coverage

Connected areas expanded along railroads,
鉄道・商業地域をはじめ、つながるエリアが拡大
commercial districts etc.

Further accelerating nationwide
5Gの全国展開をさらに加速
deployment of 5G

Railroads

Commercial
districts

have provided consent while anonymizing it to avert individual identification. KDDI’s mobile communication network andsmartphones are part of social infrastructure, and the data acquired through them is not only a valuable asset but also asocietal resource. KDDI is actively promoting data utilization that brings benefits to all municipalities, organizations, andindividuals. The business of GEOTRA is positioned as part of this effort.
We have developed a technology grounded in the Activity Based Modeling simulation methodology based onanonymized GPS big data from au, along with map and traffic data, public data (such as census data), and Point ofInterest (POI) data signifying specific map locations.
This technology crafts a “virtual persona” through AI-powered predictive analysis and machine learning based on
various data sources.

End of FY23.3
Approx.

47 routes

323 areas

As of theHokkaido 1 route, Kanto 29 routes end of April Commercial districts around2023
Chubu 3 routes, Kansai 14 routes
stations on major routes* Depending on area conditions, 5G communication may not be available.

52

52,000stations

End of FY24.3
Approx.

90,000stations

Since these “virtual personas” can be replicated/simulated within the digital realm (web), KDDI positions thistechnology as an element of “Digital Twins” techniques, particularly as the “Digital Twin of Urban Human Flow.”
But why is this “Digital Twin of Urban Human Flow” vital for urban DX?
Urban DX generally refers to creating an environment where electronic money can be freely used and where digital
services and devices like Mobility as a Service (MaaS) and drones can be effectively utilized.
However, when evaluating the effectiveness of urban DX and conducting pre-validation, traditional measurements,
such as traffic volume surveys utilizing traffic counters, were necessitated to ascertain aspects like the effective utilization
KDDI Integrated Sustainability and Financial Report 2023

53

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 1

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Promotion of Innovation Centered on Telecommunications

Values We Embrace (2)Realization of Sustainable Industrial/Infrastructure Environment

Simulating the city of the future with the Digital Twin of Urban Human Flow
GEOTRA makes it possible to predict future urban human flow. For instance, it can simulate traffic congestion predictions,forecast facility crowds, and anticipate human flows in the event of a disaster.
Japan’s social and transportation infrastructure such as roads and bridges are aging and need to be repaired or
rebuilt. However, due to a shortage of labor in the construction industry and soaring material prices, it is practically
impossible to proceed with all of these projects at once. Therefore, we aim to contribute to society by using GEOTRA

of MaaS by residents.

Activity Data* to analyze and visualize the impact of each piece of social and transportation infrastructure on the

Recently, GPS big data provided byvarious telecommunications carriers has

surrounding community in the event of its breakdown. This analysis will help prioritize repairs and rebuilding, and optimize

been utilized for urban DX. However, GPS bigplanning, benefiting society as a whole. Moreover, in the future, this tool can also be used as a tool to scientifically assess

data is “statistically processed” data to

the societal value of new social and transportation infrastructure during its construction.

protect personal information, and as such,* ■ GEOTRA Activity Data“individual person movements” cannot beknown.

Various Big Data

GEOTRA can replicate the movements ofeach individual from GPS big data with its

Attribute information at the time ofcontract/GPS location data/maps androute maps/census/information on
restaurants and other facilities

unique digital twin technology. Thisempowers us to comprehend the current
situation and predict the situation at the timeof implementation of measures, allowing foreffectiveness verification before execution.

Results of filtering people heading to Hibiya Park from its vicinity by “time (around 6:00
p.m.)”, “gender (female),” and “age (in their 20s)”. It is evident that there is a flow ofpeople moving on foot and taking a break on the park benches before returning home
at around 6:00 p.m.

GEOTRA was established in April 2022 as a joint venture between Mitsui & Co., Ltd. and KDDI.
In the two years leading up to its inception, study teams from both companies had been engaged inservice development, customer needs hearings, and pre-sales activities.
We visited various customers and asked them what solutions they really need in terms of human flow
analysis, and we were impressed by the fact that many of them said, “Big data on human flow is notunderutilized for addressing urban issues.”
The available human flow big data lacked granularity, preventing us from observing individual movements in detail. This lack of detail hindered analysis and its use as evidence-based support for implementing measures.
We embarked on our service development under the guiding principle that “if we can replicate detailed data on people’s movement within a city, we can assist urban development.”
In our fiscal inaugural year, we had many customers including major developers, general contractors,
municipalities, manufacturers, and electric power companies.
The societal value derived from their service utilization exceeded our initial expectations.
One particularly impactful case was local city with a sizable river traversing it. This city grappled withnumerous aging bridges and the challenge of prioritizing repairs. GEOTRA simulated “the potential roadcongestion in the vicinity following the loss of a bridge” for each bridge. This simulation ultimately
identified bridges of high importance and allowed the city to set priorities for each bridge maintenance.
In this second fiscal year, we have received inquiries from even more customers.
In particular, we have received many inquiries from overseas, and comments such as, “We want to use
the data to analyze the causes of traffic congestion in cities,” and “We want to understand tourist traffic
and make the best use of the data for implementation of our measures.”We intend to use GEOTRA’s technology to seriously address issues in cities overseas as well.
Furthermore, we have been able to cultivate a variety of knowledge in data anonymization, AI, softwaredevelopment, and other areas while handling human flow data. We would like to utilize the knowledge
and expand it to promote the data utilization of our customers.
We consider human flow data service as the core of our business, and will apply our knowledge tovarious fields in the future. We will continue to take on such challenges.
Representative Director, Vice President COO, GEOTRA Co., Ltd Hiroaki Suzuki

Synthetic Data Generation
Model

GEOTRA Activity Data

Generate synthetic data using
GEOTRA’s proprietary“privacy protection technology”

Generate virtual personas with the same
movement features as in the real world.

GPS Big Data of au

Obtain GPS location data from smartphones
of au subscribers who have given permission
for their location information to be used.



Developed the proprietaryprivacy protection technology,
in response to the need to
extract detailed data withprivacy protected.
Create “virtual personas”
through AI by combining au’s
GPS big data with various
other big data.

[Specific Items]
Gender, age, place of residence, place ofwork, purpose of travel, means of travel,
travel time, distance traveled, time spent,departure time, arrival time, departure
point, arrival point, travel route

Solving city issues with the “Digital Twin of Urban Human Flow” to realize a smart city (Japanese only)

Contributing to the Efficiency of Blue Carbon*1 Calculation through the Use of
Waterborne Drones
In recent years, the marine environment has changed dramatically due to climate change and other factors. In the fisheries
industry, the catch continues to decline due to the decrease in marine resources and seaweed beds.
There is an urgent need to conserve and restore fishing grounds to build a sustainable and profitable fisheries industry.
In particular, it is a key to restore seaweed beds, which are the foundation for the growth of marine life, including fisheryresources. Since the widespread use of “J Blue Credit®”*2 , which enables quantification and trading of blue carbon, will leadto the recovery of seaweed beds, KDDI Research, Inc., KDDI, and Toba City in Mie Prefecture conducted a seaweed bed
survey in June 2022 using waterborne drones in order to realize more efficient seaweed bed surveys. The use of waterborne
drones enables efficient surveys over wide areas by incorporating the advantages of both wide-area surveys using aerial
photography and detailed underwater surveys using submersible dives. Recognizing this effort, the initiative received the“Minister of Internal Affairs and Communications Award at the 31st Global Environment Awards” in March 2023.
In addition, the National Institute of Technology, Toba College, the Graduate School of Bioresources of Mie University,and the Mie Prefectural Fisheries Research Institute joined the above three organizations and launched an initiative toestablish an automated blue carbon measurement system using machine learning. Images and location data captured byunderwater camera sensor devices attached to fishing boats are integrated into an automatic blue carbon measurement
system. Through machine learning, the system identifies seaweed types, calculates the location and volume of seaweed,
thereby automatically measuring the amount of blue carbon stored in the area. This initiative aims to forge partnerships
with urban businesses to revitalize fishing villages. This initiative is scheduled to be implemented from November 30, 2022
to the end of March 2025 at the maximum, aiming to start operation of an automatic blue carbon measurement system
during this period.

54

KDDI Integrated Sustainability and Financial Report 2023

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Introduction
Materiality

Materiality1

Material Issues

VisionMateriality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 1

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Promotion of Innovation Centered on Telecommunications

Values We Embrace (2)Transforming Japan’s Fishing Industry with IoT:
Smartphone App Improves the Efficiency of Aquaculture Fisheries

Realization of Sustainable Industrial/Infrastructure Environment

KDDI is actively working to solve issues in the fishing and agriculture industries through the use of the IoT throughout
Japan. Fishery and agricultural operations heavily rely on the experience and intuition of workers. In addition, the workers
We will continue contributing to environmental problem-solving through our business by leveraging diverse

have to check changes in the condition of the sea and rice paddies by themselves, which places a heavy workload on
them. The use of IoT contributes to solving various issues, such as improving work efficiency, reducing costs, andtechnologies such as telecommunications and IoT solutions.

stabilizing and improving the quality of harvests, by making it possible to check the current condition of the sea andpaddy fields with a smartphone or tablet without having to visit the site. Also, by visualizing the experience and intuitionof workers with data, it is expected to expand employment opportunities for inexperienced workers and young people in

Identify the type of seaweed(color-coded for each type)the fishing and farming industries.
Kaiyo-cho, Kaifu-gun, Tokushima Prefecture, Shishikui Fishery Cooperative, Re:Blue inc., and KDDI signed a
Register for carbon
creditCreate a 3D model of seaweed bed
Fishingboat

collaboration agreement in December 2018 for the purpose of regional revitalization, and have been discussing issues inAmabe oyster farming and solutions using ICT.
Starting in 2020, IoT sensor devices gather environmental data, such as “water temperature,” “turbidity,” and“chlorophyll,” which is stored in the cloud and analyzed in partnership with Tokushima University to establish efficientoyster cultivation know-how.

Measurement ofcarbonstorage

Underwater
image data

Furthermore, in March 2022, the “Oyster Farming Management App” (hereinafter referred to as “the App”) was
developed to address the issue of the complicated management of oyster baskets in the “single-seed production method*”

Image databaseof oyster farming in Nasa Bay. This app enables easy monitoring of the farm’s oyster numbers, sizes, and basket locations.
Promote seaweed bed
conservation activities,
ensure sustainability,
Stable fishing catch

Calculate seaweed volume

In the future, we aim to link the App with efficient oyster farming know-how, which we have been analyzing since2020, to improve the efficiency of shipping planning, work instructions from aquaculture managers to workers, and work
reports from workers, and to stabilize and streamline oyster farming.
We will continue to utilize communication technology and IoT solutions to promote the development of the local

Overview of the initiative

fishing industry and biodiversity conservation efforts.
*A method of cultivating oysters in baskets, which produces high quality and well-fleshed oysters

Characteristics of waterborne drones used for the seaweed bed survey
In November 2020, KDDI Research, Inc. developed a waterborne drone that can be remotely controlled with aIntroduce IoT sensor☞ Visualize environmental data

smartphone. This drone was specifically designed for surveying seaweed beds and was newly equipped with anunderwater camera and a lifting mechanism for lowering and raising the camera in and out of the water. It is also
equipped with a GPS system for autonomous navigation. When the drone arrives at the point where a seaweed bed islocated, it maintains a fixed point while the camera is lowered into the water at a specified depth by the lifting device
remotely controlled with a smartphone. The captured underwater images are transmitted to a smartphone through a
Surveys taken from the air with aerial drones, etc., can determine the boundaries of seaweed beds, but it is difficult todetermine the underwater conditions, such as the type of seaweed beds and their degree of coverage. Also, underwater
drones cannot acquire highly accurate location data because GPS is not available for them.
Therefore, waterborne drones were utilized in this survey.
 evelopment of Japan’s first waterborneDdrone that can be remotely controlled bya smartphone connected to a mobile
connection (Japanese only) uccessful survey of seaweed beds usingS
waterborne drone (Japanese only)Initiatives to establish an automated blue
carbon measurement system todecarbonize fishing communities andincrease their profits (Japanese only)

Data confirmation/
analysisInternet

Measurement per hour

Requiring appropriate
care according to watertemperature and weather⇒ Rely on skilled fishers

Time-consuming work tomonitor and manage thecondition of each basket

Water and airtemperature

Growthrate

Transmitted
once per hour

Vibration

Turbidity

Automatic

Data transmission/
reception☞ Decision by workers oncommon criteria

Check with acomputer or smart
deviceManual development☞ Labor-saving management

Data analysis by
Tokushima University

Grasping the marine
environment

Monitor and share environmental
and growth conditions via PC or
smartphone

Date: XXYY

phytoplankton. For more information, see the website of the Ministry of Land, Infrastructure, Transport and Tourism.

Numberof deaths

Visualization of
the environment

KDDI IoT
CloudStandard

Growth condition record

40% death before
shipment⇒ Low productivity*1 Blue carbon is carbon that is taken up into the ocean by the action of marine organisms such as seaweed, seagrasses, andEnvironmental
measurements

Smart buoy

mobile network, enabling real-time monitoring of underwater activities by the operator.

Issues in the previous
oyster farming

Amabe Oyster Smart Farming

Oyster

No.1

No.2

Number ofoysters farmed

30

45

Number ofdeaths0

1

Check with a computeror smart device

Analyze the relationship between
operations and environmental
data and growth conditions

Data analysis☞ Establishment of efficientfarming know-how

Visualizing and analyzing oyster farming environment with IoT sensors to establish efficient production know-how
The Ministry of Land, Infrastructure, Transport and Tourism (Japanese only)*2 A unique credit issued and administered by the Japan Blue Economy Association (JBE) based on review and certification
opinion by an independent third-party committee. JBE is conducting research and development on the design of a system
for reviewing, certifying, and issuing “J Blue Credits” as a new credit to promote the role of blue carbon ecosystems as CO2
sinks and accelerate the efforts for climate change mitigation and climate change adaptation in coastal and marine areas.
J Blue Credit is a registered trademark of JBE.
IoT Application Case Study: Smart Oyster Farming Project for the World’s Most Interesting Fisheries Industry (Japanese only)J Blue Credit(Japanese only)

DX Solves Time-consuming School Duties for Teachers
Under the GIGA School Concept, various ICT devices and software have been introduced to the educational field, andKDDI has also provided communication environments and tablet terminals for schools to promote ICT-enabled andefficient learning for students. On the other hand, workstyle reforms of teachers have not progressed well, and they areoften overwhelmed by the enormous and complicated “school duties” (school operations) and have to work overtime to56

KDDI Integrated Sustainability and Financial Report 2023

57

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 1

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Promotion of Innovation Centered on Telecommunications

Values We Embrace (2)Measures Taken in Response to the Serious Accident in fiscal 2022

Realization of Sustainable Industrial/Infrastructure Environment

Reaffirming our role and responsibility as a telecommunications carrier
Our large-scale communication failure that occurred in July 2022 caused great inconvenience and trouble to many of ourcustomers. To regain the trust of customers and stabilize the telecommunications network, we ensure that measures aretaken to prevent a recurrence.

make up for it.
A survey revealed that, in 2021, public school teachers’ average daily work hours exceeded 10 hours, emphasizing the
School operations involve considerable tasks, and the integration of IT to streamline these processes remains

agencies, when smartphones were out of service. Furthermore, smartphones have become an integral part of daily life

incomplete. Against such issues, BLEND, a full-cloud integrated school operation support system provided by

and an irreplaceable item in various situations, such as electronic payment with QR codes, various purchasing activities

MOTIVATION WORKS Co., Ltd. and Managed Zero Trust provided by KDDI, are combined to promote cloud computing

including ticket purchases, and teleworking at work.

for school operations while ensuring security, thereby workstyle reforms at schools. BLEND is equipped with all the

The rapidly evolving business landscape has elevated communication services to a critical component of social

functions necessary for school duties, including attendance and grade registration, and the generation of instructional

infrastructure. This extends beyond personal communication to include logistics, transportation, government operations,records and forms. With IP address restrictions and two-step authentication, BLEND ensures security while facilitating

finance, and more. Telecommunications is now essential to maintaining the stability of broader societal infrastructure.
In order to fulfill our mission of “connecting” for telecommunications, which has become such an essential part of ourwork from various locations.
Data such as student grades, school registers, and health information is considered “sensitive information.” It’s essential

daily life and social infrastructure, we will steadily implement initiatives to strengthen our telecommunications

to separate the school operation network from the classroom learning network to safeguard such information. For thisinfrastructure. Our efforts are never finished and must be constantly improved in response to changes in the social

reason, teachers need to use different terminals for school duties and classroom work, and perform school duties only

environment, technology, and other factors.

with a specific terminal installed in the staff room. For example, teachers record student attendance confirmed in theclassroom on a piece of paper and enter it into the school operation support system after returning to the staff room. Thisapproach generally led to inefficiencies in school operations. The combination of BLEND and Managed Zero Trust enabled
the consolidation of

Secure access to school operation-related and study-related
information, both inside and outside the school
Support teachers’ diverse work styles

terminals into a single
device, creating anenvironment where
school duties can be
performed securely not

Multifactor
authentication
Single sign-on

only in the staff room,
but also from anywhere
inside and outside theschool. This integration

Reduce risk of information leakage byspoofing and increase operation efficiency
through seamless authentication

Network monitoring

Detects and responds early to illegal
behavior that is difficult for schools to
detect on their own

Secure connection

Secure communication outside school(5G/4G)

reduces the time andSince telecommunications has become such an important infrastructure, it is important to imagine customers’situation and provide them with clear and accurate information in case of service interruptions or other problems.
In addition to taking thorough measures to prevent recurrence of failures and ensuring stable service operation, we
will work to provide a communications network that can be used safely and comfortably, as a telecommunications carrier
supporting social infrastructure, by identifying new usage scenarios and service impacts, and establishing methods todeliver appropriate information in a timely manner.

Measures to support social infrastructure and continue to provide stable services
As a company-wide effort in response to the large-scale telecommunication failure, we have established the “Council for
improvement of infrastructure and customer relations” to formulate and promote measures to prevent recurrence of the
failure and to restore customer confidence. All preventive measures planned for FY23.3 have been completed. Specifically,
the measures are as follows.

■ Series of initiatives to prevent recurrence

effort required toand establishes anenvironment where

Secure PC

teachers’ work andInside theschoolstudents’ learning
remain uninterrupted,

Outside theschoolMinimize risk of data leakage due to device
loss or local data storage

Secure information access both inside and outside the school

even during
emergencies or disasters.

Achieving both efficiency and security in school operations, a challenge for the DX of Education (Japanese only)

Solution Business Planning Department, Solution Business Planning Division

Kento Yamada

Measures to further strengthen
the infrastructure

To address the persistent issue of teachers’ long working hours and improve overall operational efficiency, promoting school digital transformation (DX) is crucial. KDDI offers “BLEND,” a full-cloud school
operation support system, and “Zero Trust Security” to streamline school operations. We are working
to workstyle reforms at schools by creating an environment that allows school duties to be performedin real time in classrooms and staff rooms, at home, on school trips, and any other location, which
previously could only be performed from a specific location within the school or from a specific PC.
The main actor in the educational DX is schools. KDDI is committed to working with schools to create
necessary solutions and to work together with teachers on the education DX. Beyond that, we believethat we can realize a learning model that will lead to “personalized and optimal learning,” a longstanding theme for educators, and to the development of entrepreneurial and innovation-creating
human resources envisioned by the government.

Measures implemented in FY22.3

Connect safely both insideand outside the school

perform school duties

58

Up until 10 years ago, many households had one landline phone per family. During the major telecommunications
failure in July, we received many comments about the inability to contact each other, including reaching emergencypressing need to address the issue of prolonged working hours.

Detection tool
development

A detection tool has been developed and implemented to provide early detection of congestion. This
allows its impact on service to be visualized on a dashboard. After detection, monitors can take onetouch restoration measures for multiple exchanges to minimize and resolve the impact at an early stage.

Implementation of
measures toprevent humanerror

Last year’s failure was caused by an issue with the rules for managing work procedures, resulting in ahuman error of following incorrect procedures. To address this, we have developed a “procedure manual
management system” to rigorously enforce the rules for managing procedure manuals and prevent such
mistakes from occurring.
The “Hiyari-Hatto System” system has been developed to accumulate and analyze near-miss cases tofurther prevent human errors.

Improvement ofpublic relations
andcommunication
systemConcerning the review of content, expression, means, and timing of information dissemination, as well as
the expansion of methods to actively provide information, we discussed with our members and othercarriers, etc. through the “Public Awareness and Communication System WG” organized by the Ministry ofInternal Affairs and Communications, and developed industry rules.
In accordance with the “Guidelines for Dissemination and Publicity in the Event of Failures” published by
the Ministry of Internal Affairs and Communications, we will promptly disseminate appropriate andeasy-to-understand information to customers.

Early transition to
virtualinfrastructure

We aim to achieve early transition to virtual infrastructure for facilities, simplification of network
configurations, and automation of operations (such as automated service recovery and congestion
control). Specifically, we target the completion of the transition for voice exchanges by the end of FY25.3
and for the entire core network by the end of FY26.3.

Failure detection
and recovery byAI

We will enhance operations through data-driven approaches and leverage AI to achieve early failure
detection and recovery. Specifically, we plan to implement it for mobile network monitoring by the end of
FY24.3 and extend it to all network monitoring by the end of FY25.3.

Strengthening theorganizational
structure to
improve network
quality

To enhance the examination conducted by the “Council for improvement of infrastructure and customer
relations” established in response to the significant incident, and to improve network quality across theorganization and systems, a Quality Management Office has been established as a directly supervised unit
within the Technology Sector. Its primary mission is to promote the prevention of significant incidents andcontinuous quality improvement, as well as to optimize network design by comprehensively addressing
both the mobile and core IP networks.

KDDI Integrated Sustainability and Financial Report 2023

59

Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 1

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Promotion of Innovation Centered on Telecommunications

Values We Embrace (2)Realization of Sustainable Industrial/Infrastructure Environment

Materiality 2
What challenges do you see and how do you plan to address them as
the role of telecommunications becomes more and more importantwith the advancement of technology in the future?

Realization of Safe, Secure, andProsperous Society

Promotion of research and development of new technologies andchallenges toward a society where everyone can realize their aspirations

Values We Embrace (3)The future society envisioned in KDDI VISION 2030 will be realized

Regional Co-Creation

through the Digital Twin. In the Digital Twin. an enormous amount ofdata is exchanged instantaneously between physical and cyberspace. In

Realize regional co-creation by connecting people and regions
together with DX centered on communication and solving
information gaps and regional issues.

order to process this data, telecommunications must advance to a level
where the user is unaware of its existence, and we will continue todevelop and implement technologies such as All-Photonics Network
and user-centric RANs to achieve this goal. However, most importantly,
we must continue to provide the telecommunications in a safe andsecure manner. Threats to the stable provision of such services include
cyber attacks and natural disasters in addition to the “communication
failure” that occurred in July 2022.

The Overall Picture of KDDI’s Pursuit of Regional Co-Creation

Manual responses to “communication failures” will no longer be
feasible in increasingly sophisticated and complex networks, so AI-based design and automation of failure
recovery, etc. must be promoted. We provide communication services to our customers with the intention ofnever causing accidents, and we have taken various measures to prevent such accidents. However, even with

By tackling the issues that plague local communities, we achieve regional co-creation

perfect measures in place, it would be difficult to continue to produce equipment that never malfunctions orRealization of regional co-creation

software that is absolutely bug-free. While we are working to minimize accidents by removing bugs from theverification facility, we believe it is important to consider in advance what we will do if a failure occurs.
With the growing tension in the world, cyber attacks by hacker organizations are becoming more active
and their methods are becoming more sophisticated every day. The impact of cyber attacks on criticalinfrastructure has also become a major threat to society. In order to counter cyber-attacks, we are

During FY23.3-FY25.3, a cumulative total of 15 million people had disparities eliminated

Smartphone classes

developing technologies to automate cyber-attack analysis and monitoring operations using AI. We’re also

CATV

Municipality DX

Smart agriculture

Eliminating financial divides

On-demand transportation

Supporting regional education

intensifying our security measures by collaborating with related organizations, such as CSIRTs in Japan andoverseas, to collect and analyze vulnerability information and attack trends.

Local business and venture support mechanisms

Other major threats include climate change due to global warming, and natural disasters such as

Funding

torrential rains, large-scale typhoons, and earthquakes directly under the Tokyo metropolitan area and off theHands-on management support

DX Human Resource Education

Nankai Trough, the probability of which is increasing as this year marks the 100th year since the Great Kanto
Earthquake. We will work to strengthen the networks through measures such as the three-route configurationof the core network and a dual monitoring system with communication centers in Tama and Osaka.
Additionally, to expedite recovery from disasters, we will enhance portable, vehicle-mounted, and shipboard
base stations, etc., and promote the use of Starlink and advance the DX of recovery work, etc.
We will continue to provide services that everyone can use with peace of mind by continuing to evolve
our response to new threats that are becoming increasingly complex and sophisticated, as
telecommunications become more and more important as a social infrastructure due to future social changes
and technological advancements.

Mitigate the Digital Divide Among Local Residents Through “Smartphone Supporters” Training
We aim to achieve “regional co-creation” by bridging the gap for a total of 15 million people during the cumulative period
from FY23.3 to FY25.3. Eliminating the digital divide is also an important issue to address.
As one of the solutions, KDDI has primarily collaborated with local government entities to provide guidance on
smartphone usage and to facilitate the training of “Smartphone Supporters,” who work towards eliminating the digital
divide in the community.
From this term, we have partnered with SAGOJO, Inc., an operator of a matching platform that connects local

Senior Managing Executive Officer, Director
CTO, Executive Director, Technology Sector

Kazuyuki Yoshimurabusinesses from across the country with users who have a keen interest in travel and community contributions. We haveactively recruited potential Smartphone Supporters from a diverse group of users known as “travelers” who are
enthusiastic about traveling across the country and making community contributions. We have also conducted training forthese Smart Supporters. Through this initiative, these “travelers” work towards eliminating the digital divide in local
communities while traveling, contributing to the realization of a more sustainable approach.

60

KDDI Integrated Sustainability and Financial Report 2023

61

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Realization of Safe, Secure, and Prosperous Society

Materiality 2

Values We Embrace (3)Efforts Related to the Tsukuba Super Science City Concept

Regional Co-Creation

In April 2022, Tsukuba City in Ibaraki Prefecture was designated as a “Super City-Type National Strategic Special Zones”
that aims to realize data linkage and advanced services, accompanied by bold regulatory reforms. This designation
addresses various regional issues in fields such as transportation & logistics, healthcare & elderly care, and childcare. The

Through the activities of Smartphone Supporters, “travelers” become the contributors to regional revitalization

super city is expected to lead the “Vision for a Digital Garden City Nation” aimed at realizing a sustainable economic

In June 2023, “travelers” who had attended three pre-session courses participated in asociety.
In collaboration with the city of Tsukuba and as part of the Cabinet Office’s Super City realization project, KDDI, alongsmartphone experience event for the residents in the vicinity of Okuma Town, Fukushima
Prefecture. Okuma Town is one of the municipalities that has experienced community

with KDDI SmartDrone Inc., TIER IV, Inc., and Psychic VR Lab LTD., conducted a demonstration experiment. Thisdivision due to the effects of the nuclear accident. The revitalization of the community

experiment involved

and activation of the region are anticipated through the utilization of digital resources.

using drones androbots to deliver

During the experience event, after delivering a comprehensive lecture on how to use
smartphones, the “travelers” answered questions from each participant. The participants
showed their enthusiasm for the event, sharing comments such as “I still have many things“Travelers” to show people how to
use their smartphones

supplies that mimic
PCR samples and toI want to ask, so I hope you’ll hold the event again next time.” It turned out to be adeliver food products,

remarkably successful gathering.

as well as utilizing
cross reality (XR)

The “travelers” who participated this time were officially certified as “Smartphone
Supporters” and will expand their activities. Moving forward, we hope that they will nottechnology to visualize

only serve as agents in eliminating the digital divide in local areas but also play an active

a drone skyway calledrole as “connected minds,” creating new changes by engaging with various aspects of the“sky road” for residents

community and the region as external community members.

“Smartphone experience event” inOkuma town

On June 2, 2023, the first “smartphone experience event” was conducted in Okuma Town, Fukushima Prefecture. (Japanese only)in the form of ademonstration
experiment.

A smart drone (the device used in the demonstration)connected through mobile communication networks

The drone skyway “sky road” visualized with XR and pedestrian
traffic signals

Sample transportation that requires promptness
With the amendment to the Aviation Act enacted on December 5, 2022, unassisted visual line of sight flight (Level 4

Achieving Improved Work Efficiency and Enhanced Convenience for Residents
Through the Digitization of Administrationflight) became possible in populated areas, raising expectations for the utilization of drones in urban areas. In this sample

KDDI leverages its past experiences and co-creation know-how with other companies, supporting municipal digitalization

Tsukuba City, to Tsukuba i-Laboratory, which handles sample testing functions, over about one month. In facilities,

efforts towards the digitalization of administrative procedures. In the “Administrative Digitalization Promotion Project

including small clinics, that do not possess advanced testing equipment, residents who visit for medical examinations

Support Services in the Tama Region” by the Tokyo Association of Mayors, we support initiatives that enhance thecannot undergo tests on the spot. Instead, the samples must be transported to testing facilities with advanced

convenience of citizens, workshops aimed at resolving issues faced by staff, and assistance with tool implementation. We

equipment. As a result, inconveniences, such as delays in receiving test results, can occur. Additionally, with the aging

work hand in hand with local communities to realize the digitalization of municipalities.

population, there is an expected increase in online remote medical consultations and remote medication guidance fortransportation demonstration, we envisioned Level 4 flights in future city centers and conducted drone transportation ofmaterials resembling PCR samples from Tsukuba Medical Center Hospital, located approximately 300 meters away inresidents who face mobility difficulties. This is likely to lead to growing demands for services like prescription medication

Support for staff efficiency improvement through Business Process Reengineering (BPR)

delivery. To address these regional issues, various efforts have been made to promote the realization of drone

To streamline administrative procedures, specific issues were discussed in face-to-face workshops. Ideas for solutionstransportation.

were considered, and the gap between the current and desired visions was visualized. To achieve the desired vision,

Summary of this demonstration:

support was provided for realizing administrative digitalization through the use of DX tools based on BPR.

Implementation period: January 19, 2023, to February 27, 2023
Location: From “Tsukuba Medical Center Hospital” to “Tsukuba i-Laboratory” (approximately 300 meters one way)

BPR to contribute to residents’ procedures

Aircraft used: “PF2-LTE” (manufactured by ACSL)

We supported BPR for “application for admission to after-school programs” and “notification of pregnancy and pregnancy

Operational management: KDDI SmartDrone tools operational management system

consultation procedures” in this project. Residents who used the online system commented positively; for instance, one
resident commented: “Online applications from home are very convenient.”
To enrich local communities and the lives of the people who live there, KDDI will walk alongside municipalities
committed to bringing new energy to the region through DX.

A domestic first: Visualization of the “sky road” using XR
The realization of the social implementation of drone logistics involves a critical aspect of how well the acceptance of
local residents can be fostered and understood, especially when flying over inhabited areas. Therefore, in thisdemonstration, in collaboration with Psychic VR Lab, we worked on visualizing the drone skyway called “sky road” using
XR technology in the area where flights were conducted as part of the drone transportation demonstration mimicking PCR
samples.
The initiative to visualize drone flight routes with XR content is the first of its kind in Japan (as of February 2023).
Summary of this demonstration:
Implementation period: January 19, 2023, to February 27, 2023

Online registration of pregnancy and pregnancy
consultations reduces the burden on expectant mothers

62

Online enrollment applications for after-school programs
reduce the burden on households with children

Digitizing municipal tasks such as applications for after-school programs has reduced working hours by up to 56%. (Japanese only)

Location: Used between “Tsukuba Medical Center Hospital” and “Tsukuba i-Laboratory” sections
Signage: Installed in front of “Tsukuba Medical Center Hospital”
App used: “5G XR VIEWER SATCH X powered by STYLY”

Implementation of Drone and Robot Deliveries
Simulating Level 4 Flight in Tsukuba City – A Domestic
First, Visualizing the “Sky Road” Using XR (Japanese only)KDDI Integrated Sustainability and Financial Report 2023

63

Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 2

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Realization of Safe, Secure, and Prosperous Society

Values We Embrace (3)Regional Co-Creation

A Locally-Initiated Tourism Web Service
KDDI, with au brand message “Explore the extraordinary,” is dedicated to working on regional co-creation alongside local
partners to showcase, nurture, and uplift the unique attractions specific to each region.
We have collaborated with Gotemba City and Shizuoka Prefectural Gotemba High School to develop and launch thetourism web service “COLO” to address tourism challenges such as increasing the length of stays and revitalizing city-wide
exploration.

Towards the realization of
the Tsukuba Super Science City concept
Tsukuba City
Policy Innovation Department
Science and Technology
Strategy Divisionpossesses advanced technology in various fields

Mr. Hirofumi Oogaki

be solely technology-oriented but to use ourKDDI Sugimoto: We recognize that the KDDI Group

based on communication. We made an effort not totechnology in a comprehensive manner, including ourpartners, to align with the Tsukuba Super Science City
concept, which “places the residents at its core.”
In this demonstration experiment, which was
performed with the cooperation of Tsukuba City, ourgoal was to understand the fundamental issues faced
by local residents, face and help them comprehendand accept advanced services. We aimed to create

LX Strategy Department,
Business Exploration &Development Division

Noriaki Sugimoto

opportunities for dialogue with the local community,
and we feel that through this process, we were able
to work “together” to address various opinions andunderstandings related to regional issues. Throughthis initiative, we have realized that while advanced
technology is important, engaging in dialogues withlocal residents is even more crucial. It strongly
reinforces the importance of implementing solutions

The current issues that plague the region

Tsukuba Oogaki: In this demonstration experiment, weperspective of “the locals” who live in that area.
Service Areas:• Gotemba • Atami & Hatsushima• Isumi & Ichihara • Awaji• Hakuba Village• Setouchi• Agatsuma• HigashiShirakawa

Voice from the students involved in planning and development• I’m very happy that the spot I came up with is featured, and I hope people
from all over the country can see it.

• Through the development of content, I was able to rediscover the newcharm of places I usually pass by without much thought.

• I want people to discover a new Gotemba that hasn’t been featured inprevious tourist information.

• Along with rediscovering the goodness of Gotemba, I also felt like exploring
the goodness of my hometown, Oyamamachi, where I come from.

Eliminating Financial Divides
au Financial Group, responsible for KDDI’s financial business, encompasses various functions, such as banking, payments,
securities, life insurance, and property insurance. Starting from smartphones, they aim to transform the landscape offinance from the palm of your hand, striving for “Connected Finance” that makes finance more accessible to everyone.
They provide highly convenient financial services that cater to the diverse needs of their customers.
au Financial Group has established five materialities based on the concept of “providing the benefits of digital finance

Mr. Oogaki from Tsukuba City (hereinafter referred to as

successfully showcased a potential solution toto all,” aiming to contribute to sustainable economic growth and stable asset building in the era of 100-year lifespans“Tsukuba Oogaki”): Three challenges have beenaddress the disparities in convenience between urban

through our business. These materialities are rooted in the idea of “financial inclusion.” which realizes a world where

identified as part of the “Tsukuba Super Science Cityand suburban living. Regarding drone-based delivery

everyone can access financial services without being left behind due to poverty or discrimination.

Concept”: “disparities in the convenience of urban

services, we will persist in our efforts towards

1) Creation of economic value, social value, and environmental value through digital finance.

and suburban living,” “insufficient response to diverse

implementation and aspire to contribute to realizing

2) Providing accessible financial services for everyone truly reflects this idea.

citizens due to shortcomings in multicultural

the Tsukuba Super Science City concept in the future.

The above two materialities, indeed, reflect that idea.

coexistence,” and “reduced urban vitality leading toconvenience of urban and suburban living represents

Expectations and prospects
for smart drones in the future

an urgent issue. While urbanization along the

Tsukuba Oogaki: Through collaboration with KDDI

Tsukuba Express line is progressing, residents in

SmartDrone, we believe that it not only addresses

suburban areas face inconveniences, such as theregional disparities but also expands the potential asneed to travel by car for shopping and medical

a new means of transportation and logistics.

decreased societal sustainability.” The disparity in the64

within the community.

With the theme of “Enjoy the soulful locals,” we deliver region-specific information that you won’t find on typical
tourist websites. We label significant places for the local community as “Soul spots” and introduce them from theservices. Additionally, with the aging population, there

KDDI Sugimoto: We recognize that initiatives like thisis a growing concern that more individuals will

demonstration experiment and research project withencounter challenges in shopping as they voluntarily

Tsukuba City should not be limited to one-off efforts

surrender their driver’s licenses in the future.

but should be connected to societal implementation,

KDDI Sugimoto: KDDI is addressing various challenges

aiming to establish them as sustainable models withinthat vary by region and working with local

the region. This aligns with KDDI’s vision of regional

governments to promote initiatives to address issues,co-creation. In the future, we also hope to be involved

such as regional disparities, an aging population, andin the implementation of cutting-edge services that,a decreasing workforce. In these initiatives, we havethrough collaboration between government,

combined advanced technologies from multiple fields,

academia, and the public, contribute to thewith mobility as a central focus, to tackle regional

realization of a society where local residents can live

issues.

rich and secure lives.

Furthermore, in order to establish a presence in the individual consumer financial market, it is crucial to earn “trust”
from customers. Therefore, we promote the following aspect,3) Establishment of a resilient corporate structure and management baseIn addition to those, we are also highlighting the following.
4) Pursuit of the happiness of all employees.
5) Commitment to environmental preservation and addressing climate change.

KDDI Integrated Sustainability and Financial Report 2023

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 2

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Realization of Safe, Secure, and Prosperous Society

Values We Embrace (3)Regional Co-Creation

Materiality 2

Financial education to create the future of the younger generation

Realization of Safe, Secure, andProsperous Society

In 2022, the mandatory introduction of financial education in high schools andthe renewal of the NISA system in 2024 are accelerating the shift in Japan from“savings to investments.”
In line with this trend, au Financial Holdings’ subsidiary, au Jibun Bank, isactively involved in financial education with the goal of dispelling the notionthat “finance equals complexity.”1) “au Jibun Bank Theater: Financial Folktales” is an original story created toprovide financial education for children by incorporating financial elements

Financial education classes heldin elementary schools

into familiar folktales. With unique characters, this platform offers an

Values We Embrace (4)Eliminating Regional and Economic Disparities Globallyenjoyable way to learn the basics of finance. The content is accessible forfree on the au Jibun Bank YouTube channel, allowing anyone to watch it.

Eliminating regional and economic disparities by contributing tolocal economic development through the maintaining andexpanding of communications and peripheral services in emerging
overseas countries.

2) We have collaboratively established a “Bank” pavilion at KidZania Fukuoka
in partnership with the Bank of Fukuoka. Visitors can immerse themselves in
the roles of “bankers,” performing tasks such as account openings andinquiries. They can also take on the role of “customers” and open accounts
for depositing and withdrawing KidZania’s exclusive currency, “Kizzo,” andeven create mock cash cards. Through these two experiential settings,
visitors gain insights into the significance and proximity of money and banks,

Work experience at au Jibun Bankin KidZania

fostering an understanding of the role banks play in society.
3) Collaborating with various companies and nonprofit organizations, we

Initiatives to Solve Social Issues in Emerging Countries

conduct “Financial education classes” in elementary schools. These classes
leverage the theme of “The Three Little Pigs” from “au Jibun Bank Theater:

KDDI contributes to the elimination of regional and economic disparities in emerging countries by developing and

Financial Folktales” to convey the importance of “saving ahead” and “theexpanding telecommunications services and peripheral services, which are social infrastructure. In Mongolia, weFinancial
folktales

value of saving money strategically.” As a culminating activity, students
engage in a workshop where they design and construct their own houses,
enabling them to grasp the concept of “preparing for the future” in a fun and

engaging manner, inspired by the story of the three little pigs.

 u Jibun Bank Theater: Financial Folktalesa(Japanese only)

We are continuing our efforts to make finance feel more accessible, aiming
to address and eliminate financial divides.

au Jibun Bank YouTube channel(Japanese only)

established MobiCom Corporation LLC (MobiCom) in 1995 and launched the country’s first mobile phone service in 1996.
Since then, MobiCom has led the telecommunications and IT industry as the country’s largest integrated
telecommunications operator for 27 years. As a result, the mobile phone penetration rate, which was only 0.4% when theservice was launched, has now grown to 142%*. In Myanmar, in 2014, we started supporting Myanma Posts &Telecommunications (MPT)– a state-run operator with a communication license– through KDDI Summit Global Myanmar
Co. Ltd. (KSGM), which is a joint venture with the Sumitomo Corporation. The country’s mobile phone penetration rosefrom 13% in 2013 to 115%* in 2022.
We will continue to contribute to solving social issues in these emerging countries through the development ofSince introducing the “au Jibun Bank’s SDGs Declaration” in 2020, au Jibun Bank has been actively
involved in activities centered around the theme of “Creating the Future.”
As part of our commitment to “create the future of children,” we place a significant focus on providing
financial education.
My primary responsibility involves planning and conducting financial lessons as educational content
tailored for children. During the content planning phase, I consciously envision the expressions andemotions of the children who will be receiving the lessons. Throughout the lessons, I establish
connections between the content and real-life scenarios, present concrete examples, and prioritize
enabling students to develop a sense of familiarity and interest in the concept of money.
In FY23.3, we conducted financial lessons in elementary schools using our original content titled “auJibun Bank Theater: Financial Folktales” as the teaching material. With the central theme revolving
around the concept of saving money, we also emphasized the significance of preparing for the futureand shared intriguing insights about money. Following the lessons, post-lesson surveys, indicatedfeedback such as “I now understand the importance of money” and “I want to save money for mydesires and future,” highlighting the effectiveness of these lessons in prompting children to contemplatethe concept of money.
Recently, I’ve recognized the growing importance of instilling financial literacy from a young age,particularly considering factors, such as lowering the legal age of adulthood and the inclusion of
mandatory financial education in high schools.
In addition to our previous efforts aimed at elementary school students, we also plan to expand our
initiatives to target middle and high school students in the future. In this era known as the 100-year life,
we aspire to provide support and financial education from early childhood into adulthood.

telecommunications and peripheral services and various projects.
* Source: GSMA Intelligence

Procedures via the app helping to eliminate regional disparities
In February 2023, MobiCom launched Mongolia’s first postpaid plan “hyper” (hereinafter “the plan”), which enables
customers to sign up for the Plan via the official MobiCom application (Internet). In Mongolia, customers had to sign awritten contract at a store in order to start using postpaid services, which was inconvenient for those living in rural areas
where there are few stores. The plan utilizes the identity verification function of E-Mongolia, an online platform provided
by the Mongolian government, enabling customers to complete the procedures via the application wherever they are.
Offering the plan will contribute to eliminate the regional disparities in accessibility to telecommunication services, whichshows a major gap between urban and rural areas.

au Jibun Bank PR Department Yusuke Mita

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Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 2

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Realization of Safe, Secure, and Prosperous Society

Values We Embrace (4)Eliminating Regional and Economic Disparities Globally

Startup Support Program in Mongolia
In 2020, in collaboration with JICA and its Mongolia–Japan Center for Human Resources Development, we began providing
support to startup companies working on innovative business models and technologies to address the socio-economictransformation under the COVID-19 pandemic. In FY23.3, we provided support programs– including mentoring, lectures,and networking with investors– to three companies offering apps to childcare support, health promotion, and education.
MobiCom supports local startups through programs to solve the social issues caused by the COVID-19 pandemic,
contributing to the development of sustainable industries in Mongolia by promoting Mongolian innovations globally.

“Smart Education” Project to Support Children’s Learning
MobiCom is implementing the “Smart Education” project nationwide in Mongolia as part of its Corporate Social
Responsibility (CRS) activities in cooperation with World Vision Mongolia (an international NGO that supports children),the Ministry of Education and Science, and UNICEF.
This project was launched in 2021 with the aim of providing equal educational opportunities to children who, due tolack of Internet access or smartphones, may not be able to access educational services and delay their learning. In

MobiCom incorporates the Sustainable Development Goals into its daily operations and CSR activities
in order to create a fair and sustainable future. Smart Education aims to play an important role increating common values for society based on our SDG policy of “providing quality education andhealthy and safe learning environments for the children and youth of the next generation.”
Smart Education is a large-scale project implemented throughout Mongolia, involving more than 100
people, including partner companies and volunteers, as well as MobiCom staff. We work with teammembers on project development, monitoring, measuring effectiveness, and improving concepts for the
next project.
Surveys and questionnaires conducted among students who participated in Smart Education showedthat the program prevented children who were unable to attend online classes during the COVID-19
lockdown from falling behind in their studies. Overall, their grades for language and math classes
improved by approximately 3 to 5%.
We believe that Smart Education goes beyond the donation of Internet access and mobile phones tohelp children develop a passion for independent learning and provide equitable learning opportunities.
Now that lockdown due to COVID-19 has been lifted, our lifestyles have changed, and an educational
system based on information technology continues to play a large role. Meanwhile, it remains difficult
for children living in rural cities and poor families to benefit from these education system developments. We will continue our Smart Education project to ensure equitable educational opportunities
and to further develop the educational system through information technology. In FY24.3, we hope toincrease the number of children benefiting from the project by supporting more school-based digitallearning, rather than individual students.
MobiCom Marketing Communications & Public Relation Division Ashina Bolorkhuu

FY23.3, 2,000 children aged 12-15, who won an essay contest were provided with a data package that included asmartphone, a new MobiCom number, and access to online classroom apps (such as Teams and Zoom) without data
usage restrictions to support their online learning. In addition, 40 GB of data that can be used in MobiCom’s video
viewing application, “VOO,” is provided free of charge to further support children’s learning.

Providing e-learning programs for young people in Myanmar
MPT, which KDDI supports in the telecommunications business through KSGM, launched a free education program■ Smart Education Initiatives

through e-learning in May 2023 based on its commitment to “MPT-Holding Hands Together with the Myanmar People.”
This program offers a total of three courses (IT, vocational training, and language acquisition), with learning contents
including programming, graphic design, electrician, welding skills, and Japanese language courses. Approximately 1,000
MPT users and young adults (8 to 35 years old) with limited learning opportunities are selected from among theapplicants and offered the program free of charge, including mobile data communication during course participation.
This program creates equal learning opportunities for young people in Myanmar.

Human Rights Initiatives in Myanmar
The KDDI Group recognizes that all business activities are based on respect for human rights, and has established the“KDDI Group Human Rights Policy,” which is also followed in Myanmar.
As part of our human rights due diligence efforts in Myanmar, in 2022, we commissioned a globally renowned andtrusted human rights consultant to conduct a human rights impact assessment. The consultant recommended for us to“ensure the safety of all employees,” “conduct ongoing human rights due diligence,” and “engage in dialogue with andsupport trusted stakeholders.” We are continuing our human rights efforts in line with these recommendations.
Recognizing that all businesses in Myanmar have been placed in a difficult situation since the political upheaval, we
will continue to pursue ways to respect human rights in accordance with international human rights norms. Doing so will
include adherence to the UN Guiding Principles on Business and Human Rights, while taking care to ensure the safety of
local employees, their families, and other related parties.

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Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 2

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Realization of Safe, Secure, and Prosperous Society

Values We Embrace (4)Eliminating Regional and Economic Disparities Globally

KDDI Foundation International Cooperation Projects
The KDDI Foundation promotes social contribution activities for the development of the international community
development and the achievement of the SDGs through ICT utilization.

Materiality 3

Carbon Neutral

ICT Education Support in Nepal
In Nepal, the government has taken the lead in addressing education issues in recent years. However, educational
disparities between schools have become apparent and the government is providing educational support using ICT toensure that children can receive a high-quality education.

Values We Embrace (5)Carbon Neutral

2019Started e-learning and robot programming education in Lalitpur in cooperation with OLE Nepal* andothers2020

Installed digital learning materials on tablets and loaned them to students so that education would not
be suspended due to the COVID-19 pandemic. Also, provided home study support to allow students tocontinue learning during the school closure period

2021 to2022

Provided learning opportunities for children with audiovisual disabilities by producing digital educational
materials equipped with sign language videos and speech reading functions

2023

Held a robot programming competition for elementary and junior high school students,
facilitating an ICT education project to utilize tablets used for home study support in regular classes* OLE Nepal: Local NGO working on education issues in Nepal

In addition to achieving carbon neutrality in fiscal 2030*,
we will provide customers with renewable energy andcontribute to solving the global climate change problem.
* Scope 1+2

KDDI’s environmental policy
KDDI is committed to environmental conservation through the “KDDI Environmental Charter framework,” which outlines
our dedication to safeguarding the Earth’s precious environment for the well-being of future generations. Recognizing our
responsibility as a conscientious global corporate citizen, we are actively engaged in initiatives to achieve a carbon-freesociety, preserve biodiversity, and establish a circular economy.
Furthermore, in our sustainability management, we integrate the principles of “long-term focus” and “social value” into
our business strategy. Our goal is to attain sustainable growth in partnership with society. We firmly believe that KDDI’s
provision of a dependable and secure communication infrastructure can seamlessly integrate communication across allindustries, leading to reduced environmental impact and contributing to the realization of a resilient and sustainableeconomy.
Continuing forward, we are committed to developing business ventures that align with the ever-evolving needs of ourtimes and actively contribute to achieving a truly connected society.

Children working with tablets for home study support

Audiovisual content video with sign language
Digital educational materials for those with audiovisual disabilities are already in use at
three special-needs schools, and its introduction to five additional schools is underway.

■ Focus areas

1. Realization ofa carbon-free society

2. Biodiversity

3. Recycling-oriented society

By using ICT to provide quality education to many children and contribute to the development of human resources whowill lead the future, we will contribute to the sustainable development of the international community.

1. Initiatives Towards Achieving Carbon Neutrality
KDDI’s approach to carbon neutrality
The Japanese government has established the objective of reducing GHG emissions by 46% by 2030 (compared to fiscal
2013 levels) and aims to achieve carbon neutrality by 2050. As a telecommunications carrier of social infrastructure, KDDIis dedicated to enhancing the global environment. To attain carbon neutrality, we will pursue the following three
approaches:
1. Promotion of carbon neutrality measures for KDDI’s business activities
Annually, KDDI emits approximately 1 million tons of CO2 through electricity and other from energy consumption, mainly
in mobile phone base stations, telecommunications facilities, and data centers, contributing to around 98% of our CO2

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Carbon Neutral

Values We Embrace (5)Energy-saving endeavors rely on the collective impact of incremental reductions, which can be challenging to execute. However, by capitalizing on KDDI’s strengths through partnerships, we are actively
embracing the integration of novel technologies. In fact, reductions have been consistently advancing
each year, prompting us to request your ongoing attention to future developments.
Most of the transition towards renewable energy is achieved by switching to renewable energy plans.
However, we aspire to amplify the portion of renewable energy with additional measures. This objective is not confined to the KDDI Group but extends to collaboration with diverse partners. KDDI’scommitment to renewable energy aims to benefit our operations and contribute to the overall augmentation of renewable energy in society. We consider this crucial and resolutely prioritize utilizing renewable energy with added value.
The attainment of carbon neutrality is undoubtedly an ambitious aspiration, yet we remain steadfast in
our determination to achieve it. Moreover, fiscal 2030 serves as both our target and starting point, andensuring the enduring nature of carbon neutrality presents an even greater challenge. We are diligently
preparing alongside our partners and devoting our utmost efforts to meet this challenge.

Carbon Neutral

emissions. With the anticipated growth in 5G adoption and communication demands, efforts to curtail CO2 emissions are
increasingly vital. KDDI is advancing the carbon neutrality in our business operations by incorporating renewable energy
sources and reducing energy consumption.
2. Promotion of carbon neutrality support initiatives for customers and society
Reducing corporate CO2 emissions entails a comprehensive approach across the entire business activity supply chain.
Moreover, to accomplish societal carbon neutrality, it is crucial to encourage energy-conscious behaviors among
consumers.
KDDI will persist in delivering diverse services to aid corporate customers in achieving carbon neutrality. Furthermore,

General Manager, Carbon-Neutral Achievement Office, Technology Strategy & Planning Division

we will initiate efforts that stimulate actions towards carbon neutrality for individual consumers, such as rewarding

Go Ichimura

environmentally friendly behavior with point incentives.
3. Promotion of startup support initiatives
To achieve the ambitious target of attaining carbon neutrality by 2050, as set by the Japanese government, innovative
solutions through collaborative creation that transcend existing technological boundaries and involve various companies

Initiated the introduction of base station sleep function

and organizations are indispensable.
KDDI is firmly committed to collaborating for the advancement and broad acceptance of innovative environmental

At KDDI, we have implemented a new feature to enhance energy

technologies and novel approaches to environmental preservation. This is facilitated by supporting startups concentrating

efficiency in our base stations starting from March 2023. Throughon decarbonization technologies and circular services through the KDDI Green Partners Fund. Moreover, we will persist in

demonstrations experiments, we have ascertained that power

implementing initiatives that encourage each consumer’s actions towards achieving carbon neutrality, such as ,including

consumption can be reduced by up to 30%. We will analyze

rewarding Ponta points for environmentally responsible behavior.

fluctuations in traffic for each base station and curtail power
consumption by introducing sleep mode (pause) for specificKDDI’s carbon neutrality achievement goals

radio waves during designated time frames, such as late at night,

Through energy-saving measures and technological innovations in renewable energy, KDDI aims to reduce thewithout impacting customer communication.

environmental impact of its power consumption by achieving carbon neutrality for its globally deployed data centers

Enabling Sleep Mode for Radio Waves During Low-Traffic Hours

under the brand name “TELEHOUSE” by fiscal 2026. KDDI aims to achieve net-zero CO2 emissions from its businessactivities by fiscal 2030. The target of the entire KDDI Group is to achieve net-zero CO2 emissions by fiscal 2050.

■ Roadmap
Toward Net-Zero
CO2 Emissions

CO2 Emissions(t-CO2)In February 2023, we initiated the “Internal Carbon Pricing System (ICP),” wherein we independently determine the price
1,090,000

Fiscal 2030 KDDI(non-consolidated)carbon neutral

1,000,000
CO2 emissions
associated with
telecommunications
equipment power
consumption

Carbon neutrality
in data centers*by fiscal 2026

Mobile phone basestations &data centers
0Adoption of an Internal Carbon Pricing System

OfficeFiscal 2021

Fiscal 2026 target

Reduction in energy
consumption throughenergy-saving measures& switching to renewableenergyFiscal 2030 target* The term “data center” refers to data centers owned by the KDDI Group, excluding facilities or parts of facilities
rented from other companies to provide services.

of CO2 internally and employ it as a criterion for making investment decisions. The introduction of the ICP is designed tofoster a shift in employee awareness and expedite investments in energy efficiency and renewable energy endeavors thatlead toward carbon neutrality.
Examples of applicable cases• Installation of solar panels for mobile phone base stations and introduction of renewable energy generation facilities.
• Adaptation of energy-efficient technologies such as improved air conditioning efficiency.
• Facility upgrades to enhance energy efficiency.
• Long-term renewable energy procurement through power purchase agreements (PPA) and other means.
Internal carbon pricing• Internal carbon pricing at 14,000 yen per ton of CO2 (t-CO2).
Switching the domestic communication bureau’s electricity usage to primarily come from renewableenergy sources

The operation of “sustainable base stations” has commenced

We are gradually switching the power usage of our domestic“Sustainable base stations,” which are base stations equipped with facilities thattelecommunication facilities, including the domestic data center(TELEHOUSE), to a carbon-free plan featuring with virtually zero CO2

contribute to carbon neutrality, have been operational since June 2023.
Base stations are installed with solar panels that enable them to autonomously

emissions. In FY23.3, we switched the purchased power of six

generate power on sunny days, ensuring mobile communication even in the event of atelecommunication facilities (KDDI Shinjuku Building, KDDI Otemachi

disruption in commercial power supply during disasters. Furthermore, during the

Building, Shibuya Data Center, Oyama Network Center, Nagoya-chuonighttime, the base stations operate using the KDDI Group’s au Energy & Life carbon-

Network Center, Osaka-chuo Network Center) to a carbon-free plan. This

free plan, ensuring they operate purely on renewable energy throughout the year, 24/7.

switch is expected to reduce annual CO2 emissions by over 100,000 tons;,

We plan to increase the use of sustainable base stations in the future.

which is approximately 10% of KDDI’s annual CO2 emissions of around 1
million tons.

KDDI Shinjuku
Building

KDDI Otemachi
Building

Solar panels installed at base stations

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KDDI Integrated Sustainability and Financial Report 2023

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Support for customers’ and society’s carbon neutrality

Carbon Neutral

Values We Embrace (5)First among telecommunication providers to disclose

Carbon Neutral

First in the industry

Green Mobile

actual measurements of CO2 emissions generated bycommunication service provision

Disclose the CO2 emissions generated until
the provision of telecommunication services.

Starting from April 2023, as the firstTo further our contributions to a decarbonized society, we have established “au Renewable Energy,Inc.” to undertake renewable energy generation projects.

telecommunication provider in Japan, we have

au Energy Holdings Corporation has established “au Renewable Energy, Inc.” with a focus on enhancing efforts to increasemeasurements (primary data) of CO2 emissions

renewable energy capacity via the construction of innovative renewable energy generation facilities – gaining corporate

generated until the provision of communication

sector attention as a suitable power

services, targeting corporate customers. We are also

procurement method. To contribute to thecommitted to visualizing the CO2 emissions associated with corporate customers’ smartphone usage, which has beenachievement of carbon neutrality withindifficult to calculate accurately up to now. This visualization will contribute to setting reduction targets for Scope 3

the KDDI Group, the generated electricity

emissions that encompass the entire supply chain, as well as monitoring progress toward reduction and information

will be supplied to our own facilities, fordisclosure.

example, base stations,introduced “Green Mobile,” which discloses the actual

Corporate customers’smartphones are
the target

Transition the electricity consumed in providing
telecommunication services to renewable energy
sources.

No additional charges, no application
required.

“Green Mobile” covers all tariff plans for corporate customers’ smartphones. The electricity consumed by KDDI totelecommunication buildings, and data

provide communication services to corporate customers will be sourced from renewable energy before reaching them. As

centers.

a result, this will also contribute to reducing the CO2 emissions associated with corporate customers’ smartphone usage.

au Renewable Energy has launched a solar power generation business and will produce additional
renewable energy to meet future demands, supplying it to KDDI and also to wider society. Moving
forward, we aim to leverage the KDDI Group capabilities, including telecommunications and digitaltechnology, to control decentralized power sources, such as solar power generation, energy storage,
and electric vehicles. Ultimately, this will support the transition to a renewable energy-centered society
bolstered by a stable supply.
Our aspiration is to contribute to the realization of KDDI Group’s carbon neutrality and a future decarbonized society, working towards sustainable environmental development and local communities forthe next generation.
au Renewable Energy Inc. President, Representative Director

The task of reducing Scope 3 emissions is a challenging area, even for large corporations. Indeed,demanding carbon neutrality from business partners is quite difficult, which is a significant factor
hindering Scope 3 initiative progress. Hence, KDDI has been supporting corporate customers in digitizing their businesses through ICT services. By incorporating the additional value of carbon neutrality into
these traditional ICT services and advancing digitization, we aim to contribute to the sustainablegrowth in society and support both the realization of our customers’ carbon neutrality and their corporate activities. In the future, we will expand the scope of Green Mobilization beyond smartphones to
ICT solutions covering both the Intranet and the Internet. Additionally, we will drive contributions to
our customers’ CO2 emissions reduction through DX solutions such as CO2 emissions visualization andfactory operation optimization, together with renewable energy solutions like solar power generation.
We hope that by supporting corporate customers in accelerating their carbon-neutral initiatives, thiswill lead to the overall reduction of CO2 emissions throughout society.
General Manager,
Service Planning Department
Solution Engineering Division

Goro Suzuki

Masahiro Kajikawa

Collaboration agreement between Gunma Prefecture, KDDI, and au Renewable Energy, Inc. to realize
an independent distributed society through GX
On June 29, 2023, Gunma Prefecture signed a collaborationagreement titled “Cooperation Agreement for theParticipation in the Ministry of the Environment’s “Green Life Point” program

Realization of an Independent Distributed Society throughAs of January 10, 2023, we have joined the “Green Life Point” project

GX.” By signing this agreement, KDDI and au Renewablepromoted by the Ministry of the Environment. We aim to cultivate an

Energy will assist Gunma Prefecture in realizing its

environmentally friendly lifestyle together with our customers via point

objectives of strategically expanding renewable energy,

rewards for shopping at au PAY affiliated stores that engage inalongside achieving self-reliance and the decentralization ofenvironmentally conscious initiatives and focus on reducing food waste at au

power sources. Gunma Prefecture, with a location boasting

PAY Market. With this initiative, we will introduce environmentally conscious

one of the highest sunshine durations in the country, isefforts via participating stores, for example, with the adoption of biomass

striving for the planned proliferation of renewable energy inplastic bags and the sale of food waste reduction products through the “auaccordance with the Gunma Prefecture Renewable Energy

Ponta Portal.” Moving forward, we will continue to enhance the convenience

Promotion Plan. Low-carbon and sustainable energy – asof Ponta points within au services, while also increasing the number ofdomestically produced energy that leverages local

affiliated stores committed to environmental considerations. By encouraging

resources – is required not only for environmental reasonscustomers who share our values to shop at these affiliated stores, we aim tobut also to support regional development. Plus, there is aneed to further establish an environment that enables its

Signing Ceremony for the Collaboration Agreement with Gunma
Prefecture

Green Life Point

build a system that contributes to the realization of a sustainable society.

widespread adoption and expansion. Furthermore, while
expanding the application of this agreement to other municipalities, au Renewable Energy aims to achieve its purpose of“connecting ‘nature’ and ‘local communities’ with renewable energy, toward a future where the Earth and its people canlive prosperously together.”

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Carbon Neutral

Values We Embrace (5)Initiatives towards the adoption of perovskite solar cells:
Joint demonstration with EneCoat Technologies

Carbon Neutral

Perovskite solar cells are highly anticipated for their unique features, such as
their lightweight, flexibility, and high power generation indoors, which are
not present in traditional solar cells. This technology is expected to have asignificant impact on renewable energy expansion.

Participation in the Ministry of the Environment’s Green Life Point project is intended to not only provide
traditional cost-saving benefits but also to encourage the use of Ponta points and au PAY from a perspective of social contribution. Since its launch in January 2023, we have received entries from a totalof 1.65 million customers – as of the end of May. This initiative was made possible by undertaking
challenges such as coordination with the Ministry of the Environment and negotiations with au PAY
affiliated stores, bringing together internal stakeholders into one cohesive effort. Through this initiative,
as well as by working with partner companies like Kuradashi Co., Ltd. (which works on reducing foodwaste) and Green Lawson (Lawson’s first environmentally conscious store), we hope to serve as acatalyst for encouraging environmentally conscious actions among customers. Additionally, we hopethat customers will come to appreciate Ponta points and au PAY even more. Moving forward, taking
into account the feedback from our customers, we will continue to strive for improvements to thisinitiative, as well as enhancing the appeal of Ponta points and au PAY.
Marketing Planning Department, Marketing Division Naoko Noyori

In collaboration with EneCoat Technologies Co., Ltd., in which KDDI
invested in March 2022, KDDI has initiated joint demonstrations startingfrom FY23.3 with the aim of installing perovskite solar cells at KDDI
telecommunication base stations and facilities. In FY24.3, we are planning
outdoor demonstrations for communication base stations.
In the near future, we will continue our collaborations to leverage theadvantages of perovskite solar cells, aiming to realize a society where

Perovskite solar cells

electricity can be generated without the need for specific installation
locations – including low-illumination environments like small IoT devices and offices.
Achieving secure and safe wind power generation:
Investment in LEBO ROBOTICS, which is developing maintenance robots
Wind power generation is expected to be one of the main
sources of renewable energy moving forward, currently

KDDI Green Partners Fundshowing an acceleration in its worldwide adoption. The

The KDDI Green Partners Fund is a corporate venture capital that supports startup companies that are looking to address

blades of wind power generation facilities can experienceenvironmental challenges. Since its establishment in November 2021, the fund has provided funding to six companies andreduced efficiency, however, due to factors that include

also engaged in business support and joint demonstrations of how various assets held by KDDI can be utilized. As of

airborne particles like sand, degradation and damage from

September 2023, investments have been made in six companies.

wind and rain, and the impact of lightning, all of which

1) March 2022: EneCoat Technologies Co., Ltd., a company specializing in the development of next-generation solar cells.

necessitate regular inspections and maintenance.
Typically, such maintenance involves hazardous high-2) September 2022: Emulsion Flow Technologies Ltd., contributing to the recycling of rare metals.
3) October 2022: Amica Terra Co., Ltd., developing plastic alternative materials that return to the soil.

altitude work using ropes or cranes. However, as wind4) October 2022: Helical Fusion Co., Ltd., working on nuclear fusion power generation.

turbines continue to grow in size and their numbers increase, concerns arise regarding skilled labor shortages and rising costs.
In December 2022, through the KDDI Green Partners Fund, we invested in LEBO ROBOTICS Co., a company that

5) February 2023: LEBO ROBOTICS Co., Ltd., developing inspection and repair robots for wind turbines.

provides maintenance services for wind turbines using robots. Robot maintenance not only automates tasks that were6) April 2023: Biome Inc., working on visualizing biodiversity.

traditionally carried out by humans, as well as standardizing repair techniques, but also contributes to reducing work
hours and achieving preventive maintenance. This, in turn, contributes to ensuring the safety and security of wind 1.
power generation maintenance and improving power generation efficiency. Plus, in collaboration with LEBO ROBOTICS,
KDDI will support the further advancement of robot inspection services using communication, IoT technology, and drones
to automate and streamline wind power generation facility inspections and maintenance operations.
To further accelerate KDDI’s efforts towards
Investment in Next-Generation Energy:

decarbonization, biodiversity, and resource recycling, theKDDI Green Partners Fund aims to foster business co-KDDI

Startups

Utilization of startup
technology and services

KDDI offers demonstration
opportunities,
technical support,
and funding

Creation of new businesses
within the KDDI Group

Early implementation oftechnology with expectedsocial impact

creation with the KDDI Group by investing in andsupporting startup companies as they develop advanced
technologies and services to address these environmental
challenges – as defined in KDDI’s environmental policy. At
the same time, we also focus on the social andNuclear fusion is the source of energy generated by celestialbodies like the sun. It refers to the reaction where light atomic
nuclei, such as hydrogen, fuse together and transform into heavier
atomic nuclei like helium. It is expected to be the next-generationenergy source that simultaneously addresses energy andenvironmental impact generated by startup companies.
Through our funding and technical assistance, we aim tocontribute to the early societal implementation of
impactful technologies, thus, promoting their widespread
adoption.

Investment in Helical Fusion, which is working on nuclear fusion power generation

Solving social issues and environmental challenges

environmental issues, as it does not emit greenhouse gases orhigh-level radioactive waste. Helical Fusion is a startup company
launched with the mission of “realizing a sustainable world with
implemented nuclear fusion energy.” By leveraging world-classexpertise accumulated over decades of nuclear fusion research inJapan, they aim to develop the world’s first steady-state nuclear■ Investment area

fusion reactor.

Achieving a decarbonized society

Conservation of biodiversity

Biodiversity conservation

Renewable energy generation, energy storage
technology, energy management, carbon
credits, and more

Biological data collection, ecosystemconservation, water resource management
and more

Recycling-related technology,
plastic-free, traceability,
and more

In November 2022, via the KDDI Green Partners Fund, KDDI
invested in Helical Fusion Co., Ltd. KDDI is supporting Helical
Fusion’s business by helping to raise awareness of nuclear fusionenergy and improve its societal acceptance. This support willcontribute to achieving society’s carbon neutrality goals.

76

The image of the superconducting coil and plasma in ahelical-type nuclear fusion reactor.
KDDI Integrated Sustainability and Financial Report 2023

77

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Carbon Neutral

Values We Embrace (5)2. Initiatives Towards the Conservation of Biodiversity

Carbon NeutralKDDI’s approach to natural capital
While the environmental issue of losing natural capital, including biodiversity, could increase risks in our value chains,
KDDI can continue to grow by playing our part in resolving environmental issues through our businesses standing on

Collaborative efforts with suppliers

various technologies, such as our communication and IoT technologies. This is why KDDI supports the vision of theKDDI is advancing carbon-neutral initiatives in collaboration with our supply chain and business partners. To implement

Taskforce on Nature-related Financial Disclosures (“TNFD”) and joined the TNFD Forum in April 2023. KDDI will strive toenergy-saving measures through the adoption of energy-efficient equipment, we have established the KDDI Green

proactively disclose information based on TNFD’s information disclosure framework.

Procurement Guidelines outlining specific procurement criteria for energy-efficient equipment. Our efforts include

Furthermore, we will work on issues that are getting ever more serious—such as climate change including global

procuring energy-efficient business facilities, including telecommunication equipment, HVAC systems, and power

warming, environmental issues such as destruction of biodiversity, human rights issues and widening economic divide. We

equipment. These guidelines target the equipment specified in the latest “Ecology Guideline for the ICT Industry” set out

will collaborate with global institutions, assessment institutions, taskforces creating disclosure frameworks, as well as

by the ICT Ecology Guideline Council, for which we are also promoting procurement activities accordingly. Furthermore, in

stakeholders including investors, customers, suppliers, and employees, who are all becoming more active. KDDI, together

collaboration with our business partners, we have implemented the “KDDI Sustainable and Responsible Procurementwith our partners, aims to contribute to the sustainable growth in society and corporate value improvement.

Guidelines” at the same time as assessing key factors like environmental management through a “Sustainability
Procurement Survey.” By implementing procurement activities based on these guidelines, we will further promote efforts

Risk reduction measures in the telecommunications businessto reduce CO2 emissions.

To understand KDDI’s dependency and impact on its telecommunications business, the TNFD’s LEAP approach*1 wasKDDI Green Procurement Guidelines (Japanese only)KDDI Group Sustainable and Responsible Procurement Guidelines

adopted. An evaluation was conducted to consider the severity level of pressure on nature, with reference to IUCN*2
guidelines. In accordance with the TNFD framework, scoring was conducted based on factors that included theseriousness of dependency and impact, geographical importance, and the state of biodiversity-related laws andregulations in the given country. This analysis utilized a number of tools: including “ENCORE,” recommended for assessing
the presence and magnitude of a company’s impact on ecosystems; aggregated data like the National Biodiversity Index

External evaluation and collaboration with external organizations
Recognized as CDP’s Highest Climate Change Response Score “A List”
KDDI received its first climate change “A List” certification, the highest scorepossible for advanced environment companies, from international
environmental not-for-profit charity CDP (December 2022).
KDDI was recognized as a global leader for environmental activities, with
its initiatives such as target setting, action and transparency in climatechange operations being rated.

(NBI), which evaluates the ecological importance of the host country; and the Environmental Performance Index (EPI),
which summarizes the legal framework related to ecosystem conservation in the host country. We have also identified
key dependency and impact items from the results mentioned earlier, as well as having drawn upon our own businessperspectives.

• Impact of terrestrial ecosystem use and water resources from mining to obtain raw materials (especially metals) for
mobile devices• Soil pollutants from the use of toxic substances arising from mobile device production• Impact on terrestrial ecosystems, especially on land from building stations and installing communication cables• Dependency on the stabilizing features of water resources, climate and land to procure raw materials for stations andcommunication cables
Within its mobile device procurement process, KDDI promotes the Act on Promoting Green Procurement, together

Joined the RE100
KDDI has joined RE100, a worldwide program for corporations that arededicated to 100% renewable energy. (July 2023)
KDDI will promote the introduction of renewable energy with highadditionality for our data centers and base stations, by procuring renewableenergy power from electricity suppliers and directly sourcing renewableenergy generated by the group company.

Joined the Japan Climate Leaders’ Partnership (JCLP)
KDDI has joined the Japan Climate Leaders Partnership (JCLP), a coalition ofbusinesses in Japan that aim to create a carbon-neutral society, built on theidea that decarbonization is essential to economic development. (April 2023)
KDDI endorses the principles of the JCLP and accelerates the transition toa decarbonized society.

with the establishment and implementation of KDDI Group Sustainable and Responsible Procurement Guidelines,
engagement activities with suppliers, and the recycling of used mobile phones. Furthermore, in the case ofcommunication cables and base stations, various initiatives are being carried out in collaboration with relevant agencies.
These include route designs for communication cables that take into account environmental conservation areas,establishing disaster preparedness measures, and conducting swift support activities in disaster-affected areas.
Additionally, efforts are made to construct base stations with consideration for the landscape, as well as promoting thereuse and recycling of facilities when they are decommissioned.
*1 The process of systematically assessing natural-related risks and opportunities. It consists of four phases: Discovering points of contact with nature(Locate), diagnosing dependencies and impacts (Evaluate), assessing risks and opportunities (Assess), and preparing to address natural-related risks
and opportunities while reporting to investors (Prepare)*2 International Union for Conservation of Nature and Natural Resources.

Initiatives of Biome and KDDI to visualize biodiversity
Initiatives in biodiversity conservation require the visualization of biodiversity. However, because ecosystems vary byregion, the collecting and visualizing of biological information has been considered challenging.
Biome Inc., in which the KDDI Green Partners Fund invested in April 2023, is a startup company that offers a biologicalinformation visualization platform. Biome provides a system through its creature collection app “Biome,” which features
biological identification AI, enabling anyone to collect biological information.
Biome has started offering a “Task Force on Nature-related Financial Disclosures (TNFD) Compliance Support
Package,” which utilizes the largest domestically accumulated biological database and biological information collection,
analysis, and visualization technologies. With this package, companies are able to analyze the relationship between theirbusinesses and biodiversity using tools such as biodiversity risk maps and an enterprise-level biological survey.
With this investment, KDDI will accelerate its biodiversity conservation efforts, both in risk assessment and78

KDDI Integrated Sustainability and Financial Report 2023

79

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Kyoto University Ashiu Forest Research Station and KDDI sign a comprehensive collaborationagreement for biodiversity conservation

Carbon Neutral

Values We Embrace (5)Carbon Neutral

The Ashiu Forest Research Station, Field Science Education and Research Center, Kyoto University, and KDDI havecombined to sign a comprehensive collaboration agreement with the aim of contributing to the conservation, education,and research of biodiversity and ecosystems at the Ashiu Research Forest.

opportunity creation. Specifically, KDDI

Since the late 1990s, the valuable vegetation of the Ashiu Research Forest has significantly declined due to extensive

will utilize this package to advance thegrazing by an increasing population of Japanese deer. This has not only affected plants but various other organisms too,analysis of the relationship between its

such as insects and fish, as well as impacting the soil and rivers, resulting in ecosystem alterations and a critical situation.

business operations and biodiversity.

Through this agreement, both parties will work on the conservation of the Ashiu Research Forest’s ecosystem andAdditionally, KDDI will leverage its

biodiversity, educational and research activities related to the Ashiu Research Forest, and also the promotion of activities

communication and IoT technologies tousing DX and telecommunication technology to advance and enhance efforts focused on environmental protection.

support Biome in collecting biologicalParticipation in external initiatives

information for biodiversity visualization.

Joined the Task Force on Nature-related Financial Disclosures (TNFD) ForumIn April 2023, KDDI has joined the Taskforce on Nature-related Financial Disclosures (TNFD)
Forum, which supports the activities of the Taskforce on Nature-related Financial
Disclosures. Based on the TNFD’s disclosure framework, KDDI will organize the relationshipbetween its business and natural capital (dependence and impact) as well as risks and
The creature collection app “Biome”

The process of information collection

opportunities, and promote proactive disclosure from the four perspectives recommended
by the TNFD: Governance, Strategy, Risk management, and Metrics and Targets.
In June 2023, KDDI published its first TNFD report, summarizing information in

accordance with the TNFD framework about the Company’s dependence on and

The TNFD Forum

impacts on natural capital, as well as associated business risks and opportunities, alongwith response measures.
At Biome, we are engaged in a business that is aimed at conserving biodiversity by transforming
biological and environmental data from around the world into big data. Specifically, we develop andoperate smartphone applications for consumers, such as “Biome,” which allows users to record livingorganisms in a fun, gamified manner. In addition, ’BiomeSurvey,’ is a comprehensive app for conducting
in-depth biological surveys. Through these applications, we collect, analyze, and interpret data on the
distribution of organisms, which serves as foundational information for biodiversity conservation.
Both apps are equipped with AI that is capable of identifying the names of animals and plants fromphotos taken, allowing even non-expert people to conduct wildlife surveys. As of July 2023, Biomepossesses real-time biological distribution information exceeding five million records, which can beutilized for various purposes, including the monitoring of invasive and rare species, investigating theimpact of climate change, quantifying ecosystem services, and promoting natural tourism resources.
Additionally, we also offer services such as “BiomeViewer,” aimed at visualizing biodiversity. All of whichis part of our aspiration to provide an essential service platform for companies, administrations, organizations, and research institutions when working toward the conservation of natural environments.
We hope that our collaboration with KDDI, which has a rich customer base, will serve as a significant
catalyst for expanding our business. In the deployment of services used 24 hours a day, 365 days ayear, in various regions, real-time stable communication technology and IoT technology are indispensable. If we are successful in incorporating biodiversity conservation perspectives into such a social
infrastructure, the possibilities expand significantly. We look forward to working with KDDI to envision a
new approach to biodiversity conservation that has not before existed in the world.
Biome Inc.
CEO

Shogoro Fujiki

Joined the 30 by 30 Alliance for Biodiversity
In April 2023, KDDI has joined the “30 by 30 Alliance for Biodiversity” led by the Ministryof the Environment, which aims to establish a system to achieve the goal of conserving
and protecting at least 30% of the land and sea as healthy ecosystems. KDDIcollaborates with various stakeholders to contribute to the conservation of terrestrial
and marine areas. We will contribute to the conservation and management of areas
with high biodiversity by leveraging its experience in biodiversity conservation activities
and IoT technology through its membership in the Alliance.



30by30 (Japanese only)

3. Initiatives Towards the Realization of a Recycling-Oriented SocietyKDDI’s approach to a recycling-oriented society
The importance of efforts to circulate and utilize limited resources in response to the expanding resource demand driven
by global population growth and economic development is now being recognized. Additionally, resource circulation canlead to the resolution of a wide range of environmental issues, such as decarbonization and biodiversity conservation,
which helps to restrain activities like deforestation.
KDDI has been engaged in recycling initiatives since 2005. These have included the recycling of used mobile phones
collected from customers, as well as efforts to promote the recycling of telecommunication equipment, conserve paper
and water resources, and reduce plastics. In July 2023, KDDI became the sole domestic telecommunications provider toparticipate in an initiative aimed at increasing the volume of collected devices. This initiative involved collaboration with

We recognize that KDDI’s telecommunication technology and sensing technologies, such as drones
and IoT, are important assets for visualizing and conserving biodiversity. On the other hand, Biome has
accumulated knowledge and know-how through numerous initiatives, establishing itself as a leading
company in the biodiversity business.
We aim to leverage the strengths of both companies and collaborate with various partner businesses
and local government entities to advance efforts in biodiversity visualization and conservation.
Ultimately, we aspire to contribute to achieving nature positivity by 2030.
Sustainability Planning Department,
Sustainability Management Division

Mayuko Kashiwagi

11 worldwide telecommunications providers and was part of a program established by the Global System for Mobile
Communications (GSMA) – an industry organization.
By actively utilizing resources and reducing environmental impacts such as waste generated during its businessactivities, KDDI will contribute to the creation of a recycling-oriented society.

Promoting the recycling of waste, including mobile phone recycling (reuse of customer’s used mobile
phones and smartphones) and the recycling of discarded communication equipment
Used (post-consumer) mobile phones collected from customers at au Shops are manually disassembled in secured
rooms, with circuit boards, displays, cameras, plastics, screws, antennas, motors, speakers and other parts being
separated. Gold, silver, copper and palladium are extracted from the circuit boards, while screws and antennas are

80

KDDI Integrated Sustainability and Financial Report 2023

81

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

povo supports the collection of customers’ used devices through “Smartphone Giga Trade”

Carbon Neutral

Values We Embrace (5)Starting from March 2023, povo2.0 has introduced a buyback service

Carbon Neutral

called “Smartphone Giga Trade,” which allows customers to exchange
smartphones and other devices for data capacity (gigabytes). Thisbuyback service, which enables the exchange of smartphones and data

recycled into steel products, and plastics are recycled, to the extent possible, into plastic products. When a machine iscapacity, is the first of its kind in Japan (according to our own research).

used to disassemble a mobile phone, plastics are burned up in the incineration process and so cannot be recycled.

The service allows for the exchange of data capacity up to a

Recycling eliminates any need for new mining and refining of mineral resources such as oil, iron, gold, silver andmaximum of 640GB, depending on the buyback amount of yourcopper, while also reducing the amount of CO2 that is generated by materials processing. At KDDI, therefore, we perform

smartphone or tablet. For example, by exchanging a smartphone that’s

all disassembly manually to prevent the wastage of recyclable resources, contributing to resource circulation and thelying around your home for data capacity, you can use povo2.0 with thatrealization of a decarbonized society.

specific data capacity.

Smartphone Giga Trade

Furthermore, KDDI conducts reuse, effectively utilizing decommissioned telecommunications equipment throughregeneration and material recycling, turning equipment and components that have become unnecessary into valuable

Collaborating with startup companies to realize a recycling-oriented society

resources. In the future, we will actively strive for reuse and recycling during the regular decommissioning ofEmulsion Flow Technologies Ltd. × Recycling

telecommunication facilities such as base stations.

Through the KDDI Green Partners Fund, in September 2022, we made an investment in Emulsion Flow Technologies Ltd.

Mobile phone recycling(FY23.3)(EFT), which contributes to the recycling of rare metals.

• Collection performance: 1,673,000 units *Includes main body, batteries and chargers• Material recycling rate: 99.8%

possibility that their supply may not meet demand in the near future. Indeed, it is said that rare metals like cobalt, nickel,

Removed telecommunication equipment(FY23.3)

and lithium, which are found in lithium-ion batteries, may experience a supply shortage by 2025.

• Material recycling quantity: 298.7t• Material recycling rate: 99.8%

production, recovering high-purity rare metals through a low-cost, low-carbon, and straightforward method, and reusing

Rare metals are essential materials that support future society. However, due to their increasing usage, there is a

EFT aims to achieve resource recycling by bringing innovation to the essential solvent extraction process for rare metalthem as raw materials for the production of high-tech equipment and other goods.

Customers

Retail storesCollections ofused mobile
phonesKDDI will collaborate with EFT to conduct demonstrations on the recycling of lithium-ion batteries from used mobile(au Shops, etc.)

phones and smartphones. The goal is to build a recycling ecosystem and encourage changes in consumer behavior to

Personal information leakage
prevention through formatting
and circuit board destruction
using specialized machines

Turned into next
products and provided
to customers
Iron products

Aluminium
products

Copperproducts

Plastic products

Domestic
steelmakers

Domestic producers of
non-ferrous metals

Recycling plantNon-ferrous metals(copper/aluminum)

ensure the collection of mobile phones and other devices.
By recycling all 167 million mobile phones found in households acrossthe country, we can put them to various uses in our lives
Considering the number of mobile phones left unused in households,
we can recover so many resources in this way!

Steel equivalent to
200 houses

To KDDI-designatedrecycling plant

Plastic

Iron

Recycling plants (KDDI Challenged, etc.)

Aluminum equivalent
to 260,000 cars

In addition to this, we canreuse a vast amount of rare
metals, equivalent to150,000 gold medals.

Copper equivalent to 10,000 kmof electrical wire

Disassembly conducted in secured rooms(about one-quarter of Earth’s circumference)
Emulsion Flow, an extraction technology
Disassembly conducted by hand to facilitatematerial recycling

Different recycling
processes employedfor different materials

First Smartphone Recycling”

Mobile phones and smartphones brought to our store are accepted regardless of carrier or manufacturer. We then perform reset operations and drilling to ensure that information cannot be extracted
from the devices. Each device is carefully disassembled by our partner companies’ excellent technology, then reused in their original material state – a process known as “material recycling.” Through thethree brands provided by KDDI – namely, au, UQ mobile, and povo – we will provide opportunities andoccasions for our customers to recognize “material recycling” as a familiar and important initiative andalso to participate in the realization of a recycling-oriented society.
On the other hand, because KDDI has announced many unique products, it is also true that we often
receive feedback indicating that it is “difficult to let go” of used devices in one’s possession. We understand that many of you have cherished memories stored on these devices and have developed anattachment to them. As a solution, therefore, we want to create a system that encourages customers
who no longer need their devices to bring and recycle them to KDDI.
Sustainability Planning Department,
Sustainability Management Division

Yuta Kamioka

82* Source: Emulsion Flow Technologies “YourYour First Smartphone Recycling(Japanese only)

Emulsion Flow Technologies Ltd. (EFT) is a startup company from the Japan Atomic Energy Agency(JAEA) established in April 2021 based on the philosophy of “Lead Our Limited RARE METAL to the
FUTURE.” By utilizing the unique solvent extraction technology “Emulsion Flow” developed at JAEA, we
aim to achieve a fully circular economy by recycling previously mined terrestrial resources and using
them as raw materials for continued product production.
Recycling is made possible through collaboration and cooperation with various stakeholders. It isessential to work together with trading companies, together with the manufacturers responsible forprocesses like collection, disassembly, and processing. Above all, however, we need to work with
consumers to advance recycling initiatives.
For this purpose, it is crucial for each individual living in society to be aware of the value and impact ofrecycling. We believe that through collaboration and cooperation with KDDI, which has various
consumer touchpoints, we can encourage behavioral changes. Together with KDDI, we aim to create asociety where rare metal recycling, just like PET bottle recycling, becomes a common practice.
Emulsion Flow Technologies Ltd.
President/CEO

Hiroshi Suzuki

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Introduction
Materiality

Materiality1

Material Issues

VisionMateriality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 3

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Carbon Neutral

Values We Embrace (5)Carbon Neutral

Materiality 4

Amica Terra × Bioplastic

Strengthening the Group Management
Base Through Progressing GovernanceIn recent years, plastic pollution in oceans
and soil, as well as CO2 emissions during
plastic production, have become pressing
issues, leading to a global shift frompetroleum-based plastics to alternative
materials. While this demand is increasing,

Values We Embrace (6)some bioplastics have hurdles toovercome. The challenge of competing

Strengthening the Management Infrastructure of the Entire KDDI Group

with raw materials used for food orbiomass fuel is one such example, as well
as issues caused by slow biodegradation inmarine and soil environments.
Amica Terra Co., Ltd., in which the KDDI Green Partners Fund invested in September 2022, is a startup that develops®

®

and manufactures a plant-based, microbe-degradable plastic alternative material called “modo-cell .” modo-cell is anenvironmentally friendly material that can be produced from plant residues and abandoned bamboo forests generated
during the food manufacturing process. Crucially, the material is biodegradable due to the microorganisms that occur in

Create social and environmental value by establishing astrong management infrastructure through thestrengthening of governance in the entire KDDI Group.

natural environments.
In KDDI, we have adopted modo-cell® straws at the “BLUE LEAF CAFÉ,” which is located within our directly managed
store “au Style.” We have also incorporated them into the production of our original merchandise. Moving forward, we will
explore the possibility of replacing plastic products used in our shops and offices, with the goal of promoting plastic
reduction and achieving carbon neutrality within our supply chain.

Strengthening the Corporate Support System for Group Companies
In April 2022, KDDI established the Group Business Base Support Department within the Corporate Management

An IoT smart trash can called “SmaGO” that promotes the reduction of littering and resource recycling

Division. Additionally, a system has been built to strengthen group governance through the CFO by assigning the CFOs ofForcetec, Inc., KDDI Research, Inc., and HERALBONY Co., Ltd. installed the IoT smart trash can “SmaGO” at thedomestic and overseas group companies (with exceptions) to concurrently serve in the Group Business Base Support

International Media Center of the G7 Hiroshima Summit 2023 in May 2023, introducing initiatives focused on achieving a

Department and subsidiaries.

sustainable society through the fusion of digital technology and art.
To reduce littering and trash overflow from trash cans, Forcetec, Inc., and KDDI Research, Inc. are installing “SmaGO” inIn FY23.3, the CFO visited a total of about 50 subsidiaries, including those not belonging to the Group Business BaseSupport Department, to confirm the individual issues faced by each company. Issues reported from Group companies are

Hiroshima Prefecture. Additionally, they are assessing the effectiveness of SmaGO installations by analyzing the pedestriandiscussed at weekly review meetings with the persons in charge of the relevant divisions, as well as at monthly groupflow data and garbage accumulation data collected by SmaGO, using a simulator developed by KDDI Research, Inc. At

governance support meetings among the general managers of the relevant divisions, then reported to directors and other

the G7 Hiroshima Summit International Media Center, they introduced their initiatives and also conducted a

executives on a regular basis.

demonstration by installing a prototype of “SmaGO with an automatic resource recognition device” as trash bins at thevenue. This device, developed by KDDI Research, Inc., automatically identifies the types of waste (bottles, cans, PET
bottles) deposited into SmaGO.

Visit subsidiaries for issue hearings
Continue to provide support for issue resolution by the Corporate Management Division beyond FY24.3
Visits to
subsidiaries
Preliminary
survey• Interview withthe president• Interview with
the CFO

Recognize
individual
issuesMeetings withpersons in chargeof the relevant
divisions toreview issues(weekly)Group
GovernanceSupport Meetings
with the generalmanagers of therelevant divisions(monthly)

Report to
the CFOof KDDI(quarterly)

Report of the
President(semiannually)
Sharing among
KDDI division
executives■ Major Issues and Actions
Areas of issues
Procurement
governance

The image of the “SmaGO” installation demonstration

Information
security

Actions taken for FY23.3• Present the compliance guidelines• Conduct information security assessments for 25 Group
companies in Japan (on-site interviews to analyze thecurrent status and propose necessary measures)• Prepare to dispatch corporate personnel to Group
Human
resources

companies• Provide support services for full-time employee recruitment• Share know-how on the employment of persons withdisabilities with Group companies

84

Direction of actions taken for FY24.3• Promote the establishment of procurement governance ateach company based on the guidelines• Review the security rules and develop a shared scheme fordispatching support personnel• Conduct internal recruitment to address corporate
operation staff shortages at Group companies• Examine measures to increase the employment rate ofpersons with disabilities at Group companies

KDDI Integrated Sustainability and Financial Report 2023

85

Introduction
Materiality

VisionMateriality1

Materiality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 4

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (6)Strengthening the Management Infrastructure of the Entire KDDI Group

Establish and Upgrade Risk Control Systems
KDDI Group Risk Management
The KDDI Group has long been engaged in group-wide risk management activities, including countermeasures against
important risks and the company-wide sharing of incidents and accidents. In light of the expansion of business domains
and the diversification of Group companies through the promotion of the Satellite Growth Strategy, we are rebuilding a

I recognize that my duty as CFO is to ensure effective governance while achieving agile company
management in providing new services that cannot be offered by KDDI alone, utilizing the knowledge
and resources of our partners.
Securing personnel and resources is critical to strengthening the governance of subsidiaries. Recently,
KDDI has expanded its shared service division, which undertakes corporate operations for subsidiaries.
Also, its focus has shifted to support from the subsidiary’s perspective, allowing us to direct our
resources toward strengthening governance.
Currently, we are hiring full-time employees by utilizing the recruitment support by the shared service
division. As strengthening governance is an area where experience can be used in individual companies
as well, we expect that personnel can be trained and secured throughout the Group and flexibly
dispatched to each Group company.
KDDI Digital Life CFO Tokuhisa Saragai

the Corporate Sharing Service
Division within the Corporate
Sector. The Division’s mission isGroupcompany A

Corporate
operations

Group
company B

Corporate
operations

KDDI

Corporate
operations

to help Group companies focus
on their core business bymanner. On the second line, corporate and other divisions provide support for them. For the third line, the Audit Division
conducts audits to identify issues and provide appropriate support to Group companies to enhance their effectiveness.
Through these efforts to strengthen group governance, we aim to grow together with Group companies.

Focus resources
generated by sharedservices on corebusinesses

Consolidate operations
Corporate Sharing Service Division

Auditing

Management (persons in charge of business execution)
Directing andcontrolling

Directing andcontrolling

Reporting

Reporting

Reporting

Audit &
Supervisory Board
Reporting

1st line

2nd line

3rd line

Managing risks and maintaining
internal controls

Providing advice on risk
management

Monitoring of
1st and 2nd lines

Operational divisions

undertaking their corporate
operations, which should thatOn the first line, Group companies work together with KDDI’s core divisions to strengthen governance in an autonomous

Investee management
divisions
Reporting andconsulting

Supporting,checking, andmonitoring

Supporting,checking, andmonitoring

Reporting andconsulting

Group companies

Finance andaccounting

Procurement

Information
security

Information
systemData
governance

Sustainability

Riskmanagement

Compliance

Monitoring

Internal
Audit Division

Supervisory authorities

In April 2022, KDDI establishedThree Lines Structure to Strengthen Group Governance

Third-party audits

Strengthening Governance by Utilizing Shared Services

group-wide risk management system to further strengthen Group governance.

Monitoring

continue to increase with thebusiness growth and expansion of the entire KDDI Group, as well as provide full-cloud-shared services for them.
Specifically, in the areas of accounting, purchasing, human resources, and company management infrastructure, theDivision provides operational support based on the unified system, together with support for reducing workloads andInitiatives and Achievements in FY23.3

costs, and improving governance. In FY23.3, it provided support for the establishment of au Renewable Energy in April
2023 (including assistance in reviewing various related regulations and necessary procedures), in addition to support forfive subsidiaries focused on the Satellite Growth Strategy. The Division has also expanded its shared services forcorporate operations (accounting, payroll, purchasing, and mid-career recruiting) to existing subsidiaries. As of April 1,

Circumstances
surrounding theKDDI Group

2023, the services have been provided to a total of 42 companies.

Change in circumstances
Politics

EconomySociety

Internal situation
Technology

Mid-Term Management
Strategy

Immediate tasks

Through the provision of shared services, we aim to achieve sustainable growth for the entire Group. This initiative
includes not only “improving operational efficiency” but also “strengthening governance” by designing the Group’s systems,
rules, and programs, and promoting KDDI’s unified three-part reform for “strengthening human resources” which includes

Strengthening of Management
Activity policies

Identify key risks

personnel transfers among Group companies.

Strengthen Group governance

Promote and support autonomous
risk management

Strengthening risk management and monitoring

Sharing Service Planning Department,
Corporate Sharing Serive Division

Chisato Harada, Miho Fujii

86

As mid-career recruiters, we work to secure diverse and talented humanresources for Group companies to achieve effective human capital management.
Our division provides shared services in a wide range of areas besides recruitment support. While we have received positive feedback from Group companies on our support for their corporate operations, we have also received
comments on the difficulty of balancing the need for stronger governance andspeedy business development. We feel that our future challenge is to create asystem that allows each company to engage in business in a speedy manner,
while focusing on our original goal of “strengthening governance.”
We believe that the Division’s activities will lead to the growth of the entire
KDDI Group. Hence, we will continue to work together to support Group
companies and strengthen our services.

Details ofactivity policies

Strengthening risk
management

Strengthening accident
prevention and control

Internal audit

Business quality
improvement activities

Information security
measures

Strengthening data governanceKDDI Integrated Sustainability and Financial Report 2023

87

Introduction
Materiality

Materiality1

Material Issues

VisionMateriality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 4

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (6)Strengthening the Management Infrastructure of the Entire KDDI Group

Research and Development of Security Technologies by Digital Twin
The KDDI Group is engaged in various research and development efforts to realize a safe and secure digital society.
Particularly, KDDI Research, Inc. will contribute to ensuring safety and reliability in a society where cyberspace andphysical space are integrated as a feature of the Beyond 5G era.
As the integration of cyberspace and physical space progresses in the Beyond 5G era, there is a risk that the actual

1.Strengthening risk management
and monitoring

Strengthening risk
management

Strengthening
accident prevention and control• Confirmed the details of controls in the 1st- and 2nd-line division and the role of each division in

IoT is integrated into society as part of critical infrastructure, a cyber attack on the IoT could have a significant impact on• Conducted group-wide awareness-raising activities to restore customer trust lost due to thein cyberspace, such as the IP address of the target of a cyber attack, and information in physical space in a form that links

communication failure in July 2022.

• Collected information on incidents and accidents that occurred outside the Company and provided
it as information to be practically reflected in the risk management activities of the 1st-line division.

• Reconfirmed the role of the 2nd-line division and clarified the scope of work in the Three LineInternal audit

Model.

• Identified issues at subsidiaries and made effective use of internal audit results by the 2nd- and3rd-line division.

Business quality
improvement
2. Information security
measures3. Strengthening data
governancedamage to physical space will be enormous as the impact range of cyberattacks expands. Especially, in a world wherestrengthening governance, and promoted company-wide understanding of the importance ofstrengthening Group governance.
• Prepared a group-wide risk management platform to strengthen governance.

• Raised awareness through framework recognition and increased support by supervisors.
• Improved the RPA development skills of users through training, etc.
• Enhanced security monitoring of business facilities.
• Promoted information disclosure by issuing the cybersecurity annual report and press releases on
advanced security technology initiatives.



Cybersecurity Annual Report

our lives.
To accurately grasp the scope of impact in both cyberspace and physical space, it is important to manage information
them together. Furthermore, it is necessary to understand and analyze the management units in a cross-sectional andextensive manner.
After collecting and analyzing threat information, which can have a significant impact on the physical space too, wewill extensively provide threat information for the Digital Twin. In this way, we will build a platform for various Digital Twinsto effectively implement security measures, at the same time as conducting demonstration experiments on actual cyberphysical systems in the future.

Research and development items
1. Widely coordinated security technology by the Digital Twin
2. Cyber attack impact analysis technology by the Digital Twin
3. Security technology considering the impact on physical space• Clarified the rules for sharing personal data among Group companies.
• Started AI Impact Assessment (advance risk assessment) for AI development and utilization.
■ Coordinated security platform between cyberspace and physical space by Digital Twin

Initiative Policy for FY24.3
In FY24.3, we will address issues that have emerged from FY23.3 activities, and promote effective development of risk
management activities. Thereby, we will facilitate the completion of the Mid-Term Management Strategy, contribute to thesustainable growth in society, and corporate value improvement.

AS-IS (before Digital Twin)

TO-BE (after Digital Twin: widely coordinated security)

Cyberspace

Widely coordinated platform of the Digital Twin
Cyber attack impact analysis technology by the Digital Twin

Robust KDDI Group Information Security to Support Governance

Widely coordinatedsecurity technology by
the Digital Twin

Enhancement of Security Monitoring
To protect the information entrusted to us by our customers and handled in our services, we are constantly monitoring

Facility

against cyber-attacks. In March 2023, we completed the construction of a platform that collects information on cyber

A

Cyberspace

attackers and their methods and tactics disclosed on the Internet, and automatically generates profiles based on thisinformation. Cyber-attack information can be visualized by matching the automatically generated profiles with a wide?

variety of logs accessing the KDDI network.
Going forward, our monitoring system will be equipped with functions to predict attacks by analyzing various logs andDigitalTwin

to detect suspicious accesses at an early stage. In this way, we will further enhance our security monitoring using DX and
AI in order to respond immediately when signs of any attack are detected.

Security technology considering the impact on physicalspace

Physical space

Facility

B

FacilityC

Local
security
function■ Visualization of cyber attack information

Analysis teamInformation collection
Website A
Website B

Threat intelligence
Threat information
Threat information

88

Physical space

Quickly confirm information on a rapid
increase in cyber attacks and other issues

Cyber attack
information
Cyber attack
information
Cyber attack
information

Visualization of
cyberattack
information

It is difficult to identify which part of the physicalspace is affected by a cyber attack, while there
is also a risk that the impact on the physicalspace may be extended.



Utilizing the Digital Twin and its widely coordinated platform enables the
mapping of cyber attacks on physical space, while the impact on physical spacecan be minimized.

L aunched the research and development of coordinated security platform between cyberspace and physical spaceby Digital Twin: Countermeasures against new IoT security threats emerging in the Beyond 5G era (Japanese only)KDDI Integrated Sustainability and Financial Report 2023

89

Introduction
Materiality

Materiality1

Material Issues

VisionMateriality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 4

TCFD/TNFD
Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (6)Strengthening the Management Infrastructure of the Entire KDDI Group

Promotion of Joint Supply Chain Sustainability Activities by Three Telecommunications
Carriers
In July 2023, KDDI, Nippon Telegraph and Telephone Corporation (NTT), and SoftBank Corp. (SoftBank) agreed topromote joint activities to realize a sustainable supply chain in the telecommunications industry.

Materiality 4

Strengthening the Group Management
Base Through Progressing Governance

The three companies have been in discussions to standardize supplier engagement activities and jointly implement
various initiatives in the telecommunications industry for the future. As one of the results of this initiative, a sustainability
questionnaire was standardized and will be used as a common self-assessment questionnaire (SAQ) for the threecompanies in their supplier engagement activities, starting in FY24.3. We believe that the use of this common SAQ will
help to reduce the burden on our suppliers.

Values We Embrace (7)Respect for Human Rights

The SAQ checks suppliers’ efforts in the areas of environment, human rights and labor, health and safety, fair trade andethics, quality and safety, and information security. We will continue to work with our suppliers for further improvement
by providing them with feedback on the SAQ results.
KDDI, NTT, and SOFTBANK will continue to jointly engage in supply chain sustainability activities in thetelecommunications industry with the understanding and cooperation of suppliers, all focused on realizing a sustainablesupply chain. We will also promote sustainability activities in cooperation with various industries and companies to help
solve social issues and support a sustainable society.

Respect human rights in all business activities, eradicate humanrights violations in the supply chain, and contribute to thesustainable growth in society.

Please see pages 94 to 96 for the results of the Sustainable Procurement Survey conducted by KDDI in FY23.3. → P94

Promotion of Joint Supply Chain Sustainability Activities by NTT, KDDI, and SoftBank (Japanese only)

Basic Approach
The KDDI Group recognizes that all of our business activities are premised on respect for human rights. We believe that
we have a responsibility to respect the human rights of our employees, business partners, and all other stakeholders
involved in our business activities, as well as to prevent and mitigate human rights violations.
In July 2022, KDDI joined the United Nations Global Compact. Under the top management commitment, we will workon respecting for human rights in our business activities.

Overview of the initiatives in FY23.3
KDDI promoted initiatives to expand humanrights-respecting activities throughout theentire Group in FY23.3.

■ The cycle of human rights-respecting activities

KDDI Group Human Rights Policy

In the KDDI Group Human Rights Policy
revision conducted in October 2022, ahuman rights impact assessment was carriedout to identify high-risk areas in business and4) Information disclosure1) Identification andassessment of negative
impacts3) Monitoring ofeffectiveness2) Prevention andmitigation of negative
impacts

corporate activities. Based on theassessment results, specific human rights
priorities for the KDDI Group wereincorporated into the policy. Progress isbeing made in addressing these criticalhuman rights issues through initiatives suchas strengthening sustainable procurement,

Corrective and remedial measuresthus advancing the cycle of human rightsrespecting activities.
90KDDI Group Human Rights Policy

KDDI Integrated Sustainability and Financial Report 2023

91

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 4

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (7)Respect for Human Rights

Response to Significant Human Rights Issues within the KDDI Group
Significant human rights issues
Prevention of discrimination and harassment
Establishment of a safe and comfortable working environment

Establishing the Structure for Human Rights-Respecting Activities
At the Sustainability Committee (which convenes once every half-year) chaired by the President, Representative Director,
KDDI determines the policy on activities related to human rights, develops and reviews the promotion structure as well as
monitors checks the activities’ progress against targets. We will work on respecting for human rights under the top
management commitment.
We have also set up the Human Rights Subcommittee (which convenes once every half-year) under the Sustainability
Committee. This subcommittee, as an organization to propose and discuss the human rights issues of the entire KDDI
Group, is headed by the General Manager of the Sustainability Management Division.

Avoidance of human rights issues arising from technological advancements

Initiatives in FY23.3• Improvement in the effectiveness and awareness of thewhistleblowing system/hotline• Individual interviews with all employees aimed at early

detection of mental illness and correction of long working hours• Creating “AI Development Guidelines” and initiating theoperation of AI development impact assessment

Realization of user-friendly services and products foreveryone• Launch of the kids’ mobile phone “mamorino6”

Harmony with the local community and elimination ofhuman rights violations in the supply chain• Promoting sustainable procurement• Establishment of a helpline for business partners

Based on the “KDDI Group Human Rights Policy,” we will hold discussions on the promotion of respect for humanrights, conduct human rights due diligence, and study measures to address human rights issues, in order to promote
Group-wide efforts to respect for human rights. In FY23.3, a total of three Human Rights Subcommittee were held,
including ad-hoc sessions.

Human Rights Subcommittee Key themes (FY23.3)• Revision of the KDDI Group Human Rights Policy• Reports on human rights-respecting activities in each KDDI division• Human rights compliance in the supply chain• Consideration of the human rights-respecting activities policy for FY24.3

Penetration of the KDDI Group Human Rights Policy within Internal andGroup Companies
The activities for the integration of the KDDI Group Human Rights Policy within Internal and Group Companies are as
follows:• Internal penetration : Following the revision of the KDDI Group Human Rights Policy, we conducted explanatory articles
in our internal magazines and e-learning training with the theme of “Business and Human Rights” (Content
comprehension based on e-learning participant surveys: 98%).

• Penetration into Group companies: We shared information on human rights trends and initiatives with the CFOs of■ Human Rights Subcommittee Framework

domestic and overseas subsidiaries responsible for enhancing Group governance. We requested the assured
implementation of human rights-respect responses based on the KDDI Group Human Rights Policy, as well as internal

Board of Directors

penetration through training and awareness activities.

Sustainability Committee

Engaging in Dialogue with Experts in the Field of Human Rights

Human Rights Subcommittee
General Manager of the Sustainability Management Division
Secretariat
Sustainability Development Department
Human Rights Subcommittee members
Corporate Division

Business Division

In FY23.3, we conducted two stakeholder dialogues with experts in the human rights field.
We inquired about KDDI’s initiatives concerning human rights, telecommunications industry-specific human rights
issues, and supply chain-related human rights issues. Our focus was on evaluating KDDI’s business in terms of risks andopportunities, as well as expressing our expectations for the future. Considering the feedback we received, we willcontinue identifying and analyzing human rights risks within each business area and collaborating with suppliers to

Global Division

implement human rights measures. → P108

* Additional or modified participants depending on the agenda.



Stakeholder Dialogue

With the revision of KDDI Group Human Rights Policy and the strengthening of the Human Rights
Subcommittee’s structure, the foundation for human rights-respecting activities has solidified. We hopethat this will lead to a reduction in human rights risks concerning the supply chain and employees,
which are also socially significant.
KDDI places a commitment to respecting human rights in its interactions with customers when providing products and services, considering it a significant human rights issue. Achieving this requires cooperation from various business divisions. Moreover, we aim to engage in human rights-respecting activities to help employees who may not regularly confront human rights issues in their daily tasks tovisualize the connection between their work and human rights.
Using the latest technologies and new business ventures expected in the future may carry hidden
human rights risks due to these new challenges. To realize our corporate strategy, we also aim to
reduce such potential human rights risks and contribute to both society and KDDI’s growth.
Sustainability Development Department,
Sustainability Management Division

Takayuki Maejima

92

KDDI Integrated Sustainability and Financial Report 2023

93

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 4

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Survey Items

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (7)From FY23.3, the Sustainable Procurement Survey has been expanded to include high-risk items such as human rights,

Respect for Human Rights

environment, and information security to strengthen risk assessment in the supply chain. The questionnaire is divided into
a section on human rights, including conflict minerals and the technical intern trainees system, an environmental section
including CO2 emissions based on Scope 1, 2, and 3, and a Code of Conduct section related to CSR (Corporate Social
Responsibility). For those suppliers that are determined to be high-risk, we take corrective actions such as detailed

Respect for Human Rights in the Supply Chain

confirmation through hearings and support through improvement proposals.

The KDDI Group believes that driving sustainability initiatives not only within the company but also throughout our supply
chain will make our business more sustainable. We aim to establish a partnership system that does not cause labor

Themeproblems among suppliers related to human rights and health and safety, aiming to further improve the level ofsustainable procurement centered on human rights and the environment in collaboration and cooperation.

Conducting a Sustainable Procurement Survey
We have conducted a survey targeting our leading business partners (key suppliers*1) using a Sustainable Procurement
Survey since FY15.3.
In the survey, we refer to the Responsible Business Alliance (RBA) code of conduct and Responsible Business Conduct
Guidelines published by the Japan Electronics and Information Technology Industries Association (JEITA). We aim to share
KDDI Sustainable and Responsible Procurement Policy and other necessary information with our business partners
through survey questions defined in the KDDI Group Sustainable and Responsible Procurement Guidelines, covering areas
such as human rights, labor, health and safety, the environment, fair and ethical trade, quality and safety, information
security, and social contributions. In FY22.3, we asked our primary suppliers of the KDDI Group representing the top
approximately 90% of the total value of orders to answer the survey (150 companies)*2 and received responses from overNumber ofquestions

Questions for High-riskManagement (Human
Rights and Environment)20

Use of conflict minerals, appropriate information and employment of foreign
workers, reduction of energy consumption, etc.

Compliance with Laws andRegulations and Respect forInternational Norms

4

Compliance with laws and regulations, respect for international norms (clear
statement of policy, clarification of responsible persons, etc.)

Human Rights and Labor

12

Respect for human rights/securing workers’ rights, consideration for working
hours, appropriate wages and benefits, etc.

Health and Safety

5

Health and safety (compliance with laws, regulations, guidelines, etc.)

Environment

13

Environmental permitting and reporting, reduction of environmental impact, airemissions, water management, effective use of resources and waste management, etc.

Fair Trade/Ethics

15

Anti-corruption, proper disclosure, fair business practices, protection of informants, responsible mineral sourcing, etc.

Quality/Safety

2

Existence or non-existence of violations, establishment or non-existence of amanagement system, etc.

Information Security

8

Compliance with laws and regulations, protection of personal information,
leakage of confidential information, response to security incidents, etc.

Business Continuity
Planning

1

Formulation and preparation, etc.

Social Contribution

1

Existence or non-existence of contribution activities

Establishment ofManagement System

7

Establishment, management, and supervision of management systems, appropriate import/export control, development of complaint handling mechanisms, etc.

Total

88

97% of them. We use these responses to understand the supply chain situation and analyze risks.
Furthermore, starting from FY24.3, we will be introducing the third-party evaluation platform EcoVadis*3.
*1: Key suppliers: Suppliers with high transaction volume, suppliers of critical parts, and non-substitutable suppliers and have agreed to policies andguidelines, including sustainability requirements (environment, social, governance, etc.).

*2: Including 16 overseas subsidiaries. KDDI-related companies are not subject to the investigation.
*3: A sustainability assessment service consisting of four parts: “environment,” “labor practices and human rights,” “ethics,” and “sustainable materials
procurement.”

Item

FY23.3 KPI

FY23.3 results(reference) FY22.3 results

Questionnaire response rateover 90%

97%

98%

Number of hearing companies

over 30

32

5

100%

100%

—

Completion rate of
improvement proposals

Sample questions

Report on Survey Results
Industry

Business

Number of companies

Ratio

The average score of companies responding to the 12 themes of the survey was 83%. The highest scoring items were

Service Industry

Temporary staffing, consulting,advertising, etc.

69

46%

Information andCommunication

Software, SI, etc.

34

22%

Manufacturing

Terminals, base stations, electronicequipment, etc.

25

17%

Construction

Base station construction,
telecommunications construction, etc.

22

“Questions for high-risk management (human rights),” “Compliance with laws and regulations and respect for international
norms,” and “Information security,” while the lowest scoring items were “Questions for high-risk management(environment),” “Social contribution,” and “Establishment of management system.”

Risk Analysis and Risk Improvement Proposals
The following table shows the results of the evaluation of suppliers’ initiatives based on the “scoring rate” into which wegrouped the suppliers’ responses to the survey.
15%

For those suppliers whose efforts are judged to be insufficient and whose risk is considered high, we will provide
feedback on the survey results and exchange opinions with them, and if we are able to identify issues, we will request
improvements. In FY23.3, we conducted on-site investigations of concerns through third-party audits and provided
improvement recommendations.
Furthermore, if improvements and corrections are not made within a certain period, we will consider suspendingtransactions.

94

KDDI Integrated Sustainability and Financial Report 2023

95

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 4

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Strengthening the Group Management Base Through Progressing GovernanceValues We Embrace (7)Respect for Human Rights

Materiality 5■ Score Ratio by Theme
Average
Score Ratio

83%

Human Resources First

Questions for high-riskmanagement (human rights) 89%
Establishment ofmanagement system 62% 100%
Questions for high-risk management(environment) 62%
80%
60%
Social Contribution 69%
Compliance with Laws and Regulations andRespect for International Norms 92%
40%

Values We Embrace (8)20%Human rights and labor 85%

Business Continuity Planning 78%

Advancement of Professional Human Resources and Engagement Improvement

Health and Safety 90%

Information Security 91%

Create innovation and contribute to the sustainable growth in society by
fostering a corporate culture that encourages the active participation ofdiverse and professional talent while also providing a challenge.

Environment 78%

Quality/Safety 93%

Fair Trade/Ethics 84%

Rank

Total score

Ratio

Definition

Group Aover 80%

65%

Excellent efforts are being made.

Group B

60% to less than 80%

34%

General efforts are being made.

Group C

under 60%

1%

Insufficient efforts

Theme

Human
RightsOpinion exchange items

Advancement of Professional Human Resources and Engagement Improvement

Number of companies Improvement Proposal
requiring improvement
Completion Rate

Management regulations to prevent discrimination and harassment

2

100%

Grasping the status of management and actual conditions of products
containing conflict minerals

5

100%

Grasping the actual status of transactions with risk areas

5

100%

Initiatives for grievance mechanisms involving workers and suppliers

5

100%

10

100%

6

100%

Management of greenhouse gas emissions and CO2 emissions
EnvironSelection of suppliers in consideration of their environmental initiatives
ment(e.g., CO2 emissions)

Helpline for Suppliers: Grievance Mechanism

Mid-Term Sustainability Targets (FY25.3) (KDDI non-consolidated)
All employees who
have completed
the Basic DX
skills training

Percentage ofprofessional humanresources on
all specialized fields
30%

Ratio offemale directors
20% or over

Percentage offemales in managerial
positions

Maintain and Improve
employee engagementscore

15% or over

Maintain 72 or over

* All areas

Development ofprofessional humanresources throughthe KDDI Version Job
Style Personnel
SystemPenetration of
new personnel
system

Improvement of
employeeengagement

We have established a helpline (Japanese and English support) for employees of KDDI Group suppliers to consult orreport violations of corporate ethics and legal compliance, including human rights issues, that deviate from the “KDDIGroup Human Rights Policy” and the “KDDI Group Sustainable and Responsible Procurement Guidelines.” We always
accept consultation and reports by e-mail, etc., through the internal or external contact point established in collaboration
with external experts.
We accept anonymous reports, giving due consideration to the privacy of the consultants and the protection of the• Building a human resources portfolio• Division-driven workstyle• Expansion of training programs• Promoting career autonomy through• Promoting data-driven measures

skills training for all employees
at KDDI DX Universityaligned with the business strategy

open recruitment and the utilization ofinternal side jobs

redesign

to enhance engagement

informants. In accordance with the Whistleblower Protection Act, we ensure the confidentiality of those who consult withAt KDDI, we have been advancing the “unified three-part reform (1) penetration of new personnel system, (2) development

us and report to us and make every effort to protect them so that they will not be treated unfairly because they haveof professional human resources through the KDDI Version Job Style Personnel System, (3) improvement of employee

consulted with us or have reported something to us .KDDI concludes nondisclosure agreements with external contacts

engagement” towards the transformation into a Human Resources First Company since FY21.3. At the core of this, thewith whom we work together to resolve issues.

“KDDI Version Job Style Personnel System,” KDDI hopes that all employees actively acquire skills they can apply in new

If it is identified that its business activities have caused, or had any adverse impact on human rights, KDDI ensures that
it will provide relief for those affected.

96• Implementation of DX basic

business areas while they leverage their years of experience in the telecommunications business, so that they will
become professionals capable of working successfully both within and outside the company.
KDDI Integrated Sustainability and Financial Report 2023

97

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 5

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Human Resources First

Values We Embrace (8)Advancement of Professional Human Resources and Engagement Improvement

Percentage of professional human resources on all specialized fields (KDDI non-consolidated)
FY25.3
Targets

30% *All areas

FY23.3Results

35% *Strategic areas

Penetration of New Personnel System
A human resources portfolio that contributes to the execution of business strategies

Promotion of career autonomy

In response to the deployment of the Satellite Growth Strategy, there is a need for rapid and flexible adjustments in the

We are actively working on individual capacity development and growth support so that employees can remain proactive

organizational and personnel aspects. In order to ensure the qualitative and quantitative sufficiency of human resourcesin pursuing their career aspirations. This includes the implementation of regular 1-on-1 meetings between supervisors andrequired for the business strategy execution, it will be necessary to reallocate personnel internally and secure themteam members. We have found correlations between the frequency and content of 1-on-1 meetings and engagement

externally. To achieve this, we plan to build a human resources portfolio that identifies the desired profile of our workforce

scores. In FY24.3, we will conduct career management training for all line managers to enhance their career support

and the existing gaps.

capabilities.

Within the human resources portfolio, the skills and performance of all KDDI employees can be quantified. We have

Furthermore, we provide employees with opportunities to think about their career development. We organize age-defined “jobs” for 30 specialized areas within KDDI, further segmented by job roles and responsibilities, and have also

specific career seminars to address changing career perspectives as employees gain experience. We also hold casual

defined the skills required for each job. Assessments have been created for each of these skills, and we intend toevents like “Career Café” to address more specific career-related concerns and questions. The annual “Career Plan

implement these assessments for all employees starting from FY24.3. By utilizing the results of these assessments,

Declaration” allows employees to reflect on their future careers, engage in specific discussions with their supervisorsorganizations will be able to understand the gap (in terms of quality and quantity) between the current skill levels and theduring 1-on-1 meetings, and explore the direction of their career development, job assignments, internal side jobs, anddesired state for achieving their respective goals.

referrals for talent recruitment.

Additionally, by centrally managing information such as gender, age, and career history in the human resources

To accumulate and visualize employee career information, we have introduced the Talent Management System

portfolio, we will be able to use data to determine the optimal combinations of organizational structures and individuals.

“X-Career.” This system actively supports employees’ diverse growth and challenges by utilizing a wide range of business

Through these initiatives, we aim to activate workforce reallocation and strengthen the alignment between businessareas. It aims to enable each employee to expand and deepen their careers, fostering innovation through the integration

strategy and HR strategy.

of individual careers. We promote workforce mobility across the entire Group, expanding opportunities for internal andexternal assignments, career advancement, and human resources recruitment, all aimed at encouraging employees to■ Utilization of human resources portfolio image

autonomously shape their careers.
Methods to eliminate the human resources gap

Business needs
We want to launch new businesses related toWeb3.0 by applying network technology■ Initiatives for Career Autonomy Promotion

Internal human resources shift
Reskilling of human resources with high affinity skills

Web3.0 humanresources

Employees
who are eager
to take onchallenges

Gap in the human resources quality

Human resources portfolio
High skill level

Unrelated
jobs

Volumezone

Shortagetendency

Registering your work
experience, skills, anddivisions of interest

Search and identify
individuals

Career Plans
Desired divisions● Work Experience● Skills and Abilities● Qualiﬁcations Held

Divisions orgroup
companies
seeking humanresources●

Human resources
with high affinity skills
for Web3.0●

Hiring external human resources
Relatedjobs

Matching

Mid-career recruitment of human resources
with High-Level Skills

Point

Human resource
database

We will promote the mobility of human resources throughout the entire Group,
expand opportunities for secondments both within and outside the Group,
provide transfer opportunities for career realization, and enhance the recruitment of human resources.

Low skill level
External Labor Market

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KDDI

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 5

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Human Resources First

Values We Embrace (8)Advancement of Professional Human Resources and Engagement Improvement

Ratio of female directors

Percentage of females in managerial positions(KDDI non-consolidated)(KDDI non-consolidated)

FY25.3
Targets

20% or over

FY23.3Results

16.6%

FY25.3
Targets

15% or over

FY23.3Results

10.6%

Penetration of New Personnel System

In-house side job system

Promotion of DE&I (Diversity, Equity, and Inclusion)

Starting from FY21.3, we have introduced an in-house side job system with the aim of promoting employees’ autonomous

At KDDI, we have long believed that embracing diverse experiences and perspectives leads to the creation of new value

career development, at the same time as focusing on getting the right person in the right place. We received feedback

and allows us to meet the needs of a diverse customer base, contributing to business expansion and sustained growth.

from employees “expressing the desire for a platform to hone their expertise or gain experience in other departments.”

Since 2005, therefore, we have been committed to respecting, promoting, and leveraging diversity, enhancing diversity

However, the traditional approach of periodic reassignments or concurrent roles mandated by the company posedin gender, age, and backgrounds. Subsequently, we have continued to promote D&I (Diversity & Inclusion) to integrate an

challenges in accommodating these preferences flexibly. The introduction of the “in-house side job system” allows

increased diversity of talents.

employees to voluntarily apply for open positions within KDDI and the KDDI Group based on their interests andIn recent years, with the expansion of our business domains, customer needs have become more diverse, complex,

aspirations. This enables employees to embark on new challenges more swiftly and flexibly when compared to periodic

and rapidly evolving. As a result, we must now recognize and maximize each employee’s unique characteristics andreassignments. The tasks of side job encompass various areas, such as “improving the au PAY app” and “solving regional

abilities more than ever before, and continue to meet our customers’ needs.

issues using ICT/IoT.” The in-house side job system accelerates the exploration of employees’ expertise and the

To address this, we have transitioned to DE&I, adding “Equity” to the equation. We are focused on creating an

acquisition of new skills while increasing opportunities for innovation through the synergy of talents across organizational

environment and culture where everyone can realize their aspirations. We have explicitly stated our commitment toboundaries.

“providing support tailored to individual employees to create an equitable foundation,” which is a declaration made by■ Purpose of the in-house side job system

our President to all employees.
By aligning the starting points of employees with various attributes and fostering awareness of DE&I, we will

Affiliated department

Department engaged in side jobs

Growth in the main job

Growth in the side job

strengthen various forms of support to promote the active participation of a diverse workforce.
Acceleration of growth■ Significance and effects of KDDI’s DE&I (Diversity, Equity, and Inclusion) efforts

Employees

Company Vision

The sustainable growth in society and the corporate value improvement
Company
Return on growth

New perspectives

Increased opportunities forinnovation creation

Contribution to business strategy
Contribution to the creation of new value to meet diverse customer needs

Expansion of recruitment channels

Environment and culture where anyone
can make their aspirations a reality

Starting from March 2023, we have established and initiated the operation of the “KDDI Alumni Network,” which allows
former employees who have left the company to interact with the organization. We view alumni (former KDDI employees)
as professional human resources who have gained new experiences externally and will actively build and maintain

DE&I Initiatives

ongoing relationships with them. For those alumni who have registered with the “KDDI Alumni Network,” we will regularly
share KDDI’s recruitment and event information and actively explore opportunities for re-employment. We will alsoenhance referral-based recruitment by encouraging alumni to refer potential candidates and leverage interactions withcurrent employees to address the intensifying competition for digital talent acquisition.

D

E

Diversity

EquityI

Inclusion

Furthermore, in our new graduate recruitment efforts, we will expand the proportion of new hires in the “WILL Course,”a job-oriented recruitment track that guarantees initial placement areas, from the previous 50% to 60% starting from theFY25.3 period. Additionally, starting from the FY26.3 period for new graduate recruitment, we will implement a selectionintegrated internship program that takes into account internship experiences when evaluating candidates. By allowing
candidates to experience real tasks, we aim to ensure a better match between candidates and the company during therecruitment process. Given the increasing number of job seekers who aspire to build their careers autonomously while

Bringing together people with

Creating conditions for unleashingdiverse personalities, values, andpotential and leveling the starting

experiences

point

Recognizing and utilizing theabilities of all individuals

The KDDI Group Philosophy, Code of Business Conduct

developing expertise, we will support their growth into competitive professional human resources by providing them withinternship experiences during their student years. Through initiatives such as the “KDDI Alumni Network” and selectionintegrated internships, we will strengthen our efforts in recruiting professional human resources.

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Human Resources First

Materiality 5

Values We Embrace (8)Advancement of Professional Human Resources and Engagement Improvement

DX Fundamentals Training completion for all employees

Percentage of professional human resources on all
specialized fields (KDDI non-consolidated)
FY25.3
Targets

30% *All areas

FY23.3Results(KDDI non-consolidated: Mid-Term cumulative total)* Acquisition opportunities have been expanded to group companies.

35% *Strategic areas

FY25.3
TargetsAll
employees

FY23.3Results

6,222 employees

Professional Human Resources Development through the KDDI Version Job Style
Personnel System

Penetration of New Personnel System

Elimination of Gender GapsAs the first step towards achieving DE&I (Diversity, Equity, and Inclusion), we are committed to eliminating gender gaps.

Reskilling through KDDI DX University

The results of our employee engagement survey have shown a slight overall lower score among women. Recognizing that

To foster professional talents as a source of innovation and promote the improvement of employees’ DX (Digitalformal equality alone is insufficient to bridge this gap, we are enhancing our support to remove gender-related unfair

Transformation) skills, KDDI established the internal human resource development institution “KDDI DX University (KDU)”

barriers and level the starting point.

in FY21.3. In addition to the “DX Fundamentals Training,” which is mandatory for all executives and employees until

In pursuit of achieving our numerical targets for the representation of females in managerial positions, we have

FY25.3, we conduct specialized training in each of the five DX-related areas*, including “DX Core Skills Intensive Training”

undertaken initiatives such as “Unconscious Bias Training” aimed at changing the mindset of our executive leadership,and “DX Specialized Skills Training.” In FY23.3, 6,222 employees completed the DX Fundamentals Training, with the ratio“Roundtable discussions with females in managerial positions” to learn from the experiences of female leaders, andof professional talents in strategic areas reaching 35%.

company-wide e-learning programs to raise awareness of DE&I and the importance of women’s advancement. TheseIn FY24.3, we will expand specialized courses in AI and Web3.0, and commence AI fundamentals training for all

efforts are part of our commitment to fostering an organizational culture and environment that allows diverse talents toemployees.

thrive and deliver high performance.

* Focuses on 5 specialized areas: Business Development, Consultant & Product Manager, Technologist, Data Scientist, and Experience Architect.

Furthermore, we aim to increase the representation of women from the recruitment stage by conducting seminars andinternships targeting female students. Additionally, we are actively promoting paternity leave uptake among male

Expansion of Training Programs at KDDI DX University

employees and aim for a 100% uptake rate. To achieve this goal, we continue to conduct workshops targeting male

Starting from FY23.3, we have initiated efforts to expand the development framework provided by KDU to include

employees and their families.

specialized areas beyond DX-related domains. We have already begun offering specialized skills training in the Marketing
and Business Strategy & Management domains, and by FY25.3, we will establish training programs covering all 30■ Trends in KDDI’s DE&I Initiatives

specialized areas, including the five DX-related domains. Each training content is created by pooling the knowledge ofPenetration of KDDI Version
Job Style Personnel System

2005

2010

2015

Diversity

2020

D&I

2023

DE&I
• Roundtable discussions withProfessional
Advancementof Women

Work-life
balancesupportLGBTQ+
supportfemales in managerial positions• Curriculum addition to

executive and managerial training• Female line managers
promotion program• Senior management candidate program• Executive female talent development meeting• Unconscious bias training for
general managers and line
managers• Introduction of • Male paternity leave workshops• Extension of short working hours childcare system,

members across divisional boundaries.

As someone responsible for human resource development, I have been promoting participation in the
DX training programs and contributing to the development of training content in specialized fields
beyond DX. The KDDI Version Job Style Personnel System aims to help employees cultivate evengreater expertise and become professional talents. Therefore, I believe it’s essential to create anenvironment where the skills acquired through training can be applied in our work, and where continuous learning is encouraged.
For example, we plan to provide assistance that supports each member's skill development for supervisors, enabling their growth. Furthermore, we aim to continue fostering a culture of ongoing learning
within the company, and we want to support employees in choosing and continuing to learn the
programs they find necessary for themselves.
Human Resources Development Department, Human Resources Divisionchildcare leave• Life event support
at birth

Introduction of child nursing leave• Introduction ofsame-sex partnership

Misao Kagawa• Implementation of Family Partnership(recognition of partners as family members)

Fostering a Culture of Development
To achieve growth towards becoming professional talents, it’s essential to develop competencies through practical workwithin each workplace. To accomplish this, supervisors should effectively utilize one-on-one interactions and provide
mentorship-style support to their subordinates, fostering a culture of development.
Starting from FY24.3, we plan to implement training programs that enable supervisors to properly assess each teammember’s abilities, offer feedback to overcome growth challenges, and create opportunities for skill utilization. All line
managers will participate in this training, acquiring specific know-how related to mentorship-style support to enhancetheir skills in nurturing individual team members based on their unique situations.

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Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 5

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Human Resources First

Values We Embrace (8)Advancement of Professional Human Resources and Engagement Improvement

Maintain and improve employee engagement score (KDDI non-consolidated)
FY25.3
Targets

Maintain

FY23.3Results

72 or over

Performance for the
FY23.3 Overall Score:*Average of quarterly survey

73 results

Enhancement of Employee Engagement
Promotion of Utilizing Engagement Survey Results■ Trends in Overall Engagement Scores

Employee Interviews by In-house Counselor

We conduct employee engagement surveys quarterly, and in the74

To address the challenge of understanding employees’ mental and physical well-being without relying solely on voluntary

February 2023 survey, 97.3% of the target employees participated. The

73

overall engagement score has continued to rise since the start of the

72

73
72

71

current survey in FY20.3 and has maintained the Mid-Term Sustainability

70

Targets of “72 or higher” since FY22.3. Particularly, key drivers such as

69

69“relationships,” “support,” and “recognition” have shown improvement,

Mid-Term
Sustainability Targets

70

FY20.3

FY21.3

FY22.3

FY23.3* Average of quarterly survey results

work and career development. Furthermore, we are enhancing our

traditional counseling channels, this approach actively engages with all employees from the company’s side. The
assignments, and 3) creating a healthy workplace environment. As of the end of FY23.3, we have 44 internal counselors,67

one meetings between supervisors and team members and support for

who are third parties other than supervisors, starting from FY20.3. Instead of passively waiting for employees to come toobjectives of these interviews are: 1) early detection of mental health issues, 2) rigorous management of work

68

which we attribute to the establishment of trust through regular one-on-reports from employees, we have implemented biannual interviews for all employees conducted by in-house counselors,line managers and certified professionals. The decision to have internal counselors conduct the interviews, rather than
external counselors, is based on the belief that employees who understand KDDI’s management policies, philosophy,(Conducted once in FY20.3)

capacity to analyze engagement data to further utilize survey results inmost of whom were recruited through open applications and bring extensive knowledge and experience, including former

organizational culture, employment regulations, and internal rules are better listeners.

the consideration of HR and workstyle policies. Going forward, we aim toExperienced veteran employees, serving as internal counselors, provide reassurance by empathetically listening toenhance engagement further by strengthening demographic-specific analysis, offering training for leaders, and improving

each employee’s concerns, resulting in not only the early detection of mental health issues but also positive effects on

the analysis environment at each workplace. We will continue to drive these initiatives across the entire organization andcareer development support. Internal counselors themselves find fulfillment in supporting employees to take a positive

within individual workplaces.

approach, contributing steadily to the activation of various employees and the realization of a workplace where everyone
can work energetically.
Improving employee engagement■ Support System for Employees with In-house Counselors as Hubs

Employee engagement indicators

Employee engagement

Work engagement

Influence of company policies and initiatives

Strong influence from immediate supervisors and colleagues

Affection for the company

Liking the workplace and job, finding it enjoyable

Intrinsic willingness to contribute to the organization(company and workplace)

Proactive engagement in work by individuals

Department
manager of
Employee A

Proposes workplace improvements in casesof inappropriate attendance issues

Cooperation in case of signs of physical ormental distressOccupational healthdoctors and publichealth nurses

In-house
counselor
EmployeeA

Listens to concerns related to health,work, workplace environment, interpersonal
relationships, etc., and provides career-related advice

Sets agenda items based on
the issues identified throughcounselingWorkstyle Reform
Promotion Committee** The Workstyle Reform Promotion Committee is a meeting body that discusses workstyle-related matters. It is chaired by an executive responsible for the HR division and
Ideological strategy

Organizational
cultureEnvironment

SupportSelf-Growth Job

Interpersonal Relationships

Job

Recognition

HealthOrganization-wide efforts

Improvement in the Score of the Challenging Culture,a Key Indicator
The “Challenging Culture,” which has been a challenge since the■ Trends in the “Culture of Challenge” Member Scores
66

beginning of the survey, has shown signs of improvement. This64

improvement is attributed to the establishment of a foundation

62

for psychological safety within the team through one-on-one

60

interactions, dialogues that encourage personal challenges, andthe transition to an evaluation system that rewards individual
challenges, thanks to the introduction of a new personnel system.

104

Efforts by each workplace

58
56

includes division heads as members. Meetings are held monthly.

Over the course of four years, the employee interview initiative has led to a significant reduction in thenumber of responses to mental health precursors, interventions for organizational improvement, andcorrections for inappropriate work management. This indicates that counselors have improved theirinterviewing skills and that employees have become more willing to proactively seek advice about theirmental health due to the regularity of these interviews. In the future, to address changes in the content
of consultations resulting from employees’ career autonomy, we aim to equip counselors with career
counseling knowledge so they can provide appropriate advice. We also plan to expand effective
initiatives to promote employee health management throughout the KDDI Group, as well as analyze
and utilize data from employee feedback obtained during interviews to solve company-wide issues andpropose new initiatives.
To transform into a company that puts human resources first, it is essential to support employees’
mental and physical health employees, which will lead to increased productivity and enhanced competitiveness. By actively listening to the opinions of each employee, understanding their specific needs
and challenges, we aim to think about what we can do individually for the sustainable growth of KDDI,and we are committed to addressing these issues earnestly.
Work Style Reform & Health Management Department, Human Resources Division Yoko Ogawa

FY20.3

FY21.3

FY22.3

FY23.3

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Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Content of Engagement and Reflection on Management and Business Activities
Service Customers

Materiality 6

We strive for the satisfaction of our service customers (customer experience) by living up to their trust and offering safe

Advancing Stakeholder Engagement

and valuable products and services.
Content of Engagement• Provide information through various media, websites, SNS, etc.
• Respond to inquiries at the Customer Center (by phone and on thewebsite)• Receive feedback to improve our products and services

Influence on the management and business activities• Spread information appropriately• Improve customer experience• Share feedback across the company, Improve convenience of

products and services and guarantee safety by the divisions inchargeShareholders/Investors
We work to build a relationship of trust through honest and fair disclosure of information and active communications.
Content of Engagement• Report at General Meeting of Stakeholders, financial results briefings, and shareholder newsletters

Building strong relationships with all stakeholders, including• Meet with domestic and foreign institutional investors, explain andemployees, customers, distributors, suppliers, and shareholders• Provide information via websites

exchange opinions at briefings for individual investors

Influence on the management and business activities• Strengthen governance• Deliver information using websites and other information tools witha sincere attitude

Local Communities
We collaborate and work in partnership with local communities and fulfill our duties as a corporate citizen.

Stakeholder EngagementKDDI’s business is related to our stakeholders,■ Stakeholder Correlation Diagram

including customers, shareholders, business partners,

From the perspective of achieving sustainable

to economic value through our diverse business with
telecommunications at the core, we have identified
seven main stakeholders: service customers,
shareholders/investors, local communities, NPO/
NGO, administrative organizations/industry groups,
business partners (suppliers), and employees andtheir families.
KDDI values the dialogue with all our stakeholders
who support us. We will continue to build up
collaboration with our stakeholders and tackle
societal issues to contribute to the development of atruly connected society.

• Carry out social contribution activities in each community• Exchange opinions through local administrative organizations, etc.
• Open information morality courses (KDDI smartphone and mobile• Reflect opinions on the environment conservation activities• Solve social issues in partnership with administrative organizations
and local communities• Contribute to community safety and development

Service
Customers

etc.

enhancing social and environmental value in addition

Influence on the management and business activities

phone safety classes, Raise DRR Literacy with Your Smartphone),interact with local residents through environmental education.

employees and their families, and local communities,

growth for both the company and society byContent of Engagement

NPO/NGO

Employees
and Their
Families

Satisfactionof Service
Users

KDDI

Business
Partners(Suppliers)

All Stakeholders

Collaboration andCooperation

Customers
Sound
Relationship

Administrative
Organizations/
Industry
GroupsLocal
Communities
Dialogue andCollaboration

We contribute to a better society through dialogue and cooperation.
Content of Engagement• Practice activities through the KDDI Foundation, social contribution

Trust

Job Satisfaction

Partnership

Shareholders/
Investors

activities across the world in collaboration with NPOs and otherorganizations, and participate in progressive initiatives

Influence on the management and business activities• Understand the social issues and needs in each community

Administrative Organizations/Industry Groups
We comply with the law and maintain sound relations.
Content of Engagement• Participation in study groups and councils, information gatheringand exchange of opinions through administrative agencies, industry
associations, and economic organizations

Influence on the management and business activities• Make proposals on various laws, guidelines and deregulation

NPO/NGO

Business Partners (Suppliers)
We build partnerships based on mutual trust and carry out appropriate business activities with fair and open transactions.
Content of Engagement

Influence on the management and business activities• Conduct a sustainable procurement survey and conduct a hearing
based on the results• Briefing for business partners• Exchange of opinions with business partners and external experts

106• Promotion of sustainable procurement through supply chain

KDDI Integrated Sustainability and Financial Report 2023

107

Introduction
Materiality

Material Issues

VisionMateriality1

Materiality2

Materiality3

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality 6

Governance

TCFD/TNFD
Materiality5

Materiality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Advancing Stakeholder Engagement

Customer Relationship Management
We will continue aiming to achieve sustainable business growth by enhancing customer engagement and actively
breaking ground in new life design fields, especially those related to telecommunications. To better understand the needsof our customers and provide more fulfilling and convenient lifestyles, we aim to further improve customer experience

Employees and Their Families(CX) and provide customers with exciting experiences by expanding business in focus areas such as DX, Finance, Energy,

We continue to be a dynamic company that provides job satisfaction to all employees.

Life Transformation (LX), and Regional Co-Creation, focusing on our existing communication services.

Content of Engagement• Conduct Employee Engagement Survey• Communicate directly between the President, executives andemployees (Excitement Tours (Waku-Waku Tours))• Exchange opinions with the labor union• KDDI Sports Festival (Co-hosted with the labor union)

Influence on the management and business activities• Analyze the state of companywide organizational culture andidentify issues to be tackled in each department• Respect human rights of employees• Create a sense of unity throughout the company


Toward that aim, we at all divisions strive to refine and connect all points of customer contact, working on crossdepartmental improvements across au Shops, CS, various apps, communication and sound quality, products, website,rates and services. We share the progress at the CX Promotion Meeting, attended by top executives, to speed up theprocess.
Many evaluations, criticisms and comments we receive from customers form the guidelines for our behavior. Reflecting
these opinions sincerely in our business completes the cycle of offering further value to our customers.

Stakeholder Engagement
Customer Relationship Management

Promoting Stakeholder Dialogue

Community Involvement and Development

We actively conduct activities to incorporate the opinions and requests of stakeholders in our corporate management for

We at KDDI Group are driving various initiatives to solve societal and environmental issues of the countries and regions

further improvements.

where we operate to contribute to the development of a truly connected society. Each regional office leads community

In FY23.3, we held stakeholder dialogues on the environment and human rights, asking stakeholders to assess thedevelopment activities, placing importance on dialogue and cooperation with a variety of stakeholders, including local
communities, administrations, universities and NPO/NGO.

company’s business and their expectations for the future in terms of risks and opportunities.


Stakeholder Dialogue■ Dialogue on the environment
Experts

Biome Inc.
CEO

Feedback received

Participation in external initiatives

 he market for biodiversity conservation is expected to be worth about $10 trillion per year in the•Tfuture, but it is still in its infancy. Also, unlike climate change, it is important and challenging tolink it to countries and regions for quantification and analysis.

KDDI strives to take a leadership role by participating in domestic and international initiatives and organizations to• The power of smartphones is needed to quantify biodiversity: more than 4 billion are in use■ Participation in ESG-related initiatives

worldwide and can record location data. If the telecommunications industry recognizes this as abusiness opportunity and takes action, the scope of solutions to social problems will expand.

Shogoro FujikiSocial Contribution Activities

contribute to the development of a truly connected society.

• I expect KDDI to create a platform for data collected from camera traps, IoT, smartphones,
sensors, etc.

General Incorporated Associations
Sustainable Management Promotion
Organization
Representative Director
Takehisa Kabeya
Chief Researcher
Sonoe Hotta• Resource depletion is an important global issue, and because CO2 emissions occur throughout

the life cycle of a resource, resource recycling and carbon neutrality should be considered as a set.

• It is important to view waste as a resource that never loses its economic value and to strive to
reduce the amount of resources procured through reuse, recycling, and other means.

• As a measure against climate change, it is important not only to make efforts to reduce CO2

emissions by the company itself, but also to work with suppliers and other parties from whom
products are sourced to understand their carbon footprint and reduce environmental impact
throughout the supply chain. KDDI has a particularly large number of suppliers, so we believe its
impact on society will be significant.

United Nations
Global Compact

RE100

Task Force on Nature-related Financial
Disclosures (TNFD) Forum

30 by 30 Alliance for Biodiversity

Japan Climate Leaders’ Partnership(JCLP)■ Dialogue on human rights
Experts
General Incorporated Association
Institute for Sustainability
Management
Representative Director
Hidemi Tomita

Feedback received• In particular, the energy business presents different human rights risks than the telecommunica-

tions business. For the five focus areas of the satellite growth strategy, risks should be consideredon a business by business basis.

• It would be good to show the pros and cons so that consumers have a concrete picture of therisks involved in agreeing to privacy and data use agreements.

• As European companies take more initiatives from a legal and regulatory perspective, it is necessary to use advanced European telecommunications and IT companies as benchmarks.

• Human rights issues should be considered together, without distinguishing between global andGeneral Incorporated Association
CSO Network Japan
Board Chair
Yukiko Furuya

domestic issues. Distinguishing between global and domestic human rights issues creates problems.
It is also important to promote initiatives and show that we are not complicit in human rights
issues.

• It is important to disclose progress and responses to important human rights issues from theperspective of rights holders. There is nothing wrong with disclosing information, and it will leadto increased confidence among rights holders.

• When formulating procurement policies and establishing a complaint-handling office, we should
work with suppliers to formulate and establish such policies.

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KDDI Integrated Sustainability and Financial Report 2023

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Introduction
Materiality

Materiality1

VisionMateriality2

Material Issues
Materiality3

TCFD/TNFD

Materiality4

Visualization of Non-Financial Activities to Improve Activities

Materiality5

GovernanceMateriality6

Data

Issuing Sustainability Bonds

Third-Party Evaluation

Issuing Sustainability Bonds
Background and Purpose of the Bond Issue and the Development of the Framework■ Analysis by “AI Powered Enterprise Value Cockpit”
Indicators with a high impact on corporate value

Corporate value
Latentvariables

Company size

Shareholder
evaluation(examples)

Impact of stock
prices, exchange rates, andcommodity prices

In September 2022, KDDI formulated the Sustainability Finance Framework,
which limits the use of funds to projects that solve social issues and protect
the global environment, in order to promote its “Sustainability Management,”“Satellite Growth Strategy,” and “Strengthening of Management Base” from aEnvironmental

Social factors

Governancefactors

Expand efforts to increase the ratio of
mid-career hires

Financialfactors
Governancefund-raising perspective. We also issued KDDI Tsunagu Chikara Bonds, KDDI’s
first sustainability bonds totaling 100 billion yen. We will continuously aim for

Increase the ratio of male employees taking
paternity leave

SocialEnvironmental
factors

ESG indicators

Financial indicators

Reduce greenhouse gas emissions based on
Scope 1 and 2

Increase the ratio of female managers andexecutives

Latent variables defined in the model

sustainable growth in society and corporate value improvement by using the funds for a wide range of initiatives to solve
social issues and preserve the global environment, with a focus on 5G-related investments.
Specifically, we will contribute to the government’s “Vision for a Digital Garden City Nation” initiative by constructing
5G areas. The funds will also be used for various qualified projects, such as promoting power saving and the use ofrenewable energy in mobile phone base stations and telecommunications facilities, with the aim of achieving net-zero
CO2 emissions.

Third-Party Evaluation

Use of funds raised under this framework
The funds raised through Sustainability Finance and other means will be used for the following qualified projects that areconsistent with the “Satellite Growth Strategy” and “Strengthening of Management Base” as part of efforts to promote

ESG Indexes and Ratings

sustainability management in our Mid-Term Management Strategy. Specifically, the funds will be used for new
expenditures or refinancing of existing expenditures for qualified projects related to “5G Communications,” which is thecore of our “Satellite Growth Strategy,” and our focus areas of “Digital Transformation (DX),” “Energy Business,” “LifeTransformation (LX),” and “Regional co-creation (CATV and other services),” as well as “Carbon Neutral.” Through theseprojects, we aim to achieve our material issues, such as “promotion of innovation centered on telecommunications,”“realization of a safe, secure, and prosperous society,” and “carbon neutral,” and to work together with our partners toachieve sustainable growth in society and improve corporate value.

Visualization of Non-Financial Activities to
Improve Activities

FTSE4Good Index

FTSE Blossom Japan Index

CONSTITUENT MSCI* JAPANESG Select Leaders Index

FTSE Blossom Japan Sector
Relative Index

CONSTITUENT MSCI* JAPAN
Empowering Women Index (WIN)S&P/JPX Carbon
Efficient Index

Euronext Vigeo Eiris World
Index 120MSCI* ESG Leaders Indexes

DBJ Environmental Ratings*THE INCLUSION OF KDDI Corporation IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF KDDI
Corporation BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

We conduct activities to analyze and visualize the relationship between non-financial activities and corporate value, which
is one of the elements to promote sustainability management.
In FY22.3, we conducted a trial correlation analysis of non-financial data and PBR (Price to Book Ratio), mainly for

Evaluations and Awards

enhancing ESG information disclosure, by utilizing Digital ESG Analytics, which utilizes The Yanagi Model, provided by
ABeam Consulting Ltd.
In FY23.3, we conducted a more in-depth quantitative analysis, including cause-and-effect relationships, by utilizing amodel of “AI Powered Enterprise Value Cockpit” by Accenture Japan Ltd. The analysis was conducted jointly with ARISE
analytics Inc., which is a joint venture between KDDI and Accenture, Inc. By including the effects of latent variables suchas shareholder evaluation and company size, we analyzed the relations between non-financial data and market
capitalization, including causal relations. Indicators with a high impact on corporate value were identified as follows:
greenhouse gas emissions based on Scope 1 and 2 as an environmental indicator, efforts to increase the ratio of male

Climate Change “A List”
Certification by CDP

SBT Certification for KDDI’s
Target (to limit the temperature increase to 1.5°C)

Health and Productivity
Management 2023
(White 500)

HR Transformation of
The Year 2022

4.5 Stars in the 4th Nikkei
SDGs Management Survey

5 Stars in the 6th Nikkei
Smart Work Management
SurveyGold Rating in
the PRIDE Index

Human Capital Leaders2022

employees taking paternity leave and the ratio of mid-career hires as social indicators, and the ratio of female managers
and executives as a governance indicator. The results of these analyses are being reflected in our own initiatives andinformation disclosure.

110

External Recognition/Initiatives

KDDI Integrated Sustainability and Financial Report 2023

111

Introduction

VisionDisclosure based on TCFD Recommendations

Material Issues

TCFD/TNFD

Governance

Data

Disclosure based on TNFD Recommendations

Disclosure based on TCFD Recommendations

Board of Directors
Approval

ReportSustainability Committee (convened biannually)
Chair
President, Representative Director

KDDI announced our support for the Task Force on Climate-related
Financial Disclosure (TCFD) in April 2021. We will strive to proactively

Permanent Members
Executive Directors and General Managers of All Businesses and Corporate Sectors,
President of the KDDI Foundation, Audit & Supervisory Board members

disclose information based on the disclosure framework of governance,
strategy, risk management and metrics and targets in accordance with the
TCFD recommendations. We will also take concrete measures to address
climate change and put them into actions.

Details of Sustainability Committee activities• Formulation of sustainability action policies• Sustainability promotion framework maintenance• Confirmation of progress on KPIs

1. GovernanceKDDI has the Sustainability Committee, chaired by the President, Representative Director/the Chief ESG Promotion Officer,

Secretariat

and consisting of key members of the Board of Directors etc., to deliberate on issues related to sustainability such as theresolution of social issues through businesses (SDGs), social contributions, and measures against climate change. The
Sustainability Committee, chaired by the President, is responsible for monitoring and overseeing the risks andopportunities related to climate change, as well as approving reporting and other matters, and has final authority formonitoring, oversight, reporting, and approval.
We recognize that addressing climate-related issues is an important part of our business strategy. To promote theresolution of climate-related issues, the Sustainability Committee has approved a target of net-zero CO2 emissions in fiscal
2030 for KDDI (non-consolidated), 20 years ahead of the previous target of fiscal 2050, and carbon neutrality in fiscal

Human Rights Subcommittee (convened biannually)
Set targets, consider measures,and monitor progress related to social values,
including the promotion of respect for human rights
Carbon Neutral Subcommittee (convened biannually)
Set targets, consider measures,and monitor progress toward achievingcarbon neutrality

2026 for KDDI data centers around the world.
The Sustainability Committee assesses environmental risks and opportunities and monitors progress toward each goal.

Monitoring process for climate-related issues

Sustainability
Management Division

EnergyConservation
Working Group

Renewable
Energy Working
Group

Service
Customers

Shareholders/Investors
Local
Communities

Business Sector
Corporate Sector
Regional Offices in Japan

Senior General Managers of divisions
and general branch offices in chargeof sustainability activities andgeneral administration and humanresources related matters in each region

Social CN
Working Group

Group Companies

Stakeholders

Business
Partners(Suppliers)

NPO/NGO

Administrative
Organizations/Industry
GroupsEmployees
and Their
Families

As of September 1, 2023

The Sustainability Committee, chaired by the President, monitors the achievement of carbon neutral goal.
Specifically, the Carbon Neutral Subcommittee of the Sustainability Committee monitors the risk factors for notachieving the annual target and the opportunity factors for achieving the annual target on a semi-annual basis. The
Carbon Neutral Subcommittee’s monitoring results are reported to the Sustainability Committee as climate-related risks

2. Strategy

and opportunities, and their significance is assessed. In addition, the results of the monitoring and evaluation of targets

In May 2020, KDDI announced the KDDI Sustainable Action, KDDI’s SDGs with an eye on 2030, and declared that weand measures related to climate-related issues are reported. The Sustainability Committee meets twice a year. At thewould aim to improve energy efficiency and achieve net-zero CO2 emissions by 2050, regarding conservation of the

Sustainability Committee meeting held in the first half of the fiscal year, a report is made on the results of the previous

environment as one of the social issues. Specifically, we carried out two types of analyses: the 2°C scenario in which a

fiscal year’s target achievement status and an analysis of the factors if the target was not achieved. At the Sustainability

carbonfree society will be rapidly realized (the increase in the global average temperature is held below 2°C above pre-Committee meeting held in the second half of the fiscal year, a report is made on the estimated status of goalindustrial levels) in response to the Paris Agreement adopted at COP21, and the 4°C scenario in which physical impact

achievement for the current fiscal year and an analysis is made of the factors if the goal is not achieved.

will become apparent due to lack of measures against climate change (the increase in the global average temperature isheld at 4°C above pre-industrial levels). As a result, under the “KDDI Environmental Charter,” we announced that wewould promote “measures to combat climate change,” “development of a recycling-oriented society,” and “conservation of
biodiversity,” and make further contributions to the preservation of the global environment. In addition, in April 2022, as aresult of more proactive consideration of carbon neutrality, we will advance the previous target by 20 years and aim toachieve net-zero CO2 emissions from our business activities in fiscal 2030. We also decided that KDDI data centersaround the world will aim to achieve carbon neutrality in fiscal 2026.
In 2016, in response to the liberalization of the electricity market, we entered the retail electricity market as a retailelectricity supplier in the same year as part of our short-term strategy. In 2019, as part of our mid-term strategy, we beganoffering the “Non-Carbon Menu” and “RE100 Menu” electricity services that reduce CO2 emissions to corporate andindividual customers. As a long-term strategy, we established au Renewable Energy in April 2023 to operate therenewable energy generation business.
KDDI believes that innovation through co-creation that transcends the boundaries of companies and organizations will
be a major driving force in achieving carbon neutrality.
In November 2021, we established the KDDI Green Partners Fund to support start-up companies working on climatechange issues. The slogan of the KDDI Green Partners Fund is “leaving a prosperous planet for the future.” Through theactivities of this fund, we will provide funding to start-up companies working on climate change issues, and we will work
together with them to promote technological innovation and the dissemination of new technologies in the environmental
field by using KDDI’s various assets as growth opportunities for investee companies.

112

KDDI Integrated Sustainability and Financial Report 2023

113

Introduction

Vision

TCFD/TNFD

Material Issues

Disclosure based on TCFD Recommendations

Governance

Data

Disclosure based on TNFD Recommendations■ Scenario Analysis Results

Example (2)Target facility: Kyushu Area Telecommunications Facility B

The 1.5°C scenario in which a carbon-free society will be rapidly realized(a future in which the goal to hold the increase in the global average temperature 1.5°C above pre-industrial levels is achieved)

Countermeasures: Installation of watertight doors and waterproof shutters, concrete blocking of windows and other

Reference: IEA(International Energy Agency)「World Energy Outlook 2021」Net Zero Emissions by 2050 Scenario（NZE Scenario）

Date of completion: Construction due for completion in FY25.3

Analysis of Transition Risks
Carbon Tax
Policy and Legal(short- and mid-term
strategies)

KDDI’s Risks

KDDI’s Responses

Carbon taxation risk*

Purchase of emission credits equivalent to 190,000 t-CO2 of unachieved CO2 emissions expected to occur during the Third Plan
period from FY21.3 to FY25.3 (CO2 emission credits generated during
the Second Plan period), 40,000 t-CO2 in FY21.3 period and 150,000
t-CO2 in January 2023. These emission credits are scheduled to beallocated in the period from FY26.3 to FY27.3, depending on the
results of the third plan period from FY21.3 to FY25.3.

Tokyo
Metropolitan Risk of increased costs of buying
Ordinance/
credits (allowances) for unachieved CO2 emission reduction
Emission
Regulations

Introduction of New Technologies
to Reduce Power Consumption
and CO2 Emissions(mid-term strategy)

Risk of increased power
consumption of telecommunications equipment due to increased
communications volume

Aiming for a sustainable data center that contributes to decarbonization, a 94% reduction in power consumption for server cooling isbeing researched and developed with Mitsubishi Heavy Industries,
Ltd. and NEC Networks & System Integration Corporation using
immersion cooling, which uses liquid to cool IT equipment. In
addition, a base station sleep function (sleeping during the night
when traffic is low) has been introduced to promote the reduction of
power consumption. We have developed a function for a millimeter-wave radio model in-house and are accumulating know-how andidentifying problems. It is expected to reduce power consumption byapproximately 100 kWh per year per radio.

Market and Reputation(long-term strategy)

Risk of declining of business
reputation and consumers
decrease due to failure to meetcarbon neutral goal and delays inrenewable energy initiatives

Promoting the switch from fossil fuel power to renewable energy
power.
Plans to switch 2.7 billion kWh of electricity consumed in ourbusiness operations to a renewable energy-derived menu.
In addition, we established au Renewable Energy as a group company and launched a renewable energy generation business withadditional potential, such as solar power generation.

*1 Since the estimated CO2 emissions in fiscal 2030 are approximately 675,000 tons-CO2, in the case of carbon tax of 14,820 yen/t-CO2, it is assumed
that an annual tax of about 10.0 billion yen will be levied.

Reference: IPCC (Intergovernmental Panel on Climate Change) Fifth Assessment Report

Chronic
Risk

Cut-off wall

Watertight door

Raising of generator supply and exhaust ducts

3. Risk Management
The KDDI Group recognizes that the risks and opportunities of responding to climate change in our business operations
are important issues for our business strategy, and manages them through a company-wide risk management process.
Specifically, each business unit conducts an annual assessment of all KDDI Group business activities, including upstream
and downstream supply chain activities, from both the perspective of what management and the Sustainability
Management Promotion Division recognize as important issues and from the perspective of what each business unit
recognizes as important issues, regarding the risks and opportunities of climate change that could have a significant

The 4°C scenario in which physical impact will become apparent due to lack of measures against climate change(the increase in the global average temperature is held at 4°C above pre-industrial levels)

Acute
Risk

Main Countermeasures

Promoting the switch from fossil fuel power to renewable energy
power

1

Analysis of Physical Risks(Analyzed using the physical scenario “RCP8.5”)

openings, waterproofing of generator supply and exhaust ports, etc.

impact on the KDDI Group’s financial and business strategies.
With regard to climate change risks and opportunities that may have a significant financial and strategic impact on theKDDI Group, management and the Sustainability Management Promotion Division conduct risk identification for all
business division on a semi-annual basis. Of the risks identified, those related to climate change are managed using anKDDI’s Risks

KDDI’s Responses

Increase in severity and frequency ofdisasters caused by extreme weather(typhoons, floods, etc.)

Risk of increased costs such as personnel
expenses for emergency recovery in orderto respond quickly to the restoration of
the communication network

Preparation for efficient recovery operations
by reviewing the BCP*2 and conducting
disaster recovery drills

Increase in average temperature

Risk of increased air-conditioning powerusage in data centers to coolservers entrusted to us by
our customers

Installation of highefficiency air conditioning
systems and replacement with renewableenergyenvironmental management system (EMS) approach, utilizing the ISO environmental management system. With regard to
the risks to be managed, each relevant division sets quantitative annual targets for risk reduction and evaluates the*2 Business Continuity Plan

progress on a quarterly basis. Issues pointed out in the progress evaluation are reported to the Carbon Neutral
Subcommittee, a subcommittee of the Sustainability Committee, and risks and opportunities related to the entire
company and all divisions are discussed and approved by the Sustainability Committee.

4. Metrics and targets
Since FY13.3, KDDI has been calculating the greenhouse gas emissions (Scopes 1, 2, and 3) on a non-consolidated basis
and since FY22.3 on an entire group basis of our supply chain to quantitatively understand its environmental impact andWater Risk Assessment and Countermeasuresmanage the risks and opportunities that climate change poses to the company. We will continue to promote activities to

There is growing concern that climate change events such as flooding may cause business risks. As a proactive response

reduce greenhouse gas emissions based on the following indicators and targets.

to these threats, a water risk assessment and countermeasures have been implemented to enable facilities to efficiently
FY23.3 (Estimated)

restore business activities in the event of a disaster.

Targets (KDDI Group)KDDI systematically implements countermeasures in locations that are likely to be significantly affected by flooding
based on the expected height of the inundation in the high-risk areas (the assumed frequency of flooding is once in 1,000
years) as identified by the Ministry of Land, Infrastructure, Transport and Tourism and/or prefectural governments.

Scope 1

Direct GHG emissions that occur fromsources that are controlled or ownedby the organization

Scope 2

Indirect GHG emissions associated with theusage of electricity, heat and steam provided
by external actors

Scope 3

Indirect GHG emissions other than Scope 2(emissions by external actors related to theorganization’s activities)

Examples of Countermeasures
Example (1)Target facility: Chugoku Area Telecommunications Facility A
Countermeasures: Installation of watertight doors, concrete blocking of north-side glass window (cut-off wall), raising ofgenerator supply and exhaust ducts, installation of non-return valves on toilets, etc.
Date of completion: July 2022

114

88,165 t-CO2(consolidated)
1,308,085 t-CO2(consolidated)
5,252,273 t-CO2(non-consolidated)

Targets (KDDI Group)

Achieve carbon neutrality in fiscal 2030 ona non-consolidated basis and in fiscal 2050
on a consolidated basis

by fiscal 2030 14% reduction compared tofiscal 2019KDDI Integrated Sustainability and Financial Report 2023

115

Introduction

VisionDisclosure based on TCFD Recommendations

Material Issues

TCFD/TNFD

Governance

Data

Disclosure based on TNFD Recommendations

Disclosure based on TNFD Recommendations(1-1) Understanding dependency and the impact on natural capital■ How to understand the level of dependency and impact

Understanding dependency and impact
Step 2:
Organizing internal environments

Step 1: Scoping

KDDI endorses the principles of the Taskforce on Nature-related Financial
Disclosure (TNFD) and joined the TNFD Forum in April 2023. KDDI proactively• Mainly for telecommunication

disclose information based on the TNFD disclosure framework. We analyzed

business. Other businesses are to
be briefly analyzed.

our dependency and impact on nature, business risks and opportunities, and* 

Step 3: Scoring• Telecommunication business to be evaluated, • Brief scoring conducted using

take specific measures and actions to address them. For more information,please refer to the KDDI TNFD Report*.

Step 4-6:
Risk analysis

organizing procurement sources of raw
materials, and countries in which businesses
are operated.

indicators such as ENCORE, NBI
and EPI, to create a heatmap.

• Explained later

For “Step 1: Scoping,” we looked at business domains presented in the Mid-Term Management Strategy and decided toKDDI Corporation TNFD Report 2023

target our telecommunications business after considering various domains’ business scales, impact on natural capital, andassessment possibilities. Dependency and impact on other businesses that could be relevant to key items from naturalcapital perspectives was briefly analyzed and will be analyzed in more detail later. For “Step 2: Organizing internal

1. Governanceenvironments,” we organized internal information, and also based on publicly released information, we listed up where

KDDI’s sustainability, including for natural-capital related issues, is driven mainly by the Board of Directors and thecommunications facilities are installed and built in wide areas due to the nature of the business, we performed analyses

Sustainability Committee. → P46

by not just specific regions but also by country, including adjacent regions. For “Step 3: Scoring,” we scored risks, and

The Board of Directors receive reports from the Sustainability Committee every quarter on the progress of initiatives

raw materials for our telecommunications business are procured from, and in which countries the business operates. As

created a heatmap to identify the countries operated in, details of activities, and the state of dependency and impact. To

such as climate change, natural capital, monitoring and giving instructions on how measures are taken for key issues anddo this, indicators were used including ENCORE*1, the tool the TNFD framework recommends, to analyze whether

initiatives. The Mid-Term Management Strategy places sustainability management at the center and aims for sustainably

corporate activities impact ecosystems and if they do, as well as indexes such as NBI*2 that aggregates data to assess thegrowing society and improving corporate value together with our partners, by driving the Satellite Growth Strategy and by

ecological importance of countries engaged in the corporate activities, and EPI*3, which summarizes the availability andenhancing its underpinning management foundation. In establishing the strategies and targets to promote these efforts,

levels of laws concerning the conservation of ecosystems in the countries engaged in the corporate activities.

the Board of Directors and the Sustainability Committee take dependency, impact, risks and opportunities associatedwith nature (nature-related risks etc.) into consideration for deliberations and approvals.
The Sustainability Committee is headed by the President, and its members are all Directors of Divisions, President ofKDDI Foundation, and auditors, operating with sustainability as the pillar of a company-wide management strategy. The
Sustainability Committee is responsible for checking and discussing KDDI’s key issues and initiatives, such as climatechange and natural capital, also monitoring and supervising company risks, opportunities, and its positive and negative
impact on society and the environment, and approving reported matters. In the first half of the fiscal year the Committee
checks the progress of the year’s targets, and if the targets are not met, analyzes the causes and checks countermeasures.
In the second half of the fiscal year, the Committee checks the progress of the year’s progress and sets targets for thefollowing fiscal year.
We also established the Sustainability Management Division in April 2022 to further strengthen and accelerate thepromotion of sustainability management, centrally managing the promotion of sustainability management, executing
sustainability policies and executing and supporting the execution of measures throughout the Group, and releasing

severity level of pressure to nature. Using the tools and data mentioned earlier, we scored the indicators by theseriousness of dependency and impact, geographical importance, and state of biodiversity-related laws and regulations in
the given country.
Shown below is the heatmap that visualizes the results of evaluating the dependency and impact on natural capital.

*1 Exploring Natural Capital Opportunities, Risks and Exposure*2 National Biodiversity Index*3 Environmental Performance Index*4 A process for systematically assessing nature-related risks and opportunities. It consists of four phases, which are to: Locate (touchpoints withnature), Evaluate (dependency and impact on nature), Assess risks and opportunities, and Prepare to respond to nature-related risks and opportunities and report to investors.
*5 The International Union for Conservation of Nature■ Heatmap of dependency
Water quality

Water flow maintenanceVentilation

Surface water

Soil quality

Pollination

Pest control

Mediation of sensory
impacts
Mass stabilisation anderosion control

Maintain nursery habitats

Ground water

We identify and assess nature-related risks etc., in our value chains. From the relationships between business scales andGenetic materials(1) Risks

Flood and storm
protection

2. Strategy

Mobiledevices

Filtrationand for assessments and management of nature-related risks etc.

Fibres and othermaterials

team’s highest-level responsibility and accountability for policies, commitments and targets of nature-related risks etc.,

Disease control

instantly recognize and address the issues. A Managing Executive Officer and CFO is responsible for the management

Dilution by atmosphereand ecosystems

businesses that are high-priority from the perspective of nature-related risks etc., so that the management team can

Climate regulationHigh

Buffering and attenuationof mass flows

Medium

Bio-remediation

Low

Division has a structure for communicating to the management team the performance and progress of areas in KDDI

Animal-based energy

relevant information as the administrative division of the Sustainability Committee. The Sustainability Management

Also, using TNFD’s LEAP approach*4, and referencing IUCN*5 guidelines, we performed an evaluation with views to theProcuring raw materials
ProductionUse and disposal
Procuring raw materials

Stations

natural capital, we qualitatively assess and interpret the risks’ priority, analyze nature-related risks etc., and evaluate andConstruction
Use and disposal

promote measures.
Communication
cablesProcuring raw materials
Installation
Use and disposal
Procuring raw materials

Datacenters

Construction
Use and disposal

116

KDDI Integrated Sustainability and Financial Report 2023

117

Introduction

Vision

TCFD/TNFD

Material Issues

Disclosure based on TCFD Recommendations

Governance

Data

Disclosure based on TNFD Recommendations■ Heatmap of impact
Low■ Risk analysis results

MediumHigh
Ecosystem use

Direct use

ClimatechangeTargetKey items of
domains dependency and impact

Pollutants Non-GHG

Category

Risk factors

Impact to finance• Disaster-prevention• Impact of terrestrial

Mobile devices

Procuring raw materials
Production
Use and disposal
Procuring raw materials

Stations

Acute

Waste

Soil

Water

Atmosphere

GHG

Other
resources

Water

MarineFreshwater

Terrestrial

Mobiledevices

Other

Construction

ecosystem use andto water resourcesfrom mining toobtain raw materials(especially metals)
for mobile devices

Use and disposal

Communication
cablesTransition
risks

Installation

We have identified key dependency and impact items from the results mentioned earlier and our own businessperspectives.

• Impact of terrestrial ecosystem use and to water resources from mining to obtain raw materials (especially metals) for
mobile devices• Soil pollutants from the use of toxic substances arising from mobile device production• Impact on terrestrial ecosystem especially on land from building stations and installing communication cables• Dependency on stabilizing features of water resources, climate and land to procure raw materials for stations andcommunication cables• Enhancement of laws

Cost increasing:
Laws and regulations getting
enhanced causes prices tosoar and supplies to decline• Criticism, and reputation

Sales decreasing:• Promoting recycling of used
Sales decreasing as
mobile phones
reputation from stakeholders
including customers
worsens

and regulations
concerning mining andland pollution
worsens fromdeforestation, water use,water contamination,etc.

Physical
risks

Acute

invading living creatures’habitats for installation,
decline of disasterprevention features fromecosystem use

Cost increasing:
Additional costs incurred tomaintain ecosystemsFees
arising to recover damaged
stations and communication
cables• Increase of flood andsustainable and responsible
procurement guidelines• Engaging key suppliers,

including conducting surveys
on initiatives such as
reducing environmental
impact and conserving
biodiversity• Designing communication

cable routes that are suited
to environment-conservationareas• Collaborating with relevantorganizations for various
initiatives such as
implementation of disasterproof structures and quick
support activities forvictimized areas

landslide risks• Dependency onstabilizing features ofwater resources,• Criticism about views
climate and land toTransition
Reputation
getting lost, andprocure raw
risks
reputation worsening
materials for stations
and communication
cablesSales decreasing:
Sales decreasing due toreputation worsening• Building stations withconsiderations to landscape• Promotion of reuse andrecycling when facilities are
discarded(2) Opportunities
strengths. KDDI owns many solution technologies that can contribute to region co-creation and solutions toenvironmental issues, such as Starlink, which can organize communication environments in mountainous areas and islands■ Approach for the risk analysis

where such facilities could not be built before, as well as IoT technologies that can be utilized for data collection. We
believe that we will be able to establish ourselves as an advanced sustainability brand by incorporating into these

Risk analysis• Relatively high-risk items selected from

Cost increasing:
Destabilizing raw material
supplies, which also causes
prices to soar

resources from excessive
use of water

Meanwhile, opportunities with natural capital including biodiversity, are areas in which KDDI can demonstrate its unique(1-2) Risk analysis of natural capital

Step 4:
Selecting high-risk items

Stations, Communication cables

Construction

ecosystem
especially on land
from building
stations andinstalling
communication
cables• Establishing and running• Decline of water• Cutting down trees and• Impact on terrestrial

Use and disposal

Use and disposal

earlier

Laws andregulations

Reputation

Procuring raw materials• As mentioned

Chronic

Procuring raw materials

Datacenters

Step 1-3:
Understanding
dependency
and impact

and landslides• Soil pollutants fromthe use of toxic
substances arisingfrom mobile device
production

Costs increasing:
Supplies of raw materials
getting destabilized as• Procurement of products
suppliers get damage, whichaccording to the Act on
will also cause prices toPromoting Greensoar
Procurement

features declining due todeforestation frommining• Increased risks of floods

Physicalrisks

Risk-reducing measures

Step 5: Organizing financial impact
according to projected risks• Referencing the TNFD framework,

the procurement of raw materials,
categorize physical risks andconstruction, installation, use andtransition risks for each item
disposal of mobile devices, stations,• Evaluate possible financial impact ofcommunication cables, and datacenters
the risks

initiatives the perspective of natural capital, including that of biodiversity, and by exercising leadership early on. We are
currently evaluating various ideas referencing the World Economic Forum’s report “New Nature Economy Report II The
Step 6: Measures to take• Identify current measures against risks
and clarify the state of responses• Continue to evaluate and take

Future Of Nature And Business” etc., looking at the potential nature-related market size and KDDI’s strengths. Goingforward, we will hold further discussions with relevant divisions and external experts to materialize these ideas.

■ Concept diagram of the opportunities

measures for reducing risks

Examples of domains getting nature-related impact
EnergyAgriculture

Forestry

Construction

Manufacturing

Finance

To perform the risk analysis, for “Step 4: Selecting high-risk items,” we identified high-risk items, or items that scored high,in the dependency and impact assessment, and high-risk items from business perspectives. Next, for “Step 5: Organizing

Business domains in which KDDI’s strengths can be utilized will be evaluated,with consideration given to potential market size

financial impact according to projected risks,” we listed up specific risk factors (from the perspective of physical risks andtransition risks) and assessed the financial impact projected by such risks. For “Step 6: Measures to take,” we identified

KDDI’s strengths

the state of response to risks arising from land modifications, the procurement of raw materials and parts, building
stations and installing communication cables, or others. We will continue to evaluate and take measures for reducing
such risks by taking action such as designing communication cable routes that are suited to environmental conservation
areas and building stations with consideration to landscape protection.

118

5G mobile network
High-speed, large,
low-latency, multi-connection communication
technologies

Satellites (Starlink)

IoT

Telecommunication
Technologies thattechnologies that willachieve data analysis,achieve connection from monitoring, etc.
anywhere on earth

DronesDigital twin

Advances transportation Simulations based onand expands spaces that collected data
can be filmed

Web3Creating autonomic anddispersed communities

KDDI Integrated Sustainability and Financial Report 2023

119

Introduction

VisionDisclosure based on TCFD Recommendations

Material Issues

TCFD/TNFD

Governance

Data

Disclosure based on TNFD Recommendations

3. Risk and Impact Management

4. Metrics and targets(1) Processes for identifying and evaluating nature-related risks etc.

In promoting the conservation of biodiversity, which is one of the key issues presented in “KDDI GREEN PLAN 2030,” weKDDI identifies and assesses nature-related risks etc., in its value chains. For FY23.3, we qualitatively assessed risks mainly

have been using qualitative indicators used for ENCORE etc., to analyze natural-capital-related dependency and impact.

in the business domains presented in the Mid-Term Management Strategy, considering the relationships between

We also qualitatively assess the financial impact of risks, such as to sales and costs. In addition to the above, webusiness sizes and nature, and evaluating nature-related risks etc. mainly for our telecommunications business. First, wequantitively monitor our greenhouse gas emissions (Scope 1, 2 and 3), water resource consumption, the level of industrial

categorized the communications businesses to be assessed into mobile devices, stations, communication cables, andwaste, etc. as nature-related indicators, and also monitor the number of used mobile phones collected as an indicator todatacenters. We have considered upstream (procurement of raw materials), midstream (production, construction,

gauge the progress of waste-reduction initiatives.

installation) and downstream (use and disposal) areas of each item’s value chain and identified key raw materials, where
they come from, where production/construction/installation takes place, and where they are used and disposed of. We
then conducted a qualitative assessment of dependency and impact by value-chain country. The assessment items were

We have also been promoting activity, using various opportunities as touchpoints to collaborate with external partners
etc. In projects such as surveying of seaweed beds with aquatic drones*1, development of an automated blue carbon
measuring system*2, conservation of biodiversity in collaboration with Ashiu research forest of Kyoto University*3, andscored by the level of dependency and impact, geographical significance, and by the state of ecosystem-related laws andinvestment in a Biome Inc. that provides a platform to visualize biological information*4, we have been collaborating withregulations in the given country. Furthermore, we created a heatmap to reflect the scored results and assessed key

various stakeholders to proactively work on regional environmental conservation.

projected risks for high-scoring countries and impacted items.

Going forward, we will proactively communicate with external partners through our participation in the TNFD Forumand the 30 by 30 Alliance for Biodiversity and through dialogues with stakeholders etc., and establish natural capital(2) Management processes of nature-related risks etc. and integrating the processes into risk
management throughout the organization

strategies and targets including those for biodiversity more than ever to contribute to resolving social issues, evaluating
the indicators needed to meet such targets.

Being responsible for KDDI Group’s risk management, the Sustainability Management Promotion Division has been
identifying all business divisions’ risks every half-term-twice a year- which could impart significant impact on finance andmanagement strategy including risks related to climate change and natural-capital related risks. Furthermore, the natural
capital risks identified through the environmental ISO framework such as climate change and biodiversity risks aremanaged with an EMS (environmental management system) approach, also utilizing the environmental ISO framework.

*1

For the managed risks, qualitative annual targets are set by the divisions in charge and their progress is assessed every urveying of seaweed beds with aquaticSdrones (Japanese only)*2

ESG DataDevelopment of an automated blue carbon
measuring system (Japanese only)Investment in a biome that provides a platform
to visualize biological information (Japanese only)

quarter. The improvement details, and risks and opportunities concerning all divisions, are reported, discussed andapproved by the Sustainability Committee.

(3) Engagement with stakeholders impacted by evaluations of and response to nature-related risks etc.

*3 

Conservation of biodiversity in collaboration
with Ashiu research forest of Kyoto University(Japanese only)*4

If building stations, installing communication cables, and building datacenters are likely to inconvenience residents, i.e., bycausing noise, we explain to the residents the outline of the planned facilities and the details of the construction in aneffort to gain the residents’ understanding and support for the construction. We also pay attention to natural capital,
including biodiversity, by strictly adhering to relevant laws, regulations, municipal rules and guidelines. For disaster
response, we have been organizing structures to respond to various disasters, quickly supporting victimized areas, andtaking other such initiatives together with relevant organizations.
We also engage stakeholders who could negatively impact human rights by compromising natural capital, based on
KDDI Group Human Rights Policy. We established the policy with the understanding that all our business activities are
based on respect for human rights. To further accelerate our initiatives to fulfill our responsibility to respect human rights,
we updated the KDDI Group Human Rights Policy in October 2022. For our materiality, we have raised respect for humanrights as one of the values provided, to adhere to the KDDI Group Human Rights Policy. We will clarify human rights issues
expected of us as a global corporation and reflect findings in the measures we take, by respecting human rights in every
business activity and ensuring painstaking human rights due diligence initiatives according to the UN’s “Guiding Principles
on Business and Human Rights.”
KDDI has established the “KDDI Action Guidelines on the Preservation of Biodiversity” to multilaterally assess ourcontributions to the conservation of biodiversity. In the guidelines, we define three principles of Preserving Diversity in
Business Activities, Collaboration and Cooperation with Related Organizations and Promoting Recycling of Resources. We
have been promoting biodiversity activities with multiple opportunities as touchpoints with other parties, including
collaborations with external partners.

120

KDDI Integrated Sustainability and Financial Report 2023

121

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Board Members(As of June 30, 2023)* Number of the Company’s shares held as of March 31, 2023

Directors

Number of the Company’s
shares held: 62,500

Number of the Company’s
shares held: 42,700

Number of the Company’s

Takashi Tanaka

Makoto Takahashi

Chairman,
Representative Director

President,
Representative Director
CEO

Feb. 26, 1957 Born
Apr. 2003 Executive Officer
Jun. 2007 Managing Executive Officer, Director
Jun. 2010 Senior Managing Executive Officer,		
Representative Director
Dec. 2010 President, Representative Director
Apr. 2018 Chairman, Representative Director		(Current position)
Jun. 2021 Outside Director of Astellas Pharma Inc.
		
(Current position)

Oct. 24, 1961 Born
Apr. 2003 Executive Officer
Jun. 2007 Managing Executive Officer, Director
Jun. 2010 Senior Managing Executive Officer,		
Representative Director
Jun. 2016	Executive Vice President,
Representative Director
Apr. 2018 President, Representative Director		(Current position)
Apr. 2023 CEO (Current position)

shares held: 13,800

Number of the Company’s
shares held: 3,100

122

shares held: 37,900

Toshitake Amamiya

Kazuyuki Yoshimura

Representative Director,
Executive Vice President

Director,
Senior Managing Executive Officer
CTO

Jun. 26, 1960 Born
Apr. 2012 Executive Officer
Apr. 2019 Managing Executive Officer
Jun. 2019 Managing Executive Officer, Director
Apr. 2022 Executive Director, Personal Business and		Global Consumer Business Sector		(Current position)
Jun. 2022 Executive Vice President, Director
Jun. 2023	Executive Vice President, Representative
Director (Current position)

Apr. 19, 1965 Born
Apr. 2020	Executive Officer, Executive
Director, Technology Sector(Current position)
Jun. 2020 Executive Officer, Director
Apr. 2021 Managing Executive Officer, Director
Jun. 2022 Senior Managing Executive Officer,		Director (Current position)
Apr. 2023 CTO (Current position)

Number of the Company’s

Hiromichi Matsuda

Director,
Senior Managing Executive Officer

Director,
Executive Officer

Oct. 25, 1962 Born
Apr. 2018 Executive Officer
Apr. 2022 Managing Executive Officer
Apr. 2023	Executive Director, Solution Business
Sector, and General Manager, KDDI Group
Strategy Division(Current position)
Jun. 2023	Senior Managing Executive Officer,
Director (Current position)

Number of the Company’s

Kyoko Okumiya

Aug. 31, 1954 Born
Feb. 2010 Executive Officer of Japan Airlines Co., Ltd.
Feb. 2012	Managing Executive Officer of Japan Airlines
Co., Ltd.
Apr. 2013	Senior Managing Executive Officer of Japan
Airlines Co., Ltd.
Jun. 2013	Director, Senior Managing Executive Officer
of Japan Airlines Co., Ltd.
Apr. 2016	Representative Director, Senior Managing
Executive Officer of Japan Airlines Co., Ltd.
Number of the Company’sJun. 2018 Vice Chairperson of Japan Airlines Co., Ltd.
Apr. 2019	External Affairs Representative of Japan
shares held: 0
Airlines Co., Ltd.
Jun. 2020	Outside Director of The Shoko Chukin Bank,
Ltd. (Current position)
Jun. 2022	Outside Director of KDDI (Current position)
Outside Director of Asahi Broadcasting Group
Holdings Corporation (Current position)
Jun. 2023	Outside Director of Tokyo Electric Power
Company Holdings, Inc. (Current position)

Jun. 2, 1956 Born
Apr. 1984 Registered as attorney at law
Sep. 2000	Partner, Tanabe & Partners (Current position)
Aug. 2003	Member of Audit Committee of Kawasaki
City
Jun. 2014	Outside Audit & Supervisory Board Memberof NEC Corporation
Outside Director of MORINAGA MILKINDUSTRY CO., LTD.
Jun. 2017	Chairperson of The Labour Policy Council
Equal Employment Opportunity
Subcommittee (Current position)
Apr. 2018	Member of Administrative Advisory Council,
School of Legal and Political Studies of The
University of Tokyo (Current position)
Jun. 2018	Outside Director of The Bank of Yokohama,
Ltd.
Jun. 2023	Outside Director of KDDI (Current position)
Outside Director of ASAHI KOGYOSHA CO.,LTD. (Current position)

Outside Director, Independent Director

Number of the Company’s
shares held: 0

Outside Director, Independent Director

Audit & Supervisory Board Members

shares held: 8,200

Yasuaki Kuwahara

shares held: 7,200

Number of the Company’s

Number of the Company’s

Junko Okawa

Nov. 30, 1971 Born
Apr. 2020 Executive Officer
Apr. 2021	Executive Director, Business
Exploration & Development Division (Current
position)
Apr. 2023	Deputy Executive Director, Personal Business
Sector (Current position)
Jun. 2023	Executive Officer, Director(Current position)

shares held: 7,900

Kenichiro
Takagi

NoboruEdagawa

Yukihiro
Asahina

Full-time Audit &Supervisory
Board Member

Full-time Audit &Supervisory
Board Member

Number of

Number of

Full-time Outside
Audit & Supervisory
Board Member,
Independent Director

the Company’s

the Company’s

Number ofshares held: 41,800

shares held: 4,300

the Company’s

ToshihikoMatsumiya

Jun
KarubeOutside Audit &Supervisory Board
Member, Independent
Director

Outside Audit &Supervisory Board
Member, Independent
Director

Goro Yamaguchi

Keiji Yamamoto

Outside Director

Outside Director

Number of

Number of

the Company’s

the Company’s

shares held: 0

shares held: 2,500

Jan. 21, 1956 Born
Jun. 2009	Director and Managing Executive Officer
of Kyocera Corporation
Apr. 2013	President and Representative Director,
President and Executive Officer of Kyocera
Corporation
Apr. 2017	Chairman of the Board and Representative
Director of Kyocera Corporation (Current
position)
Jun. 2017	Outside Director of KDDI
(Current position)

Mar. 28, 1961 Born
Apr. 2016	Executive General Manager of
TOYOTA MOTOR CORPORATION
Apr. 2017	Managing Officer of TOYOTA MOTORCORPORATION
Jun. 2019	Outside Director of KDDI (Current position)
Jul. 2019	President, TOYOTA Connected Corporation(Current position)
		Operating Officer of TOYOTA MOTOR CORPORATION
Jan. 2021 Operating Officer and Chief Information & Security		Officer of TOYOTA MOTOR CORPORATION(Current position)
Jun. 2021	Chief Product Integration Officer of TOYOTA
MOTOR CORPORATION (Current position)
Apr. 2023	Senior Fellow of TOYOTA MOTORCORPORATION (Current position)

Number of the Company’s
shares held: 1,200

Shigeki Goto

Tsutomu Tannowa

Outside Director, Independent Director

Outside Director, Independent Director

Dec. 20, 1948 Born
Apr. 1996	Professor, Department of Computer Scienceand Engineering, School of Science andEngineering of Waseda University
Mar. 1997	Trustee of JNIC (Currently Japan Network
Information Center (JPNIC)) (Current position)
Apr. 2015	Chairperson, Research and Development
Strategy Special Committee, Cybersecurity
Strategic Headquarters of Cabinet Secretariat
Apr. 2019	Professor Emeritus of Waseda University
Number of the Company’s(Current position)
Jun. 2020 Outside Director of KDDI (Current position)
shares held: 2,000

Oct. 26, 1951 Born
Apr. 2007 Executive Officer of Mitsui Chemicals, Inc.
Apr. 2010 Managing Executive Officer of Mitsui Chemicals, Inc.
Jun. 2012	Member of the Board, Managing Executive
Officer of Mitsui Chemicals, Inc.
Apr. 2013	Member of the Board, Senior Managing Executive
Officer of Mitsui Chemicals, Inc.
Apr. 2014	Representative Director, Member of the Board,
President & CEO of Mitsui Chemicals, Inc.
Apr. 2020	Representative Director, Chairperson of the Boardof Mitsui Chemicals, Inc.
Jun. 2022	Outside Director of KDDI (Current position)
Apr. 2023	Director, Chairperson of the Board of Mitsui
Chemicals, Inc. (Current position)
Jun. 2023	Outside Director of TOKYO GAS CO., LTD.
(Current position)

shares held: 1,700■ Composition of Directors and Advisory Committees
Execution ofBusiness

Nomination
Advisory
Committee

Remuneration
Advisory
Committee

Other

●

●

●

●

Chairman of Boardof Directors

Makoto Takahashi

●

●

●

●

Toshitake Amamiya

●

●

Name

Representative
rightsTakashi Tanaka

OutsideIndependent

Kazuyuki Yoshimura●

Yasuaki Kuwahara●

Hiromichi Matsuda●

Goro Yamaguchi●

Keiji Yamamoto●

Shigeki Goto

●

●

●

●

Chairman of Board of Nomination
Advisory Committee

Tsutomu Tannowa

●

●

●

●

Chairman of Board of
Remuneration Advisory Committee

Junko Okawa

●

●

●

●

Kyoko Okumiya

●

●

●

●

* During the FY23.3, the Nomination Advisory Committee met on four occasions and the Remuneration Advisory Committee met on one occasion.
KDDI Integrated Sustainability and Financial Report 2023

123

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Messages from Outside Directors
As a researcher in the field of information and communication, I worked on
artificial intelligence (AI) research in the first half and research on the internet
and cyber security in the second half. In the 1980s, when I was undertaking
research in AI, the focus of my research was to find a format for the optimal
representation of knowledge.
The large language models (LLM) used in today’s generative AI achieve
skillful conversations by AI through deep learning based on big data
expressed in the natural languages (such as English, Japanese, Spanish, andChinese) that we usually use. AI does not exist alone, and the data used inmachine learning is prepared by humans. Furthermore, evaluations and minor
adjustments are carried out by many humans before the completion of asystem so that LLM can generate appropriate answers in conversations. As
per its name, AI is artificial. It is a convenient and powerful tool that connects
people when seen from the big picture.
Outside Director,

When you think in this way, it is necessary to expand and further evolve

Independent Director

opportunities for KDDI to apply the power to connect. Through the

Shigeki Goto

to AI, and at the same time, the creativity of humans will become clear. The

development of technology, work that can be done by AI will be delegatedroles of humans in society will be reviewed, human capital will become morevaluable in companies, and KDDI’s approach of human resources first should
show its true value.
The words of outside directors are respected at the meetings of KDDI’s
Board of Directors. As an outside director myself, I strive to be capable ofputting forth questions and opinions from diverse perspectives.

KDDI plays a role in telecommunications infrastructure, which is essential forlife in modern society and growing even more important with time. Amid
greater increases in communication speed and capacity, such as thetransition to 5G from now on, there is strong demand for KDDI to provide a
Outside Director,

Outside Director,

Outside Director,

telecommunication environment that is safe to use. The basis for achieving

Outside Director,

Independent Director

Independent Director

Independent Director

Independent Director

Shigeki Goto

Kyoko Okumiya

Tsutomu Tannowa

Junko Okawa

such an environment is the securing and development of human resources
with a view of the future and continuous investment.
KDDI’s Board of Directors has developed an atmosphere where vibrantdiscussions are exchanged. There are also sufficient opportunities in place
for the provision of information outside the Board of Directors, ensuring thefoundation for detailed discussions. To achieve the sustainable growth that isrequired of KDDI, it is necessary to conduct activities that contribute towardfurther strengthening of the Board’s monitoring functions.
With the telecommunications business as the base, KDDI is expanding
Outside Director,
Independent Director

Tsutomu Tannowa

124

into a wide range of business fields, and management has become more
complicated. Using my past management experience in the manufacturingindustry, I will undertake activities as an outside director from the perspectiveof supporting KDDI’s growth, in addition to risk management.

KDDI Integrated Sustainability and Financial Report 2023

125

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

ComplianceCorporate GovernanceTelecommunications—which had rapidly enhanced its presence as a social
infrastructure—has gone further to become essential for sustaining andevolving life. With telecommunications found everywhere, the power to

As a telecommunications operator that provides social infrastructure, the Company has the important social mission ofconnect keeps giving birth to new worlds that we have never imagined. The

providing stable telecommunications services on an ongoing basis, 24 hours a day and 365 days a year, regardless ofprogress of society comes from the minds of humans.

conditions. Furthermore, our telecommunications business derives from utilizing radio waves—an important asset shared

With rich imagination and strong technological capabilities, KDDI’s

Outside Director,
Independent Director

Junko Okawa

KDDI’s Approach and Guidelines on Corporate Governanceby all citizens. Accordingly, we recognize that we have the social responsibility to address the issues society faces andhuman resources are the source of our competitiveness. We are transforming

seek to resolve them through telecommunications business. Attaining sustainable growth and increased corporate value

into a company that puts human resources first to draw out their maximum

over the medium to long term is essential to achieving this social mission and social responsibility. Furthermore, we strive

potential toward the sustainable growth in society and corporate value

to engage in dialogue with all our stakeholders (including customers, shareholders, business partners, employees, andimprovement. I may be from a different industry, but in my many years of

local communities), and work in cooperation to proactively address societal issues. In this manner, we aim to contributework, I felt the infinite potential of undertaking professional work while being

to the development of a safe, secure, and truly connected society. We recognize reinforcing corporate governance as

highly motivated. At KDDI, system reforms, human resource development,

important to achieving sustainable growth and increasing corporate value over the medium to long term. Accordingly, we

and other efforts are being taken based on the KDDI Group Philosophy. I am

are in accordance with the tenets of the “Corporate Governance Code” defined by the financial instruments exchanges.

filled with excitement to see what value will be created when they succeed

While maintaining transparency and fairness, we endeavor to enhance our structures for ensuring timely and decisiveand human resource engagement further increases.

decision-making. In addition to our corporate credo and the KDDI Group Mission Statement, we have formulated theWith experiences in both customer perspective and frontline operations, I
will actively offer advice from these aspects and do my best together with

“KDDI Group Philosophy,” which defines perspectives, values, and a code of conduct that executives and employees
should share. We conduct activities to promote awareness of this philosophy throughout the Company.

people having diverse knowledge so that KDDI—as a company that plays a

By proactively adhering to Japan’s Corporate Governance Code and practicing the KDDI Group Philosophy as tworole in the important social infrastructure of telecommunications—will bebasic pillars of corporate management, we will endeavor to enhance corporate governance throughout the KDDI Group,

trusted in both such brave challenges and risk management.

including its subsidiaries, to achieve sustainable growth and increase corporate value over the medium to long term.


Corporate Governance Report■ Changes in the Corporate Governance Framework
2000–

Telecommunications and digitalization are indispensable for solving social
issues such as carbon neutrality, disaster response, and regional co-creation.

Number of
directors

forward to KDDI responding promptly to changes in society and organicallycombining knowledge, technologies, and wisdom from both inside andOutsidedirectors

enhance the value of KDDI’s existence in society.
and emotional richness of every employee is encapsulated in the KDDI
Group Mission Statement. It is necessary to try various ideas and verify theireffects so that we can put the KDDI Group Mission Statement into practiceand allow employees to apply their capabilities.

Assurance ofdiversity*1

Number of
femaledirectors

Audit &
Supervisory
Board members

Number of Audit& Supervisory
Board members

Besides working with a sense of unity with KDDI’s executives andemployees, outside directors need to have an impassive perspective as a
Outside Director,
Independent Director

Kyoko Okumiya

third party. I think it is important to strike a balance between these two
aspects.

53*2 13

12

11

2

3

Ensureindependence

10

4

13

3

12

13

2

3

From April 2018 Makoto
Takahashi

14

12

4

5

6

1

5

4

2

5

4

2

1

3

4

5

6

5

7

Nomination Advisory Committee establishedin 2015

Advisory
Committee

Using my experience as a lawyer, in the Board of Directors, I hope toIntroduction of a stock option system in 2002
Remuneration Advisory Committee established in 2011and provided and vibrant discussions are being carried out for management
related companies—is being undertaken. In addition, having been involved in

2020–

From December 2010 Takashi Tanaka

Number of
independent
directors/
auditors*3

focus on areas such as whether the necessary information is being collected
decisions, and whether the supervision of governance—including that of2015–

Directors*1

outside the company to bravely take on challenges in new areas andHuman resources are vital for sustainable growth. The economic stability

2010–

Yuusai
From June 2001 Tadashi Onodera
OkuyamaPresident

Besides the provision of a stable telecommunications infrastructure, I look

2005–

Introduction of a performance-based bonus system for executives in
2011

Transparency in executive
remuneration

Introduction of stock compensation plan for
directors in 2015

issues such as diversity and the environment as a member of government

Introduction of stock
price-linked bonuses
in 2019

committees at both the national and local level, I hope to use such
experience to offer opinions that take in social trends and needs.
The KDDI Group Philosophy

Enactment in
October 2000

Revised, continued promotion activities from 2013

*1 Number of people at the conclusion of each Annual General Meeting of Shareholders*2 Number of people at the launch of KDDI in October 2000
*3 Independent directors/auditors pursuant to Rule 436-2 of the Securities Listing Regulations of Tokyo Stock Exchange, Inc.

126

KDDI Integrated Sustainability and Financial Report 2023

127

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance■ Corporate Governance Framework(As of Sep. 1, 2023)

Annual Shareholders Meeting

Audit

Board of Directors
Directors (12) (Outside Directors (6))
Consult

AdviseAdvisory
Committees

Deliberate/
Report on
important matters

Election/
Dismissal/
Supervision

Election/
Dismissal

Audit & Supervisory Board meeting
Audit & Supervisory Board Members (5)(Outside Audit & Supervisory Board
Members (3))

ReportJudgment on appropriatenessof accounting audit

Election/
Dismissal

Accounting
Auditors

ReportReportAudit & Supervisory Board Members’
Officethose belonging to business partners that account for 1% or more of the company’s consolidated operating revenue ororders placed not independent.

Directors and Board of Directors
strategies, internal directors who are responsible for each area fulfill their accountability in the decision-making ofReportInstruct actions

Internal Control DivisionCorporate Management
Committee

Audit

Full-Time Directors

ReportAudit

Internal Audit Division(Deliberation of important matters)

Deliberate/Reporton importantmatters

have formulated our own standards for judging the independence of outside directors/auditors. Specifically, we consider

At the Board of Directors, to balance the fairness of management decisions and the steady promotion of growth

Representative Directors

Nomination
Advisory
Committee
Remuneration
Advisory
Committee

In addition to the requirements in the Companies Act and the standards provided by financial instruments exchanges weElection/Dismissal

Election/
Dismissal

Criteria for Independence of Outside Directors/Auditors

ReportInstruct/Supervise

ensure effectiveness and fairness through active discussions that utilize the insights of external officers with various
backgrounds.
In addition, the Board of Directors regularly reports on the progress and achievement of the Mid-Term Management

Internal Committees
Disclosure Committee

Financialinformation
Instruct actions

Executive Officers (33)*(Business execution)

important matters and management plans stipulated in laws and regulations. The directors are making decisions that

Information Security Committee

Strategy and annual plan that underpin company operations. Deliberations are conducted with a focus on strategies toachieve key goals and measures, as well as to addressing management issues arising from business environment changes
and other factors, with the aim of achieving sustainable growth and increasing corporate value over the medium to longterm.
Specific matters discussed by the Board of Directors are as follows.

Sustainability Committee
the 4 directors* Excludes
who double as executive
officers

Business Ethics Committee
Propose / Deliberate

ReportInstruct actions

1

Medium- to long- term strategy

The Mid-Term Management Strategy, the business environment analysis, etc.

2Company-wide plan andprogress report

Various company-wide plans for each fiscal year, quarterly financial results, business execution
reports, etc.

3

Individual business division
cases

Investments, asset acquisitions, alliances with other companies, etc.

4

Requests by Laws, Regulations,and Articles of Incorporation

Capital policy (dividends, treasury stock-related matters), executive appointments andremuneration, convocation of General Meeting of Shareholders, etc.

Business Divisions / Group Companies

Corporate Governance Promotion Framework
We believe strengthening corporate governance to be one of the most vital issues in enhancing corporate value, and weare working to improve management efficiency and transparency.

■ Board of Directors Meetings (FY23.3)

KDDI is currently a company with Audit & Supervisory Board, and in order to properly manage business execution, we
have introduced an executive officer system to assign authority, clarify responsibilities and ensure effective and efficientbusiness operations. We are also working to establish a framework for internal decision making to ensure timely
management decisions. The number of directors is 12 (10 male and 2 female), including 6 outside directors, 4 of whom

Number ofmeetings held

Internal directors’
attendance rate

Outside directors’
attendance rate

Internal auditor’s
attendance rate

Outside Audit & Supervisory Board
members’ attendance rate

11

100%

100%

100%

100%

are independent directors, meeting the criteria for the ratio of independent outside directors (1/3 or more) required ofcompanies listed on the Tokyo Stock Exchange Prime Market under the Corporate Governance Code. The Audit &Evaluation of the Board of Directors’ EffectivenessSupervisory Board consist of 5 members (all male), including 3 Outside Audit & Supervisory Board members, who are

Purpose of Conducting

designated as independent auditors. Regarding independent directors, the Company has a total of 7 independent

We conduct a self-evaluation of the Board of Directors regularly every year in order to correctly understand its situation

directors and auditors, ensuring a high degree of independence.

and continuously improve its operation.

For the outside directors/auditors, we provide opportunities for each area’s supervisor to explain industry trends,

Evaluation Process

together with our organization, businesses, technologies, and future strategies in a manner that deepens their

We assess the effectiveness of the Board of Directors based on an evaluation by all the directors and Audit & Supervisory

understanding of the Company and stimulates discussion at Board of Directors meetings. Additionally, the Company

Board members themselves. The evaluation questionnaire combines a four-grade rating scale and free writing so that theprovides individual training sessions when requested by outside directors/auditors, ensuring there are sufficienteffectiveness of the board’s initiatives are assessed and matters to be improved are identified from two perspectives:opportunities to receive training and improve knowledge where necessary. Plus, we also provide access to in-housequantitative and qualitative. The evaluation is conducted annually and covers the most recent one-year period. The

exhibitions of R&D achievements, alongside site visits to telecommunications facilities, monitoring and maintenanceresults of the evaluation are reported back to the Board of Directors and future measures are discussed. The main

centers, and other key faculties.

evaluation items are as follows.

We report twice a year on corporate ethics, risk management activities, and internal audit processes. Moreover, inorder for outside directors to strengthen their ability to gather information, they are invited to attend meetings of the

1

Operation of the Board of
Directors

Composition of members, documents and explanations, provision of information, etc.

2Supervision of Executives

Conflict of interest, risk management, management of subsidiaries, etc.

3Medium- to long-term
discussions

Participation in Mid-Term Management Strategy, monitoring plan execution, etc.

Audit & Supervisory Board when the auditing firm reports the results of the second-quarter review and the year-end audit,
and liaison meetings with Audit & Supervisory Board members are held twice a year. In addition to the above, tostrengthen information exchange and sharing between outside directors, we hold liaison meetings exclusively for outside
directors and liaison meetings for outside directors and part-time Outside Audit & Supervisory Board members.
We aim to raise the effectiveness of the Board of Directors’ supervision of management and invigorate discussions ofmanagement strategies at board meetings by providing a deeper understanding of our business through these initiatives.

128

KDDI Integrated Sustainability and Financial Report 2023

129

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Evaluation Results

Internal Audits

Summary

We have established the Internal Audit Department under the Internal Audit Division to clarify the roles and

The evaluation confirmed that KDDI’s Board of Directors is operating properly and functioning effectively. The following

responsibilities within the “Three-Lines Model” across business, administrative, and audit divisions to improve the model’s

two points received particular praise:effectiveness and to ensure the independence of the three-line function. The Department conducts internal audits of• The management of Board of Directors meetings are effectively utilizing the knowledge of outside directors/auditors

KDDI Group operations on the key risks identified through risk management activities.

from various backgrounds

The results of internal audits are reported to the Company President, Representative Director and Audit & Supervisory

Discussions at Board of Directors meetings are active, and the Board of Directors operates in an open atmosphere that

Board members together with requests and recommendations concerning improvements and corrective measures toallows outside directors/auditors to actively speak out. Additionally, the executive side provides appropriate explanations

address highlighted issues, and the status and results of internal audits are also reported to the Board of Directors every

for and responses to the comments and suggestions that leverage the insights of various outside directors/auditors.

quarter.

• Initiatives to enhance discussions at Board of Directors meetings

In FY23.3, a total of 37 audits were carried out to monitor the progress of corrective/improvement measures and to

The material contents necessary for deliberation are presented concisely, with all points at issue clarified. In addition,

prevent risks from materializing.

information and opinions on important issues, such as M&A, are provided and exchanged in advance via off-site
meetings, etc., helping the Board of Directors to improve the effectiveness of management oversight.
Moving Forward

Nomination Advisory Committee and Remuneration Advisory Committee• Further advancement of our group governance
Based on previous issues, we have been working on the establishment of a new support division and a monitoring

To ensure the transparency and fairness of systems and standards for nomination of directors and Audit & Supervisory Board

system. By regularly reporting and sharing progress and issues, we will further strengthen group governance at the Board

members and their executive remuneration, we have established the Nomination Advisory Committee and the Remunerationof Director’s supervision meetings.

Advisory Committee, which deliberate and provide advice to the Board of Directors based on discussions thereof. The chair,• Enhancement of discussions on important themes from the perspective of improving corporate value over thevice-chair and more than half of the members of these committees are independent outside directors.

medium to long term

Nomination Advisory Committee Composition

We’ve received proposals from each director and Audit & Supervisory Board member on various themes that should be

Chair: Tsutomu Tannowa (Independent Outside Director)

discussed, such as medium- to long-term growth strategies and important non-financial agendas. Moving forward, theseVice Chair: Shigeki Goto (Independent Outside Director)

themes will be taken up regularly at the Board of Directors meetings and off-site meetings. Furthermore, we will work to

Members of Committee: Junko Okawa (Independent Outside Director), Kyoko Okumiya (Independent Outside Director),

further improve the Board of Director’s effectiveness by holding extensive discussions with outside directors/auditors.


NOTICE OF THE 39TH ANNUAL SHAREHOLDERS MEETING

Takashi Tanaka, Makoto Takahashi
Remuneration Advisory Committee Composition
Chair: Shigeki Goto (Independent Outside Director)
Vice Chair: Tsutomu Tannowa (Independent Outside Director)

Audit & Supervisory Board and Audit & Supervisory Board members

Members of Committee: Junko Okawa (Independent Outside Director), Kyoko Okumiya (Independent Outside Director),

The KDDI Audit & Supervisory Board is composed of 5 members, including 3 outside members. Audit & Supervisory Board

Meetings Held FY23.3

members conduct audits in accordance with the audit policy, execution plans for auditing, audit methods and work assignments

The Nomination Advisory Committee met four times, and all members attended each time, where the committee

determined by the Audit & Supervisory Board. All 3 Outside Audit & Supervisory Board members are independent auditors.

provided advice on proposals submitted to the Board of Directors concerning the appointment of directors and executive

Full-Time Audit & Supervisory Board members attend meetings of the Board of Directors, as well as the Corporate

officers, etc.. The Remuneration Advisory Committee met once, and all members attended. The committee discussed the

Takashi Tanaka, Makoto Takahashi

Management Committee and other major meetings (Management Strategy Meeting, Monthly Profitability Review Meeting,

advice concerning proposals submitted to the Board of Directors for the determination of performance-linked

KDDI Group Business Ethics Committee, etc.) to perform their audit duties, and express their opinions, as necessary. In

remunerations and stock price-linked remunerations.

addition, in order to ensure sufficient communication with Representative Directors and to deepen mutual recognition andtrust, they exchange opinions with Representative Directors twice a year on important audit issues, improvement of theauditing environment for Audit & Supervisory Board members, audit results, and requests related to audits.
Part-time Outside Audit & Supervisory Board members receive reports on and discuss the auditing methods andOther Committees

results of the full-time Audit & Supervisory Board members at the Audit & Supervisory Board meetings, receive

We have established the KDDI Group Business Ethics Committee, a deliberative and decision making body for

explanations of management policies and growth strategies at Board of Directors meetings, and express their opinions ascompliance-related items, and the Disclosure Committee, a deliberative body for releasing information. We also haveappropriate from their standpoint as independent auditors. In addition, to promote communication with Representative

established the Sustainability Committee, which deliberates the promotion of sustainability. We collaborate with our

Directors, roundtable meetings are held twice a year to exchange opinions.

group companies to manage their governance through various systems and frameworks in order to enforce theIn addition, Audit & Supervisory Board members obtain a written explanation of the audit plan, which includes thegovernance of the whole KDDI Group.

audit policy, audit plan, and audit system of the accounting auditors, and they also receive explanations and exchange
opinions on the content of the explanation. Furthermore, the Company receives quarterly reports from the accounting
auditors on the methods and results of audits (including quarterly reviews) and holds discussions with them. In addition,
the Company communicates with the accounting auditors as necessary and exchanges opinions to contribute to theformation of mutual audit opinions.
The Audit & Supervisory Board Member’s Office has been established as a division to assist the Audit & Supervisory
Board members in their duties. The Audit & Supervisory Board Member’s Office has dedicated employees, and each Audit& Supervisory Board member has the right to direct andorder these employees, with the prior consent of the
Audit & Supervisory Board or a full-time Audit &Supervisory Board member as determined by the Audit& Supervisory Board.

130■ Audit & Supervisory Board Meetings (FY23.3)
Number ofmeetings held

Full-time Audit &Supervisory Board
members’ attendance rate

Part-time Outside Audit &Supervisory Board
members’ attendance rate

12

100%

100%

KDDI Integrated Sustainability and Financial Report 2023

131

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Items Related to Organizational Structure and Operations
Organizational form

Company with Audit & Supervisory Board

Number of independent directors/auditors

7 (including 2 female)■ Items Related to Directors
Number of directors prescribed in the articles ofincorporation

20

Tenure period of directors prescribed in the articles ofincorporation

1 yearPresiding Chair of Board of Directors

Chairman (President and Chairman are separate posts)

Number of directors

12 (including 2 female)

Number of outside directors

6 (including 2 female)

Number of outside directors designated as independent
directors

4 (including 2 female)Appointment and Selection Standards
For both types of candidates:

Nomination and Election Procedures for Audit &Supervisory Board Members

Have the character suitable for being a Board member,(1) Select candidates based on the left criteria

have high ethical standards and not be self-serving(2) Deliberate them at a Nomination Advisory Committee meeting

Director candidates: Meet one or more of the following(3) Gain approval from the Audit & Supervisory Board

criteria:(4) Approve them at a Board of Directors meeting•H ave specialized knowledge and experience in each(5) Elect them at the General Meeting of Shareholder

business field•H ave specialized knowledge or management knowledge
suitable for a supervisor•H ave a high degree of independence

Consideration Criteria for Termination•W hen the performance of a business that a director is
responsible for or the achievements of a division a

Audit & Supervisory Board member candidates:
Have a wealth of experience and broad knowledge thatwill enable more appropriate audits and oversight ofoverall management from a position that is independent

director is responsible for are exceptionally poor•W
 hen the company is harmed by a major misstep or
intentional violation of a law, regulation or the Articles ofIncorporation in their execution of duties•W hen the company’s credibility and reputation arefrom directors

significantly damaged by the inappropriate seeking of■ Items Related to Audit & Supervisory Board Members
Number of members prescribed in the articles ofincorporation

Policies and Procedure for Nomination of Director and Audit & Supervisory Board
Member Candidates

Nomination and Election Procedures for Directors

Number of members

5 (all male)Outside members

Appointed

Number of outside members

3 (all male)

Number of outside members designated as independent
auditors

3 (all male)•W hen the company determines that keeping a director(1) Select candidates based on the above criteria

5personal gain through the abuse of position or authority(2) Deliberate them at a Nomination Advisory Committee

is not appropriate(3) Approve them at a Board of Directors Meeting(4) Elect them at the General Meeting of Shareholder

Termination Procedures for Directors•A fter deliberations at the Nomination Advisory Committee
meeting, the Board of Directors deliberates the matter as
needed and implements necessary measures for termination

Diversity and Expertise of the Directors and Audit & Supervisory Board Members■ Others
Number of executive officers

33 (31 male, 2 female)* Excludes the 4 directors who double as executive officers

Implementation of anti-takeover measure

Not implemented

President, Representative Director remuneration/averageKDDI employee annual salary

23 times

experience that we believe are important for our directors and Audit & Supervisory Board members. The skills possessedby each director and Audit & Supervisory Board member are as follows.
Name ofdirector/auditor

Takashi Tanaka

Corporate Governance Framework → P128

Internal Directors

Changes in the Corporate Governance Framework → P127

From the perspective of achieving sustainable growth for the KDDI Group, KDDI defines six skills in areas of expertise andApproach to Composition of Board of Directors
ensure a diversity of opinions and highly specialized knowledge within the Board of Directors as a whole when making
decisions including important management matters and implementing oversight as required by law.

Sales andmarketingGlobalDigital technology

Finance andaccounting

Legal affairs and risk
management

●

●

●

●

●

●

●

●

●

Makoto Takahashi

●

●

●

Toshitake Amamiya

●

●

●

●

●

●

Kazuyuki Yoshimura
Yasuaki Kuwahara●

Hiromichi Matsuda
Outside Directors

KDDI appoints people who meet the following criteria in consideration of gender, age, nationality, race or ethnicity to

Corporate
management

Goro Yamaguchi●

Keiji Yamamoto●●

Shigeki Goto
Tsutomu Tannowa●●

Junko Okawa

●

●

●
●

●

●

●

●

●

●

●

●

●

●

Kyoko Okumiya
Audit & Supervisory
Board Members

132

Kenichiro Takagi●

Noboru Edagawa

●

●
●

●
●

Yukihiro Asahina●

Toshihiko Matsumiya
Jun Karube

●

●

●

●
●

KDDI Integrated Sustainability and Financial Report 2023

133

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

Governance

TCFD/TNFD

Corporate Governance

DataIntellectual Property Management

Compliance

Remuneration for Directors and Audit & Supervisory Board Members

Reasons for selecting each evaluation metric and results are as follows:

1. Remunerations for Directors•T he compensation of directors engaged in business execution is based on the KDDI Group’s business performance for

The Company’s operating performance

EPS growth rate

Reasons for selection

Reasons for selection

each fiscal year, progress toward the goals of the Mid-Term Management Strategy, and a compensation system linked to

A basic numerical value clearly showing a company’s

To provide a strong incentive to achieve the target of theshareholder value in order to increase the willingness to contribute to the improvement of corporate value over thebusiness performance.

Mid-Term Management Strategy by using an indicator set

medium to long term.

Resultas a target under the plan.

•O utside directors who perform management supervising functions without involvement in the execution of businesses

ResultAs stated on page 150-151. → P150

1.03

receive only fixed amount remuneration that does not vary with the Company’s business performance.

•T he Company has established the Remuneration Advisory Committee to ensure transparency and objectivity in the process

KPI achievement rateof determining the system and levels of executive remuneration, along with the remuneration amounts based on these.

Reasons for selection

This committee’s chair, vice-chair, and more than half of the committee members are independent outside directors.

KPI achievement rate is to measure the achievement rate

Reasons for selectionof each business strategy under the Mid-TermTo enhance a correlation between remunerations forand stock price-linked bonus are not delegated to the representative director, but the amounts are decided by

Management Strategy, and therefore linked to the KDDI

executives and the shareholders value by using an

resolution of the Board of Directors based on the advice of this committee.

business growth and performance improvement.

indicator that is directly linked with an increase/decrease

Resultin shareholders value.

•T he decision of the amounts of basic remuneration, performance-linked bonus, performance-linked stock compensation,•K DDI’s executive remuneration levels are decided through comparison with sector peer companies, or with other

Stock price fluctuation ratecompanies of the same scale, in Japan, and take into account factors that include KDDI’s management status.

ESG-related items are also set as indicators along with

Result

The appropriateness of the remuneration levels is also validated by the Remuneration Advisory Committee every year,

indicators in each business strategy.

0.99

Since FY23.3, we have increased the percentage ofwith reference to objective survey data from an external specialized organization.

•F or those who have made serious violations of the duties of directors, contrary to the delegation contract between

ESG-related items to approximately 30% of the total KPI.

KDDI and the directors, we may suspend the payment of performance-linked remuneration or demand the return ofsuch remuneration.

3. Remuneration for Audit & Supervisory Board Members

2. Policy on the Content of Director Remuneration■ Example of Compensation for Directors

Remuneration for Audit & Supervisory Board members is decided by the consensus of the members of Audit & Supervisory
Board. These members receive flat-rate remuneration that is not affected by fluctuations in the company’s operating■ Breakdown of Executive Remuneration

performance.

Annual income(3)Stock price-linked
bonus*(4)Performance-linked
stock compensation

Variable
remuneration
About 60%

(2)Performance-linked
bonus(1)Basic remuneration
KPI achievement levels, etc.
Note: T he graph was created based on the remuneration model for the President,
Representative Director.
* Because stock price-linked bonuses change in line with EPS growth rate and stock
price fluctuation rate, the graph is only an example.

(4)
Performancelinked stockcompensation

4. Remuneration for Directors and Audit & Supervisory Board Members (FY23.3)
Unit: million yen

(1)
Basic
remuneration(3)
Stock pricelinked
(2)
bonus
Performancelinked
bonus

Fixed
remuneration
About 40%

Note: The graph was created based on the actual
remuneration of the President, Representative
Director in FY23.3.

(1)Basic remuneration
This is monetary remuneration for which a fixed amount for each position is paid on a monthly basis.
(2)Performance-linked bonus
The amount of payment for each individual is calculated by the following formula, and money is paid in the first June after
the end of each fiscal year.

Total remuneration by typeExecutive classification

Total
remuneration

Basic remuneration

Directors(excluding outside directors)

824

338

Outside directors

106

Audit & Supervisory Board members(excluding outside members)
Outside Audit & Supervisory Board
members

Stock compensation

Number of
eligible members

307

180

9

106

—

—

7

69

69

—

—

3

65

65

—

—

3

Bonus

Notes: 1. T he number of directors and the amount paid above include 3 directors and 1 outside director who retired at the conclusion of the 38th General
Meeting of Shareholder held on June 22, 2022. In addition, the number of bonus recipients is 6 excluding the retirees.
2. T he number and amount of Audit & Supervisory Board members paid above include 1 Audit & Supervisory Board member who retired at the conclusionof the 38th General Meeting of Shareholder held on June 22, 2022.
3. In addition to the above, adjustment payments to directors in lieu of retirement allowance were resolved at the 20th General Meeting of Shareholder held on June 24, 2004 in connection with the cancellation of the executive retirement bonus system.
4. The basic remuneration and bonuses above are monetary remunerations, while stock compensation is non-monetary remuneration.

Performance-linked bonus: Basic amount by position multiplied by the Company’s operating performance and KPI achievement rate(3)Stock price-linked bonus
The amount of payment for each individual is calculated by the following formula, and money is paid in the first June after
the end of each fiscal year.

5. Total Remunerations and Bonuses of Board Members Who Receive Over 100 Million Yen (5 people)
Unit: million yen

Name

Stock price-linked bonus : Basic amount by position multiplied by coefficient** Coefficient: (EPS growth rate x 50%) + (stock price fluctuation rate x 50%)

A) EPS growth rate : EPS at the end of current fiscal year divided by EPS at the end of previous fiscal yearB) Stock price fluctuation rate (TOPIX growth rate): (KDDI’s stock price at the end of current fiscal year / KDDI’s stock price at the end of previous
fiscal year) divided by (TOPIX at the end of current fiscal year / TOPIX at the end of previous fiscal year)(4)Performance-linked stock compensation
For performance-linked stock compensation, points for each individual are calculated by the following formula. Points will
be awarded in the first June after the end of each fiscal year, and when the director retires, KDDI’s shares will be delivered
according to the cumulative number of points.

Executiveclassification

Total
remuneration

Total remuneration by type
Basic remuneration

Bonus

Stock compensation

Takashi Tanaka

Director

164

64

64

36

Makoto Takahashi

Director

223

76

93

54

Shinichi Muramoto

Director

116

48

43

25

Keiichi Mori

Director

105

44

38

23

Toshitake Amamiya

Director

103

42

38

23

Note: 1. The basic remuneration and bonuses above are monetary remunerations, while stock compensation is non-monetary remuneration.

Performance-linked stock compensation: Basic points by position multiplied by the Company’s operating performance and KPI achievement rate

134

KDDI Integrated Sustainability and Financial Report 2023

135

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Outside Director/Audit & Supervisory Board member Support System

Policy on Strategic Shareholdings

To ensure active discussions in the Board of Directors meetings, we inform outside directors and part-time outside Audit &KDDI believes that participating in tie-ups with a variety of companies is essential to providing our customers with

Supervisory Board members at least 3 days in advance of the dates and agenda items and provide agenda materials forincreasingly diverse and advanced services.
KDDI possesses strategic shareholdings if such possession will contribute to the sustainable growth of KDDI’s businessupcoming meetings to help them gain a deeper understanding of the agenda in advance. In addition, we make thedeliberations more substantial by accepting questions beforehand and preparing more extensive explanations for theand the medium- to long-term increase of corporate value.
Every business year, the Board of Directors reviews all the pros and cons of continuing the possession and the number

meetings based on the questions.
We established the Audit & Supervisory Board Member’s Office, which supports Audit & Supervisory Board members,
including part-time outside members. → P128

of shares to be held of each individual strategic holding by judging its significance and economic rationale. When astrategic shareholding is found to have only tenuous significance, KDDI will sell or reduce as promptly as possible.
KDDI calculates the ratio of the contribution by the issuing company to the KDDI’s profits within the most recent fiscal
year. The economic rationale is verified by comparing the ratio with the valuation of each strategic shareholding at the

Policies on Parent and Subsidiary Listings

end of the most recent fiscal year, and confirming whether the ratio satisfies the capital cost standard established byKDDI.

One of KDDI’s subsidiaries, Okinawa Cellular Telephone Company (hereafter “Okinawa Cellular”), is listed on the Tokyo
Stock Exchange Standard Market.
Being committed to “growth as a group,” KDDI aims to maximize mutual synergies and expand and strengthen new
growth foundations for the entire group by maximizing the use of our assets and supporting the growth of groupcompanies.
Okinawa Cellular was established with the cooperation of several prominent local companies, making it acommunity-based company that contributes strongly to the local community.
Based on this background, we believe that there are the following advantages to having Okinawa Cellular as a publicly

Communication with Shareholders
We consider our shareholders and investors to be especially important stakeholders who fully understand and strongly
support our business sustainability. Accordingly, we put the highest emphasis on building trust-based relationships withthem in our management and strive to practice value-oriented corporate management, active information disclosure andenhanced communication.
As part of our ongoing effort to improve communication, we hold quarterly presentation sessions, where thetraded company, and we believe that it continues to be significant to have Okinawa Cellular as a listed subsidiary.
1. Returns to investors

management team presents KDDI’s financial results directly. In addition, we organize private meetings and small-scale

By implementing shareholder returns measures as a listed company, Okinawa Cellular will be able to return profits to its

meetings with investors from both Japan and abroad and attend various conferences hosted by securities firms.

investors, including local companies that cooperated in the company’s establishment and investors who have supported
the company since its listing.

■ Vitalizing the General Meeting of Shareholder and Facilitating the Exercise of Voting Rights

Okinawa Cellular’s shareholder returns policy should be determined in consideration of the interests of all

Measures

Content

and its implementation will be determined at the company’s discretion as an independent listed company.

Early disclosure of the General Meeting of Shareholder Notice

We disclose and send a notice both electronically (by posting on our
website) and by mail around one week before the stipulated deadline.

2. Contributing to employment in Okinawa prefecture and securing talented human resources

Scheduling to avoid days when many other companies holdthe General Meeting of Shareholder

We schedule the General Meeting of Shareholders to avoid days whenmany other companies hold their shareholders’ meetings.

Electronic voting system

Shareholders can exercise their voting rights via an online voting site.
We have also introduced a system where shareholders can log in tothe online voting site using a QR code in an effort to make things moreconvenient.

Participating in an electronic voting platform

We have joined the electronic voting platform.

English version of convocation notice

We publish a full English translation of the convocation notice on our
website, online electronic voting site and voting platform.

shareholders, taking into account the balance between medium- and long-term business growth and shareholder returns,

Currently, many people from Okinawa prefecture have joined Okinawa Cellular and are playing an active role in thecompany. Given the geographical characteristics of Okinawa Cellular, we believe that the fact that its business area islimited to Okinawa prefecture meets the needs of people from Okinawa who wish to work locally, and the fact that
Okinawa Cellular is a publicly listed company also helps us recruit talented personnel.
3. Promote the use of Okinawa Cellular’s services and increase subscriptions by earning the trust of Okinawa residents
In addition to KDDI’s similar services, Okinawa Cellular also offers unique services based on local conditions. As acommunity-based listed company, we believe that we have earned the trust of people in Okinawa by operating ourbusiness in line with the expectations of the local community, and this has led to the promotion of Okinawa Cellular’sservice use and increased subscriptions.

• In order to encourage the participation of more diverse shareholders

For transactions that may cause conflicts of interest, Okinawa Cellular determines whether to implement thein the General Meeting of Shareholders, we offer a hearing loop sup-transaction after multifaceted discussions by independent outside directors and independent outside auditors. Okinawa

port (magnetic loop) and wheelchair seating.

Cellular has also established a voluntary committee led by an independent outside director as an Advisory Committee to•W e are conducting “live streaming” of the meetings so that share-

the Board of Directors to discuss director nominations and compensation, and decisions regarding management
nominations and compensation are made after discussions by Okinawa Cellular’s independent directors/auditors toensure transparency. To appropriately control conflicts of interest, directors who concurrently serve on the Boards of KDDI

Others* Extracted from the Corporate Governance Report

and Okinawa Cellular do not participate in any resolutions or deliberations on matters related to either company, thereby
ensuring their independence.
Through these efforts, we will ensure management transparency from the perspective of protecting minority
shareholders, and at the same time meet the expectations of our shareholders by increasing corporate value andCorporate Governance Report

holders can watch the proceedings and questions and answers on
the day from a remote location. We also received “advance questions” on the Internet. By using this, we are striving to revitalize communication with our shareholders.

•O n our website, we provide on-demand distribution of the General
Meeting of Shareholders for those who are unable to attend in person. The on-demand streaming includes subtitles so that anyone canfollow proceedings without difficulty.

shareholder returns.
KDDI will continue to respect independence and autonomy while mutually cooperating with Okinawa Cellular inbusiness operations and development as a group.

136



NOTICE OF THE 39TH ANNUAL SHAREHOLDERS MEETING

KDDI Integrated Sustainability and Financial Report 2023

137

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Principal Activities of Outside Directors and Outside Audit & Supervisory Board Members* For independent directors/auditors, we appointed them based on the judgment from their background that there is no risk of a conflict of interest with generalIntellectual Property Management

shareholders■ Outside Directors
Reason for selection as an outside director of the Company(if designated as an independent director includes reason for this designation)

Principal activities
in FY23.3

Mr. Yamaguchi has a wealth of corporate management experience and excellent knowledge cultivated as the President and representative director of one of the world’s leading electronic component and equipment manufacturers.
On the Board of Directors, he expressed broad opinions related to business administration and operations from a
medium- to long-term perspective, and has thus contributed to improving the corporate value of the Company. He
has again been appointed as an outside director because the Company expects him to contribute to enhancing
the supervising function of business execution based on his management experience of the other company andprovide advice from a wide range of management perspectives.

Board of Directors(Attended 11 of
11 meetings)

Name

Goro
Yamaguchi
Male

Keiji
Yamamoto
Male

Shigeki
Goto(Independent
director)
Male

TsutomuTannowa(Independent
director)
Male

Okawa
(Independent
director)

Kyoko
Okumiya(Independent
director)FemaleMr. Goto has a superior knowledge in information processing, telecommunications and network engineering, which
is directly relevant to KDDI’s business, as well as a deep understanding of cyber security that isvaluable for the operation of our business. On the Board of Directors, although he has no direct experience in company management, he expressed technical opinions related to operational policy as an information communications operator providing social infrastructure, from a medium- to long-term perspective independent of the KDDI’s
management team, and has thus contributed to improving KDDI’s corporate value. He has again been appointed
as an outside director because the Company expects him to contribute to enhancing the supervising function ofbusiness execution and provide advice in the telecommunications field from technical perspectives.

Board of Directors(Attended 11 of
11 meetings)

Ms. Okumiya has a wealth of experience and excellent expertise developed as a partner of a law firm and a member of various committees. Although Ms. Okumiya has no direct experience in corporate management, she has
been appointed as an outside director because we believe that she can contribute to the enhancement of ourcorporate value by providing expert opinions on legal risk management from a medium- to long-term perspective,
independent of our management team.

(Independent auditor)
Male

ToshihikoMatsumiya(Independent auditor)
Male

Jun
Karube(Independent auditor)
Male

138

Regarding standardization, we are advancing the standardization of research results for 5G/beyond 5G, based on
acquisition efforts.
For our Satellite Growth Strategy, we envision short-term and medium- to long-term business models andstrategically acquire intellectual property that enhances competitiveness and differentiation in each business model.
Furthermore, our cumulative IoT connections have significantly grown in the fields of societal infrastructure(connected cars, smart meters for electricity and gas, etc.) and globally. In December 2022, our company surpassed 30
million connections independently, becoming the top share in Japan. This achievement is largely attributed to theknow-how we have developed over approximately 20 years in areas such as product development and maintenance

Board of Directors(Attended 9 of
9 meetings)

Board of Directors(Attended 9 of
9 meetings)—■ Outside Audit & Supervisory Board Members

Yukihiro
Asahina“Open & Close Strategy.”
the telecommunication technologies and experience cultivated. We are also strengthening our intellectual property

 ttendance of Mr. Tsutomu Tannowa and Ms. Junko Okawa is after their appointment as directors at the 38th Annual Shareholders Meeting held on June 22, 2022.
*A* Ms. Kyoko Okumiya is a new director who was appointed at the 39th Annual Shareholders Meeting held on June 21, 2023.

Name

energy, LX, regional co-creation such as CATV, etc.), we differentiate ourselves in competitive domains through the

management. We will continue to drive innovation to realize our Satellite Growth Strategy.

■ Cumulative Number of Patents and the Patent Score Trend(Cases)(Thousands)

4,000

200

3,500

175

3,000

150

2,500

125

2,000

100

1,500

75

1,000

50

500

25

0

FY14.3

FY15.3

FY16.3■ Telecommunications

Reason for selection as an outside auditor of the Company(if designated as an independent auditor includes reason for this designation)

Principal activities
in FY23.3

Mr. Asahina has cultivated abundant experience and knowledge gained from many years ofpractical experience in the public sphere and involvement in the execution of business at variousorganizations. From the perspective of leveraging this knowledge and experience to monitor
general management and to engage in appropriate audit activities, he has been appointed as an
Audit & Supervisory Board member.

Board of Directors(Attended 11 of 11 meetings)
Audit & Supervisory Board(Attended 12 of 12 meetings)

Mr. Matsumiya has an abundance of experience and knowledge as a Certified Public Accountant, as an employee of an auditing company, as the representative of an accountancy firm, as anauditor for other companies as well as experience and insight cultivated through the executionof duties at various organizations. From the perspective of leveraging this primarily accounting-related knowledge and experience to monitor general management and to engage in appropriate
audit activities, he has been appointed as an Audit & Supervisory Board member.

Board of Directors(Attended 11 of 11 meetings)
Audit & Supervisory Board(Attended 12 of 12 meetings)

Mr. Karube has cultivated abundant experience and knowledge as a representative director of alisted company. From the perspective of leveraging this knowledge and experience to monitor
general management and to engage in appropriate audit activities, he has been appointed as an
Audit & Supervisory Board member.

Board of Directors(Attended 11 of 11 meetings)
Audit & Supervisory Board(Attended 12 of 12 meetings)

FY17.3

FY18.3

FY19.3

FY20.3■ Satellite growth area (excluding telecommunications)

FY21.3

FY22.3

FY23.3Patent Score

Femalestandardization. Meanwhile, in the service areas of our Satellite Growth Strategy (5G communication, DX, finance,
Board of Directors(Attended 11 of
11 meetings)

Ms. Okawa has a wealth of corporate management experience, in addition to excellent insight cultivated from her
work experience at a major airline company, especially in practical aspects such as customer service, corporate
revitalization, and diversity promotion. On the Board of Directors, she contributes to enhancing KDDI’s corporate
value by providing advice from a medium- to long-term perspective, independent of our management team basedon her management experience at other companies and by helping to strengthen the supervisory function of business execution. She has again been appointed as an outside director because the Company expects her to contribute to strengthening the supervisory function of business execution and provide advice from a broad managerial perspective.

1. Promotion of Innovation Centered on Telecommunications

Cumulative number of patents (Japan)

Junko

activities that are integrated into our business strategies.

We position telecommunication technologies requiring interoperability as a collaborative area that promotes

Mr. Yamamoto has excellent knowledge cultivated in IT development and electronics engineering divisions and awealth of corporate management experience as a management at one of the world’s leading automobile manufacturers. On the Board of Directors, he expressed broad opinions on promoting KDDI’s 5G/IoT strategy, etc., from a
medium- to long-term perspective, and has thus contributed to improving KDDI’s corporate value. He has again
been appointed as an outside director because the Company expects him to contribute to enhancing the supervising function of business execution and provide advice in the telecommunications field from technical perspectives.

Mr. Tannowa has a wealth of corporate management experience cultivated as the President and Representative
Director of a major chemical manufacturer, while also offering excellent insight from a global perspective. On the
Board of Directors, he contributes to enhancing KDDI’s corporate value by providing advice from a medium- to longterm perspective, independent of the KDDI’s management team based on his management experience at theother company and by helping to strengthen the supervisory function of business execution. He has again been
appointed as an outside director because the Company expects him to contribute to strengthening the supervisory function of business execution and provide advice from a broad managerial perspective.

KDDI regards our intellectual property (IP) as an important resource for sustainability management and promotes IP

0■ Others ● Patent Score* The patent score is calculated using Patent Result Co., Ltd.’s Biz Cruncher, created by KDDI.
This is calculated on an annual basis, not on a fiscal year basis.

■ Patent Cases in Satellite Growth Strategy
Smart Drone
Our patented technology
enables the provision ofsmartphone plans wheredata and calls can be
added as toppings.
(Patent No. 7076934)

Our patented technology
generates the optimal drone
control interface for eachdrone with varying
specifications.
(Patent No. 7116235)

KDDI Integrated Sustainability and Financial Report 2023

139

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

Governance

TCFD/TNFD

Corporate Governance

DataIntellectual Property Management

Compliance

2. Enhancing Brand ValueTo create such collaborative

At KDDI, we define “Tomorrow, Together” as our brand message to answer the question of what kind of presence we“KDDI DIGITAL GATE”*1, whichwant to be for our customers and society. Through the evolution of the power to connect, we express our commitment tocollaborates with corporate customers

sustainably develop and grow together with our customers, partners, and society toward the future. As part of ourto create new businesses, “KDDI∞

corporate brand activities that embody our brand message, we strengthen empathy and expectations towards KDDILabo”*2, a business co-creation

through various customer contacts such as owned media “KDDI Tobira” which communicates efforts towards realizing

platform that collaborates with large“KDDI VISION 2030,” brand experience facilities “KDDI MUSEUM,” and “GINZA 456 Created by KDDI.”

corporate alliances to support startup■ The progress status of each business co-creation platformbusinesses, we have platforms such as

Furthermore, our business brand, au, effectively communicates the attractiveness of our services through various

Fund”*3, a corporate venture capitalbrand’s value in a friendly manner. It was selected as “BRAND OF THE YEAR 2022” in the “2022 Annual Brand-Specific CM

initiative aimed at supporting startup

Favorability Ranking” by CM Soken Consulting, winning the CM favorability No.1 brand award for the eighth consecutive

growth within the KDDI Group. These

year. We will continue to work towards further enhancing the corporate brand’s value in the future.

platforms are also considered■ KDDI MUSEUM

DX projects 88(From establishment in 2018 to FY23.3)

Business matching between 388

startups and 77 major corporations(Corporate Alliances)

growth, and the “KDDI Open Innovation

touchpoints, achieving an enhancement in brand recall and image. In au’s “SanTaro” series of commercials, we convey the■ KDDI Tobira

Including collaborative initiatives
with major corporations(FY23.3 results)

Investment in 134 startups(As of July 7, 2023)

important intangible assets for■ au TV commercial “SanTaro” Series

generating new businesses.

*1 

We will continue to work on

KDDI DIGITAL GATE (Japanese only)

strengthening partnerships for businessco-creation in the future.

*2 
*3 

KDDI

Labo

KDDI Open Innovation Fund

4. Strengthening Intellectual Property Initiatives within the KDDI Group3. Deepening the Partnership for Business Co-Creation

To foster the creation of new businesses and strengthen our business competitiveness, we recognize the essential role ofIn our “Satellite Growth Strategy,” we are advancing the expansion of services that synergize with our strengths, such as

promoting support for the intellectual property activities of our group companies and invested startups, which include

5G. Given that expanding our services requires collaboration with a diverse range of partners, we are actively deepening

activities such as invention discovery, patent infringement investigations, and IP landscape analysis.

nurturing the growth of our group companies and the startups we collaborate with. Consequently, we are actively

our partnerships.

In recognition of this support, we received the Economy, Trade and Industry Minister’s Prize for companies that use IP

For instance, in the past five years, we have achieved over 30 commercialization imperatives of new businesses andservices for B to C markets, excluding communication. Many of these successes are the results of business co-creation(for the first time in“open innovation promotion company” category) at the 2018 Intellectual Property Achievementwith partners, including large enterprises and startups.

Awards held by Ministry of Economy, Trade and Industry.
In the future, to continue generating new businesses and enhancing our business competitiveness, we will continue tostrengthen our group’s intellectual property activities.

■ B to C Market New Business/Service (Cumulative)■ Support for Intellectual Property Activities for Group
Companies and Invested Startups(Cases)35(Companies)
25

25

Startups
Group
Companies

20

KDDI

15

Intellectual Property Division
Startups

10

FY19.3

FY20.3

FY21.3

FY22.3* The breakdown of the graph represents the domains of the Satellite Growth Strategies to which eachbusiness/service belongs.

20

15

10

5

0

FY23.3■ LX ■ Finance ■ Energy ■ Education ■ Healthcare

140

Startups
Group
Companies

5
0

Group
Companies

Intellectual property support
recipient companies(cumulative total)

Cumulative number of new business/service cases30■ Change in the Number of Intellectual Property Support
Recipient Companies(Group Companies and Invested Startups) pproach to the handling of intellectual property andAintangible assets to support start-ups (Japanese only)

FY18.3

FY19.3

FY20.3■ Telecommunications■ DX

FY21.3

FY22.3■ LX■ Finance

FY23.3* The breakdown of the graph represents the domains of the Satellite
Growth Strategies to which each business or service belongs.

KDDI Integrated Sustainability and Financial Report 2023

141

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

Governance

TCFD/TNFD

Corporate Governance

DataIntellectual Property Management

Compliance

Risk Management and Internal Controls

Risk Identifying Process
We regularly examine information about risks to identify significant risks that seriously influence corporations, and discuss
measures to reduce such risks and their impacts as much as possible in case we face them.
In order to ensure the achievement of our business goals, in FY23.3, we selected 29 significant risks based on issues

KDDI’s Approach (Risk Management and Internal Control)that manifested in the past and changes in the business environment, and held internal audits centered on risk prediction,

In the ever-changing business environment, the risks that companies face are increasingly diverse and complicated.
We define factors and events that negatively influence the achievement of our business goals as risks and consider

the reduction of significant risks and risk approach. In order to minimize information security risks, we have alsoestablished a common standard applicable group-wide to improve the level of information security across the group. The

enforcing risk management as material business challenge. In order to be sustainable and responsible to society, we

status of these significant risks is also reflected on business risks that are revealed in the Securities Report since it relates

promote risk management initiatives throughout the KDDI Group.

to the finance as well.

KDDI’s Risk Management and Internal Control

Basic Policy for Constructing an Internal Control System

We have established a system to centralize the management of risks with the Corporate Sector at the core.

Based on the provision of Article 362, Paragraph 5 of the Companies Act, we passed the Basic Policy for Constructing an

Furthermore, we are promoting risk management throughout the KDDI Group, in order to realize the continuousInternal Control System at a meeting of the Board of Directors. In addition, we publicly announce resolutions and our

growth of the entire group. We have appointed 44 Internal Control System Managers within KDDI and 44 at group

operational status to ensure the fair, transparent and efficient execution of our corporate duties and maintain an effective

companies, as well as 5 Internal Control System Directors to oversee their activities. Under their leadership, we introduce

system for internal controls to raise the company’s quality level.

and run internal control systems, carrying out risk management activities and run operational quality improvement
activities to foster a company culture in which risks are less likely to arise.

Initiatives in Response to the Internal Control Reporting System (J-SOX)■ Personnel in Charge of Internal Control
Audit &
Supervisory
Board
Members

Accounting
Auditors

Decide basic policies for building
internal control framework

Board of Directors
Audit in accordance withlaws and the articles ofincorporation relating todirectors’ business execution

Evaluate internal control andannounce the results

Corporate Management Committee (President)

Corporate Sector• Formulate implementation plans• Manage overall progress• Support operations of implementing divisions

Audit evaluations by managers

In response to the internal control reporting system based on the Financial Instruments and Exchange Law implemented
in FY09.3, we conducted evaluations of the internal controls at KDDI and 11 major group subsidiaries (totaling 12companies) in and outside Japan to ensure reliability of our financial reporting. The results of these evaluations werecompiled in an internal control report, which was submitted to Japan’s Prime Minister in June 2023, as well as disclosed toinvestors.

Activities to Enhance Operational Quality
In conjunction with the response to the internal control reporting system, we established an Internal Control Department

Internal Control System Directors (5)Internal Control System Managers (KDDI: 44, Group companies: 44)

KDDI GroupKDDI Corporate and Support
DivisionsGroup Companies

Offices

Offices

Offices

Individual Organizational Units

Individual Organizational UnitsManager in each division facilitates initiatives that enhance the efficiency and standardization of operations to do so.
Business improvement projects through this activity are added to a database, enabling all employees to utilize activities toKDDI Business Divisions(As of April 1, 2023)

that promotes initiatives for improving the overall operational quality of the whole Company, and Internal Control System

Individual Organizational Unitsenhance operational quality in their own division.
Furthermore, to further raise each employee’s awareness and motivation regarding the quality of operations, we haveintroduced the Operational Quality Improvement Prize to recognize excellent and ambitious initiatives. In addition, we
have started working on the introduction of robotic process automation (RPA) across the Company as a way of improving
operational quality, productivity, and efficiency at the same time, starting with the preparation of the RPA system
environment and education programs.

Risk Management Activity Cycle
In order to prevent critical events for the company, we at KDDI consider that it is important to recognize signs of danger
and implement preventive measures before the situation worsens. Based on this idea, we follow the PDCA cycle for risk

Activities to Enhance Operational Quality• e-learning training• Sharing messages from executives and good examples of initiatives in e-mail newsletters and internal magazines• Implementation of Operational Quality Improvement Prize (once a year)

management. We also have an organizational framework for risk management in place to ensure any risks we find will be
addressed promptly and appropriately.

Management
level

Present
significant risks

Report thesituations

142

Improveand adopt

Risk management
by sectors andGroup Companies

P
A

Execute intradivisional
monitoring and internal
auditsCollect and analyze
information andassess risks

DC

Implement
countermeasures

KDDI Integrated Sustainability and Financial Report 2023

143

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance■ (Reference) Main Operational Risks
Risk

Risk background

Potential impact on KDDIKDDI’s response

Compliance• The need to provide user support forCompetitors,
rival technologies andrapid market
shiftsproduct defects attributable to therapid expansion of the commercebusiness• Inability to acquire the required bandwidth• Increase in competition due to new
high-speed services provided by othertelecommunications operators• Possible rise in connection fees withother telecommunications operators• Intensifying competition caused bychanges in the business landscape due
to partnerships with other industries,
sales packages that include otherproducts (such as telecommunications +power), the emergence of MNOs and
MVNOs in the market, and other companies expanding their business scope ossible impact on the earnings perforP
mance etc. of the KDDI Group

Supporting new consumer lifestyles andpromoting initiatives to create a resilient
society that achieves both economic
development and solutions to social issues

KDDI Group Compliance and Enforcement Framework
We created the KDDI Code of Business Conduct to support ethical behavior and ensure that every employee cultivates a• Establishment of the Information Security

Inappropriate
handling or
leakage ofconfidential
communications, violationsof customer
privacy,
and improperuse of the
products andservices
provided by thecompany etc.

• Could seriously damage the brand image• Internal privacy breaches• Unauthorized access from external
networks• Natural disasters, such as earthquakes,

Communications failure,naturaldisasters,
and other
unforeseen
eventstsunamis, typhoons, or floods, as well as
secondary damage from the spread of
toxic substances caused by natural
disasters• Worldwide spread of an infectious
disease (pandemic)• War, terrorism, accidents, or other
unforeseen events• Power brownouts or blackouts• Computer viruses or other forms ofcyber-attack and hacking• Operation system hardware or software
failures• Flaws in communication equipment andservices

Compliance Policy In addition to complying with laws and regulations, we recognize that in order to fulfill oursocial responsibilities through our business activities, raising compliance awareness throughout the Group is a fundamental issue of corporate management. As a global corporate group, we continue to further enforce our group-wide compliance framework.

of the KDDI Group, lead to a possible
loss of customer trust, and make us
liable to pay compensation or surcharges• In the future, we may face higher costs
to develop the framework necessary toprotect the confidentiality of communications and customer privacy and protect
against cyberattacks• Could have a negative impact on theearnings performance of the KDDI Group

Committee• Establishment of the KDDI Code ofBusiness Conduct, KDDI Security Policy,
and KDDI Privacy Policy• Establishment of the Business Ethics
Committee• Reinforcement of various technical,
organizational and human safety
management measures• Educating all employees on how toprotect the confidentiality of communications and customer privacy• Working with our external partners,
particularly with our retail network of au
Shops, to strengthen management
through the improvement of shop
operations, regular audits, and training• Establishment of standards for the security regulation measures to be taken bybusiness systems and the review ofcompliance with the regulations.
• Establishment of the KDDI Service
Security Incident Readiness & Response
Team (KDDI-SSIRT), which specializes inservice security to prevent harm before it
occurs.

the Code is put in business mobile devices lent to employees, enabling employees to check it whenever they are unsure
what action to take. Also, we established the KDDI Group Business Ethics Committee as a decision making body for KDDI
Group’s compliance related matters.
The committee is chaired by the Chairman, Representative Director, and members include directors and additional
nominees appointed by the chair as required. The committee holds a meeting once every half-year, and in addition toassessing the conditions of Group companies, it builds and supports enhancement of compliance frameworks. The
committee is also responsible for helpline issues, corruption prevention and compliance issues such as breaches ofcompetition laws.
Under the KDDI Group Business Ethics Committee, the committee formulates policies on raising awareness, discusses
countermeasures in case compliance violations occur and is responsible for disclosure of such information as well as theprevention of recurrence. In addition, the reports on their activities are made available to all employees via the intranet.

■ KDDI Group Compliance and Enforcement Framework
President, Representative Director

Report• Risk of service outages or interruptions,etc. due to communications failures,
natural disasters or accidents, etc.
• Loss of opportunities to offer products
and services due to service outages as aresult of failures in network systems orcommunications equipment, substantial
billing errors, the closing of distributors,
the suspension of distribution, andreputational damages through media
such as SNS could damage the brandimage of the KDDI Group and lead toloss of customer trust and decreased
customer satisfaction, which could havean impact on earnings performancecompliance mindset. To ensure that the Code is shared and practiced, it is published on the intranet and a web link toReport• Initiatives to improve the reliability of our
network and prevent service outages• Establishment of a policy for implementing disaster prevention operations in theevent of a disaster, taking measures toprepare for disasters, and maintaining
close communication and coordination
with related organizations in Japan andoverseas.

KDDI Group Business Ethics Committee• Formulate policies for educational

KDDI Group Business Ethics Committee Members• Discuss countermeasures in caseLaws, regulations, andgovernment
policies relating
to the telecommunications
business

Acquisition ofhuman
resources,
training andpersonnel
management

144

 uture rise in human resources investment
F
costs

activities

compliance violations occur

Committee Chair: Chairman, Representative Director• Disclose information outside of theCommittee Members: Executives Including Directors

Company

Secretariat: General Administration Department, General Administration Division• Deliberate on measures to prevent
recurrence

Contact (Anonymous)• Revisions to the calculation formula forinter-operator connection fees and/or
accounting methods• Revisions to designated telecommunications facilities system and/or the
regulations on prohibited activities• Revisions to universal service systems• The emergence of MNOs and MVNOs
etc. in the mobile communications
business• Revisions to the frequency allocation
system• Revisions to the spectrum user fee system

Corporate Management Committee

Consult• The KDDI Group’s earnings performance,
etc. could be negatively impacted by therevision or abolition of laws and regulations or the formulation of government
policies relating to telecommunications,electricity and finance business• The KDDI Group’s earnings performance,
etc. could be negatively impacted aswell if the company’s competitive
advantage is relatively diminished as aresult of competitionIf we are unable to handle human resource
matters appropriately in the future, theGroup’s brand image could be damaged,
leading to the loss of customer trust andimpacting our earnings performance• Taking appropriate actions against laws,

regulations, and government policies• Advocating measures for fair competition
with other telecommunications operators, etc. through various deliberation
councils and study sessions as well as
the public comment system of the
Ministry of Internal Affairs and Communications

ReportFeedback/
Instruction, etc.

Business Ethics Helpline
ReportFeedback

All Employees of KDDI Group• Working together across the entire

company to support human resource
development and career development tokeep up with technological innovations• Appropriate personnel management andthe promotion of workstyle reforms
based on the laws
KDDI Integrated Sustainability and Financial Report 2023

145

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance■ Business Ethics Helpline

Compliance Education, Training and Awareness Raising

Whistleblowers(Employees of KDDI and KDDI Group, etc.)■ Examples of Initiatives in FY23.3
TargetExamples of Initiatives
Report/consultation

Promotion of the KDDI Group Philosophy
All KDDI employees

Distribution of web shortcuts related to the KDDI Code of Business Conduct tobusiness mobile devices lent to employees

KDDI Group Business Ethics staff, etc.

Explanatory Seminar on the Revised Whistleblower Protection Act

New line managers

e-learning contents on complianceKDDI Group employees

Implementation of e-learning for KDDI employees to introduce the “KDDI Code ofBusiness Conduct” and whistle-blowing case studies. The learning content will be
deployed to KDDI Group companies.

Report back/response

Report/consultation
Notification ofreceiving a report

Internal contact point
KDDI Group
Business Ethics Committee

Report back/response

Report back/response

External contact point
Legal offices

Investigation/analysis/
improvement/recurrence prevention

Relevant department’s managers

Initiatives to Prevent Harassment

Elimination of Organized Crime Groups (Basic Approach and Implementation Status)■ Examples of Initiatives in FY23.3

Our Basic Policy for the Creation of Internal Systems takes a firm stand on countering organized crime groups.
In addition to rules defining initiatives for blocking off any relations with such groups, the KDDI Code of Business

Examples of Initiatives

Conduct, which defines basic principles to be followed and enforced by all executives and employees, takes a firm stance

Dissemination of the KDDI Code of Business Conduct and thorough implementation of actions

against organized crime groups, rejecting any requests for illicit funds and refusing to comply with any demands.

Training on harassment prevention for line managers
Accepting reports on the work environment, including instances of harassment, through the company’s internal system
Dissemination of report counters such as the Sexual Harassment and Human Relations Hotline and the Business Ethics
Helpline by distributing whistleblowing cards to employees

Anti-Corruption Measures
Basic Approach to Anti-corruption
To prevent corrupt practices, the KDDI Code of Business Conduct defines the principles of promoting fair businessResponses to take when reported harassment cases have been substantiatedactivities and the conscientious performance of duties and prohibits activities such as bribing politicians and public
officials, along with other similar types of corruption.
Specifically, this includes any business entertainment, gift and invitation given to a public official in the course of

Business Ethics Helpline

business with governmental agencies that is prohibited under the National Public Service Act and other applicable laws

We established the Business Ethics Helpline in 2006 to serve as a contact point for all employees of KDDI and KDDIand regulations. KDDI has established that, when dealing with overseas governments and companies, employees will not

Group companies who have questions or concerns about business ethics including violations of regulations or laws. The

provide any business entertainment, gift or invitation as stipulated in the UN Convention against Corruption as well as thehelpline is available anytime and can receive reports through an internal or external contact point established inlaws and regulations of the relevant countries against foreign corrupt practices and unfair competition.

collaboration with external experts (reports can be received by e-mail, phone, or letter in multiple languages). We also

In addition to the above, we also stipulate the elimination of organized crime groups and prohibition of insider trading

accept anonymous consultations and declarations. We operate the Business Ethics Helpline in accordance with theand anti-competitive behavior, and any violations will be punished in accordance with internal regulations. In order toWhistleblower Protection Act, which was revised in June 2022.

prevent these violations, we use e-learning courses and e-mails to inform all employees and raise their awareness. In
FY23.3, there were no employees subject to disciplinary dismissal for violating the anti-corruption provisions of the KDDIWe are actively promoting the use of the Business Ethics Helpline and the Sexual Harassment and Human

Code of Business Conduct.

Relationships Hotline by distributing whistleblowing cards.
In FY23.3, none of the consultations or reports received from entire KDDI Group companies concerned serious issues

Sustainable Procurementthat required external declaration.
The KDDI Group Business Ethics Committee investigates the issues consulted on and reported as required while

We also urge business partners to comply with the KDDI Group Sustainable and Responsible Procurement Guidelines,

protecting privacy, and when the problems are detected, the committee members as well as the management team andwhich defines rules for prohibition of corruption, bribery, abuse of power and giving or receiving illicit funds.

the Audit & Supervisory Board members promptly review the report and take corrective actions along with measures to

Political Contributions

prevent recurrence.
In the event that human rights issues orcompliance violations against KDDI or KDDI
Group company employees etc. are found,KDDI is committed to taking appropriate
measures.

146

For any political donations we make, we observe the Political Funds Control Act and follow the KDDI Code of Business■ Compliance Consultations Received in the Last Two Years (KDDI Group)

Unit: case

Consultations

FY22.3

FY23.3Compliance consultations

556

661

Breakdown: Harassment consultations

130

259

Breakdown: Other compliance violations

426

402

Conduct and the KDDI Group Sustainable and Responsible Procurement Guidelines.
In FY23.3, we made political donations totaling 6 million yen in Japan, and there were no cases of legal action against
us concerning corruption or bribery.

KDDI Integrated Sustainability and Financial Report 2023

147

Introduction
Board Members

VisionMaterial Issues

Messages from Outside Directors

Risk Management and Internal Controls

TCFD/TNFD

Corporate Governance

Governance

DataIntellectual Property Management

Compliance

Efforts to Prevent Tax AvoidancePreventing Anti-competitive Behaviors

In accordance with OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS), we are committed to ensuring proper

The KDDI Code of Business Conduct defines rules that prohibit anticompetitive behaviors, and we make efforts to ensure

tax payment in all operating countries including Japan, by aligning tax payments with the location of our economic activity

that all employees comply with competition laws.

and value creation, in line with the revision of tax regulations to tackle BEPS. In particular, we handle transfer pricing

In addition to competition laws, we stipulate that local laws and regulations in each country and region on labor, tax,
the environment, consumer protection and data protection must be examined thoroughly to ensure full compliance.
Furthermore, under the KDDI Group Sustainable and Responsible Procurement Guidelines, we demand our business
partners to not engage in any activities that inhibit fairness, transparency or freedom of competition.
We respond promptly to requests and guidance received from the Ministry of Internal Affairs and Communications andtaxation and anti-tax haven taxation, which are critical international taxation issues, as follows.
Transfer Pricing Tax Compliance
The KDDI Group’s business is primarily in telecommunications and ancillary businesses in Japan, and its foreign-relatedtransactions are few compared with those of other multinationals of similar size. Where foreign-related transactions are
conducted, the prudence of the foreign-related transaction is confirmed in compliance with the laws and regulations ofother government agencies, ensure compliance with relevant laws and regulations, and maintain proper businessthe relevant countries, and transfer pricing documentation is prepared in accordance with the arm’s length principle.

operations.

Additionally, depending on the size of the foreign-related transaction, we pay the appropriate taxes by utilizing various

For details on our response to the large-scale communication failure that occurred in July 2022, please refer to“Measures Taken in Response to the Serious Accident in 2022”. → P59

in this report.

systems in consultation with the tax authorities.
Tax Haven Tax Compliance
We do not use tax-free or low-tax jurisdictions (so-called “tax haven jurisdictions”) for tax avoidance. When an investment
is made in a tax haven area for business reasons, the anti-tax haven taxation system is applied following the laws andResponsible Tax Practice
Basic Tax Policy
We at KDDI Group pursue the satisfaction of our customers and profit while fulfilling our social responsibilities not only by

regulations of the relevant countries. If the company is subject to anti-tax haven taxation, it will file the appropriate tax
return and pay the tax due.

■ Amount of Tax Paid

complying with international rules and applicable tax laws and regulations in all operating countries and regions, but also
by complying with and following the spirit of the law and paying tax appropriately to engage in tax fairness, and thereby
strive to maximize corporate value.
In FY23.3, we paid 339,484 million yen of corporate income tax, which accounts for 31.4% of gross income. KDDI
Group submits the Securities Report after undergoing accounting audits by external independent accounting auditors andobtaining approval of the CFO (Managing Executive Officer/ Executive Director, Corporate Sector) and the representative(President, Representative Director, CEO).

Tax Governance Structure
The KDDI Group Tax Management Regulations have been established to ensure that the KDDI Group steadily implements
the Basic Tax Policy in its actual business activities. KDDI Group companies are required to comply with the regulations.
The regulations were established upon the approval of the representative and are overseen by the Chief Financial

Unit: 100 million yen

FY22.3
Japan

3,579

98.38%

UK

20

0.55%

Mongolia

11

0.30%

France

8

0.22%

China

5

0.14%

Others

15

0.41%

3,638

100.00%Total

Officer.
Practical operations are transferred to KDDI’s Finance and Tax Department, which reports to the CFO and thenecessary meetings bodies when it becomes aware of significant events or risks related to the KDDI Group’s tax affairs.

Initiatives to Maintain and Improve Tax Governance
As KDDI Group businesses become increasingly multinational and have more international transactions, our top
management, including the representative, is working to develop and promote a tax strategy that properly recognizes
international tax risks and regards such risk as an important issue that is directly linked to management, while utilizing
external specialists to have a deeper understanding of the latest tax updates. In addition, the head office is engaged in
education for employees across the world and receives tax practice support from external specialists. With these
initiatives, we strive to maintain and improve tax governance.
Also, with regard to the tax returns it prepares, KDDI has them reviewed by an external tax accountant corporationand obtains approval of the CFO before submitting them to the tax authorities.

Tax Transparency and Relations with Tax Authorities
To maintain the transparency of tax affairs, we prepare and submit an annual report on our activities by country inaccordance with tax laws in Japan. We also work to build trust relationship with tax authorities in each country byconducting timely and appropriate disclosure of tax-related information, such as a business summary report on the overall
status of the Group’s activities in line with the relevant laws, regulations and disclosure standards of each country andregion in which we operate. With these initiatives and prior inquiries as required, we strive to reduce tax risks.

148

KDDI Integrated Sustainability and Financial Report 2023

149

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Financial and Non-Financial Data
Consolidated Financial Highlights (Years ended March 31)
Japanese GAAP ⬅

➡ IFRS
Millions of yen

FY13.3

FY14.3

FY15.3

FY15.3

FY16.3

FY17.3

FY18.3

FY19.3

FY20.3

FY21.3

FY22.3

FY23.3

3,662,289

4,333,628

4,573,142

4,270,094

4,466,135

4,748,259

5,041,9785,080,353

5,237,221

5,312,599

5,446,708

5,671,762

512,669

663,245741,299

665,719

832,583

912,976

962,793

1,013,729

1,025,237

1,037,395

1,060,592

1,075,749

14.0%

15.3%

16.2%

15.6%

18.6%

19.2%

19.1%

20.0%

19.6%

19.5%

19.5%

19.0%

959,571

1,186,069

1,292,597

1,284,553

1,410,971

1,524,207

1,560,061

1,598,670

1,750,861

1,786,170

1,813,436

1,790,063

26.2%

27.4%

28.3%

30.1%

31.6%

32.1%

30.9%

31.5%

33.4%

33.6%

33.3%

31.6%

241,470

322,038

427,931395,805

494,878546,658

572,528

617,669

639,767

651,496

672,486

677,469

Capital Expenditures → P155

467,020571,799

576,197

667,714

531,434

519,365

560,831

601,757

615,054

627,907676,461

627,544

Depreciation and Amortization

406,726

470,098494,570

518,708

532,442545,177

546,609562,282

689,473

727,438

727,779

696,591

Interest-Bearing Debt → P153

977,563

1,084,966

1,002,214

1,154,116

1,235,287

1,151,650

1,118,616

1,275,711

1,680,367

1,645,481

1,600,104

1,651,437

Equity Ratio/Ratio of Equity Attributable to Owners of the Parent

55.1%

55.1%

57.3%

54.5%

56.3%

56.7%

57.4%

57.1%

45.8%

45.2%

45.0%

43.0%

 eturn on Equity/Ratio of Return on Equity Attributable to Owners ofR
the Parent (ROE)

11.2%

13.0%

14.9%

13.5%

15.5%

15.9%

15.6%

15.5%

14.9%

14.2%

13.8%

13.4%

Return on Assets/Ratio of Return on Total Assets (ROA)

12.7%

14.7%

14.5%

12.1%

14.5%

15.0%

15.0%

14.6%

12.1%

10.3%

9.8%

9.4%

Earnings per Share/Basic Earnings per Share (EPS)*2 (yen)105.30132.87170.84158.01

197.73221.65235.54259.1

275.69284.16300.03310.25

DPS*2 (yen) → P153

30.00

43.33

56.67

56.67

70.00

85.00

90.00

105.00115.00120.00125.00135.00

Dividend Payout Ratio

28.5%

32.6%

33.2%

35.9%

35.4%

38.3%

38.2%

40.5%

41.7%

42.2%

41.7%

43.5%

Total Dividend Amount

68,795108,033

141,946

141,946

174,843

208,917217,339

248,932

265,727

274,528

278,811

293,495

—

—

—

—

50,000100,000

149,999

150,000

150,000

200,000

200,000

200,000

Total Return Amount

68,795108,033

141,946

141,946

224,843

308,917367,338

398,932

415,727474,528

478,811493,495

Total Return Rate

28.5%

32.6%

33.2%

35.9%

45.4%

56.5%

64.2%

64.6%

65.0%

72.8%

71.2%

72.8%

Net Cash Provided by (Used in) Operating Activities

523,908772,207962,249

968,752

884,538

1,161,074

1,061,405

1,029,607

1,323,356

1,682,166

1,468,648

1,078,869

Net Cash Provided by (Used in) Investing Activities*3(472,992)(546,257)(674,520)(635,745)(667,917)(637,225)(633,847)(714,578)(610,950)(658,925)(761,593)(732,480)

50,916

225,950

287,729333,006

216,621523,849

427,558

315,028

712,406

1,023,241707,056

346,389(140,249)(105,643)(224,862)(310,528)(299,003)(485,784)(453,168)(310,951)(546,381)(585,571)(727,257)(669,837)

Consolidated
Operating Revenues/Net Sales → P152
Operating Income → P152
Operating Margin
EBITDA*1
EBITDA Margin
Net Income/Profit for the Year Attributable to Owners of the Parent→ P152

Treasury Stock Purchase AmountFree Cash Flows*4 → P155
Net Cash Provided by (Used in) Financing Activities*3

Note: Terminology differences between Japanese GAAP and IFRS (adopted from FY16.3) will be presented as “Japanese GAAP/IFRS.”*1 In FY15.3, the EBITDA calculation formula has been changed.
Until FY15.3 (Japanese GAAP): EBITDA = Operating income + depreciation + amortization of goodwill + noncurrent assets retirement cost
Since FY15.3 (IFRS): EBITDA = Operating income + depreciation and amortization + noncurrent assets retirement cost + impairment loss

150

*2 Values are adjusted following stock splits conducted with effective dates of October 1, 2012, April 1, 2013, and April 1, 2015. Figures for previous fiscal years
have been retroactively adjusted.

*3 The notation ( ) in the figures represents a negative value.
*4 Free cash flows = Net cash provided by (used in) operating activities + net cash provided by (used in) investing activities

KDDI Integrated Sustainability and Financial Report 2023

151

Introduction

VisionFinancial and Non-Financial Data

Material Issues

TCFD/TNFD

Consolidated Financial Statements

Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

Financial and Non-Financial Highlights

Financial(Years ended March 31)

Operating Revenues/Net Sales

DPS(Billions of yen)
6,000

(yen)
150

■ DPS (left)

5,500

5,042 5,080

5,000
4,500

5,313

5,672

Personal Services
segment

4,748

4,573
4,334

5,237

5,447

4,270

164.4

4,466

66.7

15

15

16

17

18

19

Japanese GAAP

20

21

and revenue in focus areas ofsales increase by 4.1% year-on-year23

22

Increase in Energy business revenue

financial business resulted in net

ー6.0

14

¥ 5,671.8 billion

Business Services segment andConsolidation
adjustment, etc.

3,500

4.1%

to ¥5,671.8 billion.

IFRS■ Operating Income (left)

913

963

1,014 1,025

1,037

20.0

19.5

1,061

666

600

15.3

16.2

18.6

19.2

19.1

19.6

25.0

Business Services segment

13.2
3.7

15.0

Consolidation adjustment, etc. ー1.8

0

14

15

15

16

17

18

19

Japanese GAAP

20

21

23

22

495

547

573

618

640

651

672

10.0

0

0

15

15

16

17

18

19

20

21

23

22

IFRS

The annual dividend was ¥135, anincrease of ¥10 year-on-year, and theconsolidated dividend payout ratio
was 43.5%. For FY24.3 we plan toincrease the dividend per share (DPS)by ¥5 to ¥140 and aim for 22
consecutive periods of DPS growth.

YOY

51.3billion¥ 1,651.4 billion
Interest-bearing debt increased by ¥51.3 billion year-on-year to ¥1,651.4 billion, mainly due to an increase in corporate

year-on-year to ¥1,075.7 billion

bonds and lease obligations.

mainly due to increased operating
the effects of fuel price hikes and

D/E Ratio

0.7%¥ 677.5 billion

YOY

00.32 times

396

322

Due to the increase in operating

Although interest-bearing debt increased, equity attributable to the owners of the parent also increased. As a result, theincome, profit for the year

D/E ratio was 0.32, the same as at the end of the previous fiscal year.

attributable to owners of the parent

100

increased by 0.7% year-on-year to
14

15

Japanese GAAP

152

20.0

25

14

¥ 135.00

Operating income increased by 1.4%

678

200

0

40.0
30.0

43.33

¥ 1,075.7 billion

YOY

600

300

43.5

telecommunication failures.

IFRS

700

400

90.00

40.5

41.7
42.2

¥10.00revenue and cost efficiencies, despite
0(Billions of yen)
800

428

85.00

41.7

56.67

1.4%

Net Income/Profit for the Year Attributable to Owners of the Parent

500

38.2

70.00
56.67

50

38.3

50.0

YOY

20.0

19.0

19.5

Personal Services segment

15.6

YOY

1,076

833

663

33.2

35.4

135.00● Operating Margin (right)
(%)
30.0

741

32.6

35.9

115.00105.00120.00125.00(%)
60.0Interest-Bearing Debt

(Billions of yen)
1,200

800

100

Japanese GAAP

Operating Income

1,000

125

75

Business Services
segment

4,000

0

YOY

● Dividend Payout Ratio (right)

15

16

17

18

19

20

21

22

23

¥677.5 billion.

IFRS

KDDI Integrated Sustainability and Financial Report 2023

153

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

Financial and Non-Financial Highlights(Years ended March 31)

Financial

Total Assets

Capital Expenditures (Payment Basis)(Billions of yen)

Securities andloans forfinancial business

Trade andotherreceivables

Others+191

11,918400¥ 11,917.6 billion

+ 825

YOY

11,084¥ 833.3billion

300

150

200

50

50

billion year-on-year to ¥11,917.6

0billion, due to an increase in loans

– 316

100

100

Total assets increased by ¥833.3

2018

2019

2020

2021

2022

2023

1

1

1

1

0

—

2019

2020

2021

2022

2023

■ FTTH

28

26

22

22

22

20

188

■ Others

173

199

219

228

250

260

347

Total

201

225

241

250

272

281

■ 3G

business and trade and other■ 4G LTE・5G

152

181

174

211

191

159

receivables, despite a decrease in■ Common equipment

207

195

200

167

213

Total

360

377

374

378

404

2023

0

2018

and securities for the financial

cash and cash equivalents, etc.

¥ 57.2billion

YOY

YOY

¥ 347.1billion

Capital(Billions of yen)

5,511

200

250
150

7.5%

2022

(Billions of yen)Fixed-Line 300
and250
Others(Billions of yen)
450
350

+ 134

Cash andcash equivalents

YOY

MobileRetainedearnings+397
Treasury
stock
– 246

Non-controllinginterests+14

Others
– 11

YOY

5,665

YOY

2.8%

¥ 154.1billion¥ 280.5 billion

In the mobile business, mainly due to a decrease in 4G

In the fixed-line and others, mainly due to increased data

investment, capital expenditures decreased by ¥57.2

center-related investments at overseas subsidiaries,

billion year-on-year to ¥347.1 billion.

capital expenditures increased by ¥8.2 billion year-on-year¥ 5,664.8billion
Despite the acquisition of treasury¥ 8.2billion

to ¥280.5 billion.

Free Cash Flows

stock, mainly due to the increase inretained earnings due to higher profit(Billions of yen)
2,000

for the period, capital increased by¥154.1 billion year-on-year to

YOY

1,500

¥5,664.8 billion.

¥ 346.4 billion

1,000

2022

2023

¥ 360.7billion

Net cash provided by operating500

activities (revenue) amounted to¥1,078.9 billion, a decrease of ¥389.8

0billion year-on-year due to an increase–500

in loans for financial business.
On the other hand, cash flow used in–1,000● Free Cash Flows■ Net Cash Provided by(Used in) Operating Activities■ Capital Expenditures■ N et Cash Provided by (Usedin) other Investing Activities● EBITDA

154

2018

2019

2020

2021

2022

2023

428

315

712

1,023

707

346

1,061

1,030

1,323

1,682

1,469

1,079

(561)

(602)

(615)

(628)

(676)

(628)

(73)

(113)

4

(31)

(85)

(105)

1,560

1,599

1,751

1,786

1,813

1,790

investing activities (expenditure)
decreased by ¥29.1 billion year-on-yearto ¥732.5 billion mainly due to adecrease in 4G investment.

KDDI Integrated Sustainability and Financial Report 2023

155

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Financial and Non-Financial Highlights(1) Synergy with au

Financial(Years ended March 31)

Increased engagement
Retention/Cross-selling

Performance Highlights by Segments

au services + finance (Embedded)

Personal Services Segment

Corporate Growth Through Two-Way(2) Growth of finance businessBank

Credit card

Securities

PAY

Synergies Between Telecommunications
Business and Finance Business

Competitive
products

Customers
trust

au preferredinterest rate
(Mortgage)

Depositaccounts
and charge

We aim to expand the KDDI Group’s businessthrough (1) synergy with au and (2) growth offinancial business.
(1) Synergy with au
Enhancing engagement through the integration of auservices and finance

au Jibun Bankau customers

The Personal Services segment provides services to individual customers. In Japan, our primary focus is on offering 5G
communication services through multi-brands such as “au,” “UQ mobile,” and “povo.” We collaborate with various services
including finance, energy, and LX, which enables us to expand and enrich our service offerings, aiming to provide new

Increase of value-added ARPU
Promotion of long-term usage

Expansion of economic zone
for financial business(2) Growth of financial business
Expanding our financial business by leveraging the aucustomer base and offering competitive products

au Churn Rate*

In synergy with au, we can observe an increase invalue-added ARPU revenue and a decrease in thechurn rate.
• Finance-related value-added ARPU revenue for
FY23.3 has been steadily growing, with a year-onyear increase of +17.7%.
• au customers who also utilize multiple financial
services demonstrate a track record of reduced
churn rates.
We will continue to promote cross-use with financial
services, aiming for overall growth across the group.

added value and customer experince. Additionally, we are committed to addressing challenges faced by local
communities due to depopulation and aging. We also work alongside local partners to achieve bridging digital divide andrealize sustainable regional co-creation. Internationally, we leverage the business know-how cultivated domestically to(1) Synergy with au
Finance-related value-added
ARPU revenues

actively provide communication services, financial services, and entertainment services like video content to individual
customers in Myanmar and Mongolia.

YOY

For FY23.3, our revenue increased by 3.5% compared to the previous year, reaching ¥4,833.6 billion. This growth was

17.7%

The utilization of multiple financial services
leads to increased effectivenessdriven by increased income in our energy business and the financial business. Despite challenges such as rising fuel costs
and communication failure, cost efficiency measures and increased revenue contributed to a 1.5% growth in operating

Approx.
20%
reduction

Approx.
30%
reduction+Service 1+Service 1+Service 2

Further
reduction

income, which reached ¥880.3 billion.

■ Operating Revenue■ Operating Income/Operating Margin■ EBITDA/EBITDA Margin(Billionsof yen)5,000(Billionsof yen)1,000(Billionsof yen)
1,800

4,585

4,669

4,834

4,000

Operating Margin (right)

863

867

880

800

3,000

400

1,000

200

FY21.3

FY22.30

FY23.3

(%)
50

1,500

40

600

2,000

0

■ Operating Income (left)

1,200

30

18.8

FY21.318.6

FY22.318.2

FY23.3■ EBITDA (left)

EBITDA Margin (right)

1,526

1,534

1,505

33.3

32.9

31.1

(%)
60

40
30

600

20

10

300

10

0

0

FY21.3

FY22.3

FY23.3+Service 1+Service 2+Extra*Churn rate results for au smartphones from January to
March 2023. Short-term cancellations, intra-grouptransfers, and corporate contracts are not included.

0(2) Growth of Financial Businessau Financial Holdings■ Operating Revenue

CAGR(Billions of yen)

■ Operating Income

16.6%

CAGR

(Billions of yen)

75.5%

214.8

■ Transaction Volumes of Settlements(Trillions of yen)
/Loans

CAGR

26.2%

36.0

14.3

177.8

158.1

Focus Area

For au
alone

50

900
20

FY23.3

FY22.3

11.7
19.4

Finance

9.0

11.7

In our Mid-Term Management Strategy, known as the “Satellite Growth Strategy,” we define the financial business as oneof our focus areas. We aim to accelerate growth in new domains by utilizing the synergies of these areas centered on
telecommunications.

The Mid-Term Management Strategy for the financial business (FY23.3-FY25.3)
Expand mainly in mortgage loans and credit card
members, which are growth drivers

Double-digit
CAGR growth

FY21.3

FY23.3

FY22.3

FY25.3

Over ¥ 3 trillion

FY21.3

FY22.3

FY23.3

CAGR

ライフネット生命

credit card

(Billions of yen)

20.0%

Expansion of Customer Base

■ Loan Products Balance(Billions of yen)

CAGR

29.1%

2,730.3
1,894.6

2,328.8

2,270.3
1,396.4

LIFENET INSURANCE

Number of au PAY Card Members

8.8 million(Increase of 0.9 million YOY)

Number of au Jibun Bank Accounts(Increase of 0.53 million YOY)

Cumulative amount ofmortgage loan financing

FY21.3
au Kabucom Securities(June 2023)

5.3 million

1,597.9

au Jibun Bank

Aim for an increase in operating revenue & operating income anddouble-digit CAGR growth while expanding key indicators

156■ Deposit Balance

au Insurance

Number ofcredit card members
Mortgage loanbalance

FY23.3

au Jibun Bank

Mid-term
Bank accounts

FY22.3

Improve customer engagement

Growth of financial companies andpromotion of cross-use

Operating revenue& operating income

FY21.3

au Financial Holdings is steadily expanding its business. The CAGR for FY23.3, compared to FY21.3, shows impressive growth in various
aspects: operating revenue increased by +16.6%, operating income by +75.5%, and transaction volumes of settlements/loans by +26.2%.

au Asset Management

Customers using telecom services

FY22.3

FY23.3

FY21.3

FY22.3

FY23.3Surpassed ¥3 trillion

The main assets of the financial business are growing steadily through cooperation with au, with CAGRs of +20.0% for deposit balanceand +29.1% for loan products balance in FY23.3 compared to FY21.3, respectively. Also, the number of au PAY card members is 8.8
million, the number of au Jibun Bank accounts is 5.3 million, and the cumulative total of executed mortgage loans exceeds ¥3 trillion,
expanding the customer base.

Promote cross-selling within the financial group
KDDI Integrated Sustainability and Financial Report 2023

157

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Financial and Non-Financial Highlights

Growth Strategy for the Business Services Segment

Financial(Years ended March 31)

Customer needs in the Business Services
segment vary over time axis.

DX (NEXT Core)
Telecom
Services(1) Firstly, we will propose DX solutions basedon the needs of existing telecommunication
services customers.

Business Services Segment
In the Business Services segment, both domestically in Japan and internationally, we provide a wide range of solutions
including devices like smartphones, networks, clouds, and data center services under the “TELEHOUSE” brand to a diverse
set of corporate customers. Within the framework of “Satellite Growth Strategy,” which aims the evolution of
telecommunications business through 5G and the expansion of businesses in focus areas with communications at thecore, the Business Services segment is dedicated to offering solutions that contribute to the growth and expansion of ourcustomers’ businesses, such as IoT and DX, with 5G communication at the core. These solutions are provided globally by
one-stop offer through collaboration with partner companies. Additionally, for our small and medium-sized enterprise

Customerbase(2) For short-term challenges such as
streamlining business processes, we provide
support through Corporate DX solutions
such as managed services.

(1) Develop
outsourcing
options(2) Corporate DX
Business process
efficiency(4) Business DX
Business modeltransformation

ManagedZero Trust

Digital Twin

Data driven

Datadriven(3) Business Infrastructure
Services(3) Additionally, for outsourcing needs likecontact centers, we offer support throughBusiness Infrastructure Services.

Digital BPO
Contact Center

Time Axis(4) In Business DX, by leveraging the data obtained through above services, we contribute to the transformation of customer businessmodels through technologies like digital twins.

(SME) customers in Japan, we have established a nationwide support system through the KDDI MATOMETE OFFICEIn this way, we promote NEXT Core and contribute to solving customer challenges.

Group, a consolidated subsidiary, to provide localized support.
For FY23.3, we achieved a 6.4% increase in revenue, totaling ¥1,108.8 billion. Solution revenue etc. increased driven by
the growth of the NEXT Core business. Despite challenges such as rising fuel costs and communication failure, we

Propulsion Effects of the NEXT Core

recorded a 2.0% increase in operating income, reaching ¥190.8 billion, due to increased revenue etc.

■ Operating Revenue■ Operating Income/Operating Margin(Billionsof yen)1,200(Billionsof yen)
250

1,109

1,042

997

1,000

■ Operating Income (left)

200

800

Operating Margin (right)

(%)
50

191

40

167

187

150

600

16.8

100

400

18.0

17.2

50

200
0

FY21.3

FY23.3

FY22.3■ EBITDA/EBITDA Margin(Billionsof yen)FY21.3

FY22.3

FY23.3

EBITDA Margin (right)

350
300
250

255

274

282

25.5

26.3

25.4

(%)
35
30
25

30

200

20

150

15

100

10

50

5

0

0

10

0

■ EBITDA (left)

0

FY21.3

FY22.3

FY23.320

Digital Transformation (DX) (NEXT Core)

Focus Area

In our Mid-Term Management Strategy, known as the “Satellite Growth Strategy,” we define DX as one of the focus areas,
with NEXT Core business in the Business Services segment at the forefront of our growth efforts.

The Mid-Term Management Strategy for the Business Services Segment (FY23.3-FY25.3)
Operating Revenue
NEXT
Core

FY22.3• NEXT Core business aims for a double-digit CAGR
Aiming forabout 20% ofKDDI Group
Consolidated
Operating income

Aim fordouble-digit
CAGR growth

FY25.3

FY22.3

NEXT Core business drives businessgrowth by DX promotion

growth in revenue.

• Business segment as the second pillar, we will

In each area, double-digit growth compared tothe previous year was achieved in FY23.3■ IoT connections(Billions of yen)

Corporate DX: Achieved a scale of ¥100 billion
Managed, security, cloud, overseas SI & NW, etc(million connections)

400
300

282

394
335

Business DX: Achieved a scale of ¥150 billion
IoT, DX, andconstruction/development

200
100
0

158

FY21.3

FY22.3

FY23.3Operated in 7 global regions
Japan, North America, China,
Europe, Australia,
Middle East, India

Business Infrastructure Services: Achieved a scaleof ¥150 billion
Data centers (DC), contact centers, etc

40

32.0

30
20

24.5

Driven by connected cars,
IoT connections are steadily
increasing

18.0

10
0

FY21.3

FY22.3

DomainMulti-service use
Monthly Fee

about 4.5x

IDs

NEXT Core

Operation outsourcing
using “Managed”

Security
International

Numbers of:• Client companies• Domestic andinternational lines

Telecom Services(Customer base)Domestic“Managed”

Domestic

2010

2022

Expansion of Data Center (DC) Business* Source: peeringdb.com as of March 2023

LondonExpanded in Mar. 2022

North
America

EuropeAsia
France No.1* Connectivity

Paris

Expanded in May 2022

As of
March
2020

■ Operating Revenue ofNEXT Core

Example of a Japanese Company A
Per Customer
Sales

World No.1* Connectivity

Exceeded
20 million
connections

Overall Business Services Segment
Double-digit CAGR growth

Growth of NEXT Core

Deepen understanding of customers andprovide communications + additional value

Business Domain and
ID Expansion

Expansion of Connected

increase the operating income aiming for about
20% scale of the Group consolidated operating
income, while achieving double-digit CAGR growthin operating income.

FY25.3

Propulsion Effects of the NEXT Core

Global Expansion■ Overseas ■ Domestic

Operating Income
Double-digit
CAGR
growthBy advancing NEXT Core, we will
expand our business domain andIDs, building upon our customer baseof telecommunications business. As
an example, in the case of Japanesemanufacturer Company A, throughvarious value propositions based on
telecommunications, along with theutilization of multiple services andoutsourcing of operations throughmanaged services, their monthly
usage fees increased approximately
4.5 times from 2010 to 2022.
Moving forward, we will continue
to deepen our understanding of ourcustomers’ needs and provide value
beyond telecommunications.

As of
March
2021

As of
March
2022

As of
June
2023

The number of IoT connections installed inconnected cars exceeded 20 million as ofJune 2023. We have expanded our offerings
to major domestic automobile
manufacturers and expanded our business
operations in seven global regions.

Bangkok

Openedin May 2023

Connectivity
No.1 in Canada*

TorontoBusiness Transfer
Agreement in Jun. 2023

Data Center
Business Revenue
Exceeded¥100 billion(FY23.3 performance)

Overseas Sales Ratio:
Approximately

70%

Telehouse actively expands its data center business leveraging its strength inconnectivity. Connectivity data centers are characterized by not requiring significant
investment while maintaining high profitability. Telehouse is dedicated to this field,
capturing market growth and aiming for further business growth. In addition to Europe,
including London, which has World No.1 connectivity, Telehouse has expanded its
presence in Asia with the opening of a facility in Bangkok in May 2023 and entered theCanadian market in North America, establishing a three-pole global presence. In
FY23.3, the data center business achieved revenue exceeding ¥100 billion, withapproximately 70% of it coming from overseas.

FY23.3

KDDI Integrated Sustainability and Financial Report 2023

159

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Governance

TCFD/TNFD
Disclosure and IR

Data

Corporate Overview/Stock Information

External Assurance

Financial and Non-Financial Highlights(Years ended March 31)

Non-Financial

Indicates the latest data with third-party guarantees

Boundary

CO2 emissions

FY19.3

FY20.3

FY21.3

t

%

t

%

t

%

FY23.3

FY22.3tt%%

Scope 1*1

Direct GHG emissions

Non-consolidated

t, %

6,539

0.12

6,581

0.10

5,746

0.09

7,976

0.13

5,747

0.09

Scope 2*2

Indirect GHG emissions from consumption of purchased electricity, heat or steam Non-consolidatedt, %1,058,143

18.98

1,041,559

16.13

1,049,105

16.28

1,090,954

17.71

944,876

15.23

Purchased goods and services

Non-consolidatedt, %3,347,946

60.05

3,529,472

54.65

3,581,713

55.57

3,373,587

54.77

3,388,959

54.64

Capital goods

Non-consolidatedt, %875,31815.70

1,584,908

24.54

1,486,988

23.07

1,367,518

22.20

1,464,526

23.61

Fuel- and energy-related activities not included in Scopes 1 and 2

Non-consolidatedt, %37,1040.67

40,1880.62

41,7290.65

43,9500.71

153,839

2.48

Upstream transportation and distribution

Non-consolidated

t, %

8,777

0.16

7,408

0.11

7,183

0.11

12,035

0.20

6,292

0.10

Waste generated in operations

Non-consolidated

t, %

710

0.01

413

0.01

464

0.01

485

0.01

464

0.01

Business travel

Non-consolidated

t, %

5,012

0.09

4,955

0.08

662

0.01

908

0.01

6,114

0.10

Employee commuting

Non-consolidated

t, %

4,034

0.07

5,043

0.08

1,897

0.03

2,430

0.04

2,088

0.03

Upstream leased assets

Non-consolidated

t, %

1,133

0.02

784

0.01

514

0.01

527

0.01

527

0.01

Downstream transportation and distribution

Non-consolidated

t, %

0

0.00

0

0.00

0

0.00

0

0.00

0

0.00

Processing of sold products

Non-consolidated

t, %

0

0.00

0

0.00

0

0.00

0

0.00

0

0.00

Use of sold products

Non-consolidatedt, %229,913

4.12

237,008

3.67

268,7544.17

259,227

4.21

228,485

3.68

End-of-life treatment of sold products

Non-consolidated

t, %

344

0.01

205

0.00

150

0.00

127

0.00

979

0.02

Downstream leased assets

Non-consolidated

t, %

0

0.00

0

0.00

0

0.00

0

0.00

0

0.00

Franchises

Non-consolidated

t, %

0

0.00

0

0.00

0

0.00

0

0.00

0

0.00

Investment

Non-consolidated

t, %

0

0.00

0

0.00

0

0.00

0

0.00

0

0.00

Scope 3 Total

Non-consolidatedt, %4,510,291

80.90

5,410,384

83.77

5,390,054

83.63

5,060,794

82.16

5,252,273

Total of Scope 1 + 2 emissions

Non-consolidatedt

1,064,683

1,048,140

1,054,850

1,098,929

950,622

Total of Scope 1 + 2 + 3 emissions

Non-consolidatedt

5,574,974

6,458,524

6,444,904

6,159,723

6,202,895

Scope 3*3

84.67

Scope 1 emissions

Fuel

Consolidatedt

25,511

25,16925,42027,68788,383

Scope 2 emissions*2 (market-based)

Electricity, steam and hot and cold water

Consolidatedt

1,369,942

1,352,131

1,296,381

1,492,048

1,318,013

Consolidatedt

1,395,453

1,377,300

1,321,801

1,519,735

1,406,396

Electricity, steam and hot and cold water

Consolidatedt

1,486,429

1,486,924

1,475,724

1,614,118

1,475,170

Power consumption

Non-consolidated 1000 kWh

2,151,456

2,262,524

2,357,458

2,468,974

2,216,734

Power consumption

Consolidated

1000 kWh

2,930,568

3,079,800

3,198,506

3,634,732

3,387,049

Electricity consumption derived from renewable energy sources

Consolidated

1000 kWh

158,338

169,349

338,319

379,173488,544

Fuel consumption

Fuel consumption*4

Non-consolidated

kL

330

544

345

364

546

Energy usage

Energy usage at equipment-related facilities

Non-consolidated 1000 kWh

863,416

903,111

947,613

1,009,802

1,039,214

Renewable energy (business)

Renewable Energy Generation Volume

Non-consolidated 1000 kWh

17,99817,406

17,566

17,664

16,649Water usage

Water usage (Water supply, recycled water, well water, excluding waste water)

Consolidated

m3

730,259

674,869

1,156,206

1,630,890

2,050,273

Waste products

Industrial waste (Nonhazardous industrial waste (telecommunications equipment, normal daily waste from KDDI buildings))

Consolidated

t

3,303

3,753

3,319

4,822

4,216

Material recycling volume

Consolidated*8

t

—

—

—

—

1,571

Paper usage

Non-consolidatedt

10,853

9,512

8,798

5,313

6,809

Reduction of paper by putting bills on the web

Non-consolidated

t

4,041

4,207

4,962

5,180

5,358

Number of mobile phones and other devices collected(mobile phone main body, batteries, chargers)

Non-consolidated

10,000devices

288

279

258

260

217

Consolidated

Total of Scope 1 + 2 emissions (market-based)
Scope 2 emissions (location-based)

Power consumption

Paper resources

Promotion of mobile phone
recycling

Number of employees

Working years

Turnover rate

HiringPromoting employment of
persons with disabilities
Promotion of women’s
participation in theworkplace

160

Unit

Material Recycling rate

Non-consolidated

％

99.8

99.8

99.8

99.8

99.8

Number of consolidated employees

Consolidated

people41,99644,95247,32048,82949,659Number of consolidated foreign employees

Consolidated

people

4,208

4,393

4,581

5,111

5,833

Average working years (Male)

Non-consolidated

year

18.2

18.4

18.3

17.7

18.0

Average working years (Female)Non-consolidated

year

15.7

15.9

15.5

15.6

15.6

Turnover rate (Male)

Non-consolidated

%

1.30

1.30

1.09

2.13

2.45

Turnover rate (Female)Non-consolidated

%

1.96

2.03

1.47

2.44

2.97

Percentage of newly hired female graduates

Non-consolidated

%

36.9

31.1

32.4

33.6

33.9

Ratio of mid-career hires

Non-consolidated

%

27.5

32.7

38.1

39.7

45.0

Employment rate of persons with disabilities*5

Non-consolidated

%

2.54

2.53

2.50

2.58

2.54

The percentage of female employees in management positions*6

Non-consolidated

%

—

—

—

—

8.6

Percentage of male employees taking childcare leaveNon-consolidated

%

—

—

—

—

71.8

Gender pay gap*7

Non-consolidated

%

—

—

—

—

77.0

Notes

*1 Heavy oil (crude oil),diesel, kerosene, citygas

*2 Regarding the calcula-tion of CO2 emissions,the emissions fromelectricity consumption are calculatedusing emissoncoefficients by electricutility companies.

*3 Uses emission

coefficients indicatedin Japan’s Ministry of
the Environment’s
Overview of Basic
Guidelines on
Accounting forGreenhouse Gas
Emissions throughout
the Supply Chain.

*4 Fuel consumption

includes heavy oil,diesel and kerosene(but excludes city gas
and LP gas). The
emission coefficient
applied to GHG
emissions calculation
and reporting anddisclosure system
specified in the Act
on Promotion of
Global WarmingCountermeasures isused.

*5 Calculated for KDDI(non-consolidated)
and for employeeswith disabilities
employed by KDDI
Challenged and KDDI
Engineering. The
figures reflect theactual data as of Juneof the following fiscalyear.

*6 Starting from FY22.3,

calculations include“Managerial Positions”
as per the revised
personnel system. The
ratio for FY23.3 isbased on data as ofApril 1, 2023. Excludes
secondees on-site andincludes secondees
sent out.

*7 All employees*8 Main Subsidiaries

KDDI Integrated Sustainability and Financial Report 2023

161

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

Financial and Non-Financial Highlights(Years ended March 31)

Childcare Leave Uptake Rate for Male Workers

Non-Financial

Childcare leave uptake
rate (male)(%)*1,2

Notes

KDDI CORPORATION

71.8

Calculate the uptake rate for childcare leave and childcare-related time off*4

JCOM Co., Ltd.

59.8

Calculate the uptake rate for childcare leave*3

Chubu Telecommunications Co., Inc.

39.1

Calculate the uptake rate for childcare leave*3

BIGLOBE Inc.

41.7

Calculate the uptake rate for childcare leave*3

ENERES Co., Ltd.

66.7

Calculate the uptake rate for childcare leave*3

KDDI Evolva, Inc.

56.0

Calculate the uptake rate for childcare leave*3

OKINAWA CELLULAR TELEPHONE COMPANY (OCT)

100.0

Calculate the uptake rate for childcare leave and childcare-related time off*4KDDI Engineering Corporation

29.4

Calculate the uptake rate for childcare leave*3

KDDI Sonic-Falcon CORPORATION

65.0

Calculate the uptake rate for childcare leave*3

KDDI PRECEDE CORPORATION

122.2

Calculate the uptake rate for childcare leave*3

Supership Inc.

66.7

Calculate the uptake rate for childcare leave*3

AEON Holdings Corporation

57.1

Calculate the uptake rate for childcare leave*3

au Commerce & Life, Inc76.9

Calculate the uptake rate for childcare leave and childcare-related time off*4

au Jibun Bank Corporation

40.0

Calculate the uptake rate for childcare leave*3

mediba Inc.

90.9

Calculate the uptake rate for childcare leave and childcare-related time off*4

KCJ GROUP INC.

12.5

Calculate the uptake rate for childcare leave*3

Okinawa Telecommunication Network Co., Inc.

71.4

Calculate the uptake rate for childcare leave*3

iret Inc.

35.3

Calculate the uptake rate for childcare leave*3

Company name

Percentage of Female Employees in Managerial Positions
Company name

KDDI CORPORATIONJCOM Co., Ltd.

Chubu Telecommunications Co., Inc.

BIGLOBE Inc.

ENERES Co., Ltd.

Percentage of female employees
in managerial positions (%)*1

8.6

17.9

2.8

Notes*2• Reference date: As of April 1, 2023
• Exclude secondees on-site andinclude secondees sent out• Reference date: As of March 31, 2023
• Exclude secondees on-site andinclude secondees sent out• Reference date: As of March 31, 2023
• Include secondees on-site andexclude secondees sent out

7.1• Reference date: As of March 31, 2023
• Include secondees on-site and20.8• Reference date: As of April 1, 2023
• Include secondees on-site andexclude secondees sent out

exclude secondees sent out

9.5• Reference date: As of March 31, 2023
• Include secondees on-site andKDDI Evolva, Inc.

17.3

• Reference date: As of March 31, 2023
• Exclude secondees on-site andKDDI MATOMETE OFFICE CORPORATION

7.6• Reference date: As of March 31, 2023
• Include secondees on-site andKDDI Engineering Corporation

2.1• Reference date: As of March 31, 2023
• Include secondees on-site and

8.8• Reference date: As of April 1, 2023
• Include secondees on-site and

OKINAWA CELLULAR TELEPHONE COMPANY (OCT)KDDI Sonic-Falcon CORPORATION

KDDI PRECEDE CORPORATIONSupership Inc.

AEON Holdings Corporation

exclude secondees sent out

include secondees sent out

exclude secondees sent out

exclude secondees sent out

No. 76 of 1991) and the “Ordinance for Enforcement of the Act on the Welfare of Workers Who Take Care of Children or Other Family Members Including Child
Care and Family Care Leave” (Ordinance of the Ministry of Labor No. 25 of 1991), Article 71-4, Paragraph 1, on the acquisition rate of child care leave purposes.
4* Calculated based on the “Act on Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave” (Law
No. 76 of 1991) and the “Ordinance for Enforcement of the Act on the Welfare of Workers Who Take Care of Children or Other Family Members Including Child
Care and Family Care Leave” (Ordinance of the Ministry of Labor No. 25 of 1991), Article 71-4, Paragraph 2, on the acquisition rate of child care leave and leave
for child care purposes.

Gender Pay Gap among Workers

exclude secondees sent out

50.0• Reference date: As of March 31, 2023
• Exclude both secondees on-site and

16.7• Reference date: As of March 31, 2023
• Include secondees on-site and48.0

 ll figures are calculated based on the period from April 1, 2022, to March 31, 2023.
*1 A
 he calculation method includes secondees sent out and excludes secondees on-site.
*2 T*3 Calculated based on the “Act on Welfare of Workers Who Take Care of Children or Other Family Members Including Child Care and Family Care Leave” (Lawsecondees sent out

exclude secondees sent out• Reference date: As of October 1, 2022
• Exclude secondees on-site andinclude secondees sent out

Company name

Gender pay gap among workers (%)*1,2
All employees

Full-time workers

Part-time and fixed-term
employees

KDDI CORPORATION

77.0

78.0

84.2

JCOM Co., Ltd.

72.3

73.6

73.6

Chubu Telecommunications Co., Inc.

73.2

73.4

76.3

BIGLOBE Inc.

75.9

75.8

67.6

ENERES Co., Ltd.

71.4

73.4

44.1

OKINAWA CELLULAR TELEPHONE COMPANY (OCT)

74.4

73.1

*3

au Commerce & Life, Inc

16.4• Reference date: As of March 31, 2023
• Include secondees on-site andKDDI Evolva, Inc.

65.7

73.9

78.6

KDDI MATOMETE OFFICE CORPORATION

88.6

88.4

93.7

75.3

74.1

125.1

7.6

• Reference date: As of March 31, 2023
• Include secondees on-site andKDDI Engineering Corporation

au Jibun Bank Corporation

KDDI Sonic-Falcon CORPORATION

88.7

85.1

89.4

91.2

90.1

97.5

47.5

• Reference date: As of March 31, 2023
• Include secondees on-site andKDDI PRECEDE CORPORATIONKCJ GROUP INC.

Supership Inc.

106.4

77.4

206.5

AEON Holdings Corporation

91.3

80.2

93.7

3.7

• Reference date: As of March 31, 2023
• Include secondees on-site andau Commerce & Life, Inc

81.9

85.7

94.8

au Jibun Bank Corporation

73.1

73.7

56.8

mediba Inc.

75.3

77.2

98.9

KCJ GROUP INC.

64.7

68.8

92.7

Okinawa Telecommunication Network Co., Inc.

72.9

73.3

63.7

iret Inc.

74.4

74.8

83.9

Okinawa Telecommunication Network Co., Inc.

KDDI Technology Corporation (KTEC)

6.9

exclude secondees sent out

exclude secondees sent out

exclude secondees sent out

exclude secondees sent out• Reference date: As of March 31, 2023
• Exclude both secondees on-site andsecondees sent out*1 Calculated based on the “Act on Promotion of Women’s Participation and Advancement in the Workplace” (Act No. 64 of 2015).
*2 The reference date and whether or not the number of secondees on-site and secondees sent out are counted are indicated in the note column.

 hese figures indicate the ratio of female wages to male wages in the most recent fiscal year.
*1 T alculated based on the “Act on Promotion of Women’s Participation and Advancement in the Workplace” (Act No. 64 of 2015).
*2 C ot calculated as all employees are male.
*3 N

162

KDDI Integrated Sustainability and Financial Report 2023

163

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Consolidated Financial Statements
i. Consolidated Statement of Financial Position
Millions of yen
As of March 31

Notes

2022

2023

Millions of yen
As of March 31

Notes

2022

2023

14, 31, 32

Liabilities and Equity

AssetsLiabilities

Non-current assets:

Non-current liabilities:   Property, plant and equipment

5, 7

2,585,481

2,595,721

921,616

914,233  Right-of-use assets

7, 35

387,669

393,935   Long-term deposits for financial business

31, 32

33,24064,829  Goodwill

6, 7

540,962541,058  Lease liabilities

31, 35279,265

286,437  Intangible assets

6, 7

1,025,223

1,048,396

18, 31, 32

14,19810,3098

244,515

255,290   Long-term loans for financial business

31, 32

1,335,111

2,038,403   Securities for financial business

31, 32

338,285

411,063   Other long-term financial assets

11, 31, 32

329,268

304,106   Retirement benefit assets

16

44,72062,911   Deferred tax assets

15

12,33012,203  Contract costs

24

548,704

637,534   Investments accounted for using the equity method   Other non-current assets

12   Total non-current assets

25,08329,924

7,417,350

8,330,544   Borrowings and bonds payable   Other long-term financial liabilities   Retirement benefit liabilities

16

12,496

11,739   Deferred tax liabilities

15

144,776

188,101  Provisions

19

70,07352,414  Contract liabilities

24

71,08376,258   Other non-current liabilities

20   Total non-current liabilities   Borrowings and bonds payable

14, 31, 32   Trade and other receivables   Short-term loans for financial business  Call loans   Other short-term financial assets

74,511

99,03810, 24, 31

2,311,694

2,445,250

31, 32

255,266

304,557

31

45,06453,944

11, 31, 32

67,15460,158   Income tax receivables

2,663   Other current assets

12

113,822

141,236   Cash and cash equivalents

13

796,613480,252

3,667,028

3,587,098

11,084,379

11,917,643   Total current assets
Total assets

164

2,904

337,961   Trade and other payables

834,496

801,927   Short-term deposits for financial business

31, 32

2,184,264

2,652,723

31

141,348—   Cash collateral received for securities lent

14, 31—

244,111  Lease liabilities

31, 35

112,719

112,80518, 31, 32

2,620

6,894

126,874

129,404

25,641

25,398  Call money  Provisions

19  Contract liabilities

24

86,091

82,242   Other current liabilities

20

215,397242,712

4,015,953

4,636,176

5,573,715

6,252,863   Total current liabilities
9286,505

17, 31   Income taxes payables  Inventories

12,366
1,616,687

Current liabilities:   Other short-term financial liabilities

Current assets:

11,015
1,557,762

Total liabilities
EquityEquity attributable to owners of the parent  Common stock22

141,852

141,852  Capital surplus

22279,371

279,371  Treasury stock

22(299,827)(545,833)  Retained earnings

22

4,818,117

5,215,177   Accumulated other comprehensive income

22

43,074

31,841

4,982,586

5,122,409

528,077

542,370

Total equity attributable to owners of the parent
Non-controlling interests

37

Total equity

5,510,663

5,664,780

Total liabilities and equity

11,084,379

11,917,643

KDDI Integrated Sustainability and Financial Report 2023

165

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

ii. Consolidated Statement of Incomeiii. Consolidated Statement of Comprehensive Income
Millions of yen
Notes

2022

2023

Operating revenue

24

5,446,708

5,671,762

Cost of sales

25

2,984,589

3,260,030

2,462,119

2,411,731

For the years ended March 31

Gross profit

Millions of yen
For the years ended March 31

Notes

Profit for the year

2022

2023

732,540

738,394

Other comprehensive income

Selling, general and administrative expenses

25

1,422,539

1,408,391

Other income

26

21,001

71,629   Remeasurements of defined benefit pension plans

16, 295,201

12,526

Other expense

26

5,781

3,790

Share of profit of investments accounted for using the equity method

8

5,791

4,569

   Changes measured in fair value of financial assets through other comprehensive income

29, 31

9,001(24,837)

1,060,592

1,075,749   Share of other comprehensive income of investments accounted forusing the equity method

8, 29

(6)

(555)

14,195(12,865)

29, 31

2,422(1,042)

29

23,891

19,935

8, 29

981

1,467

   Total

27,294

20,360Operating income

Items that will not be transferred subsequently to profit or loss

Finance income

27

10,202

10,175

Finance cost

27

7,746

8,658

Other non-operating profit and loss

28

1,448

612

1,064,497

1,077,878

331,957

339,484   Translation differences on foreign operations

732,540

738,394  Share of other comprehensive income of investments accounted forusing the equity method

Profit for the year before income tax
Income tax

15

Profit for the year

Profit for the year attributable to:   Total

Items that may be subsequently reclassified to profit or loss   Changes in fair value of cash flow hedge

Owners of the parent

672,486

677,469

Total other comprehensive income

41,4907,495

Non-controlling interests

60,05460,926

Total comprehensive income for the year

774,029745,890732,540

738,394
Owners of the parent

706,668

678,235

Non-controlling interests

67,36267,655774,029745,890

Profit for the year

Total comprehensive income for the year attributable to:Earnings per share attributable to owners of the parent

34

Basic earnings per share (yen)300.03310.25

Diluted earnings per share (yen)299.73310.12   Total
Note: Items in the statement above are presented after income tax.

166

KDDI Integrated Sustainability and Financial Report 2023

167

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

iv. Consolidated Statement of Changes in Equity

v. Consolidated Statement of Cash Flows
Millions of yen

Equity attributable to owners of the parent

For the year ended March 31, 2022

Notes

As of April 1, 2021

Commonstock

Capitalsurplus141,852

278,675

Treasurystock

Accumulated
other
Retained comprehensive
earnings
income(86,719) 4,409,000

Total

16,912 4,759,720

Noncontrollinginterests

Total equity

499,749 5,259,469

Comprehensive income
Profit for the year

—

—

—

672,486—

672,486

60,054

732,540

Other comprehensive income

—

—

—

—

34,182

34,182

7,308

41,490Total comprehensive income

—

—

—

672,486

34,182

706,668

67,362774,029———(271,389)—(271,389)(31,864)(303,253)

Transactions with owners and othertransactions
Cash dividends

23

Transfer of accumulated other comprehensive income to retained earnings

—

—

—

8,020

(8,020)

—

—

—

—

(60)

(213,763)——(213,822)—(213,822)

Changes in interests in subsidiaries

—

(229)

—

—

—

(229)

(7,170)(7,399)

Other

—

984

655

—

—

1,639

—

1,639

—

696

(213,108)(263,369)(8,020)(483,801)(39,034)(522,835)

141,852

279,371

Purchase and disposal of treasury stock22

  Total transactions with owners and othertransactions
As of March 31, 2022

(299,827) 4,818,117

43,074 4,982,586

528,077 5,510,663

Millions of yen

Equity attributable to owners of the parent

For the year ended March 31, 2023

Noncontrollinginterests

Commonstock

Capitalsurplus141,852

279,371

Profit for the year

—

—

—

677,469—

677,469

60,926738,394

Other comprehensive income

—

—

—

—

766

766

6,729

7,495

Total comprehensive income

—

—

—

677,469766

678,235

67,655745,890———(288,394)—(288,394)(46,225)(334,618)

Notes

As of April 1, 2022

Treasurystock

Accumulated
other
Retained comprehensive
earnings
income(299,827) 4,818,117

Total

43,074 4,982,586

Total equity

528,077 5,510,663

Comprehensive income

Transactions with owners and othertransactions
Cash dividends

23

Transfer of accumulated other comprehensive income to retained earnings

—

—

—

11,999(11,999)———

Purchase and disposal of treasury stock

22

—

(41)

(250,152)——(250,192)—(250,192)

Retirement of treasury stock22—(5,313)

5,313

—

—

—

—

—

—

4,014

—

(4,014)

—

—

—

—

Changes in interests in subsidiaries

—

(445)

—

—

—

(445)

(7,137)(7,582)

Other

—

1,786

(1,167)

—

—

619

—

619

—

1

(246,005)(280,408)(11,999)(538,412)(53,361)(591,773)

141,852

279,371 Transfer from retained earnings to capitalsurplus Total transactions with owners and othertransactions
As of March 31, 2023

168

(545,833) 5,215,177

31,841 5,122,409

Millions of yen
For the years ended March 31

542,370 5,664,780

Cash flows from operating activities
Profit for the year before income tax
Depreciation and amortization
Impairment loss
Share of (profit) loss of investments accounted for using the equity method
Loss (gain) on sales of non-current assets
Interest and dividends income
Interest expenses(Increase) decrease in trade and other receivables
Increase (decrease) in trade and other payables(Increase) decrease in loans for financial business
Increase (decrease) in deposits for financial business(Increase) decrease in Call loans
Increase (decrease) in Call money
Increase (decrease) in cash collateral received for securities lent
(Increase) decrease in inventories(Increase) decrease in retirement benefit assets
Increase (decrease) in retirement benefit liabilities
Other   Cash generated from operations
Interest and dividends received
Interest paid
Income tax paid
Income tax refund   Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of securities for financial business
Proceeds from sales and redemption of securities for financial business
Purchases of other financial assets
Proceeds from sales and redemption of other financial assets
Purchases of stocks of associates
Proceeds from sales of stocks of subsidiaries and associates
Other   Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) of short-term borrowings
Proceeds from issuance of bonds and long-term borrowings
Payments from redemption of bonds and repayments of long-term borrowings
Repayments of lease liabilities
Payments from purchase of subsidiaries’ equity from non-controlling interests
Proceeds from the partial sales of shares of subsidiaries to non-controlling interests
Proceeds from stock issuance to non-controlling interests
Payments from purchase of treasury stock
Cash dividends paid
Cash dividends paid to non-controlling interests
Other   Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

Notes

5, 6
7
8
27
27

30
30
30
30

22

30
30
13, 3013, 302022

2023

1,064,497
728,101
2,689(5,791)(1,393)(7,022)
6,681(51,616)
16,403(207,966)
367,415(11,218)
25,532—(4,577)(6,357)387(84,111)
1,831,655
10,620(6,499)(374,768)
7,641
1,468,648

1,077,878
697,152
2,354(4,569)(1,581)(9,914)
7,142(104,796)
5,396(752,583)
500,047(8,881)(141,348)
244,111(24,421)(18,190)(757)(105,347)
1,361,693
13,468(6,768)(292,659)
3,134
1,078,869(425,800)
2,118(249,767)(339,393)
277,300(12,822)7,165(9,974)
1,595(12,015)(761,593)(394,652)
3,754(239,473)(385,468)
311,511(8,900)1,892(9,847)—(11,297)(732,480)

17—(73,375)(130,848)(12,619)6,750
108(213,763)(271,362)(32,164)(1)(727,257)
7,012(13,189)
809,802796,61349,983200,000(200,500)(128,288)(7,002)—49(250,152)(287,117)(46,810)(0)(669,837)
7,087(316,361)
796,613480,252

KDDI Integrated Sustainability and Financial Report 2023

169

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

Notes to Consolidated Financial Statements

1

Reporting Entity

KDDI CORPORATION (“the Company”) was established as a limited
company in accordance with Japanese Company Act. The location of
the Company is Japan and the registered address of the headquarteris 2-3-2, Nishishinjuku, Shinjuku-ku, Tokyo, Japan. The Company’s
consolidated financial statements as of and for the year ended March
31, 2023 comprise the Company and its consolidated subsidiaries(“the Group”) and the Group’s interests in associates and joint ven-

2

Basis of Preparation(1) Compliance of consolidated financial statements with IFRSs
The Group’s consolidated financial statements have been prepared inaccordance with IFRSs as prescribed in Article 93 of Ordinance on
Consolidated Financial Statements as they satisfy the requirement ofa “specific company” set forth in Article 1-2 of Ordinance on
Consolidated Financial Statements.
(2) Basis of measurement
The Group’s consolidated financial statements have been prepared
under the historical cost basis except for the following significant
items on the consolidated statement of financial position:• Derivative assets and derivative liabilities (measured at fair value)• Financial assets or financial liabilities at fair value through profit orloss• Financial assets at fair value through other comprehensive
income• Assets and liabilities related to defined benefit plan (measured at
the present value of the defined benefit obligations, net of the fairvalue of the plan asset)(3) Presentation currency and unit of currency
The Group’s consolidated financial statements are presented inJapanese yen, which is the currency of the primary economic environment of the Company’s business activities (“functional currency”),
and are rounded to the nearest million yen.
(4) Use of estimates and judgement
The preparation of consolidated financial statements in accordancewith IFRSs requires management to make judgments, estimates andassumptions that affect the application of accounting policies and thereported amounts of assets and liabilities, income and expenses. The
estimates and assumptions are based on the management’s best
judgments, through their evaluation of various factors that were considered reasonable as of the period-end, based on historical experience and by collecting available information. By the nature of theestimates or assumptions, however, actual results may differ fromthose estimates and assumptions.
The estimates and assumptions are reviewed on an ongoing basis.
The effect of adjusting accounting estimates is recognized in the fiscal
year in which the estimates are adjusted and in the subsequent fiscal
years. Estimates that may have a risk of significant adjustment of carrying amounts of assets and/or liabilities in the subsequent fiscal
years and the underlying assumptions are as follows:
In the fiscal year ended March 31, 2022, the Company had previously assumed that the impact of COVID-19 would last at least
throughout the entire fiscal year ended March 31, 2023. The
Company made an accounting estimate used for the preparation of170

tures. The Company is the ultimate parent company of the Group.
The Group’s major business and activities are “Personal Services”
and “Business Services”. For the details, please refer to “(1) Outline ofreportable segments” of “4. Segment information.”

its consolidated financial statements for the fiscal year ended March
31, 2023, assuming that the impact of COVID-19 on the following fiscal year and beyond will be immaterial. However, if future circumstances change and it becomes necessary to revise thesejudgments, it is possible that there could be a significant impact on
the consolidated financial results for subsequent fiscal years.
i. Estimates of useful lives and residual values of property, plantand equipment, intangible assets, and right-of-use assets
Property, plant and equipment is depreciated primarily using thestraight-line method, based on the estimated useful life that reflects
the period in which the asset’s future economic benefits are expected
to be consumed. The depreciation charge for the period could
increase if an item of property, plant and equipment becomes obsolete or repurposed in the future and the estimated useful life becomesshorter.
Intangible asset with a finite useful life is amortized on a straightline basis in principle to reflect the pattern in which the asset’s future
economic benefits are expected to be consumed by the Group.
Estimated useful life of the customer relationships acquired in a business combination is determined based on the cancellation rate. The
intangible assets related to the customer relationships are amortizedover the useful life. Should actual sales volumes fail to meet initial projected volumes due to changes in the business environment etc., orshould actual useful life in the future be less than the original estimate,
there is a risk that amortization expenses for the reporting period may
increase.
The content related to estimates of useful lives and residual valuesof property, plant and equipment, intangible assets and right-of-use
assets are described in “3. Significant accounting policies (5) Property,
plant and equipment, (7) Intangible asset and (8) Leases”.
ii. Impairment of property, plant and equipment, intangible
assets including goodwill and right-of-use assets
The Group conducts impairment tests to property, plant and equipment, intangible assets including goodwill and right-of-use assets.
Calculations of recoverable amounts used in impairment tests are
based on assumptions set using such factors as an asset’s useful life,
future cash flows, pre-tax discount rates and long-term growth rates.
These assumptions are based on the best estimates and judgments
made by management. However, these assumptions may be affectedby changes in uncertain future economic conditions, which may havea material impact on the consolidated financial statements in future
periods.
The method for calculating recoverable amounts is described in “3.
Significant accounting policies (9) Impairment of property, plant andequipment, goodwill, intangible assets and right-of-use assets” and“7. Impairment of property, plant and equipment, goodwill, intangible
assets and right-of-use assets”.

iii. Evaluation of inventories
Inventories are measured at historical cost. However, when the net
realizable value (“NRV”) at the reporting date falls below the cost,inventories are subsequently measured based on NRV, with the difference in value between the cost and NRV, booked as cost of sales.
Slow-moving inventories and those outside the normal operating
cycle are calculated at NRV that reflects future demand and market
trends. The Group may experience substantial losses in cases where
NRV drops as a result of deterioration in the market environment
against the forecast.
The content and amount related to evaluation of inventories aredescribed in “3. Significant accounting policies (15) Inventories” and“9. Inventories”.
iv. R ecoverability of deferred tax assets
In recognizing deferred tax assets, when judging the possibility of the
future taxable income, the Group estimates the timing and amount of
future taxable income based on the business plan.
The timing when taxable income arises and the amount of suchincome may be affected by changes in uncertain future economic
conditions. If there are differences between the actual amounts andestimated amounts, this may have a material impact on the consolidated financial statements in future periods.
The content and amount related to deferred tax assets aredescribed in “3. Significant accounting policies (24) Income taxes”
and “15. Deferred tax and income taxes”.
v. Measurement of defined benefit obligations
The Group has in place various post-retirement benefit plans, including defined benefits plans. The present value of defined benefit obligations on each of these plans and the service costs are calculated
based on actuarial assumptions. These actuarial assumptions require
estimates and judgments on variables, such as discount rates. The
Group obtains advice from external pension actuaries with respect tothe appropriateness of these actuarial assumptions including thesevariables.
The actuarial assumptions are determined based on the best estimates and judgments made by management. However, there is apossibility that these assumptions may be affected by changes in
uncertain future economic conditions, or by the publication or theamendment of related laws, which may have a material impact on the
consolidated financial statements in future periods.
These actuarial assumptions are described in “3. Significant
accounting policies (16) Employee benefits” and “16. Employee
benefits”.

vi. Collectability of trade and other receivables
The Group has estimated the collectability of trade and other receivables based on the credit risk. Fluctuations in credit risk of customer
receivables may have a significant effect on the amounts recognized
the allowance for receivables on the consolidated financial statements
in future periods.
The content and amount related to collectability of trade and otherreceivables are described in “3. Significant accounting policies (12)Impairment of financial assets” and “31. Financial Instruments”.
vii. V aluation technique of financial assets at fair value without
quoted prices in active markets.
The Group has used valuation techniques to utilize the inputs unobservable in the market when assessing the fair value of certain financial instruments. Unobservable input may be affected by changes in
uncertain future economic conditions, which may have a material
impact on the consolidated financial statements in future periods if it
becomes necessary to review.
The content and amount related to fair value of financial assets aredescribed in “3. Significant accounting policies (11) Financial instruments and (13) Derivatives and hedge accounting” and “32. Fair valueof financial instruments”.
viii. Provisions
The Group recognizes provisions, including asset retirement obligations and provisions for point program, in the consolidated statementof financial position. These provisions are recognized based on thebest estimates of the expenditures required to settle the obligations,taking into account risks and uncertainty related to the obligations asof the current year end date. Expenditures necessary for settling theobligations are calculated by taking all possible future results into
account; however, they may be affected by unexpected events orchanges in conditions, which may have a material impact on theGroup’s consolidated financial statements in future periods.
The nature and amount of recognized provisions are stated in “3.
Significant accounting policies (17) Provisions” and “19. Provisions”.
(5) Application of new standards and interpretations
The Group does not have significant standards and interpretations
applied from the fiscal year ended March 31, 2023.

(6) Standards not yet adopted
The following new standards and amendments announced by the approval date of the consolidated financial statements are not mandatory as ofMarch 31, 2023. The Group did not choose to adopt them before the required adoption date.
Standard The title of Standard

Mandatory adoption(from the fiscal year To be adopted by
beginning)
the Group fromIFRS 17 Insurance contracts

January 1, 2023

Fiscal year ending
March 31, 2024

Outline of new standards and amendments
IFRS 17 will replace IFRS 4, which currently permits a wide variety of practices inaccounting for insurance contracts. IFRS 17 will fundamentally change the accounting
by all entities that issue insurance contracts and investment contracts with discretionary
participation features.
Under the IFRS 17 model, entities are required to estimate total fulfillment cash flows
for insurance contracts and contractual service margin at initial recognition. Fulfillment
cash flows comprise estimates of future cash flows, adjustments reflecting the timevalue of money, and risk adjustments for non-financial risk. At the time of reporting, fulfillment cash flows are remeasured using the latest basis for measurement. Unearned
income (contractual service margin) is recognized over the coverage period.

All the standards and amendments above will be reflected in the consolidated financial statements for the relevant fiscal year described above.
The adoption will not have significant impacts on the Company’s consolidated financial statements.
KDDI Integrated Sustainability and Financial Report 2023

171

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

3

Significant Accounting Policies

The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies
have been consistently applied to all the reporting periods presented,
unless otherwise stated.
(1) Basis of consolidationi. Subsidiaries(a) Consolidation of subsidiaries
Subsidiaries are all entities over which the Group has control. An entity is consolidated as the Group controls it when the Group is
exposed to, or has rights to, variable returns from its involvement withthe entity and has the ability to affect those returns through its powerover the entity. Subsidiaries are consolidated from the date whencontrol is obtained and deconsolidated from the date when control is
lost.
Intragroup balances and transactions, and unrealized gain or loss
arising from intragroup transactions are eliminated in preparation of
the consolidated financial statements.
The accounting policies of subsidiaries have been changed to conform to the Group’s accounting policies, when necessary.
(b) C hanges in ownership interest in a subsidiary that do not
result in a change of control
The Group accounts for the transactions with non-controlling interests that do not result in loss of control as equity transactions. The
difference between fair value of any consideration paid and the proportion acquired of the carrying amount of the subsidiary’s net assets
is recognized as equity. Gains or losses on disposals of non-controlling interests that do not result in loss of control are also recognized as equity.
(c) Disposal of a subsidiary
When the Group ceases to have control, any retained interest in theentity is remeasured to its fair value on the date when control is lost,with the changes in the carrying amount recognized in profit or loss.
The fair value will be the initial carrying amount when the retainedinterests are subsequently accounted for as associate, joint venture
or financial asset. In addition, any amounts previously recognized inother comprehensive income in respect of that entity are accounted
for as if the Group had directly disposed of the related assets or liabilities. This means that any components of other comprehensive
income that are attributable to the subsidiary are reclassified fromequity to profit or loss or directly to retained earnings.
(d) Unification of reporting period
The consolidated financial statements include the financial statementsof subsidiaries whose closing dates are different from that of theCompany. For the preparation of the consolidated financial statements, such subsidiaries prepare financial statements based on theprovisional accounts as of the Company’s closing date.
ii. Associates
Associates are entities over which the Group does not have control
but has significant influence over the financial and operating policies
through participation in the decision-making of those policies.
Investments in associates are accounted for using the equity methodof accounting. Under the equity method, investment in an associate
is initially recorded at cost, its amount is adjusted to recognize theGroup’s share of the profit or loss, and other comprehensive incomeof the associate from the date on which it has significant influence
until the date when it ceases to have the significant influence is lost.
If the ownership interest in an associate is reduced but significant
influence is retained, only a proportionate share of the amount previously recognized in other comprehensive income is reclassified to

172

profit or loss or transfers within equity, based on how the reserve
should be reclassified on the disposal of related assets or liabilities.
When the Company’s share of losses in an associate equals or
exceeds its carrying amount of interest in the associate, the Group
does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group’s investment in associates includes goodwill recognizedon acquisition. Accordingly, goodwill is not recognized or tested for
impairment separately. The gross amount of investments in associates is tested for impairment as a single asset. Specifically, the Groupevaluates on a quarterly basis whether there is objective evidence
which indicates that the investment may be impaired or not on aquarterly basis. When objective evidence exists that the investments
in associates are impaired, those investments are tested for impairment. Unrealized gains or losses on transactions between the Groupand its associates are eliminated to the extent of the Group’s interestin the associates. The accounting policies of associates have beenchanged to conform to the Group’s accounting policies, whennecessary.
iii. Joint arrangements
The Group enters into joint arrangements when the Group has joint
control of a business or entity.
Joint control is the contractually agreed sharing of control of anarrangement, which exists only when the decisions about the relevant
activities that significantly affect the returns of the arrangement
require the unanimous consent of the parties sharing control.
For accounting, joint arrangements are classified as either joint
operations or joint ventures. A joint operation is a joint agreement
whereby parties that have joint control of the arrangement have rights
to the assets and obligations for the liabilities relating to the arrangement. A joint venture is a joint arrangement whereby the parties thathave joint control of the arrangement have rights to the net assets of
the arrangement.
When a joint arrangement is classified as a joint operation, theGroup’s share of the assets, liabilities, revenue and expenses in relation to the arrangement are recorded directly in the financial statements. On the other hand, when a joint arrangement is classified as a
joint venture, net assets related to the arrangement are recorded in
the financial statements using the equity method.
(2) Business combination
The Group accounts for business combinations by applying theacquisition method. Consideration transferred to acquire subsidiaries
is the fair values of the assets transferred, the liabilities incurred byformer owners of the acquiree and the equity interests issued by theGroup. Consideration transferred also includes the fair values of any
assets or liabilities resulting from a contingent consideration arrangement. Each identifiable asset acquired, liability and contingent liability
assumed in a business combination is generally measured at its
acquisition-date fair value.
Non-controlling interests are identified separately from those of theGroup and are measured as the non-controlling shareholders’ proportionate share of the acquiree’s identifiable net assets. For eachacquisition, the Group recognizes the acquiree’s non-controlling interests either at fair value or as the non-controlling interest’s proportionate share of the amount recognized for acquiree’s identifiable net
assets.
Acquisition-related costs, including finder’s fees, legal, due-diligence and other professional fees, are charged to expense whenincurred.
Where the aggregate amount of consideration transferred, theamount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity interest in

the acquiree exceeds the fair value of the identifiable net assets
acquired, such excess is recorded as goodwill. Where the aggregate
amount of consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of theacquirer’s previously held equity interest in the acquire is less than thefair value of acquired subsidiary’s net assets, such difference is recognized directly in profit or loss as a bargain purchase.
If the initial accounting for a business combination is not completeby the end of the reporting period in which the business combination
occurs, the Group recognizes in its financial statements provisionalamounts for the items for which the accounting is incomplete.
Subsequently, the Group retrospectively adjusts the provisionalamounts recognized on the date when control is obtained as measurement period adjustments to reflect new information obtained
about facts and circumstances that existed as of the date when control is obtained and, if known, would have affected the amounts recognized for the business combination. However, the measurement period
shall not exceed one year from the date when control is obtained.

(5) Property, plant and equipment(3) Segment information

ii. Depreciation and useful lives
Property, plant and equipment is depreciated mainly using thestraight-line method over the estimated useful lives of each component. The depreciable amount is calculated as the cost of an asset
less its residual value. Land and construction in progress are notdepreciated. In cases where components of property, plant andequipment have different useful lives, each component is recorded asa separate property, plant and equipment item.
The estimated useful lives of major components of property, plantand equipment are as follows:
Communication equipment
Machinery
9-15 years
Antenna equipment
10-42 years
Toll and local line equipment
6-27 years
Other equipment
9-27 years
Buildings and structures
10-38 years
Others5-22 years

Operating segments are reported in a manner consistent with theinternal reporting provided to the chief operating decision-maker. The
chief operating decision-maker is responsible for allocating resources
and assessing performance of the operating segments. The board of
directors that makes strategic decisions has been identified by theGroup as the chief operating decision-maker.
(4) Foreign currency translation
i. Functional currency and presentation currency
Foreign currency transactions of each Group company have beentranslated into their functional currencies at the exchange rate prevailingat the dates of transactions upon preparation of their financial statements. The consolidated financial statements of the Group are presented in Japanese yen, which is the functional currency of the Company.
ii. Foreign currency transactions
Foreign currency transactions are translated at the spot exchange rateof the date of transaction or the rate that approximates suchexchange rate. Monetary assets and liabilities denominated in foreign
currencies are translated at the exchange rate prevailing at the fiscal
year end date. Non-monetary items at fair value denominated in foreign currencies are translated at an exchange rate as of the date when
their fair values are measured.
Exchange differences arising from the translation and settlement ofmonetary assets and liabilities denominated in foreign currencies arerecognized as profit or loss. However, exchange differences arisingfrom the translation of equity instruments measured through othercomprehensive income and qualifying cash flow hedges are recognized as other comprehensive income.
iii. Foreign operations
For the purpose of the presentation of the consolidated financial statements, the assets and liabilities of the Group’s foreign operations,
including goodwill, identified assets and liabilities, and their fair value
adjustments resulting from the acquisition of the foreign operations,
are translated into presentation currency at the exchange rate prevailing at the fiscal year end date. Income and expenses of foreign operations are translated into Japanese yen, the presentation currency, at
the average exchange rate for the period, unless the exchange rates
fluctuate significantly during the period.
Exchange differences arising from translation of foreign operations’financial statements are recognized as other comprehensive income.
In cases of disposition of whole interests of foreign operations, andcertain interests involving loss of control or significant influence,exchange differences are accounted for as profit or loss on disposal offoreign operations.

i. Recognition and measurement
Property, plant and equipment of the Group is measured on a historical cost basis and carried at its cost less accumulated depreciationand impairment losses. The acquisition cost includes costs directly
attributable to the acquisition of the asset and the initial estimatedcosts related to disassembly, retirement and site restoration, as well
as borrowing costs eligible for capitalization.
In cases where components of Property, plant and equipment havedifferent useful lives, each component is recorded as a separate
Property, plant and equipment item.
Subsequent costs are included in the asset’s carrying amount or
recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably. All otherrepairs and maintenance are recognized as expenses during the financial period in which they are incurred.

The depreciation methods, estimated useful lives and residual values are reviewed at the end of each reporting period, and if there are
any changes made, those changes are applied prospectively as achange in an accounting estimate.
iii. Derecognition
Property, plant and equipment is derecognized upon disposal. The
gain or loss arising from the derecognition of an item of property, plantand equipment is included in gain or loss when the item isderecognized.
(6) Goodwill
Goodwill is the excess of the cost of acquisition over the fair value of
the Group’s share of the identifiable net assets of the acquiree on thedate of acquisition.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units(CGUs), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the
goodwill is monitored for internal management purposes.
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortized. Instead, it is tested for impairment annually and if events or changes in circumstances indicate a potential
impairment. For the impairment, please refer to “ 3. Significant
accounting policies (9) Impairment of property, plant and equipment,
goodwill, intangible assets and right-of-use assets.”

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Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance(7) Intangible assets
i. Recognition and measurement
The Group applies the cost method in measuring intangible assets,
excluding goodwill. Those assets are carried at its cost less accumulated amortization and impairment losses.
Intangible assets acquired separately are measured at cost at initialrecognition. Intangible assets acquired in a business combination arerecognized separately from goodwill and are measured at fair value atthe acquisition date when such assets meet the definition of intangible asset and are identifiable, and their fair values can be measured
reliably.
Expenditure on research activities to obtain new science technology or technical knowledge and understanding is recognized as an
expense when it is incurred.
Expenditure on development is recognized as intangible asset in
the case where the expenditure can be measured reliably, product or
production process has commercial and technical feasibility, theexpenditure probably generates future economic benefits, and theGroup has intention to complete the development and use or sell theasset, and has enough resources for their activities. In other cases,
the expenditure is recognized as an expense when it is incurred.
ii. Depreciation and useful lives
Intangible assets are amortized using the straight-line method overtheir estimated useful lives. Estimated useful lives of major components of intangible assets are as follows. Intangible assets with indefinite useful lives are not amortized.
Software5 years
Customer relationships
4-30 years
Assets related to program supply 22 years
Spectrum migration cost
9-17 years
Others5-20 years
The amortization methods and estimated useful lives are reviewed at
the end of each reporting period, and if there are any changes made,those changes are applied prospectively as a change in an accounting
estimate.
(8) Leases
At the inception of the lease, the Group determines whether the lease
includes a lease or lease. Whether or not the contract includes alease is determined based on whether or not the right to control theuse of the identified asset is transferred to the consideration andexchange for a certain period.
When the contract includes a lease, right-of-use assets are initiallyrecognized at the amount calculated by adding or subtracting the initial direct cost to the initial use of the lease liability. Lease liabilities are
initially recognized at the present value of lease payments that are notpaid at the inception of the lease.
Right-of-use assets are depreciated using the straight-line method
over the period from the inception of the lease to the end of the usefullife of the assets or the end of the lease term, whichever is earlier.
Lease liabilities are subsequently measured at an amount thatreflects the interest rate on the lease liability, the lease payments
made and, where applicable, the review of the lease liability or any
change in the terms of the lease.

174(9) Impairment of property, plant and equipment, goodwill,
intangible assets and right-of-use assets
At the end of each reporting period, the Group determines whether
there is any indication that carrying amounts of property, plant andequipment, identifiable intangible assets and right-of-use assets may
be impaired. If any indication exists, the recoverable amount of theasset or the cash-generating unit to which the asset belongs is estimated. For goodwill and intangible assets with indefinite useful lives,
the impairment test is undertaken annually or more frequently if
events or circumstances indicate that they might be impaired. A
cash-generating unit is the smallest group of assets that generates
cash inflows that are largely independent of the cash inflows fromother assets or groups of assets.
The recoverable amount is the higher of fair value less costs of disposal or value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects the time value of money and the risks specificto the asset.
When the impairment test shows that the recoverable amount of
the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the cash-generating unit or group of units, andthen to the other assets of the unit or group of units pro rata on thebasis of the carrying amount of each asset in the unit or group ofunits. Any impairment loss for goodwill is recognized in profit or loss
and is not reversed in subsequent periods.
For assets other than goodwill, the Group determines at the end ofeach reporting period whether there is any indication that an impairment loss recognized in prior years has decreased or been extinguished. An impairment loss is reversed when there is an indicationthat the impairment loss may be reversed and there has been achange in the estimates used to determine an asset’s recoverable
amount. When an impairment loss recognized is reversed, the carrying amount of the asset or cash-generating unit is increased to its
updated estimated recoverable amount. A reversal of an impairment
loss is recognized, to the extent the increased carrying amount does
not exceed the lower of the recoverable amount or the carrying
amount (net of depreciation and amortization) that would have been
determined had no impairment loss been recognized. A reversal of an
impairment loss is recognized as other income.
(10) Non-current assets held for sale or disposal group
An asset or group of assets of which the carrying amount is expected
to be recovered primarily through a sales transaction rather than
through continuing use is classified into “Assets held for sale.” To
qualify for classification as “non-current assets held for sale”, the saleof a non-current asset must be highly probable and it must be available for immediate sale in its present condition. In addition, management must be committed to a plan to sell the asset in which the sale
is to be completed within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, and the criteria set out above are met, all assets
and liabilities of the subsidiary are classified as held for sale, regardless of whether the Group will retain a non-controlling interest in its
former subsidiary after the sale.
Assets held for sale are measured at the lower of its “carrying
amount” and “fair value less cost to sell.” Property, plant and equipment and intangible assets classified as “assets held for sale” are notdepreciated or amortized.

(11) Financial instruments
i. Financial assets(a) Recognition and measurement of financial assets
The Group recognizes a financial asset when it becomes a party to
the contractual provisions of the instrument. The Group initially recognizes trade and other receivables on the date of transaction. At initialrecognition, the Group measures a financial asset at its fair value plus,
in the case of financial assets not measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction cost of a financial asset
measured at fair value through profit or loss is recognized as profit orloss.
(b) Classification of non-derivative financial assets
The classification and measurement model of non-derivative financial
assets are summarized as follows. The Group classifies financial
assets at initial recognition as financial assets measured at amortized
cost, equity instruments measured at fair value through other comprehensive income or financial assets measured at fair value throughprofit or loss.
(i) Financial assets measured at amortized cost
A financial asset that meets both the following conditions is classified
as a financial asset measured at amortized cost.
• T he financial asset is held within the Group’s business model
whose objective is to hold assets in order to collect contractual
cash flows.
• T he contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
A financial asset measured at amortized cost is initially recognizedat fair value plus transaction cost directly attributable to the asset.
After initial recognition, the carrying amount of the financial asset
measured at amortized cost is determined using the effective interest
method, net of impairment loss, if necessary.
(ii) E quity instruments measured at fair value through other comprehensive income
The Group makes an irrevocable election to recognize changes in fairvalue of investments in equity instruments through other comprehensive income, not through profit or loss. A gain or loss from fair valuechanges will be shown in other comprehensive income and will not
be reclassified subsequently to profit or loss.
An equity instrument measured at fair value through other comprehensive income is recognized initially at fair value plus transaction
cost directly attributable to the asset. After initial recognition, theasset is measured at fair value with changes in fair value included as“financial asset at fair value through other comprehensive income” inother comprehensive income. Accumulated gains or losses recognized through other comprehensive income are directly transferred toretained earnings when an equity instrument is derecognized or its
fair value substantially decreased.
Dividends are recognized in profit or loss.
(iii)Financial assets measured at fair value through profit or loss
When any of the above-mentioned conditions for classification offinancial assets is not met, a financial asset is classified as “at fairvalue through profit or loss” and measured at fair value with changes
in fair value recognized in profit or loss.
A financial asset measured at fair value through profit or loss is recognized initially at fair value and its transaction cost is recognized in
profit or loss when incurred. A gain or loss on a financial asset measured at fair value through profit or loss is recognized in profit or loss,
and presented in the consolidated statement of income for thereporting period in which it arises.

The Group does not designate any debt instrument as at fair value
through profit or loss to remove or significantly reduce an accounting
mismatch.
(c) Derecognition of financial assets
The Group derecognizes its financial asset if the contractual rights tothe cash flows from the investment expire, or the Group transfers substantially all the risks and rewards of ownership of the financial asset.
Any interests in transferred financial assets that are created or continuously retained by the Group are recognized as a separate asset or
liability.
ii. Non-derivative financial liabilities(a) Recognition and measurement of financial liabilities
The Group recognizes financial debt when the Group becomes aparty to the contractual provisions of the instruments. The measurement of financial debt is explained in (b) Classification of financial
liabilities.
(b) Classification of financial liabilities
Financial liabilities measured at amortized cost
A financial liability other than those measured at fair value throughprofit or loss is classified as a financial liability measured at amortizedcost. A financial liability at amortized cost is initially measured at fairvalue less transaction cost directly attributable to the issuance of thefinancial liability. After initial recognition, the financial liability is measured at amortized cost based on the effective interest rate method.
(c) Derecognition of financial liabilities
The Group derecognizes a financial liability when the financial liability
is extinguished, i.e. when the contractual obligation is discharged,
cancelled, or expired.
iii. Presentation of financial assets and liabilities
Financial assets and liabilities are offset and the net amount is presented in the consolidated statement of financial position only when theGroup currently has a legally enforceable right to set off the recognizedamounts and intends either to settle on a net basis, or to realize theasset and settle the liability simultaneously.
(12) Impairment of financial assets
The Group recognizes 12-month expected credit loss as provision for
doubtful receivables (non-trade receivables) when there is no significant increase in the credit risk since initial recognition. When there isa significant increase in credit risk since initial recognition, expectedcredit losses for such remaining life of the financial assets are recognized as provision for doubtful receivables. Whether credit risk is significantly increased or not is determined based on the changes indefault risk. To determine if there is a change in default risk, the following factors are considered. However, the Group always measuresprovision for trade receivables, which do not include any material
financial component at an amount equal to lifetime expected credit
losses.
• External credit rating of the financial asset• Downgrade of internal credit rating• O perating results, such as decrease in sales, decrease in working
capital, asset deterioration and increase in leverage• R educed financial support from the parent company or associatedcompanies• Delinquencies (Overdue information)
Expected credit losses are measured based on the discounted
present value of the differences between the contractual cash flows
and the cash flows expected to be received.

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Material Issues

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TCFD/TNFD
Disclosure and IR

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Corporate Overview/Stock Information

External Assurance(13) Derivatives and hedge accounting(14) Cash and cash equivalents(17) Provisions

Derivatives are initially recognized at fair value as on the date thatderivative contracts are entered into. After initial recognition, derivatives are remeasured at fair value at the end of each reporting period.
The Group utilizes derivatives consisting of exchange contracts,
foreign exchange swaps and interest swaps to reduce foreign currency risk and interest rate risk etc.
The method of recognizing the resulting gain or loss depends onwhether the derivative is designated as a hedging instrument, and if
so, the nature of the item being hedged.
The Group designates derivatives as cash flow hedge (hedges tothe exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly
probable forecast transaction).
At the inception of the transaction, the Group documents the relationship between the hedging instrument and the hedged item, alongwith their risk management objectives and strategies to conduct various hedge transactions.
At the inception of the hedge and on an ongoing basis, the Groupassess whether the derivative used in hedging transaction is highly
effective in offsetting changes in cash flows of the hedged item.
Specially, when the Group assesses whether the hedge relationship is effective, the Group assess whether all of the following requirements are met:(i) There is an economic relationship between the hedged item andthe hedging instrument.
(ii) The effect of credit risk does not dominate the value changes
that result from that economic relationship.
(iii) The hedge ratio of the hedging relationship is the same as that
resulting from the quantity of the hedged item that the entity
actually hedges and the quantity of the hedging instrument thatthe entity actually uses to hedge that quantity of hedged item.

In the consolidated statement of cash flows, cash and cash equivalents consist of cash, demand deposits and short-term investmentswith maturities of three months or less that are readily convertible tocash and subject to insignificant risk of change in value and bankoverdrafts. In the consolidated statement of financial position, bankoverdrafts are shown within current liabilities.

Provisions are recognized when the Group has legal or constructive
obligations as a result of past events, it is probable that outflows of
economic benefits will be required to settle the obligations, and reliable estimates of the obligation can be made. To determine theamount of a provision, the estimated future cash flows are discounted
using a pre-tax discount rate that reflects the time value of money
and the risks specific to the liability where necessary. Unwinding of
the discount over time is recognized in finance cost.

Hedge effectiveness is assessed on an ongoing basis and about
whether the hedging criteria described above are met.
The effective portion of changes in the fair value of derivatives thatare designated and qualify as cash flow hedges is recognized in othercomprehensive income. The ineffective portion is recognized in profit
or loss. Cumulative profit or loss recognized through other comprehensive income is transferred to profit or loss on the same period thatthe cash flows of hedged items affect profit or loss.
If a hedging relationship ceases to meet the hedge effectivenessrequirement relating to the hedge ratio but the risk management
objective for that designated hedging relationship remains the same,an entity should adjust the hedge ratio of the hedging relationship sothat it meets the qualifying criteria again (rebalancing).
After rebalancing, hedge accounting will be discontinued in cases
where it no longer meets the requirements of hedge accounting or
hedging instruments are expired, sold, terminated or exercised,
hedge accounting will be discontinued.
In the case that the hedge accounting is discontinued, the cumulative profit or loss on the hedging instrument that has been recognizedin other comprehensive income when the hedge was effective willremain in other comprehensive income until the forecast transaction
occurs. When forecast transactions are no longer expected to arise,
the accumulated amount of profit or loss recorded in equity is transferred to profit or loss.
Aggregated fair values of hedging instrument derivatives whosematurities are over 12 months are classified as non-current assets or
liabilities, and those whose maturities are less than 12 months areclassified as current assets or liabilities.

176(15) Inventories
Inventories mainly consist of mobile handsets and materials / work inprogress related to construction.
Inventories are measured at the lower of cost and net realizablevalue. The cost is generally calculated using the moving averagemethod and comprises all costs of purchase and other costs incurredin bringing the inventories to their present location and condition. Net
realizable value represents the estimated selling price in the ordinary
course of business less any estimated cost to sell.
(16) Employee benefits
i. Post-employment benefits
The Group has adopted a defined benefit plan and a defined contribution plan as post-employment benefit plans for its employees.
(a) Defined benefit plans
The asset or liability recognized on the consolidated statement offinancial position in relation to the defined benefit pension plans(defined benefit asset or liability) is the present value of the defined
benefit obligation less fair value of the plan assets at the end of thereporting period. The defined benefit obligation is determined annually
by independent actuaries using the projected unit credit method. The
discount rates are on the basis of the market yields of high-quality
corporate bonds at the end of the reporting period, that are denominated in the currency in which the benefit will be paid, which corresponds to the estimated timing and amount of future benefits are tobe paid.
Defined benefit cost includes service cost, net interest on the net
defined benefit liability (asset), and remeasurements of the net defined
benefit liability (asset). Service cost and net interest are recognized in
profit or loss. Net interest is determined using the discount rate
described above. The remeasurements comprise actuarial gains andlosses and the return on plan assets (excluding amounts included in
net interest). Actuarial gains and losses are recognized immediately inother comprehensive income when incurred, and past service costs
are recognized as profit or loss.
The Group recognizes remeasurements of all the net defined benefit liability (asset) resulting from its defined benefit plans in other comprehensive income and reclassifies them immediately to retained
earnings.
(b) Defined contribution plans
Contributions to the defined contribution plans are recognized as
expenses for the period over which employees provide services.
In addition, certain subsidiaries of the Group participate inmulti-employer pension plans, and recognize the payments madeduring the fiscal year as profit or loss and contribution payable as aliability.
ii. Short-term employee benefits
Short-term employee benefits are measured at the amounts expected to be paid when the liabilities are settled and recognized as an
expense. Bonus and paid annual leave accruals are recognized as aliability in the amount estimated to be paid under these plans, when
the Group has legal or constructive obligations to pay them and reliable estimates of the obligation can be made.

(18) Share-based payment
i. Stock options
The Group has equity-settled stock option plans as incentive plans for
its directors and employees. Stock options are measured at fair value
at the grant date, which is calculated using the Black-Scholes or othermodels.
The fair value of stock options at the grant date is recognized as an
expense over the vesting period, based on the estimated number ofstock options that are expected to vest, with corresponding amountrecognized as increase in equity.
ii. E xecutive compensation BIP trust and stock-granting ESOP
trust
The Group has introduced the executive compensation BIP (Board
Incentive Plan) trust and a stock-granting ESOP (Employee Stock
Ownership Plan) trust. These plans are accounted for as equity-settled share based payments and the shares of the Company held by
the trust are included in treasury stock. The fair value of the shares of
the Group at the grant date is recognized as expenses over the period from the grant date to the vesting date, with a corresponding
increase in capital surplus. The fair value of the shares of the Group
granted is determined by adjusting the market value, taking into
account the expected dividend yield of the shares.
(19) Equity
i. Common stock
Common stock is classified as equity. Proceeds from the Company’s
issuance of common shares are included in common stock and capital surplus and its direct issue costs are deducted from capitalsurplus.
ii. Treasury stock
When the Group acquires treasury stocks, the consideration paid, netof direct transaction costs and tax, is recognized as a deduction fromequity. When the Group sells treasury stocks, differences between
the carrying amount and the consideration received upon sale arerecognized as capital surplus.
(20) Revenue
i. Mobile telecommunications services
The Group generates revenue mainly from its mobile telecommunications services (including UQ mobile and MVNO services) and sale ofmobile handsets. The Group enters into mobile telecommunications
service agreements directly with customers or indirectly through distributors, and sells mobile handsets to its distributors.
Revenue from the mobile telecommunications services primarily
consists of basic monthly charges and communication fees (“themobile telecommunication service fees”), and commission fees suchas activation fees. Revenue from the mobile telecommunication service fees and commission fees are recognized on a flat-rate basis andon a measured-rate basis when the services are provided to the customers, which is when the service is provided to the customer inaccordance with contract and the performance obligation is fulfilled.

Discounts of communication charges are deducted from the mobile
telecommunications service fees on a monthly basis.
Furthermore, the consideration for transactions related to revenue
from mobile telecommunications services is received within approximately one month of the billing date.
Revenue from the sale of mobile handsets comprises proceedsfrom the sale of mobile handsets and accessories to customers or
distributors.
The business flows of the above transactions consist of “indirect
sales,” wherein the Company sells mobile handsets to distributors
and enters into communications service contracts with customers
through those distributors, and “direct sales,” wherein the Company
and certain subsidiaries of the Company sell mobile handsets to customers and enter into communications service contracts directly withthe customers. Revenue in each case is recognized as described
below.
Revenue from the sale of mobile handsets is received withinapproximately one month following the sale to the distributor or othervendor.
(a) Indirect sales
As the distributor has the primary obligation and inventory risk for themobile handsets, the Group sells to the distributors, the Group considers distributors as the principals in each transaction. Revenue fromthe sale of mobile handsets is recognized when mobile handsets aredelivered to distributors, which is when control over the mobile handsets is transferred to the distributor and the performance obligation is
fulfilled. Certain commission fees paid to distributors are deductedfrom revenue from the sale of mobile handsets.
(b) Direct sales
In direct sales transactions, revenue from the sale of mobile handsets
and revenue from service fees, including mobile telecommunications
service fees, are considered to be bundled. Therefore, contracts thatare concluded for a bundled transaction are treated as a single contract for accounting purposes. The total amount of the transaction
allocated to revenue from the sale of mobile handsets and mobile
telecommunications service fees is based on the proportion of eachcomponent’s stand-alone selling prices. The amount allocated tomobile handset sales is recognized as revenue at the time of sale,
which is when the performance obligation is determined to have been
fulfilled. Stand-alone selling prices for mobile handsets and mobile
telecommunications service revenues are the prices that would beobservable if mobile handsets and mobile telecommunications service were sold to customers independently at the inception of thecontract. The amount allocated to mobile telecommunications service
fees is recognized as revenue when the service is provided to thecustomer, which is when the performance obligation is determined tohave been fulfilled.
In both direct and indirect sales, activation fees and handset modelexchange fees are deferred as contract liabilities upon entering into
the contract. They are not recognized as a separate performanceobligation, but combined with mobile telecommunications services.
They are recognized as revenue over the period when material renewal options exist.
The consideration of these transactions is received in advance,
when the contract is signed.
Points granted to customers through the customer loyalty program
are allocated to transaction prices based on the stand-alone selling
prices of benefits to be exchanged based on the estimated point utilization rate, which reflects points that will expire due to future cancellation or other factors. The points are recognized as revenue when
the customers utilize those points and take control of the goods orservices, which is when the performance obligation is consideredfulfilled.

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assuranceii. F ixed-line telecommunications services (including the CATV
business)
Revenue from fixed-line telecommunications services primarily consists of revenues from voice communications, data transmission,
FTTH services, CATV services and related installation fees.
The above revenue, excluding installation fee revenue, is recognized when the service is provided, which is when the service is provided to the customer in accordance with contact and theperformance obligation is fulfilled. Installation fee revenue is recognized over the estimated average contract period based on the percentage remaining.
The consideration for these transactions is received within approximately one month of the billing date.
iii. Value-added services
Revenue from value-added services mainly comprises revenue frominformation fees, revenue from commission on transfer of receivables,
revenue through advertising businesses, agency fees on content services, and revenue from the energy business, etc.
Revenue from information fees comprises the revenue from membership fees for the content provided to customers on websites that
the Group operates or that the Group jointly operates with other entities and the performance obligation is fulfilled over the period in which
the service is provided. Revenue from commission on transfer ofreceivables comprises the revenue from fees for collecting the receivables of content providers from customers as the agent of content
providers together with the telecommunication fees and the performance obligation is fulfilled when the Group collects the receivables.
Electric power revenue comprises the revenue generated from electric power retail services and the performance obligation is fulfilled
when the Group provides the services.
These revenues are recognized over the period in which the service
is provided based on the nature of each contract since the performance obligations identified based on the contract with customer are
fulfilled over time or when the Group provides the service.
The Group may act as an agent in a transaction. To report revenue
from such transactions, the Group determines whether it shouldpresent the gross amount of the consideration received from customers, or the net amount of the consideration received from customers
less payments paid to a third party. The Group evaluates whether theGroup has the primary obligation for providing the goods and services under the arrangement or contract, the inventory risk, latitude inestablishing prices, and the credit risk. However, the presentation
being on a gross basis or a net basis does not affect profit for theyear.
The Group considers itself an agent for commission on transfer ofreceivables, advertisement services and certain content services
described above because it earns only commission income based on
pre-determined rates, does not have the authority to set prices andsolely provides a platform for its customers to perform content-related services. The Group thus does not control the service before control is transferred to the customer. Therefore, revenue from these
services is presented on a net basis.
The consideration for these transactions is received within approximately one to three months after the performance obligation has
been fulfilled.
iv. Solution services
Revenue from solution services primarily consists of revenues fromequipment sales, engineering and management services (“the solution service income”). The solution service income is recognizedbased on the consideration received from the customers when the
goods or the services are provided to the customers and the performance obligation is fulfilled.
Payment for any performance obligation is received within approximately one month of the billing date.

178

v. Global services
Global services mainly comprise solution services, data center services and mobile telephone services.
Revenue from data center services comprise the service charges
the Group receives for using space, electricity, networks or otheramenities at its self-operated data centers in locations around theworld. In general, contracts cover more than one year, and revenue isrecognized for the period over which the services are provided.
The consideration for these transactions is billed before the performance obligation is fulfilled and is received within approximately one
month of billing.
Revenue from mobile telephone services comprises revenue frommobile handsets and mobile telecommunication services. Revenue
from the sale of mobile handsets is recognized at the time of sale ofthe handsets, when the performance obligation is determined to havebeen fulfilled. Revenue from mobile telecommunication services isrecognized at the time the services are provided to the customer,
when the performance obligation is determined to have been fulfilled.
(21) Finance income and costs
Finance income mainly comprises interest income, dividend income,exchange gains and changes in fair value of financial assets at fairvalue through profit or loss. Interest income is recognized using theeffective interest method. Dividend income is recognized when theright to receive payment (shareholders’ right) is established.
Finance costs mainly comprise interest expense, exchange losses
and changes in fair value of financial assets at fair value through profit
or loss. Interest expense is recognized using the effective interest
method.

• T emporary differences arising from the initial recognition of assets
and liabilities related to transactions other than business combination, that affects neither the accounting profit nor the taxable profit(loss); and• T axable temporary differences associated with investments in subsidiaries and associates, where the Group is able to control thetiming of the reversal of the temporary difference and it is probablethat the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognized on all deductible temporary differences, unused tax loss carry forwards and tax credits to the extent
that it is probable that taxable profit will be available against which the
deductible temporary differences etc. can be utilized. Deferred tax liabilities are recognized on taxable temporary differences. The carrying
amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable thatsufficient taxable profit will be available to realize all or part of the benefit of the deferred tax assets.
Deferred tax assets and liabilities are measured at the tax rates thatare expected to apply in the period when the temporary differences
will reverse, based on tax laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset when there
is a legally enforceable right to offset current tax assets against current tax liabilities, and income taxes are levied by the same taxation
authority on the same taxable entity.

4(1) Outline of reportable segments

Other non-operating profit and loss includes gain and loss on investment activities. Specifically, gain and loss on step acquisitions, gain
and loss on sales of stocks of subsidiaries and associates, and gain
and loss on deemed disposal are included.

The reporting segments of the Group are units of the Group of which
separate financial information is available, and which are periodicallymonitored for the board of directors to determine the allocation of thebusiness resources and evaluate the performance results.
The Group has the two reportable segments of Personal Services
and Business Services as well as operating segments.
The Personal Services segment provides services to individual
customers.
In Japan, we aim to provide new added value and experience value
by expanding 5G telecommunication services and other services
such as finance, energy, and LX in a coordinated manner through ourmulti-brands “au,” “UQ mobile,” and “povo.”
In addition, we are addressing challenges in local communities due
to depopulation and aging, and are working with local partners toeliminate the digital divide and achieve regional co-creation.
Overseas, we are leveraging our business know-how cultivated inJapan to provide telecommunication services and financial and entertainment services such as video and games to individual customers
in Myanmar, Mongolia, and other Asian regions.
The Business Services segment mainly provides a wide range ofcorporate customers in Japan and overseas with a variety of solutions encompassing smartphones and other devices, network andcloud services, and TELEHOUSE brand data center services.
Furthermore, in our mid-term management strategy (FY2022–2024), we announced the “Satellite Growth Strategy,” which strives to
evolve the telecommunications business through 5G and expand
business in focus fields, centering on telecommunications. We provide global one-stop solutions that contribute to the development andexpansion of our customers’ businesses through IoT and DX centered on 5G communications in collaboration with our partners.
For small and medium-sized corporate customers in Japan, ourconsolidated subsidiary, the KDDI MATOMETE OFFICE GROUP isbuilding a regional support network offering close contact throughout
Japan.

Borrowing costs directly attributable to the acquisition and construction of a qualifying asset, which takes a substantial period before it isready for its intended use or sale, are capitalized as part of the cost ofsuch asset. All other borrowing costs are recognized as expenses in
the period they incurred.
(24) Income taxes
Income taxes are composed of current and deferred taxes and recognized in profit or loss, except for taxes related to items that are recognized directly in equity or in other comprehensive income.
Current tax is measured at the amount expected to be paid to or
recovered from the taxation authorities on the current year’s taxable
income, plus adjustments to the amount paid in prior years. To determine the current tax amount, the Group uses the tax rates and tax
laws that have been enacted or substantively enacted by the end of
the fiscal year in the countries in which the Group operates and earns
taxable income or losses.
Deferred tax assets and liabilities are, using asset and liability method, recognized on temporary differences between the carrying
amounts of assets and liabilities on the consolidated financial statements and their tax base, and tax loss carry forwards and tax credits.
However, no deferred tax assets and liabilities are recognized on following temporary differences:• Taxable temporary differences arising from the initial recognition of
goodwill;

For the purpose of the consolidated financial statements, dividends
to owners of the parent company are recognized as a liability for theperiod over which the dividends are approved by the owners of theparent company.
(26) Earnings per share
The Group discloses basic and diluted earnings per share (attributable to owners of the parent) related to common stock.
Basic earnings per share is calculated by dividing profit for the year
attributable to common stockholders of the parent by the weighted
average number of common shares outstanding during the reporting
period, adjusted for the number of treasury shares acquired. For the
purpose of calculating diluted earnings per share, net profit attributable to owners of the parent and the weighted average number ofcommon shares outstanding, adjusted for the number of treasury
shares, are further adjusted based on the assumption that all dilutive
potential common shares are fully converted. Potential common
stocks of the Company are related to the BIP trust and ESOP trust.

Segment Information(22) Other non-operating profit and loss(23) Borrowing costs(25) Dividends

The reportable segments for some businesses were changed due
to organization change in the fiscal year ended March 31, 2023.
Accordingly, the segment information for the fiscal year ended March
31, 2022 is presented based on the segment classification after thischange.
(2) C alculation method of revenue, income or loss, assets andother items by reportable segment
Accounting treatment of reported business segments is consistent
with “3. Significant accounting policies”.
Income of the reportable segments is based on the operating
income.
Inter segment transaction price is determined by taking into consideration the price by arm’s length transactions or gross costs after
price negotiation.
Assets and liabilities are not allocated to reportable segments.

KDDI Integrated Sustainability and Financial Report 2023

179

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance(3) Information related to the amount of revenue, income or loss and other items by reportable segment(4) Information by product and service

The Group’s segment information is as follows:

Information by product and service is described in “Note 24. Revenue”
Millions of yen

Reportable segment

For the year ended March 31, 2022

Amounts on the
consolidated
financial
Adjustment
statements(Note 2)

Personal

Business

Sub-total

Other(Note 1)

Total

4,596,528

827,5455,424,074

22,634

5,446,708—

Revenue
Revenue from externalcustomers
Inter-segment revenue ortransfers  TotalSegment income (loss)

5,446,708

214,575

287,254

62,838350,091(350,091)—

1,042,120

5,711,327

85,472

5,796,799(350,091)

5,446,708(6) Information by major customer

867,092

187,072

1,054,164

7,590

1,061,754(1,162)

1,060,592

Description is omitted as the revenue from a specific external customer is less than 10% of the revenue on the consolidated statement of income.

2,457
1,448

Profit for the year before income tax

1,064,497

Other items Share of profit of investment
accounted for using the equity
methodii. Non-current assets (excluding financial assets, deferred income tax assets and retirement benefit assets)
Description is omitted as non-current assets located in Japan accounts for most of these assets on the consolidated statement of financial
position.

72,679Other non-operating profit and loss

Impairment loss

i. Revenue
Description is omitted as the revenue from external customers in Japan accounts for most of the revenue on the consolidated statement ofincome.

4,669,208

Finance income and finance cost (Net) Depreciation and amortization(5) Information by region

644,236

85,023

729,260

2,357

731,617(3,838)727,779

1,998

676

2,674

15

2,689

—

2,689

3,600

464

4,063

1,728

5,791

—

5,791

5

Property, Plant and Equipment(1) Movements of property, plant and equipment
Movements of acquisition costs, accumulated depreciation and accumulated impairment loss of the property, plant and equipment are as follows:
Acquisition costs
Millions of yen

Millions of yen

Reportable segment

For the year ended March 31, 2023

Amounts on the
consolidated
financial
Adjustment
statements(Note 2)

Personal

Business

Sub-total

Other(Note 1)

 Revenue from externalcustomers

4,754,821

892,7815,647,602

24,1605,671,762—

5,671,762 Inter-segment revenue ortransfers

78,747

216,025

294,772

65,305360,077(360,077)—

4,833,567

1,108,807

5,942,374

89,465

6,031,838(360,077)

5,671,762

880,308

190,808

1,071,116

4,181

1,075,297

452

1,075,749

Total

Revenue  TotalSegment income (loss)

1,517

Other non-operating profit and loss

612

Profit for the year before income tax

1,077,878 Share of profit of investment
accounted for using the equity
methodLand

Constructionin progress

Other

Total

As of April 1, 2021

5,660,918

704,918

288,161

226,901

518,224

7,399,122

Acquisition

16,9531,897

284

467,207

2,172

488,513

Transfer from construction in progress

281,954

31,5554,718(354,341)

36,115—

Disposal(100,429)(8,708)(218)(6,421)(18,020)(133,796)

2,311

4,966

939

978

8,447

17,640

354

1,193

(171)

(2,674)

2,739

1,441

5,862,061

735,821

293,712331,649

549,676

7,772,919

4,209

236

11

359,960619

365,035

Transfer from construction in progress

296,388

16,646760(357,379)

43,584—

Disposal(89,941)(7,968)(1,014)(446)(22,808)(122,179)

Exchange differences(1,457)

3,161

637

665

6,318

9,323

Other
As of March 31, 2022
Acquisition

Other
As of March 31, 2023

Other items
Impairment loss

Buildings andstructures

Exchange differences

Finance income and finance cost (Net) Depreciation and amortization

Communicationequipment

608,820

89,446698,2652,378

700,644(4,053)

696,591

2,289

48

2,337

17

2,354

—

2,354

2,652

(244)

2,408

2,161

4,569

—

4,569

4,018

1,108

(682)

(4,960)(2,387)(2,904)

6,075,279

749,004

293,423

329,488575,0028,022,195

Notes: 1. “Other” includes construction and maintenance of facilities, research and development of leading-edge technology, and other operations that do not constitute reportable segments.
2. Adjustment of segment income shows the elimination of inter-segment transactions.

180

KDDI Integrated Sustainability and Financial Report 2023

181

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Accumulated depreciation and accumulated impairment loss
Millions of yen

Communicationequipment

Buildings andstructures

As of April 1, 2021

(4,142,776)(420,345)

Depreciation(317,551)
88,747

Disposal

LandConstruction inprogress

Other

Total

(4,082)(3,340)(335,594)(4,906,137)(27,894)——(39,960)(385,405)

7,747

—

(1)

17,202

113,695

Impairment loss

(1,455)

(172)

—

(14)

(181)

(1,822)

Exchange differences(1,450)(1,219)—(359)(4,741)(7,770)(4,374,484)(441,884)(4,082)(3,715)(363,274)(5,187,439)(286,778)(21,955)­——(40,250)(348,984)

Disposal

86,465

6,185

­265

—

22,198115,113

Impairment loss

(1,459)

(177)

­—

(11)

(243)

(1,889)

407

(602)

(1)

(160)

(2,918)(3,275)(4,575,849)(458,433)(3,819)(3,885)(384,488)(5,426,474)

As of March 31, 2022
Depreciation

Exchange differences
As of March 31, 2023

Note: T he depreciation of the property, plant and equipment is included in “cost of sales” and “selling, general and administrative expenses” in the consolidated statement offinancial positions.

The carrying amounts of the property, plant and equipment are as follows:6

Goodwill and Intangible Assets(1) Movements of goodwill and intangible assets
The movements of the acquisition costs, accumulated amortization and accumulated impairment loss of the intangible assets are as follows:
Acquisition costs
Millions of yen

Intangible assets
Software

Customer
related

Programsupply related

Spectrum
migration cost

Other

Total

555,191

888,168

328,972

36,363111,131661,897

2,581,721—

168,281——

20,32849,914

238,523

Disposal—(95,598)———(41,445)(137,043)

Exchange differences

542

567

—

—

—

1,831

2,940

Goodwill
As of April 1, 2021
Individual acquisition—(1,785)

—

—

(753)

(19,981)(22,518)

As of March 31, 2022

Other555,733

959,633

328,972

36,363130,707652,216

2,663,623

Individual acquisition—

138,020——

10,760108,256

257,036

Disposal—(91,971)———(50,814)(142,785)

Exchange differences

96

(660)

—

—

—

582

17

Other
Carrying amount

As of March 31, 2023

—

3,253

—

—

(76)

(11,292)(8,115)555,829

1,008,274

328,972

36,363

141,391

698,947

2,769,776

Millions of yen

Communicationequipment

Buildings andstructures

Land

Construction inprogress

Other

Total

As of April 1, 2021

1,518,142

284,573

284,079

223,561

182,630

2,492,985

As of March 31, 2022

1,487,577

293,937

289,630

327,934

186,4022,585,481

As of March 31, 2023

1,499,429

290,571289,604

325,603

190,515

2,595,721

Accumulated amortization and impairment
Millions of yen

Intangible assets
Goodwill(2) Property, plant and equipment pledged as collateral
For the amount of property, plant and equipment pledged as collateral for liabilities including borrowings, please refer to “Note 14. Borrowings andbonds payable.”(3) Property, plant and equipment with limited ownership
There is no property, plant and equipment with limited ownership.
(4) Property, plant and equipment under construction

As of April 1, 2021

Software

Customer
related

Programsupply related

Spectrum
migration cost

Other

Total

(14,771)(503,041)(129,554)(13,223)(33,315)(322,566)(1,016,469)

Amortization—(131,681)(20,820)(1,653)(13,171)(46,367)(213,693)

Impairment loss

—

(858)

—

—

—

—

(858)

Disposal—

93,918———41,064

134,982

Exchange differences

—

(300)

—

—

—

(1,098)(1,398)Other
As of March 31, 2022

—

—

—

—

—

—

—

(14,771)(541,963)(150,374)(14,876)(46,486)(328,968)(1,097,437)

Amortization—(136,682)(19,562)(1,653)(15,005)(49,644)(222,546)

Expenditures included in the carrying amount of property, plant and equipment under construction are presented as construction in progress inthe table above.

Impairment loss

—

(449)

—

—

—

(3)

(452)

Disposal—

90,094———50,344140,438(5) Capitalization of borrowing costs

Exchange differences

—

307

—

—

—

(632)

(324)

Other

—

—

—

—

—

—

—

(14,771)(588,693)(169,936)(16,529)(61,491)(328,902)(1,180,322)

There are no significant borrowing costs included in the acquisition costs of the property, plant and equipment for the years ended March 31,
2022 and 2023.

As of March 31, 2023

Note: The amortization of intangible assets is included in “cost of sales” and “selling, general and administrative expenses” in the consolidated statement of financial positions.

182

KDDI Integrated Sustainability and Financial Report 2023

183

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

The carrying amounts of goodwill and intangible assets are as follows:
Carrying amountMillions of yen

Intangible assets
Goodwill

Software

Customer
related

Programsupply related

Spectrum
migration cost

Other

Total

As of April 1, 2021

540,420

385,126

199,418

23,14077,816339,331

1,565,251

As of March 31, 2022

540,962

417,669

178,598

21,487

84,220323,249

1,566,186

As of March 31, 2023

541,058

419,581

159,035

19,83479,900370,046

1,589,454(2) Total expenditures related to research and development expensed during the period
Research and development costs expensed as selling, general and administrative expenses for the years ended March 31, 2022 and 2023 are¥25,081 million and ¥26,373 million, respectively.

in use.
In assessing value in use, the estimated future cash flows from CGUs or groups of CGUs are discounted to their present value. When the Groupcalculates the future cash flows and discount future cash flows, the business plan developed based on different type of forecasted revenue andcost such as cost of sales and selling, general and administrative expenses, growth rates and pre-tax discount rates are used as significant
assumptions.
The forecast of cash flows used as a basis to estimate future cash flows is based on the recent business plan approved by the management,
which reflects past experience and external information, and the maximum forecast is 5 years. After 5 years, a certain growth rate of profit before
tax after consideration of a long-term average growth rate for the market is used.
The growth rates of estimated profit before tax in projection period, which are used to calculate value in use of CGUs, are as follows.
CGUs or groups of CGUs

2022

2023

JCOM Co., Ltd. CATV business

0.0%

0.0%

Jupiter Shop Channel Co., Ltd.

0.0%

0.0%

AEON HD

0.0%

0.0%

ENERES Co., Ltd.

0.0%

0.0%

BIGLOBE Inc.
Other

(3) Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives described above as of March 31, 2022 and 2023 is ¥63,379 million.
The details of intangible assets are trademark rights that were acquired through business combinations. As these trademark rights exist as longas businesses are continued, useful lives of these intangible assets are assumed to be indefinite.

Millions of yen

As of March 31

0.0%

0.0%

0.0%-6.0%

0.0%-6.5%

The growth rates used in estimated cash flows of CGUs or group of CGUs reflect the status of the country and the industry to which the CGUs
belongs, and does not exceed the long-term average growth rate for the market.
The pre-tax discount rates, which are used to calculate value in use of CGUs or groups of CGUs to which goodwill and intangible assets withindefinite useful lives, are allocated are as follows.
CGUs or groups of CGUs

7

Impairment of Property, Plant and Equipment, Goodwill, Intangible Assets and Right-Of-Use Assets

Impairment test of CGUs including goodwill and intangible assets with indefinite useful lives
The Group tests for impairment of goodwill and intangible assets with indefinite useful lives at least annually, and whenever there is an indicationof impairment.
The total carrying amounts of the goodwill and intangible assets with indefinite useful lives allocated to CGUs or groups of CGUs are as follows:
Goodwill
Millions of yen

2022

2023

JCOM Co., Ltd. CATV business

280,709280,709

Jupiter Shop Channel Co., Ltd.

92,577

92,577

AEON HD

31,621

31,621ENERES Co., Ltd.

14,19914,199BIGLOBE Inc.

14,072

14,072

Other

107,784

107,880

Total

540,962541,058

Millions of yen

2022

2023

JCOM Co., Ltd. CATV business

5.8%

5.7%

Jupiter Shop Channel Co., Ltd.

7.3%

5.6%

AEON HD

5.2%

5.6%

ENERES Co., Ltd.

6.5%

6.3%

BIGLOBE Inc.

CGUs or groups of CGUs
As of March 31

As of March 31

Other

8.1%

8.5%

5.2%-15.2%

5.7%-19.3%

Although goodwill and intangible assets with indefinite useful lives have a risk of impairment when significant assumptions used for impairment
test change, the Group has determined that a significant impairment loss is not probable in the CGUs or groups of CGUs regardless of the reasonable change of business plan the growth rate and/or discount rate used for impairment test.

Intangible assets with indefinite useful lives
CGUs or groups of CGUs

Millions of yen

As of March 31

2022

2023

BIGLOBE Inc.

26,374

26,374

Jupiter Shop Channel Co., Ltd.

19,85919,859AEON HD17,14617,146

Total

63,37963,379The recoverable amount of goodwill and intangible assets with indefinite useful lives allocated to CGUs or groups of CGUs is calculated using value

184

KDDI Integrated Sustainability and Financial Report 2023

185

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

8

10 Trade and Other Receivables

Investments Accounted for Using the Equity Method

The analysis of trade and other receivables is as follows:(1) The carrying amounts of investments accounted for using the equity method

Millions of yen
Millions of yen
For the year ended March 31

Interests in associates
Total

2022

2023

244,515

255,290

244,515

255,290(2) The Group’s share of comprehensive income of associates accounted for using the equity method
i. Associates
Profit for the year, other comprehensive income and comprehensive income of associates accounted for using the equity method are as follows.
As of and for the years ended March 31, 2022 and 2023, there is no individually significant associate accounted for using the equity method.
Millions of yen

For the year ended March 31

2022

2023

Profit for the year

5,791

4,569

Other comprehensive income, net of tax

975

913

Total comprehensive income for the year

6,766

5,481

As of March 31

2022

2023

Current:
Trade receivables   Accounts receivable-trade and notes receivable

2,182,975

2,281,671

Accounts receivable-other (Note)

146,991

182,747

Loss allowance(18,272)(19,168)

2,311,694

2,445,250   Total
Note: Accounts receivable-other mainly consists of the receivable related to the payment agency service.

The amounts of trade and other receivables expected to be recovered after more than twelve months from March 31, 2022 and 2023 are¥340,336 million and ¥418,636 million, respectively.
The amount of the trade and other receivables on the consolidated statement of financial position is presented less loss allowance.

11 Other Financial Assets
The analysis of other financial assets is as follows:
Millions of yen

9Inventories

2022

2023

85

80

199,608

178,090   Security deposits

56,70064,627   Long-term accounts receivables

13,081

15,760   Lease receivables

55,04040,205   Other

17,761

21,225   Loss allowance(13,008)(15,879)    Sub total

329,268

304,106

9,596

6,961

   Lease receivables

35,122

28,832   Short-term investment

8,500

10,456(3) Inventories pledged as collateral   Other

13,937

13,909    Sub total

67,15460,158There are no inventories pledged as collateral.

    Total

396,422364,265

As of March 31

Non-current assets (Other long-term financial assets):(1) The analysis of inventories

Financial assets at fair value through profit or loss

The analysis of inventories is as follows:  Derivatives
Millions of yen

As of March 31

Finished goods and manufactured goods
Work in progress

2022

2023

71,262

96,169

2,684

2,570

Other

565

299

Total

74,511

99,038There is no inventory to be sold after more than 12 months from March 31, 2022 and 2023.
(2) Write down of the inventories expensed during the period

Millions of yen

186   Equities
Financial assets at amortized cost  Debt instruments

Current assets (Other short-term financial assets):

Write down of the inventories expensed during the period is as follows:
For the year ended March 31

2022

2023

Write down of the inventories expensed (Note)

7,599

2,308

Note: Write down is recognized as costs of sales.

Financial assets at fair value through other comprehensive income  Equity instruments

Financial assets at fair value through profit or loss  Derivatives
Financial assets at amortized cost  Debt instruments

KDDI Integrated Sustainability and Financial Report 2023

187

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

12 Other Assets(2) Terms of issuing bonds payable

The analysis of other non-current assets and other current assets is as follows:

The summary of terms of issuing bonds payable is as follows:
Millions of yen

2022

As of March 312023

Non-current assets
Long-term prepaid expenses

20,635

26,909

Other

4,447

3,016

25,08329,924  Sub total
Current assets

As of March 31

EntityMillions of yen

Description

KDDI Corp. 20th series of unsecured notes

December 13, 2013KDDI Corp. 21st series of unsecured notes

September 10, 2014

KDDI Corp. 22nd series of unsecured notes July 12, 2018KDDI Corp. 23rd series of unsecured notes

November 22, 2018KDDI Corp. 24th series of unsecured notes

November 22, 2018KDDI Corp. 25th series of unsecured notes

November 22, 2018KDDI Corp. 26th series of unsecured notes

April 26, 2019KDDI Corp. 27th series of unsecured notes

April 26, 201913 Cash and Cash Equivalents

KDDI Corp. 28th series of unsecured notes

April 26, 2019

The analysis of cash and cash equivalents is as follows:KDDI Corp

29th series of unsecured notes

November 29, 2019KDDI Corp

30th series of unsecured notes

October 27, 2022

KDDI Corp

31st series of unsecured notes

October 27, 2022

Prepaid expenses

71,28386,518Advance payments

18,35521,058Other

24,18433,660  Sub total

113,822

141,236  Total138,905

171,160

Millions of yen
As of March 31

Cash in hand and deposits held at call with banks
Term deposits with original maturities of three months or less
Total
Cash and cash equivalents in consolidated statement of cash flow

2022

2023

794,375

480,052

2,238

199

796,613480,252

796,613480,252

2022

2023

Interest
rate (%)

29,97829,991(29,991)0.80
per year

Unsecured December 20, 2023

29,96929,9820.67
per year

Unsecured September 20, 2024

29,93329,9440.31
per year

Unsecured July 12, 2028

39,96639,987(39,987)

0.11
per year

Unsecured November 22, 2023

29,951

29,9650.25
per year

Unsecured November 21, 2025

19,952

19,9590.40
per year

Unsecured November 22, 2028

29,96729,9840.13
per year

Unsecured April 26, 2024

29,94529,9580.23
per year

Unsecured April 24, 2026

39,90339,9170.36
per year

Unsecured April 26, 2029

49,979(49,979)—0.02
per year

Unsecured November 29, 2022—

49,9120.21
per year

Unsecured October 27, 2025—

49,8820.43
per year

Unsecured October 27, 2027

Issuance date

Collateral

Due

Note: The amounts in ( ) presents the current portion of the bonds payable.

(3) Assets pledged as collateral and secured liabilities
Assets pledged as collateral are as follows:
Millions of yen

14 Borrowings and Bonds Payable

As of March 31

2022

2023

(1) The analysis of borrowings and bonds payable

Property, plant and equipment

519

519

Stocks of subsidiaries and associates (Note)

The analysis of borrowings and bonds payable is as follows:
Millions of yen
As of March 31

2022

2023

Averageinterest rate(%) (Note)

Securities for financial business
Loans for financial businessDue (Year)

Non-current

Other non-current assets

Bonds payable (excluding current portion)

279,564

309,503

0.33

2024-2029

Long-term borrowings (excluding current portion)

642,052

604,730

0.42

2024-2029

921,616

914,233——

Current portion of bonds payable

49,97969,9790.41—

Current portion of long-term borrowings

180,491

198,465

0.34—  Sub total

Other long-term financial assets Total

768

768

281,608356,266—

163,456

6,000

13,248—3,787

288,895

538,043

Obligations underlying to these assets pledged as collateral are as follows:

Current

Short-term borrowings  Sub total  Total56,03469,517

0.07—

286,505

337,961——

1,208,121

1,252,194——

Note: Average interest rate represents weighted average interest rate to the ending balance of the borrowings and other debts.

Millions of yen

2022

2023

Long-term borrowings (Note)

50,00061,100Current portion of long-term borrowings

30,00050,000

Short-term borrowings

36,500—Call money

134,300—

As of March 31

Accounts payable

132

66

Cash collateral received for securities lent—

244,111

250,932

355,277 TotalNote: Shares of Kagoshima Mega Solar Power Corporation, an affiliate accounted for using the equity method, are pledged as collateral for its borrowings from financial institutions. The amounts of borrowings as of March 31, 2022 and 2023 are ¥11,192 million and ¥9,725 million, respectively. These amounts are not included in long-term borrowings in the above table.

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Certain subsidiaries of the Group have financed from financial institutions due to acquisitions and others. Except for certain loan agreements on
insignificant amount of borrowings, these borrowings are subject to financial covenants such as maintenance of shareholder’s equity, net asset
and surplus of profit as prescribed in the terms of each agreement. The amounts of borrowings as of March 31, 2022 and 2023 are ¥433,863 million and ¥399,013 million, respectively.
Except for the borrowings above, there is no financial covenant on borrowings and bonds payable, which has a significant effect on the Group’s
financial activities. For the fair value and amounts by due dates of borrowings and bonds payable, please refer to “Note 31. Financial instruments”
and “Note 32. Fair value of financial instruments”.

Millions of yen

Recognized
Recognizedas otherAcquisition
directly in comprehensive by business
equityincome combinations

As ofApril 1,
2022

Recognizedas profit
or loss

Accrued bonuses

11,239575——

Accrued business tax

7,518

719

—

—

Inventories

4,642(1,989)—(1) Movement by major cause of deferred tax assets and deferred tax liabilities

Loss allowance

10,202

7,237

The balance of and the movement in recognized deferred tax assets and deferred tax liabilities are as follows:

Property, plant and equipment andintangible assets

55,209Lease liabilities

129,589

Deferred points

12,897Retirement benefit liabilities

2,227

15 Deferred Tax and Income Taxes

For the year ended March 31, 2022
Millions of yen

As ofApril 1,
2021

Recognizedas profit
or loss

Recognized
Recognizedas otherAcquisition
directly in comprehensive by business
equityincome combinations

Other(Note)

As ofMarch 31,2022

Deferred tax assets Accrued bonuses

10,516

633

—

—

—

90

11,239 Accrued business tax

12,374(4,859)

—

—

—

2

7,518

Inventories

4,321

19

241

—

—

61

4,642

Loss allowance

10,635

(452)

(1)

—

—

19

10,202

Property, plant and equipment andintangible assets

53,697

1,512

—

—

—

—

55,209Lease liabilities

101,788

27,801————

129,589

Deferred points

17,587(4,690)

—

—

—

0

12,897

Other(Note)

As ofMarch 31,
2023

2

(4)

11,812

5

(273)

7,969

—

—

(140)

2,514

—

—

—

138

17,577(9,368)

—

—

8

207

46,058

(949)

—

—

—

—

128,640(4,230)

—

—

—

(115)

8,552

(635)

(5)

0

5

(6)

1,586

Deferred tax assets

Accrued expenses

6,055

1,079

—

—

2

244

7,380

Contract liabilities

33,333(2,820)

—

—

—

(436)

30,077

Other

35,085(8,207)

139

(326)

15

(30)

26,677  Total

307,996(18,587)

134

(326)

37

(414)

288,840

1,842

379

—

—

—

—

2,221

173

21

—

—

—

—

194

Appraisal gain on equity instruments

26,671——(8,044)29(2)18,653 Property, plant and equipment,
intangible assets and right-of-use
assetsDeferred tax liabilities
Retained profits of foreign relatedcompanies
Special reserves

133,828

1,103

—

—

—

343

135,274

Identifiable intangible assets

85,292(6,538)

—

—

—

—

78,755Retirement benefit assets

12,626

(14)

—

5,715

—

412

18,738Contract costs

173,482

25,259————198,741

Other

6,537

5,412

(15)

(788)

190

825

12,161  Total

440,451

25,623(15)(3,117)

219

1,578

464,739Retirement benefit liabilities

3,754(1,604)

(4)

79

—

2

2,227

Accrued expenses

5,973

81

—

—

—

1

6,055

Contract liabilities

35,413(2,079)

—

—

—

—

33,333

Other

34,987

98

—

—

—

—

35,085  Total291,045

16,461

236

79

—

175

307,996

1,225

616

—

—

—

—

1,842

174

(1)

—

—

—

—

173

Appraisal gain on equity instruments

17,349

4,762

—

4,559

—

—

26,671 Property, plant and equipment,
intangible assets and right-of-use
assetsDeferred tax assets

12,33012,203

105,800

28,028————133,828

Deferred tax liabilities

144,776

188,101

88,101(2,808)

—

—

—

—

85,292

Deferred tax assets, net(132,446)(175,898)

Deferred tax liabilities Retained profits of foreign relatedcompanies
Special reserves

Identifiable intangible assets

190

For the year ended March 31, 2023

Retirement benefit assets

12,119(1,937)

—

2,444

—

—

12,626

Contract costs

148,431

25,051————

173,482

Other

6,520

(1,426)

—

1,068

—

375

6,537

  Total379,720

52,285

—

8,071

—

375

440,451

Note: “Other” includes exchange differences on foreign operations.

(2) The analysis of deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities on the consolidated statement of financial position are as follows:
Millions of yen
As of March 31

2022

2023

The Group evaluates the recoverability of deferred tax assets at recognition by considering the possibility to utilize a part or all of deductible temporary differences or tax loss carryforwards for future taxable income. The Group considers the planned reversal of deferred tax liabilities as well
as expected future taxable income and tax planning for evaluating the recoverability of deferred tax assets, and recognizes deferred tax assets tothe extent that future taxable income is expected.
Deferred tax assets for tax losses in certain subsidiaries as of March 31, 2022 and 2023 are ¥5,821 million and ¥4,847 million, respectively.
All deferred tax assets related to these losses were determined recoverable as taxable income exceeding the tax losses is expected.

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance(3) D eductible temporary differences, net operating loss carryforwards and tax credit carryforwards, unaccompanied by the recognitionof deferred tax assets
As a result of evaluating the recoverability of the deferred tax assets above, the Group has not recognized deferred tax assets on certain deductible temporary differences and tax loss carryforwards. The amounts of deductible temporary differences, net operating loss carryforwards and tax
credit carryforwards, unaccompanied by the recognition of deferred tax assets are as follows:
Millions of yen

2022

2023

Deductible temporary differences

33,235

8,678

Tax loss carryforwards

48,90356,972

82,13965,649As of March 31

Total
Expiration of tax loss carryforwards for which deferred tax assets have not been recognized is as follows:

Millions of yen
As of March 31

2022

2023

1st year

104

1,404

2nd year

188

173

3rd year278

75

4th year309

126

48,02555,194

48,90356,972

5th year and thereafter
Total(4) Income taxes
The analysis of income taxes is as follows:(6) Reconciliation of effective tax rates
Reconciliation of statutory effective tax rates and actual tax rates for the years ended March 31, 2022 and 2023 are as follows. The actual tax rate
shows the ratio of income taxes incurred by all Group companies to the profit before income tax for the year.
For the year ended March 31

2022

2023

Statutory income tax rate

31.4%

31.4%

Non-taxable dividends received(2.0%)(1.8%)

Impact of tax differences of foreign subsidiaries

1.1%

1.5%

Tax credit(0.1%)(0.1%)

Valuation allowance

1.9%(0.3%)

Other(1.0%)

0.7%

Average actual tax rate to incur

31.2%

31.4%

16 Employee Benefits
The Group operates defined benefit pension plans and lump-sum retirement plans (unfunded) as its defined benefit plans, as well as defined contribution pension plans.
The Company and its certain consolidated subsidiaries adopt point system in their retirement benefit plans, where the amount of benefits is calculated based on the accumulated points granted in proportion to the employees’ entitlement and wage ranks.
Management, operation and benefit of the assets are mainly controlled by legally independent KDDI Corporate Pension Fund (the “Fund”).
In accordance with Defined Benefit Corporate Pension Act and other laws, the Group is obliged to pay contributions to the Fund, which pays
pension benefits. The trustee of the Fund is obliged to comply with laws, appointments by the Minister of Ministry of Health, Labour and Welfare
or the Head of the Regional Bureau of Health and Welfare, by law of the Fund and resolutions of the board of representatives, as well as to fulfill
fiduciary duties related to the management and operation of the funded money. The trustee is prohibited from abusing the appropriate management and operation of the funded money for self-interest or the interest of third party other than the Fund.

Millions of yen
For the year ended March 31

2022

2023

301,111289,339(1,393)

6,042

Current tax expenses
Current tax expenses on the profit for the year
Adjustments in respect of prior years ( (): refund)Previously unrecognized tax loss carryforwards of prior years that is used to reduce current tax
expenses  Sub total(3,576)(107)

296,142295,274

Deferred tax expenses
Origination and reversal of temporary differences

35,99744,278

1

(8)

445

(5)

(628)

(55)

Impact of change of tax rates
Previously unrecognized tax loss carryforwards of prior years that is used to reduce deferred tax 
expenses
Review of the collectability of deferred tax assets  Sub total

35,81544,210  Total331,957

339,484(1) Defined benefit pension plansi. The amounts on the consolidated statement of financial position
The amounts related to the defined benefit pension plans on the consolidated statement of financial position are as follows:
Millions of yen
As of March 31

Present value of the defined benefit obligations (funded)
Present value of the defined benefit obligations (unfunded)

2022

2023

401,194353,214

11,127

11,623

Fair value of plan assets(444,546)(416,009)

Status of the funding(32,224)(51,172)

Retirement benefit liabilities

12,496

11,739Retirement benefit assets(44,720)(62,911)

Net retirement benefit liabilities(32,224)(51,172)(5) Income taxes recognized in other comprehensive income
Income taxes recognized in other comprehensive income are described in “Note 29. Other comprehensive income.”

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

The fair value of the plan assets as of March 31, 2022 and 2023 consists of the components below:

ii. Movement in the defined benefit obligations and plan assets
The movement in the defined benefit obligations is as follows:

Millions of yen
Millions of yen

For the year ended March 31

2022

2023

With quoted prices
in active markets

Without quoted
prices in active
markets

Equities

61,911—

The movement in the present value of the defined benefit obligations
Opening balance

413,130

2022

As of March 31

412,321

2023

Total

With quoted prices
in active markets

Without quoted
prices in active
markets

Total

61,911

53,153—53,153Current service cost

11,1634,554Interest expense

2,176

2,145

Debt securities

185,353—

185,353

165,499—

165,499

419,020

Other (Note)

47,103150,178

197,281

45,403

151,955

197,357

Total

294,368

150,178444,546

264,054

151,955

416,009   Sub total

426,469

Remeasurements   Amount from change in financial assumptions

216(38,053)   Amount from change in demographic assumptions

91

(30)

Benefit payments(14,706)(16,360)

Exchange differences

17

10

New consolidation

—

4

Other

235

246

412,321364,838

Ending balance
The movement in the plan assets is as follows:

Millions of yen

Note: Other includes hedge funds, private equities and cash.

iv. The analysis of expenses related to defined benefit plans
The amount of expenses recognized related to defined benefit plans is as follows:
Millions of yen
For the year ended March 31

Current service cost

2022

2023

11,1634,554Interest expense

2,176

2,145

Interest income(2,886)(2,880)10,453

3,819

Total

2022

2023

Opening balance(439,384)(444,546)

Interest income(2,886)(2,880)(8,092)

19,635

As of March 31

2022

2023

13,544

14,827

Discount rate

0.6%

1.4%

(7,801)(3,045)

New consolidation

—

—

Other

74

—

(444,546)(416,009)

For the year ended March 31

Changes in fair value of the plan assets

Remeasurements   Return on plan assets
Benefit payments
Contribution to the plans   Contribution from employers

Ending balance

The expenses above are included in the “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement ofincome.
v. Actuarial assumptions
Major actuarial assumptions at the end of each period are as follows:

Other than the component above, actuarial assumptions also include expected salary growth rate, mortality and expected retirement rate.

The weighted average duration of the defined benefit obligations for the years ended March 31, 2022 and 2023 are 15.4 years and 14.6 years,
respectively.
iii. Components of plan assets
KDDI Corporate Pension Fund manages its funded money to secure long-term return required to cover the benefit of pensions and lump-sum
payments over the future. Based on this, our investment policy is to basically analyse the risk/return characteristics by asset and evaluate the correlation among assets in order to invest in a diversified portfolio.
Specifically, it sets policy asset allocation with the efficient combination of various assets including equities and government and corporate
bonds, designs corresponding manager structure, selects managing trustee and invests.
In accordance with the provision of the Defined Benefit Corporate Pension Act, bylaw of the Fund requires the amount of contributions to berecalculated the amount of contributions at least every 5 years, with the financial year-end serving as the basis date to maintain balanced financesin the future. It is reviewed, as necessary, if there is a significant change in the circumstances surrounding the Fund.

vi. Sensitivity analysis of actuarial assumptions
The movement in the defined benefit obligations due to changes in discount rates by the ratio below at the end of each period is as follows. This
analysis assumes that actuarial assumptions other than those subject to the analysis are constant, but in reality, the movement of other actuarial
assumptions may change.
Discount rates
Millions of yen
As of March 31

2022

2023

0.5% increase(25,365)(19,881)

0.5% decrease

25,95121,808vii. Contributions to the plan assets in the next financial year
The policy of the Group is to contribute the necessary amount to the plan in order to meet the minimum funding requirement, based on related
regulations. The Group estimates the contributions to the plan assets for the year ending March 31, 2024 to be ¥1,540 million.
(2) Defined contribution pension plans
The amount of expenses recognized related to defined contribution pension plans is as follows:
Millions of yen
For the year ended March 31

2022

2023

Expenses related to defined contribution pension plans

5,064

8,057

The expenses above are included in the “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement of

194

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assuranceincome.
Certain Group subsidiaries participate in a multiemployer plan, Sumisho Rengo Corporation Pension Fund.
Sumisho Rengo Corporation Pension Fund is a fund-type corporate pension established in accordance with Defined Benefit Corporate Pension
Act, and co-operated by multiple Sumitomo Shoji Group companies. Certain Group subsidiaries cannot reasonably calculate the amount of pension assets corresponding to the amount of their contributions, and therefore the amount of contributions is recognized as retirement benefit
expenses as defined contribution pension plans. The expenses on the consolidated statement of income for the years ended March 31, 2022 and2023 are ¥1,835 million and ¥1,819 million, respectively.
The Group can reduce its costs and practical burden related to administration and finance operation by participating in this fund and simultaneously reduce the risk of a pension plan’s discontinuance, while the fund is co-operated by multiple companies and the Group cannot necessarilyreflect its intent.
The financial position of the fund based on the latest annual report (closed by pension accounting) is as follows. The fund does not accept or
succeed other funds, and does not incur benefit obligations by other employers.
(i) Status of funding in the overall plan
Millions of yen

2022

2023

Pension assets(52,533)(55,035)

Benefit obligations for the purpose of calculating pension financials

43,57846,368Difference(8,955)(8,667)

Ratio of the funded pension assets

120.5%

118.7%(8,955)(8,667)For the year ended March 31

The analysis of other financial liabilities is as follows:
Millions of yen

2022

2023

2,197

806

   Long-term account payables

2,112

1,967

  Other

9,889

7,535

   Sub total

14,19810,309  Derivatives

2,620

6,894

   Sub total

2,620

6,894

   Total

16,81817,202As of March 31

Non-current liabilities (Other long-term financial liabilities):
Financial liabilities at fair value through profit or loss  Derivatives
Financial liabilities at amortized cost

Current liabilities (Other short-term financial liabilities):
Financial liabilities at fair value through profit or loss

Difference consists ofSurplus(1) Movements of provisions(ii) Ratio of contributions by the Group to the fundMillions of yen

2022

2023

Contributions by the Group

(1,706)(1,743)All contributions to the fund

(2,757)(2,812)For the year ended March 31

Ratio to all contributions to the fund

19 Provisions

61.9%

62.0%

Changes in provisions are as follows:
Millions of yen

Asset retirement
obligation

Provision for customer points

Other provisions

Total

72,89627,210

16,296

116,401

As of April 1, 2021
Increase during the year

In accordance with a provision of the Defined Benefit Corporate Pension Act, a bylaw of the Fund requires the amount of contributions to berecalculated every 5 years, with the financial year-end serving as the basis date to maintain balanced finances in the future. It is reviewed, as necessary, if there is a significant change in the circumstances surrounding the Fund.
(iii) Contributions to the multiemployer plans in the next financial year
The Group estimates the contributions to the multiemployer plans for the year ending March 31, 2024 to be ¥1,819 million.

Decrease during the year (intended use)
Decrease during the year (reversal)
As of March 31, 2022
Increase during the year
Decrease during the year (intended use)
Decrease during the year (reversal)

2,182

37,667

1,846

41,695(10,493)(40,889)(11,001)(62,383)

—

—

—

—

64,58523,9887,141

95,713995

22,448

6,485

29,927(17,798)(28,620)(1,410)(47,828)

—

—

—

—

As of March 31, 2023

47,781

17,816

12,21577,81217 Trade and Other Payables

Non-current liabilities

47,269—5,145

52,414

The analysis of the trade and other payables is as follows:

Current liabilities

512

17,816

7,070

25,398Millions of yen

2022

2023

Accounts payable (Note)

620,656

586,110

Accounts payable-trade176,842

172,402

Accrued expenses

36,55743,040

Other obligations

440

375

834,496

801,927

As of March 31

Current liabilities  TotalThe main components of provisions of the Group are as follows:

Note: Accounts payable mainly consists of the payables for capital investments and sale commission.

The amounts of trade and other payables expected to be settled after more than twelve months from March 31, 2022 and 2023 are ¥3,218 million and ¥1,019 million, respectively.

18 Other Financial Liabilities
196(2) Components of provisions

i. Asset retirement obligation
Asset retirement obligations are recognized using the reasonably estimated amount required for the removal of equipment, such as basestations, certain offices, data centers and network centers. The estimate is based on present assumptions and is subject to changes if
assumptions are revised in the future.

customer points. The Group has measured the amounts of provision
for customer point at an estimated amount to be used in the future
based on historical experience.
There is an inherent uncertainty regarding the extent of usage ofsuch points by customers, and once the points expire, the customers
forfeit the right to use them.

ii. Provision for customer points
The Group operates some points programs, including the au Ponta
point program, and grants points to customers of the Group, for the
purpose of sales promotions. In anticipation of the future use of such
points by customers, the Group has recorded these points, which aremainly granted by using au Pay and au Pay card, apps and productsales services provided by other companies to debt as a provision foriii. Other provisions
Other provisions include provision for contract loss and provision forwarranties for completed construction.

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Disclosure and IR

Data

Governance

TCFD/TNFD

Corporate Overview/Stock Information

External Assurance

For the year ended March 31, 2023

20 Other Liabilities
The analysis of other liabilities is as follows:
Millions of yen

2022

As of March 312023

Non-current liabilities:
Long-term deposits payable

1,865

1,902

Other

9,150

10,465

11,015

12,366

Deposits payable

129,059

136,314

Accrued bonuses

34,41636,498Consumption tax payable

17,66428,715

Other34,25841,185  Sub total

215,397242,712  Total226,412

255,078  Sub total
Current liabilities:

BIP trust

Number ofshares granted

Granted date

Fair value at granted
date (Yen) (Note 1)

Vesting conditions

195,319

March 10, 2022

3,620.06(Note 2)

Notes: 1. With respect to stock grants, fair values are measured based on observable market prices. Moreover, the expected dividends are incorporated into the measurementof fair values.
2. Vesting conditions are subject to continued service from grant date to vesting date.

(2) Okinawa Cellular Telephone Company
Consolidated subsidiary Okinawa Cellular Telephone Company has BIP trust and ESOP trust. The shares in Okinawa Cellular Telephone Company
are granted by the institution.
For the year ended March 31, 2022
Number ofshares granted

Granted date

Fair value at granted
date (Yen) (Note 1)

Vesting conditions

BIP trust

2,245

March 24, 2021

5,089.00(Note 2)ESOP trust

5,558

March 24, 2021

5,089.00(Note 2)

Notes: 1. With respect to stock grants, fair values are measured based on observable market prices. Moreover, the expected dividends are incorporated into the measurementof fair values.
2. Vesting conditions are subject to continued service from grant date to vesting date.

21 Share-Based Payment (Stock Grant Plans)

For the year ended March 31, 2023

The Company and its certain consolidated subsidiaries have several stock compensation plans (hereafter, the “Plan”) for directors, executive officers, and administrative officers (excluding directors residing overseas, outside directors and part-time directors) that have entered into engagement agreements with the Company (hereafter, “Directors and Other Executives”).
For the directors, the Company and its certain consolidated subsidiaries have adopted the Board Incentive Plan (BIP). For the Group’s senior
management, the Company has adopted the Employee Stock Ownership Plan (ESOP).
BIP (Board Incentive Plan) is being initiated in order to link compensation for Directors and Other Executives with shareholder value and toincrease their awareness of contributing to increases in operating performance and corporate value over the medium to long term. This ESOP
Trust is being introduced as an incentive plan to enhance corporate value over the medium to long term by increasing awareness among theCompany’s managers of operating performance and stock price.
Under BIP and ESOP, the right (the number) for stock granted is vested based on achievement based off of Key Performance Indicators (KPIs)
annually.
The expenses for the stock grant plans recognized in the consolidated statement of operations for the year ended March 31, 2022 and 2023
are ¥1,599 million and ¥1,856 million, respectively.

Number ofshares granted

Granted date

Fair value at granted
date (Yen) (Note 1)

Vesting conditions

BIP trust

2,557

March 25, 2022

4,916.00(Note 2)ESOP trust

5,696

March 25, 2022

4,916.00(Note 2)

Notes: 1. With respect to stock grants, fair values are measured based on observable market prices. Moreover, the expected dividends are incorporated into the measurementof fair values.
2. Vesting conditions are subject to continued service from grant date to vesting date.

22 Common Stock and Other Equity Items(1) Common stock and capital surplus
The number of authorized shares, outstanding shares, common shares and the balance of capital surplus in each consolidated fiscal year are as
follows:(1) KDDI CORPORATIONStockThe Company has BIP trust and ESOP trust. The stocks of the Company are granted by the institution.
For the year ended March 31, 2022

Balance as of April 1, 2021
Number of shares
grantedFair value at granted
Granted date
date (Yen) (Note 1)

Increase and decrease during the period (Note 3)
Vesting conditions

BIP trust

194,506

March 11, 2021

3,283.86(Note 2)ESOP trust

276,168

March 11, 2021

3,283.86(Note 2)

Notes: 1. With respect to stock grants, fair values are measured based on observable market prices. Moreover, the expected dividends are incorporated into the measurementof fair values.
2. Vesting conditions are subject to continued service from grant date to vesting date.

Balance as of March 31, 2022
Increase and decrease during the period
Balance as of March 31, 2023

Millions of yen

Authorized shares

Outstanding shares

Common stock

Capital surplus

4,200,000,000

2,304,179,550

141,852

278,675

—

—

—

696

4,200,000,000

2,304,179,550

141,852

279,371—(1,467,242)—

1

4,200,000,000

2,302,712,308

141,852

279,371

Notes: 1. Common stock has no par value.
2. Outstanding shares are fully paid.
3. The decrease in the number of outstanding shares was due to the cancellation of treasury stocks.

Under the Companies Act of Japan (the “Companies Act”), at least 50% of the proceeds upon issuance of equity instruments shall be credited tocommon stock. The remainder of the proceeds shall be credited to additional paid-in capital. The Companies Act permits, upon approval at thegeneral meeting of shareholders, the transfer of amounts from additional paid-in capital to common stock.

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VisionFinancial and Non-Financial Data

Material Issues

TCFD/TNFD

Consolidated Financial Statements

Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

For the year ended March 31, 2023:(2) Treasury stock

Millions of yen

Changes in the number of treasury shares during each consolidated fiscal year are as follows:
Treasury stock   Cancellation of treasury stock

Changes in fairvalue of cash flowhedge

Remeasurementsof benefit pension
plan

Total

6,297

36,403375—

43,074

12,980(24,156)(852)

12,429401(Millions of yen)

28,782,253(86,719)

60,391,051(213,763)——

Increase and decrease during the period   Purchase of treasury stock (Note 1)

Translationdifferences on
foreign operations

Amount(Shares)

Balance as of April 1, 2021 (Note 3)

Changes measured in fair valueoffinancial assets atfair value throughother comprehensive income   Disposal of treasury stock (Note 2)(194,372)

655

Balance as of March 31, 2022 (Note 3)

88,978,932(299,827)   Purchase of treasury stock (Note 1)

59,823,205(254,933)   Cancellation of treasury stock(1,467,242)

5,313   Disposal of treasury stock (Note 2)(1,743,966)

3,614

Balance as of March 31, 2023 (Note 3)

145,590,929(545,833)

Increase and decrease during the period

Notes: 1. T he increase in the number of treasury shares in the fiscal year ended March 31, 2022 and 2023, are mainly due to the purchase from the market, 60,390,800 shares,
and 59,823,200 shares, respectively.
2. The decrease in the number of treasury stock is due to the allocation to grant to beneficiaries of executive compensation BIP trust and stock grants ESOP trust.
3. The balance of treasury stock as of April 1, 2021, March 31, 2022 and March 31, 2023 includes share of the Company owned by the executive compensation BIP
trust and stock grants ESOP trust.

(3) Retained earnings
The Companies Act provides that 10% of the dividend of retained earnings shall be appropriated as legal capital surplus or as legal retained earnings until their aggregate amount equals 25% of common stock. The legal retained earnings may be used to eliminate or reduce a deficit or betransferred to retained earnings upon approval at the general meeting of shareholders.
(4) Changes in accumulated other comprehensive income

Balance as of April 1, 2022
Amount incurred during the year
 Reclassified to consolidated
statement of income

—

—

366

—

366

—

430

—

(12,429)(11,999)

19,277

12,677(112)—

31,841

Transferred to retained earnings
Balance as of March 31, 2023

Note: Amounts presented above are net of tax. Income taxes related to each component of other comprehensive income are set out in “Note 29. Other comprehensive income”.

ii. The analysis of accumulated other comprehensive income
Accumulated other comprehensive income includes following items.

(a) Translation differences on foreign operations
This represents the exchange differences incurred upon consolidation of the foreign operations’ financial statements denominated in foreign
currencies.
(b) Changes in fair value of financial assets at fair value through other comprehensive income
This represents the valuation differences on fair value of financial assets at fair value through other comprehensive income.
(c) Changes in fair value of cash flow hedge
This represents the effective portion of changes in fair value of derivative transactions designated as cash flow hedge, which is used by the Groupto avoid the risk of future cash flows fluctuations.
(d) Remeasurements of defined benefit pension plan
Remeasurements of defined benefit pension plan are mainly the effects of differences between the actuarial assumptions at the beginning of theyear and their actual results, and the effects of changes in actuarial assumptions.

Changes in each component of accumulated other comprehensive income are as follows:
i. Changes in each component of accumulated other comprehensive income
For the year ended March 31, 2022:
Millions of yen

Balance as of April 1, 2021
Amount incurred during the year
 Reclassified to consolidated
statement of income
Transferred to retained earnings
Balance as of March 31, 2022

Translationdifferences on
foreign operations

Changes measured in fair valueoffinancial assets atfair value throughother comprehensive income

Changes in fairvalue of cash flowhedge

Remeasurementsof benefit pension
plan

Total

(10,541)

28,273(820)—

16,912

16,838

10,943573

5,207

33,561

(1)

—

621

—

620

—

(2,813)—(5,207)(8,020)6,297

36,403375—

43,07423 Dividends
Dividends to common shareholders are as follows:(1) Dividends paid
For the year ended March 31, 2022

Resolution

Type

Aggregate amountof dividends Dividends per share(Millions of yen)

(Yen)

Record date

Effective dateJune 23, 2021
General meeting of shareholders(Note 1)

Common stock

136,524

60

March 31, 2021

June 24, 2021

October 29, 2021
Board of directors (Note 1)

Common stock

134,82360 September 30, 2021

December 1, 2021

Note: A mounts presented above are net of tax. Income taxes related to each component of other comprehensive income are set out in “Note 29. Other comprehensive income”.

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Governance

TCFD/TNFD
Disclosure and IR

Data

Corporate Overview/Stock Information

External Assurance

For the year ended March 31, 2023
Resolution
June 22, 2022
General meeting ofshareholders (Note 1)
November 2, 2022
Board of directors (Note 2)

For the year ended March 31, 2023
Aggregate amount of dividends(Millions of yen)Type

Common stock

143,988

Common stock

142,496

Dividends per
share (Yen)Record date

Effective date65

March 31, 2022

June 23, 202265

September 30,
2022

December 5,
2022

Notes: 1. Dividends of the Company’s shares owned by the executive compensation BIP trust and stock grants ESOP trust are not included in the aggregate amount of the dividends above.
2. D
 ividends of the Company’s shares owned by the executive compensation BIP trust are not included in the aggregate amount of the dividends above.

(2) D ividends whose record date is in the current fiscal year but whose effective date is in the following fiscal year are as follows:

June 22, 2022
General meeting ofshareholders (Note 1)

Type

Aggregate amountof dividends(Millions of yen)

Source ofdividends

Dividends per
share (Yen)Record date

Effective dateMillions of yen

4,754,821
Mobile communications revenues

1,591,413

Multi-Brand value-added revenues

766,584

Fixed-line telecommunications

819,678

Others

1,577,145

Business Services

892,781

Others

24,160Total

5,671,762

Profit from contracts with customers

5,518,184

Profit from other sources

153,578(2) Outstanding contract balances
The Group’s receivables and contract liabilities from contracts with customers are as follows.

Common stock

143,988

Retainedearnings

65

March 31, 2022

June 23, 2022

For the year ended March 31, 2023

Type

Source ofdividends

Dividends per
share (Yen)Record date

Effective dateCommon stock

150,998

Retainedearnings

70

March 31, 2023

June 22, 2023

Contract liabilities

Notes: 1. Dividends of the Company’s shares owned by the executive compensation BIP trust and stock grants ESOP trust are not included in the aggregate amount of the dividends above.
2. D
 ividends of the Company’s shares owned by the executive compensation BIP trust are not included in the aggregate amount of the dividends above.

24 Revenue(1) Division of revenues
The Group divides revenues from contracts with customers into five categories depending on the contract: mobile telecommunications services
and multi-brand value-added services, fixed-line telecommunications services, business services and other services. Profit from each segment isdivided as follows.
For the year ended March 31, 2022
Segment

For the year ended March 31, 2022:

Receivables from contracts with customers
Aggregate amountof dividends(Millions of yen)

Resolution
June 21, 2023
General meeting ofshareholders (Note 2)

Product / Service

Personal Services

Note: The amounts presented exclude inter-segment transactions.

For the year ended March 31, 2022:

Resolution

Segment

Product / Service

Personal Services

Millions of yen

4,596,528
Mobile communications revenues

1,710,466

Multi-Brand value-added revenues

647,961

Fixed-line telecommunications
OthersMillions of yen
As of March 31, 2022

2,003,196

2,032,463

172,558

157,174

Millions of yen
As of April 1, 2022

Millions of yen
As of March 31, 2023

2,032,463

2,106,035

157,174

158,500

For the year ended March 31, 2023:

Receivables from contracts with customers
Contract liabilities

The contract liabilities are earned from activation fees related to mobile communications services and “au HIKARI” brand services. Points granted
to customers through the customer loyalty program are allocated to transaction prices based on the stand-alone selling prices of benefits with theadvance payment.
Regarding revenue recognized for the years ended March 31, 2022 and 2023, ¥83,842 million and ¥76,680 million were included in outstanding contract liabilities at the beginning of the fiscal year, respectively.
In the fiscal year ended March 31, 2022 and 2023, the revenues recognized from performance obligation fulfilled (or partially fulfilled) in the past
period are immaterial.
(3) Transaction amounts allocated to remaining performance obligations
The transaction amounts allocated to remaining performance obligations in the fiscal year ended March 31, 2022 and 2023 are ¥132,985 millionand ¥144,662 million, respectively. The performance obligations mainly comprise the revenues from activation fees related to mobile communications services and “au HIKARI” brand services and assumes to be fulfilled when the service is provided. The revenues are expected to be recognized within approximately six years, from March 31, 2022 and 2023. Approximately 50% of the transaction value allocated to the performanceobligation is expected to be recognized as revenue within one year. In addition, the Group adopts the simplified method from paragraph 121 of
IFRS 15 as a practical expedient and has not included information related to remaining performance obligations that have an original expected
duration of one year or less.

818,371
1,419,730

Business Services

827,545

Others

22,634

Total

5,446,708

Profit from contracts with customers

5,345,235

Profit from other sources

Millions of yen
As of April 1, 2021

101,472

Note: The amounts presented exclude inter-segment transactions.

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance(4) Assets recognized from the costs to obtain or fulfill contracts with customers

26 Other Income and Other Expense

The Group’s assets recognized from contract costs are as follows.

(1) The analysis of other income
Millions of yen
March 31, 2022

Millions of yen
March 31, 2023

Costs to obtain contracts

490,031582,382

Costs to fulfill contracts

58,67255,153The portion expected to be recovered from the incremental costs to obtain contracts with customers and the costs directly related to fulfilling contracts is capitalized and recorded under contract costs in the consolidated statement of financial position. Incremental costs to obtain contracts
comprise costs to obtain contracts with customers that would not have been incurred had the contracts not been obtained.
Incremental costs to obtain contracts that are capitalized are mainly sales commissions to agencies like au shop incurred when contracts are
obtained. Costs to fulfill contracts mainly comprise necessary set-up and other fees incurred between the receipt of an application and the start ofservices. These capitalized costs comprise incremental costs that would not have been incurred had telecommunications contracts not beenobtained. Furthermore, when capitalizing these costs, only the amount expected to be recovered is recognized after taking into account the estimated contract period for the telecommunications contracts. The resulting assets are amortized on a straight-line basis in line with the main estimated contract period for users of each service.
Regarding the estimated contract period, we make significant assumptions related to factors such as the expected period until cancellation ormodel change based on past performance data and other relevant elements.
These assets are amortized on a straight-line basis based on three to four years of estimated contract period in the fiscal year ended March 31,
2022 and 2023.
The Group determines the recoverability of capitalized contract costs when they are capitalized and re-evaluates this each quarter. Specifically,
the Group determines whether or not the book value of the assets exceeds the remaining amount of consideration the company expects toreceive based on the telecommunications contract over the estimated contract period less the costs directly related to providing the service thathave not yet been recognized as expenses.
In determining the recoverability, we make significant assumptions regarding the business plan based on revenue projections and cost fluctuation projections for cost of sales, sales and general administrative expenses, and other costs.
If the scenario used in estimates and assumptions changes, an impairment loss related to the asset is recognized in net profit or loss. This
could therefore have a material impact on the value of assets capitalized from contract costs. Accordingly, the Group regards these estimates asmaterial.
The amortization costs incurred from these assets in the years ended March 31, 2022 and 2023 amounted to ¥211,812 million and ¥233,952
million, respectively, and the impairment losses are not recognized.

The analysis of other income is as follows:
Millions of yen
For the year ended March 31

2022

2023

Subsidy income, etc.

2,902

55,392Gain on sale of fixed assets

1,658

1,747

Compensation income, etc.

797

2,366

Income from recovery of bad debts

786

717

Other

14,85911,408Total

21,001

71,629(2) The analysis of other expense
The analysis of other expense is as follows:
Millions of yen
For the year ended March 31

2022

2023

Reduction entry of land contribution for construction

10—

Loss on sale of fixed assets

265

165

Other

5,506

3,624

Total

5,781

3,790

27 Finance Income and Finance Cost
(1) The analysis of finance income

25 Expenses by Nature

The analysis of finance income is as follows:

Expenses by nature that constitute cost of sales and selling, general and administrative expenses are as follows:

Millions of yen
Millions of yen

For the year ended March 31

2022

2023

Interest income:Financial assets at amortized cost

2022

2023

Handset sales cost, repair cost

702,641

657,987

Depreciation and amortization

727,779

696,591

Communication equipment usage fee and rentals

332,953

352,031

Staff cost

461,176

468,597

Other   Total

For the year ended March 31

Operations outsourcing

332,509340,776

Sales commission

360,590357,675

Power retail sales cost

410,175

630,628

Advertising expense

113,728

104,135

Sales promotion expense

68,034105,390

Other (Note)

897,544954,611

Total

4,407,127

4,668,421

Note: Other mainly consists of maintenance costs for communication equipment and rent, etc.

537

1,998

Dividend income:Financial assets at fair value through other comprehensive income

5,989

7,910

Gain on foreign currency exchange

3,037

—

639

267

10,202

10,175(2) The analysis of finance cost
The analysis of finance cost is as follows:
Millions of yen
For the year ended March 31

2022

2023

6,067

6,528

615

615

Interest expense:
Financial liabilities at amortized cost
Financial liabilities at fair value through profit or loss  Derivatives
Foreign exchange loss

204

—

14

Other

1,065

1,501

   Total

7,746

8,658

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

28 Other Non-Operating Profit

30 Cash Flow

The analysis of other non-operating profit is as follows:
Millions of yen
For the year ended March 31

2022

2023

Gain or loss on change in equity

1,309

35

Gain on bargain purchase—584

Gain or loss on sales of stocks of subsidiaries and affiliates

139

(7)

1,448

612

   Total

An analysis of net debt and the movements in net debt for the periods presented are as follows:
Millions of yen

Cash/current
bank account809,802400,925

19,517

895,655

329,384(3,584)

Cash flows(20,201)(130,848)

36,517(73,375)———

117,985

—

—

—

—

7,012

(613)

—

—

—

—

Foreign exchange adjustments

Amounts arising during the year, amounts transferred to profit and tax effect included in other comprehensive income of the Group are as follows:
Millions of yen
For the year ended March 31

2022

2023

Items that will not be reclassified subsequently to profit or loss

Fair value movements

—

—

—

—

—

1,387

Other non-cash movements

—

4,536

—

264

159

—
(2,197)

Net debt as of March 31, 2022

796,613391,984

56,034

822,544

329,543

Cash flows(323,448)(128,288)

13,483(19,400)

50,000—Acquisitions—

132,917———(1,100)

7,087

58

—

—

—

—

—

—

—

—

—

1,030

Foreign exchange adjustments

Remeasurement of the net defined benefit liability (asset)

Hedge assets
held for borrow.
Bonds Due after 1 year

Net debt as of April 1, 2021
Acquisitions

29 Other Comprehensive Income

Lease Borrowings due Borrowings due
liabilities
within 1 year
after 1 year

Fair value movements   Gain (loss) arising during the year

7,566

18,241Other non-cash movements  Tax effect(2,365)(5,715)Net debt as of March 31, 2023   After tax effect

5,201

12,526

Note: Borrowings includes the liabilities generated from operating activities.

   Gain (loss) arising during the year

13,560(32,881)  Tax effect(4,559)8,044   After tax effect9,001(24,837)

(6)

(555)

—

2,572

—

52

(61)

361

480,252

399,242

69,517803,196

379,482(1,906)

Net change in financial assets at fair value through other comprehensive income

Share of investments accounted for using the equity method   Gain (loss) arising during the year   After tax effect   Total

(6)

(555)

14,195(12,865)

2,870(1,869)Items that may be reclassified subsequently to profit or loss
Changes in fair value of cash flow hedge   Gain (loss) arising during the year   Transferred to profit for the year

621

366

   Before tax effect

3,491(1,503)  Tax effect(1,068)461   After tax effect

2,422(1,042)

23,892

19,935(1)—   Before tax effect23,891

19,935   After tax effect23,891

19,935

1,003

1,485

Exchange differences on translating foreign operations   Gain (loss) arising during the year   Transferred to profit for the year

Share of investments accounted for using the equity method   Gain (loss) arising during the year206   Transferred to profit for the year

(22)

(17)

   After tax effect

981

1,467

   Total

27,294

20,360    Total other comprehensive income

41,4907,495KDDI Integrated Sustainability and Financial Report 2023

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance(c) Quantitative and qualitative information on the amounts arising from expected credit losses
Loss allowance for trade receivables

31 Financial Instruments(1) Risk management
The Group’s operating activities are subject to influence from thebusiness and financial market environment. Financial instruments heldor assumed in the course of business are exposed to risks inherent inthose instruments. Such risks include (i) Credit risk, (ii) Liquidity riskand (iii) Market risk. The Group has a risk management program inplace to minimize effects on the Group’s financial position and resultsof operations through establishing an internal management system
and using financial instruments. Specifically, the Group manages
these risks by using methods as described below.
i Credit risk management(a) Credit risks of financial assets owned by the Company
Credit risk is the risk that a party to the Group’s financial instrument
will cause a financial loss for the Group by failing to discharge its contractual obligation. Specifically, the Group is exposed to the following
credit risks. Trade, lease, other receivables and loans for financial
business of the Group are exposed to the credit risk of our customers. The debt securities held for surplus investment are exposed tothe issuer’s credit risk related to the deterioration of its financial condition. In addition, derivatives used by the Group to hedge exchange
risk and interest rate risk and bank balances are exposed to the credit risk of the financial institutions that are counterparties to thesetransactions.
(b) Responses to the risk owned by the Company
With regard to credit risks to the customer, the Group has a system inplace for assessing credit status as well as performing term administration and balance management for each counterparty based on thecredit management guidelines of each Group company.
With regard to lease, other receivables and loans for financial business, the Group determines there has been a significant increase incredit risk of the financial assets since initial recognition in case the
cash collection of the financial assets was delayed (as well as thecase of request for grace period) after the trade date. However, evenwhen late payment or request for grace period occurs, the Group
does not determine that there has been a significant increase in credit
risk if such late payment or request for grace period would be attributable to temporary cash shortage, the risk of default would be low,
and the objective data such as external credit ratings reveals theirability to fulfil the obligation of contractual cash flow in the near future.
With regard to debt securities, the Group determines there has
been a significant increase in its credit risk since initial recognition
when the Group evaluates the risk of default is high based upon rating information provided by major rating agencies.
Expected credit loss is recognized and measured through transactions and financial information available in the course of such credit
risk management, while taking macroeconomic condition such as thenumber of bankruptcies and actual or expected significant changes in
the operating results of the debtor into consideration. Regardless of
the analysis above, a significant increase in credit risk is presumed if adebtor is more than 30 days past due in making a contractual
payment.
A default occurs when a debtor to a financial asset fails to makecontractual payments within 90 days of when they fall due.

208

Millions of yen

The Group directly writes off the gross carrying amount of the credit-impaired financial assets when all or part of the financial assets areevaluated to be uncollectible and determined that it is appropriate to
be written off as a result of credit check.
The Group’s receivables have no significantly concentrated credit
risk exposure to any single counterparty or any group ofcounterparties.
The Group considers that there is substantially low credit risk resulting from counterparty default because counterparties of the Group’s
derivatives and bank transactions are limited to high credit quality
financial institutions. For surplus investments and derivative transactions, the finance and accounting department, following internal rulesof each Group company and accompanying regulations that prescribe details, arranges to have each transaction approved by anauthorized person as designated in the authorization regulation on atransaction-to-transaction basis so that the Group can minimize credit risk. Counterparties to those transactions are limited to financial
institutions with high credit rating.
Measurement of expected credit losses on trade receivables
As trade receivables do not contain a significant financing component, the Group measures loss allowance at an amount equal to thelifetime expected credit losses until the trade receivables are recovered. With regard to performing trade receivables, loss allowance isrecognized by estimating the expected credit losses based on historical credit loss experience and forward-looking information for thetenor of each trade receivables.
Measurement of expected credit losses on lease, other receivables and loans for financial business
When credit risk related to lease and other receivables has notincreased significantly since the initial recognition at the end of thereporting period, the Group calculates the amount of loss allowanceof the financial instruments by estimating the 12-month expectedcredit losses collectively based upon both historical credit loss experience and forward-looking information.
On the other hand, when a significant increase in credit risk sinceinitial recognition as of the end of fiscal year is presumed, the Groupestimates the lifetime credit losses on the financial instruments individually and measures the amount of loss allowance based on historical credit loss experience and forward-looking information.
Measurement of the expected credit losses on other investments (debt securities)
When credit risk related to debt securities has not increased significantly since initial recognition at the end of the reporting period, theGroup calculates the amount of loss allowance of the financial instruments by estimating the 12-month expected credit losses.
On the other hand, when a significant increase in credit risk sinceinitial recognition as of the end of fiscal year is presumed, the Groupestimates the lifetime credit losses on the financial instruments andmeasures the amount of loss allowance based on historical credit
loss experience and forward-looking information.

Measured at the amountequal to the lifetime
expected credit losses
Balance as of April 1, 2021

29,149

Increase during the year

28,834

Decrease during the year (reversal)(14,957)

Decrease during the year (intended use)

(12,072)

Other

101

Balance as of March 31, 2022

31,055

Increase during the year

34,159Decrease during the year (reversal)(18,305)

Decrease during the year (intended use)

(11,355)

Other

(766)

Balance as of March 31, 2023

34,788Loss allowance and reversal of loss allowance are recorded in “selling, general and administrative expenses” in the consolidated statement ofincome.
There is no contractual, uncollected balance for financial assets written off during the fiscal years ended March 31, 2022 and 2023 respectively,
for which collecting efforts are still being made.
There are no significant loss allowances for lease receivables, other receivables, loans for financial business and other investments (debt
securities).
(d) Maximum exposure to credit risks
The Group’s maximum exposure to credit risks is as follows.
The Group’s maximum credit risk exposure (gross) represents the amount of the maximum exposure with respect to credit risks without taking
into account any collateral held or other credit enhancement.
Maximum exposure for trade receivables
For the year ended March 31, 2022
Millions of yen

Gross carrying amountCurrent

More than 30 days
past due

More than 90 days
past dueTotal

2,235,392

16,80190,8552,343,048

Expected loss rate

0.3%

9.3%

25.4%

—

Loss allowance

6,410

1,564

23,081

31,055For the year ended March 31, 2023
Millions of yen

Gross carrying amountCurrent

More than 30 days
past due

More than 90 days
past due

Total

2,232,238

151,129

96,8112,480,178

Expected loss rate

0.3%

1.4%

27.1%

—

Loss allowance

6,509

2,091

26,18834,788

Note: There is no collateral and other credit enhancement owned by the Group.

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VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Governance

TCFD/TNFD
Disclosure and IR

Data

Corporate Overview/Stock Information

External Assurance

ii. Liquidity risk management
The Group is exposed to liquidity risk that the Group may be unable to meet the obligations such as notes and trade payables.
The Group finances necessary funds through bank borrowings, bond issuances and liquidation of receivables in the context of its capital
expenditure project mainly to conduct telecommunications businesses. Any excess funds incurred are invested in short-term deposits etc.
Most of the trade and other payables are payable within one year. The Group’s current liabilities including such trade payables are exposed toliquidity risk at the time of settlement, however, the Group avoids the risk using methods such as monthly financial planning review conducted byeach Group company. In addition, to manage liquidity risk, the Group aims for continuously stable cash management through monitoring accountactivity by preparing monthly cash flow projection, and maintains liquidity at certain level. The Group has short-term deposits etc. that is considered to be readily convertible into cash to address liquidity risk. Please refer to “Note 13. Cash and cash equivalents” for details.
Long-term financing is conducted following approval by the Board of Directors of the annual financial plan prepared by the finance andaccounting department. The Group minimizes its liquidity risk by entering into a number of long- and short-term unexpended commitment line
contracts with domestic dominant financial institutions and leading financial institutions in foreign countries in addition to uncommitted credit
facilities.
(a) Maturity analysis
The following tables analyse the Group’s non-derivative financial liabilities and derivative financial liabilities to be settled on a net basis by category
based on the remaining periods to contractual maturity at the end of each fiscal year. Amounts shown in the tables below are contractual undiscounted cash flows.
As of March 31, 2022
Millions of yen

Carrying Contractual
amountcash flow
Non-derivative financial liabilities
Trade and other payables
Short-term borrowings
Long-term borrowings
Bonds payable
Deposits for financial business
Lease liabilities  Sub total
Derivative financial liabilities (Note)
Currency-related transactions
Interest rate-related transactions  Sub total  TotalWithinone yearOver oneyear totwo years

Over twoyears tothree years

Over three
years tofour years

Over four
years tofive years

Over fiveyears

iii Market risk management
Market risk management consists of (a) Exchange risk management, (b) Interest rate risk management and (c) Price risk managementof equity instruments.
(a) Exchange risk
The Group is exposed to exchange rate fluctuation risk (“exchange risk”) that results from translating foreign currency denominated trade receivables arising from transactions that the Group conducted using non-functional currencies into their functional currencies at the exchange rate prevailing at the end of reporting period.
The Group also operates in foreign countries. Currently, the Group is developing international businesses through capital contribution andestablishment of joint ventures in Asia (Singapore and China etc.), North America and Europe etc. As a result of these international operating
activities, the Group is exposed to various exchange risks primarily related to the U.S. dollar.
A certain subsidiary hedges exchange fluctuation risk by adopting forward exchange contracts as derivative transactions. The purpose is to fix
the exchange fluctuation for broadcasting right related to foreign programs. For derivative transactions, the Company develops implementationplans on a transaction-to-transaction basis following internal rules approved by the Board of Directors, and obtains approval as stipulated in theauthorization regulation, before conducting the transactions. The Group’s policy is to use derivative transactions only to avoid risk and conduct nospeculative transactions in order to gain trading profits.
(i) Sensitivity analysis of exchange rate (except for au Jibun Bank)
Sensitivity analysis of the impact of the 10% appreciation of the Japanese yen against the U.S. dollar, Pound and Euro at the end of each fiscal
year against profit before tax of the Group is as follows.
This analysis assumes that all other variables (balance, interest etc.) are held constant, and the sensitivity analysis below does not contain
impacts of translation of financial instruments denominated in functional currencies, and impacts of translation of revenues and expenses, assets
and liabilities of foreign operations into presentation currency.
Millions of yen
For the year ended March 31

834,496
56,034
822,544
329,543
2,217,505
391,984
4,652,104

834,496
56,034
831,251
334,0112,219,388
392,509
4,667,689

831,278
56,034
167,820
50,993
2,186,136
114,106
3,406,367

2,949—
195,462
70,983
143
84,881
354,418165—
149,633
60,5783,158
57,903
271,4379—
130,988
30,458
145
38,101
199,701

5—
78,53430,348
1,329
25,868136,08490—
108,81490,65328,476
71,649299,682

1,275
3,542
4,817
4,656,922

1,275
3,542
4,817
4,672,507

1,275
1,345
2,620
3,408,986

—
901
901
355,319———
271,437

—
1,296
1,296
200,997———
136,084———
299,682

2022

2023

Profit before tax
U.S. dollar(2,255)(3,143)Pound(1,789)(2,050)Euro(1,154)(1,163)  Total(5,197)(6,356)

If the Japanese yen depreciate 10% against the U.S. dollar, Pound and Euro and all other variables are held constant at the end of each fiscal
year, the impact on the Group’s profit or loss would be the exact reserve of the figures presented above assuming.
(ii) Derivatives (currency-related transactions)
Details of major exchange contracts existed at March 31, 2022 and 2023 are as follows:
Derivatives designated as hedges
Certain subsidiaries of the Group is to apply hedge accounting to foreign exchange risk

Note: Credits and debts resulting from derivative transactions are presented on a net basis.

Millions of yen

2022

As of March 31

Contractual amount

As of March 31, 2023
Millions of yen

Carrying Contractual
amountcash flow
Non-derivative financial liabilities
Trade and other payables
Short-term borrowings
Long-term borrowings
Bonds payable
Deposits for financial business
Lease liabilities  Sub total
Derivative financial liabilities (Note)
Currency-related transactions
Interest rate-related transactions  Sub total  TotalWithinone yearOver oneyear totwo years

Over twoyears tothree years

Over three
years tofour years

Over four
years tofive years

Over fiveyears

801,927
69,517803,196
379,482
2,717,552
399,242
5,170,915

801,927
69,517
817,520
384,4092,717,771
398,3145,189,458

800,90969,517200,71371,3032,705,020
116,806
3,964,268

411—
154,882
60,898
10,092
84,851
311,134

129—
154,173
80,7781,179
58,309294,5686—
140,650
30,563868
40,951
213,038

4—
146,977
50,529610
26,839224,960

469—
20,12490,3391
70,558
181,491

2,476
5,224
7,700
5,178,615

2,476
5,224
7,700
5,197,158

2,410
361
2,771
3,967,038

(4)
—
(4)
311,12963
740
803
295,371———
213,0388—
8
224,967

—
4,123
4,123
185,613

Currency-related transactions

Fair value

2023

Contractual amount

Total

Over oneyear

AssetsLiabilities

47,007

9,568

3,130

10

Fair value

Total

Over oneyear

AssetsLiabilities

43,117

9,541

1,198

687
Millions of yen

As of March 31

2022

2023

Carrying amount

3,120

511

Contractual amount
Maturity date
Hedge ratio (Note 1)
Change in intrinsic value of outstanding hedging instrument (Note 2)

47,007

43,117

April 2022-December 2027

May 2023-December 2027

1

1

2,097

(2,609)Notes: 1. Since the Group enters into the foreign exchange contracts in the same currency that future purchase transactions are highly likely to occur, the hedge ratio of foreignexchange contracts is one-to-one.
2. The change in the value of the hedged item used as the basis for recognizing hedge ineffectiveness approximates the change in the fair value of the hedging instrument. The Group does not have a non-effective portion of the hedge.

Note: Credits and debts resulting from derivative transactions are presented on a net basis.

210

KDDI Integrated Sustainability and Financial Report 2023

211

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

Derivatives not designated as hedges
Millions of yen

2022

As of March 31

Contractual amountCurrency-related transactions

Fair value

2023

Contractual amount

Total

Over oneyear

AssetsLiabilities

127,095

—

(354)

4,285

Fair value

Total

Over oneyear

AssetsLiabilities

147,511

—

2,340

2,410

(b) Interest rate risk
Interest rate risk is defined as the risk that market interest rate fluctuation results in changes in fair value of financial instruments or future cash
flows arising from financial instruments. The interest rate risk exposure of the Group mainly relates to payables such as borrowings or bonds, andreceivables such as interest-bearing deposits. As amount of interest is influenced by market interest rate fluctuation, the Group is exposed tointerest rate risk resulting from changes in future cash flows of interest.
The Group finances funds through bond issuance at fixed interest rates in order to avoid future increase in interest payments, primarily resulting
from rising interest rates.
Certain subsidiaries stabilize their cash flows by using interest rate swap transactions to minimize interest rate risk on borrowings.
(i) Sensitivity analysis of interest rate (except for au Jibun Bank)For each fiscal year, there is no material impact on income before income taxes in the consolidated statements of income, even if a 1% interest
rate fluctuation occurs for the financial instruments with floating interest rates held. This analysis assumes that all other variables (balance,
exchange rate etc.) are held constant.
(ii) Derivatives (Interest rate-related transactions)
In interest swap contracts, the Group enters into agreements to exchange the differences between fixed rate and floating rate interest amounts
calculated by reference to an agreed notional principal amount. Using these contracts, the Group minimizes its risk of cash flows fluctuations arising from floating rate borrowings.
Derivatives designated as hedges
Millions of yen

2022

As of March 31

Contractual amountInterest rate-related transactions

Fair value

2023

Contractual amount

Total

Over oneyear

AssetsLiabilities

130,000

130,000—

2,197

Fair value

Carrying amountContractual amount
Maturity date

Total

AssetsLiabilities

131,100

51,100

8

1,101

2022

2023

(2,197)(1,093)130,000

131,100

December 2023-December 2025

December 2023-March 2028

Hedge ratio (Note 1)
Change in intrinsic value of outstanding hedging instrument (Note 2)(i) Sensitivity analysis of price of equity instruments (except for au Jibun Bank)
Sensitivity analysis of the impact of the 10% decrease in the price of equity instruments at the end of each fiscal year against other comprehensive
income of the Group (before tax effect) is as follows:This analysis is on presumption that all other variables (balance, exchange rate etc.) are held constant.
Millions of yen
For the year ended March 31

Accumulated other comprehensive income (before tax effect)

2022

2023

(13,789)(12,216)(d) Market risk management at au Jibun Bank Co., Ltd.
Our consolidated subsidiary, au Jibun Bank, monitors and manages the amount of market risk on a daily basis using Value at Risk (VaR). VaR iscalculated using the historical simulation method (holding period of 21 business days, confidence level of 99%, observation period of 250 business days). Market risk amount is ¥3,177 million in total, as of the end of the fiscal year ended March 31, 2022. Similarly, the total market risk
amount is ¥4,090 million, as of the end of the fiscal year ended March 31, 2023. Note that VaR measures the amount of market risk at a certain
probability of occurrence statistically calculated based on past market fluctuations, and may not be able to capture risks under circumstanceswhere the market environment changes dramatically beyond what is normally possible.
(2) Capital management
The Group seeks to realize sustainable medium- and long-term growth and maximize its corporate value. To achieve those objectives, the Group’s
basic policy for equity risk management is to maintain adequate equity structure while monitoring capital cost, along with maintaining current
fund-raising capability and ensuring financial soundness. Major performance benchmarks used by the Group to manage its equity are Ratio of
equity attributable to owners of the parent and debt / equity ratio (“D/E ratio”).
Ratio of equity attributable to owners of the parent and D/E ratio at the end of each fiscal year are as follows:

Over oneyear

Millions of yen
As of March 31(c) Price risk management of equity instruments
Price risk of equity instruments is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The Group is exposed to such price risk as it holds equity instruments.
To manage price risk arising from those equity instruments, the corporate finance and accounting department documents policies of investmentin the equity instruments and the entire Group complies with those policies. For material investments, it is obliged to report to and obtain approval
from the Board of Directors in a timely manner. To manage those equity instruments, the Group continuously reviews its holdings by monitoringmarket value and the financial condition of the issuer (counterparty) taking into account the market condition and the relationship with thecounterparty.

1

1

1,387

1,104

As of March 31

Ratio of equity attributable to owners of the parent (Note 1)
D/E ratio (debt / equity ratio) (Note 2)

Unit

2022

2023

%

45.0

43.0

ratio

0.32

0.32

Notes: 1. Ratio of equity attributable to owners of the parent : Equity attributable to owners of the parent / Total assets ×100
2. D/E ratio (debt / equity ratio): Interest bearing debt / Equity attributable to owners of the parent

As of March 31, 2022 and 2023, the Group meets the material capital controls applicable to the Group (excluding general rules such as theCompanies Act etc.).

Notes: 1. Since the Group runs the borrowing (hedged item) and interest rate swap transaction (hedging instrument) in the same amount, hedge ratio of interest rate swap transaction is one-to-one.
2. The change in the value of the hedged item used as the basis for recognizing hedge ineffectiveness approximates the change in the fair value of the hedging instrument. The Group does not have any non-effective portion of the hedge.

Derivatives not designated as hedges
Millions of yen

2022

As of March 31

Contractual amountInterest rate-related transactions

212

Fair value

2023

Contractual amount

Total

Over oneyear

AssetsLiabilities

76,98676,986(1,269)1,278

Fair value

Total

Over oneyear

AssetsLiabilities

145,631

145,631

4,123

4,123

KDDI Integrated Sustainability and Financial Report 2023

213

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

As of March 31, 2023

(3) Classification of financial assets and financial liabilities

Millions of yen

Classification of financial assets and financial liabilities of the Group is as follows:

Carrying amount

As of March 31, 2022
Millions of yen

Financial assets at
amortized cost

Carrying amountFinancial assets at
amortized cost

Financial assets atfair value throughFinancial assets
other comprehen- at fair value throughsive income
profit or loss

Non-current assets:
Total

Non-current assets:
Securities for financial businesses
Other long-term financial assets

1,328,363

—

6,747

1,335,111—

338,285—

338,285

129,576

199,60785

329,268

Current assets:
Trade and other receivables
Short-term loans for financial business

2,311,694——

2,311,694

255,266——

255,266

Call loans

45,064——45,064

Other short-term financial assets

53,762—

13,392

67,154

Cash and cash equivalents  Total

Total

Financial assets:

Financial assets:Long-term loans for financial business

Financial assets atfair value throughFinancial assets
other comprehen- at fair value throughprofit or loss
sive income

796,613——796,6134,920,338

537,892

20,224

5,478,455

Long-term loans for financial business——

2,038,403

2,038,403

Securities for financial business

55,152355,911—411,063

Other long-term financial assets

125,937

178,09080

304,106

Current assets:
Trade and other receivables

2,445,250——

2,445,250

Short-term loans for financial business

247,054—

57,503

304,557

Call loans

53,944——53,944

Other short-term financial assets

50,032—

10,12760,158Cash and cash equivalents

480,252——

480,252

3,457,621

534,000

2,106,112

6,097,733  TotalMillions of yen

Carrying amountFinancial liabilities atfair value throughFinancial liabilities
other comprehen- at fair value throughFinancial liabilities atamortized costprofit or loss
sive income

Millions of yen

Carrying amountFinancial liabilities atfair value throughFinancial liabilities
other comprehen- at fair value throughFinancial liabilities atamortized cost
sive income
profit or loss

Total

Financial liabilities:
Non-current liabilities:
Borrowings and bonds payable

921,616——

921,616Long-term deposits for financial business

33,240——33,240

Lease liabilities

279,265——

279,265

Other long-term financial liabilities

12,001—

2,197

14,198Current liabilities:
Borrowings and bonds payable

286,505——

286,505

Trade and other payables

834,496——

834,496

2,184,264——

2,184,264

Call money

141,348——

141,348

Lease liabilities

112,719——

112,719

—

—

2,620

2,620

4,805,452

—

4,817

4,810,270

Short-term deposits for financial business

Other short-term financial liabilities  Total

214

Total

Financial liabilities:
Non-current liabilities:
Borrowings and bonds payable

914,233——

914,233

Long-term deposits for financial business

64,829——64,829Lease liabilities

286,437——

286,437

9,503

—

806

10,309337,961——

337,961

Other long-term financial liabilities
Current liabilities:
Borrowings and bonds payable
Trade and other payables
Short-term deposits for financial business

801,927——

801,927

2,652,723——

2,652,723

Call money

244,111——244,111

Lease liabilities

112,805——

112,805

Other short-term financial liabilities  Total

—

—

6,894

6,894

5,424,529

—

7,700

5,432,229

Note: E ffective from the fourth quarter of the fiscal year ended March 31, 2022, au Jibun Bank Corporation has changed its management for
housing loan receivables from a management aimed at collecting receivables to a management aimed at sustainable business development
and securing a stable revenue base through the collection of receivables, resulting in a change in business model.
In accordance with the change in business model, effective April 1, 2022, the measurement category of loans for financial business,
which is categorized in financial assets at amortized cost, will be changed to financial assets at fair value through profit or loss. For details of
the measurement method for each category, please refer to “3. Significant Accounting Policies (11) Financial Instruments”. The amount tobe reclassified as of April 1, 2022 is ¥1,362,678 million.

KDDI Integrated Sustainability and Financial Report 2023

215

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance(4) Financial assets at fair value through other comprehensive income
The Group owns the equity instruments listed above as investment to maintain and strengthen the business relationship with investees, and therefore classifies them as financial assets at fair value through other comprehensive income.
i. The analysis and fair value by description of financial assets at fair value through other comprehensive income
The analysis and dividends received related to financial assets at fair value through other comprehensive income are as follows:
Millions of yen

2022

2023

137,893

122,161

61,714
199,607

55,929178,090

As of March 31

Fair value
Listed equities
Unlisted equities  TotalMillions of yen
For the year ended March 31

2022

2023

Dividends received
Listed equities
Unlisted equities  Total

2,597
3,390
5,987

2,704
5,206
7,910

Major description of investments in financial assets at fair value through other comprehensive income is as follows:
Millions of yen
As of March 31

Listed equities
TOYOTA MOTOR CORPORATIONLAWSON, Inc.
GREE, Inc.
PIA Corporation
Internet Initiative Japan Inc.
gremz, Inc.
Japan Airport Terminal Co., Ltd.
JTOWER Inc.
East Japan Railway Company
Finatext Holdings Ltd.
Other  Sub total
Unlisted equities
COMMUNITY NETWORK CENTER INCORPORATEDJapan Platform of Industrial Transformation, Inc.
WiL Fund II, L.P.
WILLER Co., Ltd.
every, Inc.
Other  Sub total  Total

2022

2023

88,839
9,864
8,696
5,184
3,448
3,829
3,404
4,007
2,124
2,306
6,191
137,893

75,148
11,837
5,520
5,035
4,617
4,067
4,019
2,712
2,191
2,057
4,958
122,161

6,316
5,000
4,221
—
2,212
43,96461,714
199,607

5,050
5,000
4,205
2,053
1,868
37,75355,929178,090

ii. Financial assets at fair value through other comprehensive income disposed during the period
The Group sells its financial assets at fair value through other comprehensive income as a result of periodic review of portfolio and for the management of risk assets. Fair value at the disposal date, accumulated gains / losses arising from sale and dividends received are as follows:
Millions of yen
For the year ended March 31

2022

2023

Fair value at the disposal date

7,320

1,897

Accumulated gains / losses arising from sale

2,863
2

(514)
0

Dividends received

216

iii. Reclassification to retained earnings
The Group reclassifies accumulated gains or losses arising from changes in the fair value of financial assets at fair value through other comprehensive income into retained earnings, when it disposes the investments, etc. Accumulated gains or losses, net of tax, reclassified from accumulated
other comprehensive income into retained earnings are ¥2,813 million and ¥(430) million, respectively, for the years ended March 31, 2022 and2023.
(5) Analysis of gains and losses arising from derecognition of financial assets measured at amortized cost and the reason for
derecognition
Millions of yen

Gains and losses arising from derecognition of financial assets measured atamortized cost ( ( ):losses)
For the year ended March 31

Loans for financial business

2022

2023

11,647—In the fiscal year ended March 31, 2022, au Jibun Bank Corporation derecognizes a portion of the loans for financial business listed on its consolidated balance sheet due to the sale of housing loan obligations.

32

Fair Value of Financial Instruments

The financial instruments that are measured at fair value are classified into 3 levels of fair value hierarchy according to the observability and significance of the inputs used for measurement. The levels of the fair value hierarchy are defined as follows:• Level 1: Quoted prices in active markets for identical assets or liabilities• L evel 2: The fair value of the asset or liability measured using inputs that are observable either directly or indirectly other than quoted prices
included within level 1• Level 3: The fair value of the asset or liability measured using inputs that are not based on observable market data (that is, unobservable inputs)
The Group determines the hierarchy of the levels based on the lowest level input that is significant to the fair value measurement.
(1) The fair value of financial assets and financial liabilities that are measured at fair value on a recurring basis.
i. The hierarchy of the fair value
The following table presents the classification by fair value hierarchy of the financial assets and financial liabilities recognized at fair value on the
consolidated statement of financial position.
As of March 31, 2022
Millions of yen

Recurring fair value measurements
Financial assets: Financial assets at fair value throughother comprehensive income   Securities for financial business   Other financial assets   Equities
Financial assets at fair value through profit or loss
Loans for financial business
Other financial assets  Derivatives   Currency-related transactions   Interest rate-related transactions  Money trusts  Investment trusts
Financial liabilities:
Financial liabilities at fair value through profit or loss   Other financial liabilities   Derivatives    Currency-related transactions    Interest rate-related transactions

Level 1

Level 2

Level 3

Total

317,948

20,337—338,285

137,893—

61,714

199,607

—

6,747

—

6,747

—
—
—
—

8,326
1,355
1,747
2,049

—
—
—
—

8,326
1,355
1,747
2,049

—
—

1,275
3,542

—
—

1,275
3,542

KDDI Integrated Sustainability and Financial Report 2023

217

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

As of March 31, 2023
Millions of yen

Level 1
Recurring fair value measurements
Financial assets: Financial assets at fair value through other comprehensive
income   Securities for financial business   Other financial assets   Equities
Financial assets at fair value through profit or loss
Loans for financial business
Other financial assets  Derivatives   Currency-related transactions   Interest rate-related transactions  Money trusts  Investment trusts
Financial liabilities:
Financial liabilities at fair value through profit or loss   Other financial liabilities   Derivatives    Currency-related transactions    Interest rate-related transactions

Level 2

Level 3

218

Millions of yen

Total

Financial assets measured at fair value through other comprehensive income
Equities
As of April 1, 2021

335,026

20,884—355,911

122,161—

55,929178,090

61,672Acquisition

9,247

Gain recognized on other comprehensive income(3,533)Sale(3,296)Other(2,376)

As of March 31, 2022—

2,095,906—

61,714

2,095,906
The following table presents the movement of financial instruments within level 3 for the year ended March 31, 2023.

—
—
—
—

2,917
4,123
385
2,781

—
—
—
—

2,917
4,123
385
2,781

Millions of yen

Financial assets measured at fair value through other comprehensive income
Equities
As of April 1, 2022

61,714

Acquisition

8,895

Gain recognized on other comprehensive income(13,938)

Sale

(879)

Other
—
—

2,476
5,224

—
—

2,476
5,224

Any significant transfers of the financial instruments between levels are evaluated at each period end. There was no significant transfer of thefinancial instruments between levels for the years ended March 31, 2022 and 2023.
Effective from the fourth quarter of the fiscal year ended March 31, 2022, au Jibun Bank Corporation has changed its management for housing
loan receivables from a management aimed at collecting receivables to a management aimed at sustainable business development and securing
a stable revenue base through the collection of receivables, resulting in a change in business model.
In accordance with the change in business model, effective from April 1, 2022, the measurement category of loans for financial business, whichis categorized in financial assets at amortized cost, will be changed to financial assets at fair value through profit or loss. For details of the measurement method for each category, please refer to “3. Significant Accounting Policies (11) Financial Instruments”. The carrying amount to bereclassified and its fair value as of April 1, 2022 are ¥1,362,678 million and ¥1,381,184 million.
ii. M
 easurement method of the fair value of financial assets andfinancial liabilities(a) Securities for financial business
Securities for financial business are measured using quoted prices in
active markets for identical assets if such prices are available, and areclassified as level 1 of the fair value hierarchy. If such prices areunavailable, they are measured using the prices based on available
information like brokered markets and the valuation technique basedon the discounted future cash flows using discounted rates reflecting
risk free rates and credit spreads, and are classified as level 2 of thefair value hierarchy according to observability of inputs.

rates at the end of each fiscal year, with the resulting value discounted back to present value. The financial assets and financial liabilities
related to currency-related transactions are classified as level 2 of thefair value hierarchy.

(b) Other financial assets and liabilities(i) Equities
Listed equities are based on the prices on exchange and within level
1 of the fair value hierarchy.
Unlisted equities are calculated by the valuation technique basedon the discounted future cash flows, valuation technique based on
the market prices of the comparative companies, valuation techniquebased on the net asset value and other valuation techniques, and arewithin the level 3 of the fair value hierarchy. Unobservable input suchas discount rates and valuation multiples are used for fair value measurements of unlisted equities, adjusted for certain illiquidity discounts
and non-controlling interest discounts, if necessary.

(iii) Money trusts
Money trust is principally calculated by the same method as securities for financial business and classified as level 2 of fair value
hierarchy.

(ii) Derivatives
Currency-related transactions
Currency-related transactions are calculated using forward exchangeiii. Reconciliation of level 3
The following table presents the movement of financial instruments within level 3 for the year ended March 31, 2022.

Interest rate-related transactions
Interest rate-related transactions are calculated by the present valueof the future cash flows discounted using the interest rate adjusted
for the remaining period until maturity and credit risk. The financial
assets and financial liabilities related to interest rate-related transactions are classified as the level 2 of the fair value hierarchy.

(iv) Investment trusts
Investment trusts are measured using quoted prices in inactive markets for identical assets based on market approach, and are classified as level 2 of fair value hierarchy.
(c) Loans for financial business
Loans for financial business are calculated by the present value of the
future cash flows discounted using the interest rate adjusted for theremaining period until maturity and credit risk, and are classified aslevel 2 of the fair value hierarchy.

137

As of March 31, 2023

55,929iv. Evaluation process of level 3
Fair value measurements of unlisted equities are performed by finance and accounting departments independent from equity management
departments in accordance with the prescribed rules. Fair value measurements including fair value models are examined for the adequacy byperiodically evaluating the business descriptions and the availability of business plans of the companies issuing the equities, as well as comparative listed companies.
v. Quantitative information related to assets classified as level 3
Information related to evaluation technique and significant unobservable inputs of assets measured at fair value on a recurring basis classified aslevel 3 is as follows:
As of March 31, 2022
Fair value

Equities

Millions of yen

Valuation technique

Unobservable
inputsRange

61,714

Income approach

Discount rate

3.0%–16.6%

Millions of yen

Valuation technique

Unobservable
inputsRange

55,929

Income approach

Discount rate

2.9%–16.6%

As of March 31, 2023
Fair value

Equities

vi. Sensitivity analysis related to the changes in significant unobservable inputs
For financial instruments classified as level 3, no significant changes in fair value are expected to occur as a result of changing unobservable
inputs to other alternative assumptions that are considered reasonable.
(2) The fair value of financial assets and financial liabilities that are not measured at fair value but disclosed on the fair value
i. The hierarchy of the fair value
The following are the fair value of financial assets and financial liabilities that are not measured at fair value but disclosed on the fair value. The
financial assets and financial liabilities that are measured at amortized cost are included.

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Data

Governance

TCFD/TNFD
Disclosure and IR

Corporate Overview/Stock Information

External Assurance

As of March 31, 2022
Millions of yen

Fair value
Carrying amount

Level 1

Level 2

Level 333 Commitments
Purchase commitments

Total

Financial assets
Loans for financial businessMillions of yen

1,583,629—

1,601,404—

1,601,404

Other financial assets   Monetary claims bought

Property, plant and equipment
13,129—12,527—

12,527

Financial liabilities  Bonds payables
Deposits for financial business

Intangible assets
Total

Borrowing and bonds payable  Borrowings

For the year ended March 31

742,544—743,873—

743,873

329,543

330,083——

330,083

2,217,505—

2,219,031—

2,219,031

2022

2023

253,953

207,544

14,906

14,959268,859

222,503

Note: These amounts above do not reflect the contents of all contracts that the Group is expected to enter into in the future.

34 Earnings Per Share

Notes: 1. Loans for financial business in the table above include their current portion.
2. Borrowings and bonds payable in the table above include their current portion.
3. Financial assets and financial liabilities whose fair values are similar to the carrying amounts are not included in the table above.

(1) Basic earnings per share

As of March 31, 2023

Basic earnings per share and its calculation basis are as follows:
Millions of yen

Fair value
Carrying amount

Level 1

Level 2

Level 3

Total

17,426—

17,410—17,410  Government bonds

55,15256,131——

56,131   Monetary claims bought

11,637—

11,384—

11,384

Financial assets
Loans for financial business
Other financial assets

Financial liabilities

Millions of yen
For the year ended March 31

Profit for the year attributable to owners of the parent
Weighted average number of common shares outstanding (Thousands of shares)
Basic earnings per share

2022

2023

672,486

677,469

2,241,430

2,183,607

300.03310.25(2) Diluted earnings per share
Diluted earnings per share and its calculation basis are as follows:

Borrowing and bonds payable

Millions of yen  Borrowings

692,096—690,687—

690,687  Bonds payables

379,482

379,031——

379,0312,717,552—

2,718,651—

2,718,651

Deposits for financial businessNotes: 1. Loans for financial business in the table above include their current portion.
2. Borrowings and bonds payable in the table above include their current portion.
3. Financial assets and financial liabilities whose fair values are similar to the carrying amounts are not included in the table above.

ii. Measurement method of the fair value(a) Loans for financial business
The fair value of loans for financial business is measured at the present value calculated by discounting each portion of future cash flowsclassified by period, for the corresponding remaining maturity using
the applicable interest rate considering credit risk. Loans for financial
business are classified as level 2 of the fair value hierarchy.
(b) Government bonds
The fair value of government bonds is estimated based on quoted
price, therefore government bonds are classified as level 1 of the fairvalue hierarchy.
(c) Monetary claims bought
The fair value of monetary claims bought is measured using quoted
prices in inactive markets for identical assets based on market
approach and is measured at the present value calculated by discounting each portion of future cash flows classified by period, for thecorresponding remaining maturity using the applicable interest rateconsidering credit risk. Monetary claims bought are classified as level
2 of the fair value hierarchy.
(d) Borrowings
For borrowings with variable interest rates, the carrying amount isused as fair value, as the rates reflect the market interest rate within ashort term and there is no significant change expected in the Group220

entities’ credit conditions after financing. For borrowings with fixedinterest rates, fair value is estimated by discounting the total of principal and interest using the current interest rate adjusted for theremaining maturity period of the borrowings and credit risk.
Borrowings are classified as level 2 of the fair value hierarchy.

For the year ended March 31

Profit for the year attributable to owners of the parent
Adjustment of profit
Profit used in calculation of diluted earnings per share(f) Deposits for financial businessFor demanded deposits of the deposits for financial business,amounts payable on request at the year-end closing date (carrying
amount) are considered to represent fair value. The fair value of time
deposits is measured at the present value calculated by discounting
each portion of future cash flows classified by period. The discountrate is the interest rate used when accepting new deposits. In addition, the contract principal and interest of time deposits classified ismeasured at the amounts after classification. Deposits for financial
business are classified as level 2 of the fair value hierarchy.

2023

672,486

677,469——

672,486

677,469

Thousands of shares
For the year ended March 31

Weighted average number of common shares outstanding

2022

2023

2,241,430

2,183,607

2,214

909

2,243,645

2,184,516

Effect of dilutive potential common shares
BIP trust and ESOP trust(e) Bonds payables
For bonds payable with quoted price, the fair value is estimatedbased on quoted price. For bonds payable without quoted price, thefair value is calculated by the present value of future cash flows discounted using the interest rate adjusted for the remaining maturity
period and credit risk. Bonds payables with quoted price are classified as level 1 of the fair value hierarchy and bonds payables without
quoted price are classified as level 2 of the fair value hierarchy.

2022

Weighted average number of common shares during the year

Yen
For the year ended March 31

2022

2023

Diluted earnings per share

299.73310.12

Notes: In the calculation of basic earnings per share and diluted earnings per share, shares in the Company owned by the executive compensation BIP trust and thestock-granting ESOP trust are included in treasury stock. Therefore, the number of these shares is deducted in calculating the number of common shares outstanding at
the end of the year and the weighted average number of common shares outstanding during the year.

KDDI Integrated Sustainability and Financial Report 2023

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance(b) Maturity analysis

35 Lease

Millions of yen(1) Lease as a lessee

As of March 31

2023

The Group mainly leases office space, buildings for base stations, dark fiber and in-house customer premises equipment for CATV and communication. Lease contracts for office space, buildings for base stations and dark fiber include extension and termination options. However, the Group
does not have any lease contracts that contain restrictions or covenants.

Within one year

40,19543,894

Over one year to two years

27,97830,545

Over two year to three years

17,597

19,198i. Amounts recognized in the consolidated statements of financial position

Over three year to four years

10,102

11,022

Over four years to five years

4,148

4,525

Millions of yen
As of March 31

2022

2023

Right-of-use assets
Real estate for base stations as the underlying asset

146,818

149,693

Transmission lines as the underlying asset

30,94927,735

Real estate for office and telecommunication business as the underlying asset

117,502114,357

Telecommunication equipment as the underlying asset

13,85015,721Other underlying assets

78,55086,429   Total right-of-use assets

387,669

393,935

Millions of yen
As of March 31

Increase of right-of-use assets

2022

2023

117,985

132,917ii. Amounts recognized in the consolidated statements of income
2022

2023

Real estate for base stations as the underlying asset

54,12255,289Transmission line as the underlying asset

6,186

5,381

Real estate for office and telecommunication business as the underlying asset

36,06934,794

Telecommunication equipment as the underlying asset

6,986

6,458

Other underlying assets

24,201

22,136

127,564

124,058

1,968

2,206

For the year ended March 31

Over five years

1,098

1,198

101,118

110,383

Unearned finance income(10,956)(41,346)

Net investment in the lease

90,162

69,037Total

36 Non-Cash Transactions
For the fiscal years ended March 31, 2022 and 2023, non-cash transactions (investment and finance transaction that don’t require the use of
cash and cash equivalents) comprise acquisition of right-of-use assets resulting from new leases of ¥117,985 million and ¥132,917 million,
respectively.

37 Major Subsidiaries(1) Organizational structure

Millions of yen

Depreciation associated with right-of-use assets

Major subsidiaries of the Group are as follows. They have share capital consisting solely of ordinary shares that are held directly by the Group, andthe proportion of ownership interests held equals the voting rights held by the Group. The country of incorporation or registration is also their principal place of business.
The proportion of voting rights (%)

As of March 31

Company name
Okinawa Cellular Telephone
Company

Personal
Services

Location
Naha-shi,
Okinawa

JCOM., Ltd. (Note 1)

Personal
Services

Chiyoda-ku,
Tokyo

J:COM West Co., Ltd.

Personal
Services

Chuo-ku,
Osaka

Management of CATV (broadcasting and telecommunication
business)

UQ Communications Inc. (Note 2) Services

PersonalChiyoda-ku,
Tokyo

Wireless broadband services

BIGLOBE Inc.

Personal
Services

Shinagawaku, Tokyo(2) Lease as a lessor

AEON Holdings Corporation ofJapan

Personal
Services

Shinjuku-ku,
Tokyo

i. Finance lease
KDDI Summit Global Myanmar Co., Ltd. (KSGM), a consolidated subsidiary, supports the telecommunications business operations of Myanma
Posts & Telecommunications (MPT), an organization under the Ministry of Transport and Communications in Myanmar. KSGM mainly leases telecommunication equipment to MPT classified as finance lease in the joint operation.

Chubu Telecommunications Co., Services
Business
Inc.

Personal
ServicesNaka-ku,
Nagoya-shi,
Aichi

Wire and Wireless Co., Ltd.

Personal
Services

Chuo-ku,Tokyo

Wireless broadband services

Chuo-ku,Tokyo
Minato-ku,
Tokyo

Holding company for financial
business
Holding company of internet service companies   Total depreciation associated with right-of-use assets
Interest expense associated with lease liabilitiesiii. Cash flows associated with leases

Millions of yen
For the year ended March 31

Total cash outflows associated with leases(a) Income from leaseNot applicable.

2022

2023

132,817130,494

Segment

Personal

au Financial Holdings Corporation Services
Supership Holdings, Inc

222

2022

Personal
Services

Key businessTelecommunications services (aumobile phone services)Management of CATV operatorsand broadcasting service providers

Telecommunications services
underTelecommunications BusinessAct
Operation of language schools
starting with English conversation
Telecommunications services
underTelecommunications Business
Act

2022

2023

52.5

53.9

50.0

50.0

93.1

93.1

(93.1)(93.1)

32.3

32.3

100.0

100.0

100.0

100.0

80.5

80.5

95.2

95.2

100.0

100.0

83.6

83.6

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance

The proportion of voting rights (%)

As of March 31

Key business

2022

2023

Koto-ku,Tokyo

Mail order services

55.0(50.0)

55.0(50.0)

Chiyoda-ku,
TokyoManagement of TV channels

100.0

100.0

(100.0)(100.0)Chiyoda-ku,
Tokyo

Business administration of subsidiary companies involved inenergy—100.0Company name

Segment

Location

Jupiter Shop Channel Co., Ltd.

Personal
Services

Jupiter Entertainment Co., Ltd.

Personal
Services

au Energy Holdings Corporation

Personal
Services
Business
Services

KDDI Matomete Office
Corporation

Business
Services

KDDI Evolva, Inc.

Business
Services

KDDI Digital Divergence Holdings Business
Services
Corporation

KDDI Engineering Corporation

KDDI Research, Inc.

Other

Other

Shibuya-ku,
TokyoShinjuku-ku,
Tokyo

Minato-ku,
TokyoShibuya-ku,
TokyoFujimino-shi,
Saitama

IT support services for small andmedium-sized companies
Call center, temporary personnel
services
Functions for the planning, formulation, and advancement of thebusiness strategies of groupcompanies in DX business, andmanagement business of groupcompanies
Construction, maintenance andoperation support for communication equipment
Technology research and productdevelopment related to telecommunication services

KDDI America, Inc.

Business
Services

KDDI Europe Limited

Business
Services

KDDI China Corporation

Business
Services

KDDI Asisa Pacific Pte Ltd.

Business
Services

Kawasaki-ku,
Construction and maintenance ofKawasaki-shi,
submarine cable
Kanagawa
Design, construction, operation
Shinjuku-ku,
support and maintenance forTokyo
communication equipment
New York,
Diversified telecommunications
U.S.A.
services in US
Diversified Telecommunications
London, U.K.
services in Europe
Sales, maintenance and operaBeijing, China tion of communication equipment
in China
Diversified Telecommunications
Singaporeservices in Singapore

TELEHOUSEInternational
Corporation of America

Business
Services

New York,
U.S.A.

Kokusai Cable Ship Co., Ltd.

Other

Japan Telecommunication
Engineering Service Co., Ltd.

Other

TELEHOUSE Holdings
Limited
TELEHOUSE International
Corporation of Europe Ltd.
KDDI SUMMIT GLOBALSINGAPORE PTE. LTD.

Business
Services
Business
Services
Personal
Services

London,U.K.
London,U.K.
SingaporeKDDI Summit Global Myanmar
Co., Ltd.

Personal
Services

Yangon,Myanmar

MobiCom Corporation LLC

Personal
Services

Ulaanbaatar,
Mongolia

95.0
100.0

—

100.0

100.0

100.0

100.0

The proportion of ownership interests held by non-controlling interests

2022

2023

50.0%

50.0%

The proportion of ownership interests held by non-controlling interests held equals the voting rights by non-controlling interests.
Amounts before adjustments to internal transactions of the Group are as follows:

Millions of yen
As of March 31

Current assets

2022

2023

177,096

162,135

Non-current assets

1,133,837

1,142,944

Current liabilities

212,303280,254

Non-current liabilities

637,641

539,176

Total equity

460,989

485,649

Amounts equivalent to the interests in total equity of JCOM attributable to the Group, and the non-controlling interests are as follows:
Millions of yen
As of March 31

91.7

91.7

100.0

100.0

83.2

83.8

2022

2023

Interests attributable to owners of the parent

213,466

231,210Non-controlling interests

247,523

254,438

460,989

485,649

Total(b) Consolidated statements of income and comprehensive income

Millions of yen
For the year ended March 31

2022

2023

100.0

100.0

100.0
(4.2)

100.0
(4.2)

Revenue

842,375

873,965

Profit for the year before income tax

115,798

116,906

Income taxes

34,06837,73985.1

Profit, net of tax

81,73079,167

85.1

70.8

70.8

(2.3)

(2.3)

Holding company

100.0

100.0

Data center services in Europe

92.8(92.8)

Data center services in America

Other comprehensive income

1,847(1,363)

Total comprehensive income

83,57777,804

Amounts equivalent to the profit for the year and comprehensive income attributable to the Group, and the non-controlling interests are as follows:
Millions of yen

2022

2023

Profit for the year attributable to owners of the parent

41,74640,70592.8(92.8)

Profit for the year attributable to non-controlling interests

39,984

38,462

81,73079,16750.1

50.1

Other comprehensive income attributable to owners of the parent

915

(639)

Other comprehensive income attributable to non-controlling interests

931

(724)

100.0

100.0

1,847

(1,363)(100.0)(100.0)Total comprehensive income attributable to owners of the parent

42,66240,066

Total comprehensive income attributable to non-controlling interests

40,91537,73898.8(98.8)

98.8(98.8)

83,57777,804

Numbers in parentheses represent indirect voting rights.
Notes: 1. T he Group does not own a majority of the voting rights in JCOM., Ltd. (“JCOM”). However, the Group owns 50% of the voting rights of JCOM and has the power togovern its financial and operating policies. Accordingly, JCOM is controlled by the Group and included in the consolidated financial statements.
2. The Group does not own a majority of the voting rights in UQ Communications Inc. (“UQ”). However, UQ is consolidated by the Group because UQ is considered to becontrolled by the Group on the grounds that the Group is the largest shareholder of UQ, the director dispatched from the Group has the right of representation, thedirectors dispatched from the Group have the executive power in the UQ’s Board of Directors, and the operations of UQ are significantly dependent on the Company.

224

As of March 31

95.0

100.0

Support for telecommunications
business operations of Myanma
Posts & Telecommunications(MPT)
Diversified telecommunications
services in Mongolia

JCOM., Ltd. (“JCOM”).

(a) Consolidated statements of financial position

100.0

Holding company(2) Financial statements of the Group’s subsidiaries with material non-controlling interests

For the year ended March 31

Sub total

Sub total

Total

For the years ended March 31, 2022 and 2023, dividends paid by JCOM to non-controlling interests were ¥27,113 million and ¥30,724 million,
respectively.

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Data

GovernanceCorporate Overview/Stock Information

External Assurance(c) Consolidated statement of cash flows
Millions of yen
For the year ended March 31

2022

2023

194,877

40 Subsequent Events
Repurchase of treasury stocks
At the board meeting held on May 11, 2023, the Company’s Board of Directors resolved that the Company would repurchase its own shares pursuant to Article 156 of the Companies Act of Japan, which applies pursuant to Article 165, Paragraph 3, of that law.

Cash flows from operating activities (net)184,369

Cash flows from investing activities (net)(92,861)(89,808)

Cash flows from financing activities (net)(80,893)(122,475)(1) Reason for repurchase of the Company’s own shares

Increase (decrease) of cash and cash equivalents

10,615(17,407)

To implement flexible capital policies in response to the change in the business environment and to provide shareholders return.
(2) Reason for repurchase of the Company’s own shares(a) Type of shares to be repurchased: Shares of common stock(b) Total number of shares to be repurchased: Up to 92,000,000 shares(c) Repurchase period: From June 1, 2023 to May 31, 2024(d) Total amount of repurchase price: Up to ¥300 billion

38 Related Party Transactions(1) Related party transactions
For the year ended March 31, 2022:
There are no significant related party transactions and balances to be disclosed, and the most common terms used by other entities include
something like such transactions are negotiated in the ordinary course of business.
For the year ended March 31, 2023:
There are no significant related party transactions and balances to be disclosed, and the most common terms used by other entities include
something like such transactions are negotiated in the ordinary course of business.
(2) Remuneration of key management
Remuneration of key management is as follows:
Millions of yen
For the year ended March 31

2022

2023

Short-term employee benefits

953

884

Share-based payment

186

180

1,139

1,064

Total

Data center in Canada
At the board meeting held on June 21, 2023, the Company’s Board of Directors resolved to acquire assets, including land, buildings and facilities
in Canada from Allied Properties REIT (Headquarters: Toronto, Canada, CEO: CECILIA WILLIAMS) for CAD 1.35 billion (converted to 144,612 million yen using the TTM on June 21, 2023, at an exchange rate of 1CAD = ¥107.12), with the contract being signed on the same day. Additionally,in response to this agreement, we plan to establish a new subsidiary, “KDDI Canada, Inc.” on June 26, 2023, with the purpose of operating data
center business in Canada.
The Company has been promoting “Sustainability Management” by implementing its “Satellite Growth Strategy” to increase corporate value
and a cycle of sustainable growth in society. As one of the focused areas of the growth strategy, the Company has been expanding its DX
domain. With the data center business being one of the core parts of DX, the Company aims to expand interconnection data centers (hereinafterreferred to as “interconnection DC”) as places where customers such as content providers, cloud service providers, and telecommunication carriers connect with each other and create new value.
In addition to “TELEHOUSE London,” which has the world’s largest number of connections (Note), and “TELEHOUSE Paris, which has the largest number in France (Note), the Company also established a new data center in Bangkok, Thailand in May 2023, expanding not only in Europe,
but also in Southeast Asia. Through this agreement, the company will acquire Canada’s top (Note) interconnection DC and strengthen its data
center business in North America to promote its business on a global scale.
Note: The number of customer interconnections in a data center. As of June 21, 2023.

(1) Background and Aims
Remuneration of key management represents remuneration to directors and audit & supervisory board members of the Company, including outside directors and audit & supervisory board members.

39 Contingent Events
Commitment line lending contract
Certain consolidated subsidiaries are engaged in consumer lending business through cash advances and credit card loans, which are related tothe credit cards. With regard to such loans, of the amount established in a loan contract (the contracted limit), the contract allows customers totake out a loan at any time within the amount of credit limit approved by these consolidated subsidiaries (the loan limit).
Since some of these contracts expire without the actual loan being drawn, in addition to the Group Companies having discretion to increase or
decrease the loan limit, the unused balance of these loans would not necessarily be drawn in its entirety.

(2) Overview of KDDI Canada, Inc.
Name
Location
Business Description
CapitalDate of Establishment

The balances of the unused lending commitment lines are as follows:
Millions of yen

2022

2023

Total commitment line borrowings

704,483

751,327

Amounts lent

220,951

247,054

Unused balance of lending

483,532

504,272

As of March 31

The global data business is accelerating and the need for data centers is increasing. With the spread of IoT and 5G, traffic by users who use
apps and view content on mobile devices is increasing. As a result, interconnection DCs, which enable content providers, Internet operators,
hyperscalers, etc. to interconnect within the data centers and create value, are becoming increasingly important for realizing a digital society.
As a platform for society, the Company will accelerate its business centered on high-quality interconnection DCs, which are the easiest to interconnect, and contribute to the expansion of global business for corporate customers and the prosperity of the digital world.

Major Shareholders and their Shareholding Ratio

KDDI Canada, Inc.
Toronto, Canada
Data Center Business
CAD 1,100 million
June 26, 2023 (Scheduled Date)
KDDI 100%41 Approval of the Consolidated Financial Statements
The consolidated financial statements for the year ended March 31, 2023 were approved by Makoto Takahashi, president and CEO, on June 22,
2023.

226

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

228

KDDI Integrated Sustainability and Financial Report 2023

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Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

230

KDDI Integrated Sustainability and Financial Report 2023

231

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

232

KDDI Integrated Sustainability and Financial Report 2023

233

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

TCFD/TNFD
Disclosure and IR

Governance

Data

Corporate Overview/Stock Information

External Assurance

Disclosure and IR

Corporate Overview

KDDI is continuously committed to disclose corporate information that could have a material bearing
on the investment decisions of investors, in a timely and easily understandable manner for shareholders and investors, inaccordance with the Financial Instruments and Exchange Act and the Securities Listing Regulations of Tokyo Stock
Exchange, Inc. KDDI discloses its IR Basic Policy* on its website, explaining such matters as fundamental thinking regarding IR activities and the system for disclosing pertinent information. In particular, regarding financial information to bedisclosed at the end of fiscal period, KDDI set up a Disclosure Committee which deliberates intensively in every fiscal
year with the goal of improving business transparency and supplying appropriate information to the public.
KDDI’s Approach

IR Basic Policy

Three IR Activity Guidelines

KDDI places top management priority on building a

Through IR based on the activity guidelines outlined

trusting relationship with its shareholders and investors,

below, KDDI strives to build long-term, trusting

ensuring value-oriented corporate management, active

relationship with shareholders and investors, as well as

information disclosure, and enhanced communication.

maximize its corporate value.

Value-Oriented Corporate
Management

Trusting relationshipwith shareholders andinvestors

Active Information
Disclosure

Registered Place of Business
3-2, Nishi-Shinjuku 2-chome, Shinjuku-ku,
Tokyo 163-8003, Japan

Company NameKDDI CORPORATION
Date of Establishment
June 1, 1984 (The KDDI CORPORATION was
established in October 2000 through the merger of
DDI CORPORATION, KDD Corporation, and IDO
CORPORATION.)

President, Representative Director CEO
Makoto Takahashi
Capital¥141,852 million

Business Objective
Telecommunications business* Matters to be decided by the Board of Directors.

Maximizing corporate
value(As of March 31, 2023)

Enhanced
Communication

Open IR Activities

Number of Employees
49,659 (consolidated)

Head Office10-10, Iidabashi 3-chome,
Chiyoda-ku, Tokyo 102-8460, Japan

Stock Information(As of March 31, 2023)

9433

SE Code■ Breakdown of Shareholding by Investor Type
Other

Proactive IR Activities

Organized IR Activities

Number of Shares
Authorized

4,200,000,000 shares

Number of Shares Issued
and Outstanding

2,302,712,308 shares

Number of Shareholders

420,608 shareholders

Companies
31.93%

2,303
millionsharesIndividuals and Others(including treasury stock）
11.65%

Financial
Institutions
25.43%
Securities Firms
4.63%
Foreign Companies,
etc 26.36%

IR Activities in FY23.3
Enhancing Communication
Financial results briefings for analysts and institutional investors are held along with quarterly financial results disclosures
to explain the company's business performances directly from our management. In addition, our directors and the IR
department hold individual meetings with institutional investors in Europe, North America, Asia and other regions on eachfinancial disclosure to explain KDDI's financial status and future strategies. In FY23.3, a total of 650 meetings are held
face-to-face, visiting and online as appropriate (including participation in 13 conferences hosted by securities companies
in Japan and overseas.) We will continue to work hard to improve communication.
KDDI takes the opinions expressed by shareholders and investors seriously, communicating them not only to ourmanagement but also to our employees in general, as valuable reference information for business strategies andmanagement strategies.

Active Information Disclosure
KDDI provides webcasts of its financial results briefings on its website, and also posts an English-language version.
We are working to improve the information by posting such information as various financial documents including,financial statements, financial/performance data, information related to corporate governance, etc. The data can also beviewed on our IR app and website, which are compatible with multiple devices.
Regarding our small meetings, we provide on-demand streaming of certain briefings on our website.
As a result of our IR activities, we received excellent evaluations in FY23.3. In particular, KDDI won “Internet IR 2022
Excellence Award” of the Daiwa Investor Relations. Additionally, we were commended for operating an outstanding
website in “All Japanese Listed Companies’ Website Fulfillment Ranking Fiscal 2022” of the Nikko IR.

234■ Major Shareholders
Name of Corporate Entity

Number of Shares Held

Shareholding Ratio(Ratio of Voting)* (%)

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

346,662,400

16.06

KYOCERA Corporation

335,096,000

15.52

Toyota Motor Corporation

316,794,400

14.67

Custody Bank of Japan, Ltd. (Trust Account)

146,907,800

6.80

STATE STREET BANK WEST CLIENT - TREATY 505234

32,864,175

1.52

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd

21,656,856

1.00

JP MORGAN CHASE BANK 385781

21,410,133

0.99

SSBTC CLIENT OMNIBUS ACCOUNT

21,275,738

0.98

STATE STREET BANK AND TRUST COMPANY 505103

20,267,366

0.93

JPMorgan Securities Japan Co., Ltd.

19,468,688

0.90* The shareholding ratio (the ratio of voting) is calculated excluding treasury stock (144,271,545 shares as of March 31, 2023). In addition, theCompany’s shares held by the Executive Remuneration BIP Trust (1,319,384 shares as of March 31, 2023) are included in the number of shareswith voting rights, but the Company does not exercise its voting rights on these shares. The shareholding ratio (the ratio of voting) is calculatedby rounding off to the second decimal place.

KDDI Integrated Sustainability and Financial Report 2023

235

Introduction

VisionFinancial and Non-Financial Data

Material Issues

Consolidated Financial Statements

Disclosure and IR

Data

Governance

TCFD/TNFD

Corporate Overview/Stock Information

External Assurance

External Assurance
Environmental Data Guarantee Statement■

Third-party Assurance by LRQA (Limited Assurance)
Data subject• Scope 1 GHG emissions• Scope 2 GHG emissions(market-based and location-based)• Energy usage• Water usage• Industrial waste■

Third-party Verification by Waseda University (Limited Assurance)
Data subject• Scope 3 GHG Emissions

Social Data■

Third-party Assurance by PricewaterhouseCoopers Sustainability LLC (Limited Assurance)
Data subject• Proportion of Female
Managers• Rate of Paternity Leave Taken
by Males• Gender Pay Gap



236

Third-party AssuranceKDDI Integrated Sustainability and Financial Report 2023

237